California Free Press

Start Closing US Military Bases in Foreign Countries Now!

This is an excellent article in CommonDreams.org reprinted here:

Published on Thursday, February 26, 2009 by Foreign Policy In Focus

Too Many Overseas Bases

by David Vine

In the midst of an economic crisis that's getting scarier by the day, it's time to ask whether the nation can really afford some 1,000 military bases overseas. For those unfamiliar with the issue, you read that number correctly. One thousand. One thousand U.S. military bases outside the 50 states and Washington, DC, representing the largest collection of bases in world history.

Officially the Pentagon counts 865 base sites, but this notoriously unreliable number omits all our bases in Iraq (likely over 100) and Afghanistan (80 and counting), among many other well-known and secretive bases. More than half a century after World War II and the Korean War, we still have 268 bases in Germany, 124 in Japan, and 87 in South Korea. Others are scattered around the globe in places like Aruba and Australia, Bulgaria and Bahrain, Colombia and Greece, Djibouti, Egypt, Kuwait, Qatar, Romania, Singapore, and of course, Guantánamo Bay, Cuba - just to name a few. Among the installations considered critical to our national security are a ski center in the Bavarian Alps, resorts in Seoul and Tokyo, and 234 golf courses the Pentagon runs worldwide.

Unlike domestic bases, which set off local alarms when threatened by closure, our collection of overseas bases is particularly galling because almost all our taxpayer money leaves the United States (much goes to enriching private base contractors like corruption-plagued former Halliburton subsidiary KBR). One part of the massive Ramstein airbase near Landstuhl, Germany, has an estimated value of $3.3 billion. Just think how local communities could use that kind of money to make investments in schools, hospitals, jobs, and infrastructure.

Even the Bush administration saw the wastefulness of our overseas basing network. In 2004, then-Secretary of Defense Donald Rumsfeld announced plans to close more than one-third of the nation's overseas installations, moving 70,000 troops and 100,000 family members and civilians back to the United States. National Security Adviser Jim Jones, then commander of U.S. forces in Europe, called for closing 20% of our bases in Europe.  According to Rumsfeld's estimates, we could save at least $12 billion by closing 200 to 300 bases alone. While the closures were derailed by claims that closing bases could cost us in the short term, even if this is true, it's no reason to continue our profligate ways in the longer term.

Costs Far Exceeding Dollars and Cents

Unfortunately, the financial costs of our overseas bases are only part of the problem.  Other costs to people at home and abroad are just as devastating. Military families suffer painful dislocations as troops stationed overseas separate from loved ones or uproot their families through frequent moves around the world. While some foreign governments like U.S. bases for their perceived economic benefits, many locals living near the bases suffer environmental and health damage from military toxins and pollution, disrupted economic, social, and cultural systems, military accidents, and increased prostitution and crime. 

In undemocratic nations like Uzbekistan, Kyrgyzstan, and Saudi Arabia, our bases support governments responsible for repression and human rights abuses. In too many recurring cases, soldiers have raped, assaulted, or killed locals, most prominently of late in South Korea, Okinawa, and Italy. The forced expulsion of the entire Chagossian people to create our secretive base on British Diego Garcia in the Indian Ocean is another extreme but not so aberrant example.   

Bases abroad have become a major and unacknowledged "face" of the United States, frequently damaging the nation's reputation, engendering grievances and anger, and generally creating antagonistic rather than cooperative relationships between the United States and others. Most dangerously, as we have seen in Saudi Arabia and Yemen, and as we are seeing in Iraq and Afghanistan, foreign bases create breeding grounds for radicalism, anti-Americanism, and attacks on the United States, reducing, rather than improving, our national security. 

Proponents of maintaining the overseas base status quo will argue, however, that our foreign bases are critical to national and global security. A closer examination shows that overseas bases have often heightened military tensions and discouraged diplomatic solutions to international conflicts. Rather than stabilizing dangerous regions, our overseas bases have often increased global militarization, enlarging security threats faced by other nations who respond by boosting military spending (and in cases like China and Russia, foreign base acquisition) in an escalating spiral. Overseas bases actually make war more likely, not less.

The Benefits of Fewer Bases

This isn't a call for isolationism or a protectionism that would prevent us from spending money overseas. As the Obama administration and others have recognized, we must recommit to cooperative forms of engagement with the rest of the world that rely on diplomatic, economic, and cultural ties rather than military means. In addition to freeing money to meet critical human needs at home and abroad, fewer overseas bases would help rebuild our military into a less overstretched, defensive force committed to defending the nation's territory from attack. 

In these difficult economic times, the Obama administration and Congress should initiate a major reassessment of our 1,000 overseas bases. Now is the time to ask if, as a nation and a world, we can really afford the 1,000 bases that are pushing the nation deeper into debt and making the United States and the planet less secure? With so many needs facing our nation, it's unconscionable to have 1,000 overseas bases. It's time to begin closing them.

Straight Talk on the National Debt and Who's Responsible for it

Now that we have a Democratic President, the Republicans all of a sudden are becoming very worried about the National Debt and deficit spending. That's funny. Since 1980 when Reagan became President, the National Debt has increased by a factor of ten under three Republican Presidents. It tripled under Ronald Reagan who came into office with a National Debt of about $900 billion and left office in 1988 with a National Debt of about $3 trillion. Thus Reagan tripled the National Debt during his term in office contributing more to the debt than all the Presidents and all the wars that preceded him. President Bush the father left office with a National Debt of about $4 trillion thus having raised the Natonal Debt by over $1 trillion in his four years in office.

Then President Clinton took over in 1992. In 1992, the Federal budget deficit was $290 billion - the largest dollar deficit in American history. Clinton was able to turn this legacy of debt around. This is from "President Clinton Announces Another Record Budget Surplus":

September 27, 2000 Web posted at: 4:51 p.m. EDT (2051 GMT) WASHINGTON (CNN) -- President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion. "Eight years ago, our future was at risk," Clinton said Wednesday morning. "Economic growth was low, unemployment was high, interest rates were high, the federal debt had quadrupled in the previous 12 years. When Vice President Gore and I took office, the budget deficit was $290 billion, and it was projected this year the budget deficit would be $455 billion." Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years -- $223 billion this year alone. This represents, Clinton said, "the largest one-year debt reduction in the history of the United States."

Clinton ran budgetary surpluses his last three years in office. The federal budget surplus for fiscal year 1999 was $122.7 billion, and $69.2 billion for fiscal year 1998. Overall, President Clinton raised the debt by only about $1 trillion for his 8 years in office while placing the US on a track for future surpluses after he left office. Instead, George W Bush came into office in 2000 and promptly turned Clinton's projected budgetary surpluses around and starting running huge deficits. Vice-President Cheney remarked, "Reagan proved that deficits don't matter." George W Bush entered office with a national debt of about $5 trillion and doubled it to $10 trillion by 2008. In keeping with Republican philosophy he reduced taxes on the wealthy. The theoretical projected government revenues that were supposed to have developed from increased productive investment by the wealthy - due to decreased taxes - never materialized. Instead massive increases in the national debt were the result of Bush's policies. Thus during this period from 1980 to 2009 Republican Presidents added about $9 trillion to the National Debt and a Democratic President added about $1 trillion although he had actually run budgetary surpluses his last three years in office. The National Debt had increased by a factor of 10 in less than 30 years. In other words the National Debt today is over 10 times what it was when Reagan entered office.

How did the Republican party achieve this run-up in US National Debt? By lowering taxes primarily. Spending was not reduced under the Republican Presidents but lowered taxes resulted in tremendous additions to the debt and a large transfer of wealth from the middle class to the rich.

This is from "United States National Debt - An Analysis of the Presidents Who Are Responsible for the Borrowing":

Prior to the Neo-Conservative takeover of the Republican Party, there was not much difference between the two parties’ debt philosophy.  They both worked together to minimize it.  However the debt has been on a steady incline ever since the Reagan presidency.  The only exception to the steep increase over the last 30 years was during the presidency of Bill Clinton, when he brought spending under control and the debt growth down to almost zero. Comparing the borrowing habits of the two parties since 1981, when the Neo-Conservative movement really took hold and government spending raced out of control, it is extremely obvious that the big spenders are Republicans and their party’s presidents. The only Democratic president since then, Mr. Clinton, raised the national debt an average of 4.3% per year. The Republican presidents (Reagan, Bush, and Bush II) raised the debt an average of 10.8% per year. That is, for every dollar a Democratic President has raised the national debt in the past 30 years, Republican presidents have raised the debt by $2.5. Any way you look at it, Neo-Conservative Republican presidents cannot or will not control government spending.

The theory that giving tax breaks to the rich would actually create jobs and stimulate the economy thereby producing additional tax revenues that would compensate for the lower tax rates has been proven historically not to be true, but we are still faced by the spectacle today of Republicans calling for less government spending (now that we have a Democratic President) and becoming deficit hawks. John McCain calls it "intergenerational theft." Of course, he wasn't calling it that under Republican Presidents. This just shows what total hypocrites they are and what a lack of respect they have for the American people that they think they can pull the wool over their eyes.

The fact is that Reagan was able to push his tax cuts through both Houses of Congress, but he never pushed through any reduced spending programs.  His weak leadership in this area makes him directly responsible for the unprecedented rise in borrowing during his time in office, an average of 13.8% per year.  The increase in total debt during Reagan’s two terms was larger than all the debt accumulated by all the presidents before him combined.  From 1983 through 1985, with a Republican Senate, the debt was increasing at over 17% per year.  While Mr. Reagan was in office this nation’s debt went from just under 1 trillion dollars to over 2.6 trillion dollars, a 200% increase.  The sad part about this increase is that it was not to educate our children, or to improve our infrastructure, or to help the poor, or even to finance a war.  Reagan’s enormous increase in the national debt was not to pay for any noble cause at all; his primary unapologetic goal was to pad the pockets of the rich.  The huge national debt we have today is a living legacy to his failed Neo-Conservative economic policies.  Reagan’s legacy is a heavy financial weight that continues to apply an unrelenting drag on this nation’s economic resources. George Bush Sr. meekly followed in Reagan’s shadow after his election in 1988, by increasing the debt on average a mere 11.8% a year during his four years as President.  In his last year in office he quite responsibly worked with Democrats to raise taxes to help reduce the massive yearly increases in the national debt.  This bipartisan plan got the growth down to under 11% in 1992, but it was too little too late and didn’t make much difference in the overall trend. The Neo-Conservatives controlling the Republican Party rewarded him for putting the nation’s future above his party’s ideology by throwing him out of office even though it had hardly been a year since he was credited with winning the Gulf War. In 1993 President Clinton inherited the deficit spending problem and did more than just talk about it; he fixed it.  In his first two years, with a cooperative Democratic Congress, he set the course for the best economy this country has ever experienced.  Then he worked with what could be characterized as the most hostile Congress in history, led by Republicans for the last six years of his administration.  Yet, under constant personal attacks from the right, he still managed to get the growth of the debt down to 0.32% (one third of one percent) his last year in office.  Had his policies been followed for one more year the debt would have been reduced for the first time since the Kennedy administration.  Contrary to the myth fostered by our right-wing friends, under a Democrat, revenue increased and spending decreased. When President Bush II came into office in 2001 he quickly turned all that progress around.  With the help of a Republican controlled Congress he immediately gave a massive tax cut based on a failed economic policy; perhaps an economic fantasy describes it better.  The last year Mr. Clinton was in office the nation borrowed 18 billion dollars.  The first year Mr. Bush II was in office he had to borrow 133 billion.  The first tax cut Bush pushed through a willing Republican Congress caused an upswing in government borrowing that was supposed to stimulate the economy, but two years later Bush had to push through yet another tax cut.  The second tax cut was needed because it was clear that the first one did not work.  Economic history tells us the second did not work either.  As a result of all his tax cutting with no cutting in spending, in 2003 President Bush set a record for the biggest single yearly dollar increase in debt in the nation’s history.  He did it again in 2004, increasing the debt more than half a trillion dollars.  Since 2003 total borrowing has typically been around $500,000,000,000 per year.  Even Mr. Reagan never increased the debt that much in a single year; Mr. Reagan’s biggest increase was only 282 billion, half of GWB’s outrageous spending.  As a result of the fact that the debt was already pretty high when Bush II entered office, his annual rate of increase is only averaging 7% per year so far.  In 2006 he was holding press conferences bragging that the debt was increasing at the rate of only 300 billion dollars a year, yet in reality it was twice that.  Again the facts do not match Neo-Con rhetoric.

The Republican rhetoric is at odds with the truth of the situation. Although they accuse the Democrats of "tax and spend," Democrats have historically been more fiscally responsible and fiscally conservative than Republicans by a long shot. And the Republican "trickle down" theory has not worked. It didn't create jobs. It didn't grow the economy. It didn't produce enhanced revenues for the Federal government. It didn't do any of the things Republicans said it was going to do. Instead the only result is that it lined the pockets of the rich. Together with the Republican "free trade" policy, supply side economics has resulted in a diminished middle class, fewer American jobs and a massive transfer of income and wealth from the poor and middle class to the rich.

And yet during the first few weeks of the Obama administration, you can't turn on CNN without hearing the mantra from Republican pundits and Congress persons that the Democrats are running up the National Debt and creating a burden for our grandchildren. This is totally disingenuous. McCain is among the worst of the bunch. His hypocrisy is glaring.

According to the Washington Post:

Just two weeks after being feted by President Obama for bipartisanship, Sen. John McCain on Tuesday went head-to-head with Mr. Obama for the first time since the election, mobilizing his own campaign supporters to oppose the president's giant economic recovery spending bill. In taking the strong stand -- he accused Democrats of "trying to jam" the $885 billion bill through the Senate -- the former Republican presidential candidate signaled that he wants to recapture the role he used to serve as chief foe of pork-barrel spending. The e-mail marks an early test of Mr. McCain's political capital after suffering an electoral defeat at the hands of Mr. Obama in November. "I cannot and do not support the package on the table from the Democrats and the Obama Administration. Our country does not need just another spending bill, particularly not one that will load future generations with the burden of massive debt," Mr. McCain said in the e-mail, though he praised the president for trying to reach out to Republicans.

And all the other Republicans have gone on and on in the same vein. First you have to wonder how they are getting so much air time. Their appearances on media talk shows has outnumbered Democratic appearances by a factor of two to one. Secondly, where were they in their concern for the tax burden of future generations when Republicans controlled the White House? They hardly spoke a word of criticism of deficit spending then. And how are they getting their voices heard to a greater extent than the party which is presently in power? Republican lies are shaping the views of the electorate to a far greater extent than Democratic truth telling and that's a great cause for concern. If the Democrats can't use their power to expose the Republican myths about the economy, then this does not auger well for the continued recovery of the economy or the success of the Obama administration. Supply side, trickle down economics should have been totally discredited by now. Instead, Republicans are continuing to tout the virtues of tax cuts, the very same philosophy that's responsible for the current economic catastrophe. Obama and the Democrats need to get their voices heard to a far greater extent. True, Obama has used the bully pulpit effectively, but Republicans continue to shape public opinion. The Obama administration needs to reinstate some version of the Fairness Doctrine that Reagan eliminated which would give them at least equal media exposure.

President Bush II slipped into office and once again applied the Neo-Con manta of the old trickle down tax model and immediately created a need to raise the debt level to pay for an unjustified tax cut in 2001. Predictably (and before 9/11) the nation lost jobs and there were fewer new millionaires.  Not learning from his past mistakes, Bush pushed through yet more tax cuts in 2003, 2005 and 2006 -- all while expanding the military, the largest single component of the budget.  He and his lap dog Republican Congress never learned from their mistakes.  As a result, the national debt has increased an average of $1.5 billion per day since the beginning of 2002. While it is a great jabbing sound bite, the facts show that the “tax and spend” rhetoric Republicans often spew about Democrats is not as bad as it sounds.  Taxing before spending actually reflects good government.  The facts also show that it most often takes a Democratic President to control and reduce spending.  The truth is that the Republicans are the party of “borrow and spend”.  They hate taxes, but love to spend; their solution is to put off paying till later for our security today.  They prefer to see our children pay for their debt.  Neo-Conservative thinking has run up over an 9.5 trillion dollar debt that will not be paid off for a generation or more, and is still increasing at an astounding rate with no end to deficit spending in sight.  ... When Mr. Reagan was in office he had a Democratic House and a Republican Senate to deal with.  But the “Great Communicator” used the bully pulpit to force both Houses of Congress to go along with his tax cuts on the promise that spending cuts would follow.  However, the spending was never reduced.  The mixed-party Congress, with no presidential leadership, failed to follow through on reducing spending. How did Mr. Clinton lead the nation into fiscal responsibility?  When there was a Democratic run Congress he worked with them to put a policy in place that the Republicans dumped the minute Mr. Bush entered office.  That reasonable and responsible policy was; if you cut taxes you must make a corresponding cut in spending.  They called it “pay as you go.”  We need that kind of responsible leadership again.  Under President Clinton the Republican Congress lived within the ‘pay as you go’ rule and spending was extremely well controlled.  The Republicans rapidly abandoned this rule when Mr. Bush entered office in 2000 and deficit spending started skyrocketing immediately.  Republicans have proven they do not have the guts or the political will to do what it takes to get spending under control.  For the country’s sake we were hoping a new Democratic Congress would change the direction of this otherwise certain economic train wreck.  They tried, but could not overcome Republicans using the filibuster more times than in any other Congress to block all progressive bills.   Republicans chose gridlock over progress. ...  In stark contrast to their rhetoric, the fact is that in the last 60 years when Republicans held all the power, they never used it to reduce the debt; in fact they always increased it.  If you want deficit reduction you need Democrats in control, because the “borrow and spend” Republicans have never done it on their own.

In short the Democrats need to realize that shaping public opinion is a looming battle to be fought and that the Republicans, rather than wishing the Obama administration well in a spirit of bipartisanship, quite to the contrary, are on the attack from Day 1, and the media are going along with them because they represent the media corporations' interests. No less than a total discrediting of Ronald Reagan and his trickle down, supply side economics is called for. The perverseness and hypocrisy of the Republicans needs to be exposed, and the Democrats now in power shouldn't go along with media attempts to promote the Republicans' sick and discredited points of view. It's outrageous that anyone should be seeking to convince the American people at this point that the way out of a total meltdown of the American economy is the very same philosophy that, having been practiced for the greater part of the last 28 years, is responsible for getting us into it. The Democrats have to hammer this home. They have to realize that the Republicans are not their friends, nor are they friends of the American middle class despite McCain's frequent use of the sobriquet, "my friends"; they are not well meaning. They are truly only interested in supporting the status quo and represent the interests of the wealthy and large corporations. And they look forward to the revolving door and the lucrative jobs waiting for them when they leave "public service."

In a recent development, Obama has leapfrogged the Republicans by declaring that his projected budget will eventually reduce the deficit thereby taking the wind out of their sails on this issue. Getting his all encompassing plans out there before the public lets the debate proceed on the total package - not just one small portion of it.

From the New York Times, February 21, 2009:

WASHINGTON — After a string of costly bailout and stimulus measures, President Obama will set a goal this week to cut the annual deficit at least in half by the end of his term, administration officials said. The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy. Mr. Obama’s budget outline, which he will release on Thursday, will also confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy. The president inherited a deficit for 2009 of about $1.2 trillion, which will rise to more than $1.5 trillion, given initial spending from his recently enacted stimulus package. His budget blueprint for the 2010 fiscal year, which begins Oct. 1, will include a 10-year projection showing the annual deficit declining to $533 billion in the 2013 fiscal year, the last year of his term, officials said.

Frank Thomas Comments on Mortgage Deductability and More

Frank Thomas commented on Robert Reich's blog as follows:

Responding quickly to your question about whether the US should have similar policies as Canada and possibly Holland regarding the deductability of home mortgage interest, I can only say that the Dutch will carefully explore options here from all aspects.

There is already common ground for disallowing interest deductions for a Second home or Vacation residence. Also, there's serious consideration and likely eventual agreement to set an upper home mortgage value LIMIT on which interest expense is tax deductible.

Extending the qualifying age for Soc. Security from 65 years to 67 years is also highly likely to be put into law here. Should be considered for the US also.

I have to repeat that such Dutch tax revenue enhancement measures will go hand-in-hand with selective government program cost reductions.

The EU has a strict rule for all members and would be new members that a country's National Debt must not exceed 3% of GDP ... or corrective actions must be taken.

The inherently prudent Dutch have traditionally always had a strong distaste for unnecessary Debt accumulation, personally and government-wise. Hence, the country makes every effort to adhere fiercely to this 3% Debt to GDP rule ... without walking away from the well-run social nets that help people in trouble during good times as well as bad times.

This reflects, "We are all in this world together concept" of most European countries. So the Dutch will, using one of Art's favorite terms, even "tweak" the social nets to fit the new permanent economic realities.

For want of better words, I call Holland's prudent, pragmatic, Social-Economic model, "Balanced Capitalism."

I think we in the States should at least study the possibility of adjusting the tax deductability of home mortgage interest ... might go hand-in-hand with reductions in tax rates for middle class.

It certainly should be considered for John McCain's 10-11 palaces and like situations. -;)

John, you have written well about some other very practical and significant tax revenue enhancement actions the US could undertake simultaneously with its heavy stimulus spending ... WITHOUT creating conflicts of purpose.

As you and I have been postulating, both strategies are critical to keep the Debt explosion down ... including for example, a fee on market exchange transactions that would calm down speculative stock/bond/option trading and yield substantial tax revenues for social-infrastructure investments.
This would also be the thinking of the Dutch who tend to get right down to the business of building consensus for the hard decisions in correcting financial problems in a strucurally, sustainable way ... bearing in mind market dynamics and general welfare of all citizens.

Frank followed up in a later comment:

A short followup on your question of interest rate deductibility.

The US allows deductibility of interest on "home equity" loans with a mortgage value cap, I believe.

This is a questionable practice given lessons of current Financial Bubble where many home equity loans were used to buy personal consumption items (TV, furniture, appliances, computer systems, and for the well-off to buy 'yachts' or another palace, for example). This has been an effective way to get around the 1986 Tax Reform Act which forbids interest deductions on credit cards and personal loans (similar to Holland).

It also encourages a culture of overspending and borrowing far above what is earned. Of course, the easy availability of credit cards in the US.(average of 5-6 cards in America compared to 2 in The Netherlands where such debt is strictly controlled) also contributes significantly to our explosive personal debt culture .

As mentioned, the US mortgage interest deductibility practice favors the wealthy who can buy palatial estates (each with a cap on the mortgage value used for interest expense deductibility)and who also have the negotiating power to get "interest only" mortgages -- resulting in a very attractive rich-get-richer subsidy compared to middle-class taxpayers' average tax benefit from homeownership in the $2,300/year range, according to published research. This average benefit is probably even sinking now due to the enormous number of foreclosures to date and expected over next 12 months.

Whatever the Dutch decide, it will be done in phased steps and may also include some reduction in individual income tax rates. But, as stated, the main Dutch focus is on second home & vacation home owners and setting a cap on Second-Time homeowners. The Dutch are also examining the merits of eliminating entirely the interest expense deductibility on home equity loans.

Lastly, most studies have concluded there is no justification for saying that home-mortgage interest deductibility results in expanded home ownership. Canada, England and Australia do not allow such a deduction and their home ownership rates are not much different than those in the States.

It's all about find the right balance among societal needs, controlling excess and abuse, and taxpayer needs.

Frank Thomas
Wednesday, 25 February, 2009

China Builds Rail Infrastructure, Does Universal Health Care, While Individual Chinese Buy 6 Carat Diamond Earrings!

While the US is investing a paltry $8 billion in high speed rail in the stimulus package, China is investing hundreds of billions in rail projects.

This is from the NY Times:

A $17.6 billion passenger rail line across the deserts of northwest China, a $22 billion web of freight rail lines in Shanxi province in north-central China and a $24 billion high-speed passenger rail line from Beijing to Guangzhou here in southeastern China are among the biggest projects. But extra spending is being planned in practically every town, city and county across the country.

And, unlike the United States, China has the cash to pay for it, with few debts and a tiny deficit.

China will spend $88 billion constructing intercity rail lines, the highest priority in the plan. It spent $44 billion last year and just $12 billion as recently as 2004, said John Scales, the transport coordinator for China at the World Bank.

And while the US is in recession, China's growth rate is down to only 9%! And they're still doing a stimulus package!

This is from the same article:

China said Wednesday that, separate from its stimulus program, it would spend $123 billion to provide universal health care within two years instead of 11.

Meanwhile, individual Chinese are buying 3 carat diamond earings.

And in Hong Kong, wealthy mainlanders are turning up at jewellery stores in growing numbers seeking diamonds, big ones.

"They're looking for five-carat diamond rings and six-carat diamond earrings — three carats for each ear," said Yollanda Lam, the marketing manager for the King Fook jewellery store chain here.

They're also buying up US real estate:

Some Chinese are so eager to turn their yuan into other assets that when an online real estate brokerage organised a tour of foreclosure auctions in the United States, it received so many applications that it had to turn away nearly 400 people.

I guess you can have high speed rail, universal health care, individual wealth, a 9% growth rate and little or no national debt - all at the same time. Now tell me, please, which societal model is the successful one and which one is the failure. Please, no bias. Which is the world's wealthiest nation and which the poorest? Americans are totally delusional!

Also posted on Robert Reich's blog.

US Proposes Invading Holland!

The Hague - In 2002, Congress passed a law enabling United States forces to unilaterally storm into peaceful Holland to liberate American soldiers held for war crimes.

Coming in the early days of the war on terrorists, and as the International Criminal Court was being formed here, the measure provoked controversy and seemed to the Dutch – stout US allies – an absurd example of America's "with us or against us" foreign policy.

The law is still on the books.

Formally titled the American Service Members Protection Act, the measure is widely and derisively known here as the Invasion of The Hague Act.

Odd as it may seem, the law allows the US to constitutionally send jack-booted commandos to fly over fields of innocent tulips, swoop into the land of wooden shoes, tread past threatening windmills and sleepy milk cows into the Dutch capital – into a city synonymous with international law – and pry loose any US troops.

Today, the Dutch mostly treat the issue as a joke, a cowboy American moment. But it is widely felt that if President Barack Obama's foreign policy team wants to achieve a symbolic break with the previous White House, it could rescind the invasion law.

As a Dutch Ministry of Justice official put it, "I wouldn't overstate how seriously we take this any more, but it does seem a bizarre symbol."

In 2002, Dutch diplomat Harold DeWitt wrote to colleagues: "We are quite alarmed to hear about the impending invasion of the Netherlands. Our military is on high alert. We would really value you forwarding any news and relevant information as soon as it comes to your attention and, in particular, as it regards the timing. I would like to be able to notify my superiors … prior to any invasion."

The act was passed in the time between the Afghan and Iraqi wars. Pentagon officials wanted to avoid war crimes arrests by an untested world court – a body they feared might make anti-American political statements, rather than stick to its legal knitting.

In retrospect, jurists say, US officials over-read the power of the court. Under basic ICC rules called "complementarity," the ICC is powerless to prosecute war crimes the US is willing to investigate.

"The argument for The Hague Act was always very weak," says Mark Ellis, head of the International Bar Association in London. "Under the ICC statutes, if soldiers' [are charged with] war crimes, all the US has to say is that it is undertaking a good faith effort to investigate. That automatically sets aside ICC jurisdiction."

In the past six years, no US soldiers have been indicted by the ICC; and in cases such as Abu Ghraib, the US military has been willing to investigate.

In The Hague, the fury has subsided.

"The Dutch were a little bit offended. We consider ourselves the legal capital of the world, and your major ally not only threatens you, but tries to blackmail you," says Max van Weezel, a well-known political columnist and author. "If the Obama administration can reverse this law, we Dutch would think the Americans are becoming a little bit normal again. But I don't know if he can."

Frank's response:

Hi John,

 

Yes, we are all very familiar with the Congressional Act amendment by Jesse Helms in effect giving legal sanction for US Marines and Navy Seals to invade Holland to liberate US military war crime personnel from being held and proscecuted by the International Criminal Court. This court is 100 meters from our apartment in The Hague where we have a direct view of the PEACE PALACE from our dining room. Helms exploited an atmosphere of patriotic hysteria after 9/11 to get the Bush wackies to sign off on this bizarre amendment to the Defense Authorization Act. The Dutch were astonished how their country, as  a staunch fellow-ally of America, could be treated with such limitless and  disrespectful  arrogance. General feeling here at the time was  that America wants to be the world's judge, jury and executioner. Irony is that the Invasion of The Hague Act leaves primary responsibility to investigate and punish war crimes to the individual states. 

 

The Dutch dismissed the Act as being in all practicality NOT executable .... for most countries would not tolerate an invasion for purpose of freeing US military personnel or public officials handed over to the Court. Needless to say, this Act was the butt of a lot of Dutch black humor and loss of respect for the Bush Administration. As writer said:  "As everybody knows, the rest of the world commits war crimes but not the good ol' USA."  

 

Frank Thomas

The Netherlands

 

Discussion on Health Care in US and Holland

The following is an interesting discussion that appeared on Robert Reich's blog recently:

Frank Thomas said:

I have described the Dutch Health Care System a couple of times on this blog many months ago. I cited actual case costs for specific case operations in selected European countries versus the States. The reality results were and remain shocking.

Suggest you go to Google and search for the video entitled, "The New Dutch Health Care System." There are English under-titlings. It´s an excellent summary of a class care AND cost-effective health care system

Everyone must have and is entitled to have the Dutch standard Basic package, without any right of "cherry-picking or screening out of undesirables by health insurers. Insurance firms are obligated to accept EVERYONE regardless of age, gender, or health.

System has a standard premium cost for EVERYONE of about €95,00/month ($115,00 or $1,375 annually). Children up to 18 years of age are covered by this basic premium fee FREE of charge.

The €95.00/monthly charge is automatically REDUCED if one's income lies below a certain level.

You can also take out
'additional' health insurance if you want to cover more than standard medical care. However, there is no acceptance obligation for insurance companies in the case of this type of insurance. Insurers generally offer an `above standand´ package of specific coverages at a reasonable added monthly fee not exceeding 10-15% of the basic monthly premium.

Rates or cost prices billable to insurers for prescription medicines, hospital treatment procedures and operations are fixed by the Ministry of Health.

Monthly premium costs even including extra coverages are at least ONE-HALF those in the US today! Operations for almost any procedure here are anywhere from 40-60% less than in the States. That´s true for health care systems in most other mature European countries, e.g., Denmark, Sweden, Germany, Belgium Switzerland, etc.

The employer pays 50% of the cost, the employee, 45% and the government 5%.

You should definitely look up a published Index called the `EURO HEALTH CONSUMER INDEX´ for a recent comparison of European health care systems.

You will find that in 2008 the Netherlands health care system was ranked number ONE or the BEST in Europe (and Holland has been in the top three rankings for years.)

America´s social insurance systems are light years behind Europe. Our health care, particularly, is by far more costly, and for less quality, compared to Europe. Most countries here are also sharply and constantly focused Preventative health care actions, i.e., diet, exercise, less use of antibiotics, less stress (for example, by insuring prudent but human social nets in tough times, etc.).

Frank Thomas, The Netherlands

Thursday, 19 February, 2009

 Frank Thomas said...

Michael,

You should look up the 2008 EURO HEALTH CONSUMER INDEX for latest rankings and comparative review of health care systems in Europe.

Thursday, 19 February, 2009

Anonymous said:

Frank, the Netherlands Health system works well in Holland, because only 1% of the Dutch citizenry is obese.

Try and introduce the Dutch system into the USA, where 48% of the US citizenry is obese,and, lets see what happens.

Lifestyle induced illnesses caused by obesity, in 48% of the US population, will never be covered by 95 Euro a month per person.....

950 Euro per month sounds more like it for all of us US Fatties and our Fat kids.

Thursday, 19 February, 2009

Anonymous,

Your statement that only 1% !! of Dutch citizens are overweight is QUITE off the mark.

The measure here whether a person is overweight is based on the BODY MASS INDEX (BMI).

The is one's Weight in kilos Divided by the Square of one's Height in Meters.

According to the World Health Organizarion, adults with a BMI of 26.7 (= 71 kilos Divided by 1.63 x 1.63) are considered overweight.

Based on this measure, about 42% of the Dutch population is overweight.

But I agree this % is far higher in the States.

Thursday, 19 February, 2009

 Jordan said...

There are number of reasons why our health care system is more ineficient and more costly then universal health care systems.

Insurance companies work on pooling premiums from large number of insurees to spread cost of caring for some that need expensive treatments in order to have a life.

Bigger the pool of insured, cost is spread over more people. In our system you have insurers for profit and other insurers for care. Over the years, insurers for profit, tend to deny the pool entrance to costly claimers so it will keep total cost down. Denied ones go to only ones that will care for them; state providers. Denied ones are usualy costly ones, so states cover most of diabetics, cancer patients and other chronic patients.

You might think that if you belong to profit insurers that you pay less in premiums due to denied chronic entrees, but you pay for higher taxes needed to cover those chronic ones that treatment is covered with our taxes. So you come out the same, wheather you pay it up front or in the back. Only thing is you are tricked into believing that there are no back expenses, or as RR calls it externalities.

Other reason for higher cost of our system per person, is that insurers are for "PROFIT". Much of the premiums go to pay outrageous CEO bonuses, dividends, advertising, and worst of all is insurance agents that get commisions.

In universal health care there are no such expenses as above mentioned. Because everyone is automaically included. I would estimate cost of those as 50% of premiums we and corporations pay. It is all wasted on non-care costs of operations. Not to mention, all malpractice insurance coverage and lawsuits that are paid out of premiums, which rarely happens in univeersal health care systems. Not to mention health insurance cost that our corporations bare, while other nation's corporations do not. There is a competitive advantage for outsourcing to other universal care country companies.

All aforementioned is obvious once you became chronic patient, do we all need to become chronic patients to learn how fake our insurance system is, and all those lies from insurance corporations and repugs about "we have best hospitals so we have best system"
Only they are afraid to mention who is able to enter those best hospitals. And why there is so many unqualified doctors practicing in our country? Because there is no centralised system for pateints, and also no centralised system for doctors. Unqualified doctors cause malpractice insurance to skyrocket and take about 25% of surgeons salaries, which raises the cost of treatments.

Not to mention the pharmaceuticals that are totaly twisted story on its own.

Thursday, 19 February, 2009

Frank Thomas said:

As I mentioned, people who are unable to pay the fixed premium (of about $1,400 per person per year) for the standard benefits package, due to a low income, can apply for a government Care Allowance.

This Safety Net makes certain that SOLIDARITY between income groups is a fundamental aspect.

Alongside the insured's fixed premium contribution, the insured also pays an income -dependent contribution to the government of 6.5% of income up to an income maximum of €30,000($36,000) or a maximum contribution of about €2,000 ($2,400) annually.

Employers are obliged to reimburse this contribution to their employees. This income is used to even the risks between insurers with expensive customers ... so it is in effect a Safety Net for insurers.

Thus, this largely private system with government setting competing conditions and limiting its funding is paid for in three ways: 45% by the Employee Fixed Premium contribution; 50% by the Employer income-dependent contribution; and 5% by the government's Care Allowance.

The government remains responsible for Accessibilty, Affordability, and Quality of health care. The government does not participate directly in the actual provision of care as latter is in the hands of private care suppliers.

Citizens can change insurer every year. Insured parties can choose their own care if they wish and have the costs they pay to the Care Provider reimbursed by the insurer.

The insurer sets the level of the fixed premium but is required to provide the same care to Everyone for the basic benefits package.
The insurers are legally not permitted to select on the basis of prior medical disorders, risks, and "expensive" customers.

This reformed system introduced in Jan. 2006 was implemented to correct following deficiencies in the old system:

1....too many different schemes: social health insurance; private health insurance; civil servants' health insurance

2....little or no choice for insured parties

3....ineffective or no competitiive incentives for insurers

4....little or no pressure on suppliers/care providers to achieve better performance

5....unfair premium and income effects

6....final element introduced is what has been termed "government constraints", i.e., market competition and system equity has to be regulated.

Sound familiar to a few of our US health care problems noted by Jordan?

Making the health care system more Efficient and Affordable have been the primary goals. The Dutch government's Care Expenditures are growing steadily from 3.9% of GDP in 1960; to 7.6% in 1980; to 8.3% in 2000; to 9.7% in 2005; to 10.2% in 2008.

The future aging of Dutch society (like in the US) spells further accelerations of health care costs as a % of GDP despite the significant efficiences introduced in 2006.

The following forecast illustrates this challenge:

Senior Citizens.......% Above 65

1950.....................7.5%

1970....................10.0%

1990....................13.0%

2010....................15.0% !

2030....................22.0% !

2050....................21.5%

Constant intelligent reform is a must to contain costs and insure quality throughout the system

Thursday, 19 February, 2009

I forgot to mention that US health care costs reached a high 17% of GDP in 2008 ($2.4 billion)compared to the plus 10% of GDP range for Holland and many other European countries. Further, this 17% is based on facts over 45 million Americans have no insurance while Holland's population is 100% covered with basic health care insurance.

Quite amazing difference when you think about it!

Thursday, 19 February, 2009

Michael says;

Frank T.:

I believe your decimal point off--as the GDP--a bit bigger than 6 times the 2.4 billion --

But, your not a math prof. correct? joke!

Amazing? Ha--that may qualify for entry into the G. book of records!

Getting towards your bed time--

Thank you for the as you say --maybe amazing info. for a few here!

Yes, and just how many holidays are taken and vacations too?

Point being you work a bit less a year too--so based on a per hr. worked the difference grows more amazing?

Michael

Thursday, 19 February, 2009

Michael,

Thanks for correction:
Math was a strength until I passed 70; been in decline since then in many areas, as Art will confirm with my spelling proficiency (billions vs. trillions). Of course, I assumed a 2008 GDP of $14.3 Trillion with a 2008 health care expenditure of $2.4 trillion (= +- 17%, I believe);-).

Thursday, 19 February, 2009

Not One Bank Failure In Canada!

In this current "worldwide" economic crisis, there's one country that hasn't had even one bank failure, calls for a bailout or government intervention in the financial or mortgage sectors. Guess which one?

HINT: It's very close to us. In fact right next door. Give up? CANADA

Fareed Zakaria has an excellent write-up in this week's Newsweek magazine.

It seems good old Canada did not follow the US in all the deregulation nonsense. They still have the equivalent of Glass-Steagall intact up there. No laissez-faire, unfettered capitalism for them. While those countries who followed the American neocon model are wallowing in debt and writhing in financial pain and uncertainty, Canada is poised to profit, thrive and take advantage of opportunities that the envious unfettered capitalists are in no position to while they sit on the sidelines trying to figure out a way to get themselves out of the present mess.

According to Zakaria:

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1 — compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

In addition Canadians cannot deduct mortgage interest, and unlike in America, cannot just walk away from a mortgage so a default is your problem not the bank's. Despite all this there is a higher rate of home ownership in Canada than in the US.

Other virtues of the Canadian system according to Zakaria:

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.

What this tells me is that Zakaria is not a Republican. Touting the virtues of a "socialized" country with a "socialized" health care system? You've got to be kidding. Wait till Rush Limbaugh gets wind of this. In fact the banner on the cover of this week's Newsweek is "We Are All Socialists Now." Tell that to the Republicans who routinely disparage, demean and demonize socialism wherever it rears its ugly head! Just the mention of the word is enough to send them into paroxysms of apoplexy. I suppose UTR, a commenter on Robert Reich's blog, will cancel his subscription to Newsweek now - not that he's a Republican, mind you.

In worldwide economic councils, Canada is pushing for economic reforms that would emulate its approach. Let's hope they are successful, and the free market, laissez faire, trickle down, Reaganomic, Milton Friedman, Chicago School model is cast into the dustbin of history.

Also posted as a comment on Robert Reich's blog.

Lisa Checks In From Germany

I was reading Reobert Reich's blog from the Democratic Underground link and I have to say, your take on this economic mess helped me understand it much better. Thank you.
 
Reading your profile I can say we've probably held the same number of jobs in our lifetime. I was born in Indiana in '59 and lived around the states but finished my degree in '05 finally. I had to take an econ class and was struggling to remember how our economy worked and what trickle down economics was all about. Your comment on Reich's blog had me nodding in agreement. All of my school books are in storage, so I can't refer to those old lessons and chapters.
 
BTW, I boycotted walmart when their employee lawsuits started to make the news and I vowed I would never shop there again.
 
Anyway, in the meantime, I live in Germany and I'm watching this meltdown from afar. I didn't pay any attention to politics until Oprah introduced me to Obama and since then, I have made it my mission to learn everything I can. I didn't know if I was a democrat or republican 2 yrs ago. (I still consider myself an independent). I was tainted by Nixon in '74 when he said - I'm not a crook! Ha ha. I thought then and still think now, they're all crooks, aren't they? I'm hoping Obama doesn't disappoint me after cheering him on. I also voted for the first time in years in '08.
 
I agree with your comment and post about european countries and their unemployment. One thing to remember here too is that these countries have universal health care. No one, not one of these people ever have to worry about health care, bankruptcy from being sick and/or losing their homes because of a family illness bankrupting them. Not to mention, the banks here in Germany require about 30% down payment for any home purchase (or more) so their bank loans are more secure because of the flat housing market. Which is itself is a whole nutter subject.
 
I think unemployment in Germany has gone down a little since I moved here two years ago, but it's starting to tick back up again. I've been unemployed the whole time because my British husband and I weren't supposed to be here this long. He finished his MBA last March, so we're both looking for jobs in the states now. Fine time for us eh?
 
Anyway, I've bookmarked your blog because I want to read more and I enjoy reading someone that can make sense of all this mess for me. Thank you again. I look forward to learning more.
 
Lisa

An Nguyen: Report From Singapore

I just got back from Vietnam last Sunday after a nice Tet's celebration there. Despite the down turn of the economy, the Vietnamese still have high spirit and carried on the traditional festivity as usual. I visited as many relatives and friends as I could on this trip (too short), attended a lot of parties, and ate too much....It was a real delightful trip.
 
My family in Vietnam is doing well. This year, we added two more new members to our family. My youngest sister gave birth to a lovely girl (her second girl), the second youngest sister just gave birth to an adorable boy (her second boy). We feel very blessed with our additions.
 
Florence has already gone back to school after a short Chinese New Year holiday. We just celebrated her 8th birthday, last Sunday night. Flo has requested a computer for her birthday present since last year.
 
Singapore's economy is still doing OK, despite warnings from the government. Recently, the prime minister advised all Singaporeans to tighten their pockets and start saving for hard times ahead. Subsequently, retail businesses and restaurants are beginning to see the effect of his advice.
 
Working and living in Singapore is heaven for big salary earners. Its income tax is a joke compared to the U.S. and most European countries. People generally don't turn down a job relocation offer to this country.
 
I'm not surprised to see a lot of wealthy Americans moving to Singapore at all. However, because of this, low income foreigners from Vietnam, China, India, Sri Lanka, Burma, etc. are feeling pain because of the government. They started to come up with all types of surcharge policies to collect money from foreigners - visa fees, special school fees, high cost medical fees, employment levy fees (up to 50% of one's income), work permit fees, employment pass fees, etc... Singaporeans also jumped in to share the pie. In the past 2 years, the housing rental fee increased from 50% to 200%.  This is the most outrageous thing I have ever seen in any country. Since most of the tenants are foreigners, the government just looks the other way and lets their citizents to do whatever they want. There is no such thing as a tenant advocate to protect them from these profiteers.

An Infrastructure Project the US Should Consider

by John Lawrence

So the Obama administration wants to rebuild the US infrastructure which is badly in need of repair. Rebuilding and refurbishing bridges and highways is a worthy project, but here's something even more important that hasn't even been mentioned yet: undergrounding US utilities. Every time there is an ice storm or a hurricane or a tornado, it takes out thosands of utility poles leaving people without power for weeks. What sense is there to put back the utility and power poles to be knocked down again by the next big storm? Storms are only getting more violent as global warming proceeds apace. Last year's ice storms in New England and this year's ice storm in Kentucky prove my point.

This is from New Hampshire News January, 13, 2009:

PETERBOROUGH, N.H. -- Federal officials are assessing the damage caused to small businesses by the ice storm that struck New Hampshire last month. Many businesses lost inventory and revenue at one of the most critical times of the year, state officials said. The Small Business Administration is now taking stock of the losses to see if the station sustained enough damage to qualify for recovery help. Twelve Pine in Peterborough was one of the businesses hit hard by the ice storm, owner Sven Green said. The business, which specializes in prepared gourmet meals, lost power during the storm and lost all its fresh food, and it's still dealing with the effects. "We had to adjust our hours," Green said. "I'd say, overall, we lost $50,000, if not more, in revenue and inventory." The story is similar at other bus- inesses, said Roy Duddy of the state Division of Econ- omic Devel- opment. "What we're seeing is a loss of inventory, a lot of loss of sales and revenue around Christmas time, which really could have turned around a lot of businesses, to enjoy additional revenue during the holiday season," he said. If the state can show that 25 businesses or homes in any county suffered a 40 percent uninsured loss due to the ice storm, then that county and the adjoining counties become eligible for federal low-interest loans from the Small Business Administration. "Once that declaration is made, that 40 percent goes out the window," said Terry Miller of the SBA. "Anybody with any kind of damage, whether it's a flat tire or a total loss of their house, is eligible to apply for recovery." State officials said they believe 250 businesses from Cheshire to Strafford counties suffered storm-related losses.

In Kentucky this year more than 700,000 homes and businesses were without power for weeks. They had to call in the National Guard to help restore power.

This is from Huffington Post:

MAYFIELD, Ky. — Gov. Steve Beshear deployed every last one of his Army National Guardsmen on Saturday, with his state still reeling after a deadly ice storm encrusted it this week. More than half a million homes and businesses, most of them in Kentucky, remained without electricity from the Ozarks through Appalachia, though temperatures creeping into the 40s helped a swarm of utility workers make headway. Finding fuel _ heating oil along with gas for cars and generators _ was another struggle for those trying to tough it out at home, with hospitals and other essential services getting priority over members of the public. The addition of 3,000 soldiers and airmen makes 4,600 Guardsmen pressed into service. It's the largest call-up in Kentucky history, which Beshear called an appropriate response to a storm that cut power to more than 700,000 homes and businesses, the state's largest outage on record. Many people in rural areas cannot get out of their driveways due to debris and have no phone service, the governor said. "With the length of this disaster and what we're expecting to be a multi-day process here, we're concerned about the lives and the safety of our people in their own homes," Beshear said, "and we need the manpower in some of the rural areas to go door-to-door and do a door-to-door canvass ... and make sure they're OK." Staff Sgt. Erick Duncan of Murray said he and his colleagues have been putting in long shifts to open tree-littered roads. Duncan, who manned a chain saw, said he expects the assignment to last quite a while. "It's a mess and we're just in the city limits," he said. "We're not even out in the county yet. And there's plenty of cities and counties to go to." Thousands of people were staying in motels and shelters, asked to leave their homes by authorities who said emergency teams in some areas were too strapped to reach everyone in need of food, water and warmth. The outages disabled water systems, and authorities warned it could be days or weeks before power was restored in the most remote spots. That uncertainty had many appealing for help and officials urging those in dark homes to leave, if they could. Many were stuck in place by blocked roads and other obstacles.

Rather than go through the process of rebuilding the power lines again and again, doesn't it make sense to spend the money to underground them once? Then, at least, the next time a storm blows in, whatever misery it might cause, it won't be because of power outages.

Government Should Nationalize Banks; Deal With Problems Directly

Robert Kuttner has an excellent write-up on Huffington Post recently. In it he compares the Paulson-Geithner approach to resolving the banking crisis which attempts to get banks to do what's necessary to the alternative of having the government take a more hands on approach, nationalize the banks and deal with the nuts and bolts of each bank's problems. This makes a lot of sense. Throwing money at banks to try to get them to do the right thing is flogging a dead horse and the only visible results are a wasting of taxpayer money. Banks are going to do what's in their self-interest - not in what's in the country's interest. What is needed is a direct hands on approach. Later when the banks are restored to health, they can be re-privatized.

Here's what Kuttner had to say:

Geithner has gone out of his way to throw cold water on the idea of bank nationalization. Rather, the new plan will be some variation on the original strategy that former Treasury Hank Paulson sought and then rejected--getting toxic assets off bank books without asking a great deal in return. The plan reportedly will allocate $50-100 billion for mortgage relief, but here again this is to be done indirectly rather than through direct federal refinancing of distressed mortgages. Here's the problem with this whole approach. The government has not been shy about telling banks what to do, but has done so in an ad hoc manner, without adequate information, without a strategic plan, and without the authority that goes with ownership. The Wall Street Journal recently published a devastating investigative account of how the Treasury Department ordered Bank of America to acquire Merrill Lynch, a deal that turned out to be a disaster for the acquiring bank. Executives were warned that if they did not go alone with the plan, the Journal reported, there would be hell to pay. Basically, the government has been acting as if it owned the banks, but in a half-backed, scattershot manner. It would be far better to nationalize the large banks outright, sort out their balance sheets, and then decide what level of financial relief is required to get the banks functioning. This prevents the dilemma of government either overpaying for assets that are currently under water, or failing to provide enough aid. If government is the owner, then government actually runs the bank and there is no risk of windfall benefits to banks at taxpayer expense. When the banks are back on their feet, they can be sold to new private owners. The current approach, apparently to be revised only slightly by Geithner, produces the worst of both worlds. Government is left holding the bag for the losses, but government lacks the direct tools to run the banks properly. On the mortgage front, it would be far more effective for government to simply refinance at-risk mortgages directly, as the government did in the 1930s under Roosevelt's Home Owners Loan Corporation. Obama's problem is that his key economic appointees are averse to radical solutions to a radical crisis. Geithner and National Economic Council chief Larry Summers have both been quoted saying that governments "make poor bank managers." Geithner's own track record as point man for the rescue efforts of the Bush administration certainly proves his point, at least as far as his own work is concerned. But in fact, the Federal Deposit Insurance Corporation, which does take over failed banks from time to time, has an excellent record of sorting out their balance sheets, nursing them back to health, and then returning them to the private sector. The Treasury lacks this competence. This is all the more reason for government to build up the necessary expertise and then take over failed banks, rather than just pumping in money and intervening in fits and starts. There is time to add more money to the stimulus package if the first attempt falls short. But time is fast running out on the more urgent need to get the banking system functioning.

Frank Thomas: Unemployment in Holland is Only 2.7%!!

There was a fascinating long program on Dutch TV two days ago showing the flight and relocation of large numbers of super-rich Americans families and their wealth to Singapore.

Primary reasons other than living style preferences:

Corporate Tax Rate:......18%
Individual Tax Rate:..... 3.5-20%
Goods and Services Tax... 7%

This is a small indication of the trend of "TRICKLE UP and OUT!" by many Americans who could care less about fact their wealth was made in America.

INDIVIDUAL Tax Rates, including high-income progressive rates, are as follows for European countries versus US and Canada:

AUSTRIA.........0-45%
DENMARK.........0-63%
FINLAND........25-53%
FRANCE.........10-50%
GERMANY.........0-45%
ITALY..........23-43%
NETHERLANDS.....0-52%
NORWAY..........0-48%
SPAIN...........0-42%
SWITZERLAND.....0-13%

UK.............20-40%
CANADA.........19-53% (fed.& provincial)

U.S.............0-35%

You will note that the high European rates for the higher income levels are hardly at ultra SOCIALISTIC levels as most US politicians and commentators like to fabricate stories about.

These higher progressive rates structures insure a constant recycling of tax funds to all areas of social and infrastructure improvements, contributing substantially to societal job growth and productivity gains.

The relatively higher European than US tax revenues from progressive tax rates, when recycled into economy, also act as an effective ECONOMIC STABILIZER and CUSHION in cyclical upturns and downturns. Holland's high-income individual tax rate of 52% has long contributed to a solid (low volatile) 2-4% GDP growth trend and very reasonable unemployment levels in 3-5% range.

As I noted in a recent post, Holland's current unemployment rate in this crisis of all crises is 2.7%. It could well go to 5%, but this is still not bad. Says a lot about the quality of Holland's Economic Model ... and its clever balance between capitalistic and social investment values.

Recycling of excessive wealth is unquestionably one of the magical stability points in Holland's BALANCED ECONOMIC MODEL concerning three fundamental DRIVERS of GDP I've spoken about so many times on this blog: Consumption (63%), Investment (6-8%), Savings (6%).
Similar US figures are: 70%, 4% and ZERO.

As you know, I've long felt that this US panacea of focusing on Consumption in the 70%
range is encouraging zero savings and irresponsible debt accumulation. It represents a serious structural FAULT in our Economic system.

Thanks for bringing some great specifics and solution rationale to this problem.

Tuesday, 10 February, 2009

Instead of 'Trickle Down,' We've Had 'Trickle Up' Economy for 30 Years With Pools of Money Forming at the Top of the Economic Spectrum

The stimulus package is all about supporting the demand side of the economy. We've had supply side economics for 30 years, and it hasn't worked. Instead of money trickling down from the wealthy to the poor, it has trickled up from the poor to the wealthy and then pooled at the top with no downspout. Money will always trickle up because a dollar spent in the consumer economy is most likely spent with a large corporation - Wal-Mart, Home Depot, Starbucks, large developers, automobile manufacturers. Rarely, any more, is it spent at a Mom and Pop store. All the malls have nationalized franchise operations not local shop owners. The local Mom and Pops have been put out of business by the large franchises. Food comes from agribusiness - again large corporations - and not small local growers and organic farmers. So money trickles up not down.

There is no lack of merchandise. On the contrary there is a glut of merchandise which is then force sold by means of advertising. Small operations cannot afford TV advertising. Gas is sold by mega corporations - Exxon Mobil, for example - not by small operators. Everything we buy, except at a boutique perhaps, represents large commercial interests - major corporations. So money trickles up. Money spent on purchases at Wal-Mart ends up in the hands of the Walton family of billionaires, one of the richest families on the planet. Reagan's supply side economics - that we should give more money in the form of tax breaks to the Waltons in the hopes that they would hire more minimum wage employees - just doesn't make any sense.

So money pools at the top and when middle class and poor consumers have gone into debt over their heads, they stop buying or are forced to stop buying because they can't borrow any more since their credit ratings have plummeted and you have an economic contraction because 70% of GDP is based on consumer spending and much of that is based on consumer borrowing.

When the private sector is inadequate insofar as creating jobs is concerned, not enough money is getting into the hands of consumers to make the economy hum. There is no dearth of products waiting to be sold. There is inadequate consumer demand because consumers have no money or credit. So trickle down economics is a fraud. There is no trickle down effect. Instead all the money has trickled up to a few wealthy families and large corporations and the monopoly game is over. Capitalism has traditionally survived only because the next "big thing" has come around to enlarge and expand the economic pie and create new jobs and opportunities whether that "big thing" was railroads, the automobile, radio, TV, the telephone, personal computers or the internet, to mention a few.

When there is no "big thing" on the horizon, existing production is rationaliozed by replacing human workers with machines. Therefore, by not only trying to jump start the economy by injecting capital into the lower economic classes but also trying to create the next "big thing" in terms of green energy, Obama is doing precisely the right thing. Eventually, capitalism will have to not depend on a growth economy but rather it will have to learn to function in a steady state economy but that won't be easy as money, when it is not taxed at the top of the economic spectrum and reinjected at the bottom, will only pool and remain at the top creating a financialized economy like the one we had recently where money chases ever higher returns on money and is not productively invested in such a way as to create jobs.

The only jobs being created today are in the government - read military-industrial complex - in health care - read the most costly industry on the planet with meager results - and in the banking industry until lately - read the financialization of the economy. War and miserable health care are immensely profitable. Oil is also immensely profitable but all these things are bad for the planet. Whether peace can replace war, a rational universal health care system can replace the present mishmash and productive investment or progressive taxation can replace financialization remains to be seen. Pork is typically distributed to states by means of military expenditures. Lobbyists want to keep irrational systems in place because they are immensely profitable.

One way to stabilize a capitalist system and prevent money from pooling at the top is to tax corporations and the wealthy and redistribute the money to the poor and middle class. This is in recognition that trickle down economics is a fraud and money will always trickle up. Progressive taxation allows the pools to be drained in such a way that money is again placed in the hands of consumers who then can continue to spend in such a way that consumption can continue to make its 70% contribution to GDP. If enough private sector jobs are not created to support the consumer economy, consumers will not be able to consume and government must step in to make up the difference either by creating government jobs or private sector jobs by contracting out. This is nothing new. Government has been creating jobs for years in the war economy. The Bush administration even contracted out much of its military operations to Halliburton, KBR, Blackwater etc. The trick is to have an economy that works while demilitarizing the country at the same time. The trick is to have an economy that works while rationalizing - and therefore, eliminating much of the profits of - the health care system.

Reunionization would also place more bargaining power and higher paychecks in the hands of consumers, but it can't prevent the diminution of jobs as more and more workers are replaced by machines leaving only the most menial jobs which are then outsourced or are taken by illegal workers. The only rational solution is to make consumers effective part owners of the means of production which is what progressive taxation effectively does. The economy can hum along quite nicely and profits can still be made if ownership of the means of production is not seen as a be all and end all, profits are reduced and citizens and consumers can have a stake in the economy, if not through their work, then through the redistribution of wealth.

In the Frenzy Over Stimulus, Let's Not Forget About Paying For It

According to Keynes, governments should go into debt to get the economy moving again, and then, once moving, should start paying down that debt. However, in recent years government has done nothing but go into debt in bad times and good. Debt is a key part of the US' problems, and so is not really part of the solution. There is no reason why government can't stimulate the economy by spending while simultaneously putting into place revenue enhancing mechanisms. And this can be done without raising taxes on the middle class. Instead, taxes can be raised on the investor class while reducing taxes on the middle class, and that will be the most politically expedient way to go. For starters, Obama can close the loopholes in the offshoring of corporate profits. Secondly, Senator Bernie Sanders' plan to tax excessive income by imposing a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers should be put into effect.  That would raise more than $300 billion in revenue. Thirdly, Thom Hartmann's plan: instating a .25 percent Securities Turnover Excise Tax  (STET) on every stock, swap, derivitive, or other trade would produce - in its first year - around $150 billion in revenue.

Furthermore, by lifting the cap on the social security tax, the social security and medicare trust funds can be returned to solvency. None of these revenue enhancers would take money out of the pockets of the American middle class at all; hence, the outrage over tax increases should be entirely muted. Obama started this process by stressing in the election campaign that he would cut taxes for the middle class but not for the rich. This mantra needs to be repeated and reinforced. Tax loopholes that favor corporations should be closed. There is no reason Federal revenue enhancement should not proceed concurrently with stimulative government spending. Isn't the idea to balance the budget or even have a surplus in order to pay down the national debt? Instead everybody seems hell bent on government spending money without government making money as if that in and of itself were going to resurrect the economy. What will resurrect the economy is increased government spending to be sure as the government has to be the pump primer and money recycler of last resort. However, not raising government revenues at the same time by siphoning off the excessive money sloshing around in investor class pools will only contribute to the problem long term. It is this excessive capital pool among the investor class that is responsible for the banking nightmare that got us into this mess. Lancing this boil will only be of benefit to the overall economy.

The excessive capital pool floating around at the top of the financial spectrum was not being used for productive investment in the general economy. Instead, it was capital in search of double digit returns on capital. It was money used for making more money off of money. It resulted in the financialization of the world economy and the creation of exotic financial instruments like derivatives and credit default swaps not to mention collateralized debt obligations. It encouraged indebtedness among the American middle class so that debt instruments could be bought and sold, so that the investor class could make money off of middle class debt peonage. The more indebted the middle class and the government, for that matter, became, the more the wealthy could make money off that indebtedness. There was more potential money to be made off of debt than there was to be made off of equity investment or investment in productive industry. So there was less industry and more encouragement of and capitalizing on debt. Mortgage debt, auto debt, student loan debt, credit card debt - every facet and aspect of American life was turned into an opportunity for creating more debt and hence more opportunity for the investor class. America has become the Debt Society. Mortgage backed securities, asset backed securities, Treasury bonds, corporate bonds, municipal bonds - there was no aspect of American life or government that was not fueled by more debt instead of more savings. At a time when corporations were only concerned about maximizing their profits, China accumulated tremendous capital reserves by being satisfied with only minimal profits and became America's banker using that strategy. Which strategy has been more successful: profit maximization or profit minimization? Chinese capitalism/socialism has outstripped American unfettered, laissez-faire capitalism and has emerged relatively unscathed from the global financial implosion. While the rest of the world was led down the primrose path by the US and is due to experience a 5% contraction in their economies this year, China is predicted to experience only a 6% expansion. Which system has been more succesful?

What we are left with is the carcass of an economy in which consumption is the main generator of GDP. And it's not GDP based on income or savings or exports or government spending, but GDP based on debt. Increasingly, it's consumption of non-essential items, frivolous items, items that have no redeeming social value. What happens when Americans go back to more traditional values in terms of their over consuming? Why they underconsume, but that is a huge problem for an economy built on irrational and needless consumption because then businesses that are predicated on US citizens consuming things that are not essential for health and welfare go under, people become unemployed and GDP shrinks. An economy based on consumer debt cannot continue to function if consumers cannot or will not go further into debt. People whose credit ratings have been destroyed by overspending cannot continue to borrow in order to beef up general consumption and GDP. Prudent citizens will pay down their debt rather than continue to spend on frivolus stuff.

The only fiscal conservative in the last 30 years has been President Bill Clinton. He balanced the budget and even paid down the national debt. George W. Bush on the other hand immediately started running up the debt again with his defense spending and tax cuts for the wealthy. If tax cuts for the wealthy and defense spending ran up the debt, doesn't it make sense that tax increases for the wealthy and cutting defense spending should be part of the way out of this morass? I realize that Obama can't do everything at once. But the fiscal conservatism of Senators Collins and Snowe of Maine should lead them to support Obama in his eventual goal of following in Bill Clinton's footsteps and balancing the budget. The Democrats need not be stymied by the Republicans in advancing and selling their plans both to stimulate the economy by targeted spending and also to balance the budget and pay down the national debt by taxing the wealthy. In fact a tax on wealth itself should be an option that remains on the table.

The Democrats need to hone their filibuster proof coalition and get on with it. Give Snowe and Collins all the perks they want. They seem like honest people. Hopefully, they aren't as corrupt as the red state Republicans who only lust after lucrative lobbying positions after they leave government. After cementing their coalition, Obama should forget further bipartisanship but proceed full steam ahead. Ram the legislation down the red state Republicans' throat. After all isn't this what the Republicans have been doing to them for the last 30 years while Democrats have been fighting a rear guard action? Time is of the essence! In two years there will be another Congressional election. If the Democrats lose senatorial seats, their job of governing will get even more difficult. They need to go for it now and not dilly-dally and dither and fritter away their time. The Republican strategy is to stall and delay and use up precious time until they come back into power again. Meanwhile, with the economy in crisis due to the policies of Republican government control for the last 30 years, they are still, unimaginably, winning the propaganda wars. Something has to be done to counter the toxicity of right wing punditry and demogoguery, namely Rush Limbaugh and others.

In short there is no time to waste. Stimulative spending and increased revenue enhancement should proceed on parallel tracks. Taxing the rich while creating jobs and transferring income to the poor and middle class will not decrease or undermine the stimulus effect of jump starting the economy. In fact it will lead to a normalization of the economy where productive work and moderate consumption will occur, and it will lead to a sounder dollar. New and more rational patterns of consumption should emerge. Idled production of non-essential and frivolous goods and services might actually benefit the economy and the quality of life in the long run. If it results in lowered GDP, so be it. There is no good reason why GDP has to grow ad infinitum. Overconsumption and undersaving should be discouraged, and at the same time indebtedness at all levels of American life including municipal, state and Federal government must be done away with. Fiscal prudence and responsibility should be the watch words. Government should be the job creator of last resort, and government needs to be not only the pump primer of the economy but the money recycler of the economy removing money from the stagnant, non-productive investment pools of those at the top of the financial spectrum and reinjecting it at the bottom of the financial spectrum where it will be spent on essential consumption.

GOP Revs Up Spin On Stimulus

Great post by E. J. Dionne in Truthdig:

The irony of President Barack Obama’s Blue Tuesday is that the wall-to-wall television interviews he granted were designed not to apologize for Tom Daschle’s fall from grace but to fight back against the Republicans’ success in tarnishing his stimulus package.

    Obama’s network appearances were planned as a response to a wholly unanticipated development: Republicans—short on new ideas, low on votes and deeply unpopular in the polls—have been winning the media wars over the president’s central initiative.

    They have done so largely by focusing on minor bits of the stimulus that amount, as Obama said in at least two of his network interviews, to “less than 1 percent of the overall package.” But Republicans have succeeded in defining the proposal by its least significant parts.

    Daschle’s withdrawal as the nominee for secretary of health and human services poses a long-term challenge to the administration’s ambitious health care plans because he was so crucial to the White House’s strategy. But the battering the stimulus has taken is an immediate problem.

    Although Obama aides dismiss the media coverage as “cable chatter” important only inside the “Washington echo chamber,” they acknowledge that Congress does its work inside that noisy hall and that the journalistic back-and-forth has tainted its key legislative objective. “We didn’t give it as much air cover last week as we should,” said one top adviser. “We lost a week.”

    This thinking was reflected during Obama’s interviews, once he got through his apologies for having “screwed up” the Daschle matter.

    Obama kept bringing the stimulus discussion back to the bill’s purpose of restoring life to a cratered economy. He also highlighted the bill’s substantive elements—in health care, education, energy and relief to fiscally ailing states—that have received scant attention in news accounts dominated by political questions about how much Obama should concede to the Republican minority.

    For most of the debate, Obama has cast himself as a benevolent referee overseeing a sprawling and untidy legislative process to which he would eventually bring order. While doing little to defend the overall package or to reply to its Republican critics, he urged Democrats to knock out small spending measures that had caused public relations problems.

    In the meantime, those critics were relentless, often casting logic aside to reframe the debate from a practical concern over how to rescue the economy to an ideological dispute about government spending.

    “This plan is a spending plan; it’s not a stimulus plan,” said Sen. Jim DeMint, R-S.C., ignoring the truth that stimulus plans—including Republican proposals to put more money into resolving the housing crisis—by definition include significant new spending.

    And Republicans who in one breath say they want more tax cuts declare in the next that they are against the tax cuts Obama has actually proposed.

    Sen. Jon Kyl of Arizona said of Obama’s $500 refundable tax credit: “Calling a rebate to people who don’t pay income taxes a tax cut doesn’t make it a tax cut.” Presumably Kyl doesn’t consider the payroll taxes (or, for that matter, sales taxes) paid disproportionately by low- and middle-income Americans as taxes.

    But such volleys have gone largely unreturned, and the biggest danger for Obama will come if Republican attacks erode support for the stimulus among Democrats. That’s why the president will be spending more time with congressional Democrats in the coming days. The administration’s visionary emphasis on winning expansive Republican support has been replaced by a down-to-earth struggle to get a bill through the Senate.

    Its hopes rest in part on a different form of bipartisanship. If Washington Republicans have decided to build a wall of opposition to the stimulus, Republican governors and mayors are eager for the money Obama wants to give them.

    Thus will Obama and his allies be touting strong support for the stimulus from the Republican governors of California, Connecticut, Florida and Vermont. Mayors will be called upon to move House Republicans still open to persuasion.

    In just two weeks, Obama and his advisers have been forced to learn basic lessons on the run. The elation of Inauguration Day has given way to a classic form of partisan hardball. The media cannot be counted on to be either liberal or permanently enchanted with any politician. Arguments left unanswered can take hold, whether they make sense or not. And one more lesson: No occupant of the White House has ever been able to walk on water. 

How to Pay for the Stimulus Without Raising Taxes

With the close to one trillion dollar stimulus package inching its way through Congress, no one has even bothered to suggest a way to pay for it without adding it to the already humungus national debt. Politicians can only hope that other countries (mainly, China, Japan and Saudi Arabia) will consider the US to be too big to fail, and will blithely go along with loaning us additional billions. Meanwhile, the US continues to operate 761 military bases abroad costing billions upon billions each year. At the same time the military-industrial-political (MIP) complex continues to fund godawfully expensive boondoggles like the F-22 fighter plane being built by Lockheed Martin. These projects are designed in such a way as to bring the maximum number of dollars into the maximum number of political districts, and, therefore, represent jobs and patronage that politicians can claim to have brought home to their constituents. While the bases represent the military garrisoning of the world, the Air Force and Navy's complex weapons systems represent sheer waste as they are designed to counteract a threat that doesn't even exist while weapons systems like the Warthog aircraft which can be built at a fraction of the cost of the F-22 are actually useful in combat in situations that are likely to present themselves today, namely fourth generation insurgencies. HELLO, the Soviet Union has ceased to exist! And Osama bin Laden, operating out of a cave, has been successful in causing the US superpower to spend another trillion dollars adding that to the national debt and hastening the day when the American empire will go the way of the Roman one.

According to Nick Turse:

Since bin Laden's supreme act of economic judo in 2001, the U.S. military has spent multi-billions of tax dollars on a string of bases in Iraq and Afghanistan, failed wars in both countries, and a failed effort to make good on George W. Bush's promise to bring in bin Laden "dead or alive." Despite this record, the Pentagon still has a success option in its back pocket that might help bail out the American people in this perilous economic moment. It could immediately begin to auction off its overseas empire posthaste. To head down this road, however, U.S. military leaders would first have to take a brutally honest look at the real costs, and the real utility, of their massively expensive weapons systems and, above all, those bases. Today, the Pentagon acknowledges 761 active military "sites" in foreign countries -- and that's without bases in Iraq, Afghanistan, and certain other countries even being counted. This "empire of bases," as Chalmers Johnson has noted, "began as the leftover residue of World War II," later evolving into a Cold War and post-Cold War garrisoning of the planet. With those bases came a series of costly wars in Korea in the 1950s, Vietnam in the 1960s and 1970s, and the Persian Gulf in the early 1990s. An extremely conservative estimate of their cost by the Congressional Research Service -- $1 trillion (in 2008 dollars) -- tops the present economic bailout. Add in brief cut-and-run flops like Lebanon in 1983 and Somalia, from 1992-1995, as well as now-forgotten hollow victories in places like the island of Grenada and Panama, and you tack on billions more with little to show for it. Since 2001, the Bush administration's Global War on Terror (including the wars in Afghanistan and Iraq) has cost taxpayers more than the recent bailout -- more than $800 billion and still climbing by at least $3.5 billion each week. And the full bill has yet to come due. According to Noble Prize-winning economist Joseph Stiglitz and Harvard University professor Linda Bilmes, the total costs of those two wars could top out between $3 trillion and $7 trillion. While squandering money, the Global War on Terror has also acted as a production line for the creation of yet more military bases in the oil heartlands of the planet. Just how many is unknown -- the Pentagon keeps exact figures under wraps -- but, in 2005, according to the Washington Post, there were 106 American bases, from macro to micro, in Iraq alone. If you were to begin the process of disentangling Americans from this world of war and the war economy that goes with it, those bases would be a good place to start. There is no way to estimate the true costs of our empire of bases, but it's worth considering what an imperial tag sale could mean for America's financial well-being. One thing is clear: in getting rid of those bases, the United States would be able to recoup, or save, hundreds of billions of dollars, despite the costs associated with shutting them down.

Here's an idea - why not convert some of those military bases to Peace Corps bases which could be maintained at a fraction of the cost and would represent an effort to solve the real problems of the world which have to do with providing food and clean water to more than a billion people lacking them. This will do more to improve America's image and the good will of others towards the US than all the military bases combined because the heart of the matter in terms of terrorism is the economic disenfranchisement of much of the world's population. This is what breeds resentfulness towards the US. Devoting resources to peace will yield greater dividends than devoting resources to war and be far cheaper. The US controlled IMF and World Bank has for the last 30 years been involved in an effort to shove laissez faire economics down the throats of the world's lesser developed nations. Milton Friedman was personally involved with Pinochet in Chile in order to convert the Chilean economy into laissez faire capitalism with disastrous results for the Chilean middle class. These efforts at privatization devastated the middle class while creating a class of super wealthy individuals. This policy was replicated over and over in other parts of the world including the privatization of the water supply in Bolivia. Now with the discrediting of Chicago School of Economics capitalism, a new paradigm for economic development is in order - one which helps directly the poverty stricken, the billions without adequate food, medical care, clean water or housing. In short the Peace Corps could start to remedy these problems on a world wide basis thus gaining friends for America instead of engendering resentment world wide. Call it socialism if you will, but direct help for the billions of suffering worldwide set up in such a way as to strip out the profit motive would be the surest way to provide direct help and get immediate results.

Chalmers Johnson has long written about the folly of spending trillions of dollars on the military industrial complex including the 761 military bases abroad that comprise what he calls "base world":

It is hard to imagine any sector of the American economy more driven by ideology, delusion, and propaganda than the armed services. Many people believe that our military is the largest, best equipped, and most invincible among the world's armed forces. None of these things is true, but our military is, without a doubt, the most expensive to maintain. Each year, we Americans account for nearly half of all global military spending, an amount larger than the next 45 nations together spend on their militaries annually. Equally striking, the military seems increasingly ill-adapted to the types of wars that Pentagon strategists agree the United States is most likely to fight in the future, and is, in fact, already fighting in Afghanistan -- insurgencies led by non-state actors. While the Department of Defense produces weaponry meant for such wars, it is also squandering staggering levels of defense appropriations on aircraft, ships, and futuristic weapons systems that fascinate generals and admirals, and are beloved by military contractors mainly because their complexity runs up their cost to astronomical levels. That most of these will actually prove irrelevant to the world in which we live matters not a whit to their makers or purchasers. Thought of another way, the stressed out American taxpayer, already supporting two disastrous wars and the weapons systems that go with them, is also paying good money for weapons that are meant for fantasy wars, for wars that will only be fought in the battlescapes and war-gaming imaginations of Defense Department "planners." ... The inevitable day of reckoning, long predicted by Pentagon critics, has, I believe, finally arrived. Our problems are those of a very rich country which has become accustomed over the years to defense budgets that are actually jobs programs and also a major source of pork for the use of politicians in their reelection campaigns. Given the present major recession, whose depths remain unknown, the United States has better things to spend its money on than Nimitz-class aircraft carriers at a price of $6.2 billion each (the cost of the USS George H. W. Bush, launched in January 2009, our tenth such ship) or aircraft that can cruise at a speed of Mach 2 (1,352 miles per hour). ... President Obama has almost certainly retained Robert M. Gates as Secretary of Defense in part to give himself some bipartisan cover as he tries to come to grips with the bloated defense budget. Gates is also sympathetic to the desire of a few reformers in the Pentagon to dump the Lockheed-Martin F-22 "Raptor" supersonic stealth fighter, a plane designed to meet the Soviet Union's last proposed, but never built, interceptor. The Air Force's old guard and its allies in Congress are already fighting back aggressively. In June 2008, Gates fired Secretary of the Air Force Michael W. Wynne and Air Force Chief of Staff General T. Michael Moseley. Though he was undoubtedly responding to their fervent support for the F-22, his cover explanation was their visible failure to adequately supervise the accounting and control of nuclear weapons. Similar savings could be gleaned by shutting down military bases abroad that are very costly to maintain and staff. Without those bases, billions of dollars in other Pentagon expenses would immediately disappear. For instance, during the years of the Global War on Terror, the Overseas Cost of Living Allowance, which equalizes the "purchasing power between members [of the military] overseas and their U.S.-based counterparts," has reached about $12 billion. Over the same period, the price tag for educating the children of U.S. military personnel abroad has clocked in at around $3.5 billion. By shutting down the 127 Department of Defense schools in Europe and the Pacific (as well as the 65 scattered across the U.S. mainland, Puerto Rico, and Cuba) and sending the children to public schools, the U.S. would realize modest long-term savings. Once no longer garrisoning the globe, the Pentagon would also be able to cease paying out the $1 billion or so that goes into the routine construction of housing and other base facilities each year, not to mention the multi-billions that have gone into the construction, and continual upgrading, of bases in Iraq and Afghanistan. ... Some recent Pentagon contracts for general operations and support functions overseas are instructive. In March, for instance, Bahrain Maritime and Mercantile International was awarded a one-year contract worth $2.8 billion to supply and distribute "food and non-food products" to "Army, Navy, Air Force, Marine Corps and other approved customers located in the Middle East countries of Bahrain, Qatar and Saudi Arabia." In July, the French foodservices giant Sodexo received a one-year contract worth $180 million for "maintenance, repair and operations for the Korea Zone of the Pacific Region." These and other pricey support contracts for food, fuel, maintenance, transport, and other non-military expenses, paid to foreign firms, would disappear along with those U.S. garrisons, as would enormous sums spent on all sorts of military projects overseas. In 2007, for instance, the Army, Navy, and Air Force spent $2.5 billion in Germany, $1 billion in Japan, and $164 million in Qatar. And this year, the Pentagon paid a jaw-dropping $1 billion-plus for contracts carried out in South Korea alone.

The Pentagon and the Defense Department will have to come to grips sooner or later with the fact that the current recession era US economy cannot support these far flung military operations, foreign bases and expensive purposeless weapons systems. It needs a redesign from the top down. Instead of high flying super speed jets which cannot possibly hit targets on the ground accurately without destroying civiliian population in the process, what are needed are low and slow flying aircraft and drones which can be manufactured at a fraction of the price. Strip out the jobs and make work programs from the MIP complex and a stripped down lean and mean military machine could be designed from the top down - one which is designed to face the threats of the 21st century - and one that would require only a fraction of the expenditures. Combine that with diplomatic efforts to bring peace in the world and economic aid to the world's suffering and struggling and you have a sustainable policy worthy of a great nation. Obama has already started down this road, but how far he can get in the face of immense opposition remains to be seen. The whole tone and face of America in the world is already starting to change from that of the bullies who controlled American policy for the last eight years. They did more to create enemies than to make friends. Instead of destroying enemies (the Bush-Cheney approach) Obama will try to convert them into friends. After all they are mainly stateless actors whose grievances result from America's heavy-handed approach to foreign policy for the last 30 years and even before that. The approach was ideologically driven and supportive of US corporations that had their fingers in the pies of various nations in order to profit at those nations' expense. American ideology has turned out to be a nightmare that has brought the world to its knees not by American military might but by colossal financial fraud and the failure of unfettered capitalism.

Other countries are starting to take a bolder stand against having US military bases in their countries. Case in point: Kyrgyzstan - the President of which has recently said that the US base there will be closed. This base is important to the US effort in Afghanistan, but evidently Kyrgyzstan wants more money from the US to keep it open and Russia resents having US bases in its "sphere."

Nature abhors a vacuum so while there are some who want to resurrect a failed ideology of unfettered capitalism, the consensus world wide is that this philosophy has failed and must be replaced by one more conducive to the welfare of the average middle class person instead of the preening, moneyed elite.

While US Spends Billions on Armaments, Billions of People Lack Food and Clean Water

This is from "Solving the Global Food Crisis: The Case for a 'Poverty Czar'" by Bruce Friedrich:

This past week, the U.N. Food and Agriculture Organization (FAO) convened an international panel on food security at which FAO chief Jacques Diouf argued that global food production will have to double by 2050 simply to prevent another billion people from starving. At the same time, two new scientific reports-one from the hunger relief charity Oxfam International and one from international affairs think-tank Chatham House-predicted that global food prices will rise sharply over the next 20 years. And in 2008 alone, the number of people in dire poverty-individuals not consuming enough calories for their basic sustenance-increased by 4 percent (that's an additional 40 million starving individuals) to a staggering 973 million, according to the U.N. Already, there have been riots over food in Haiti, Bangladesh, and Egypt as well as unrest in dozens of other countries. And as Obama has rightly noted-as has his transition team chief, John Podesta, in his must-read book The Power of Progress-global poverty is at the root of global security: Dire poverty breeds war, failed states, and terrorism. This is an uncontroversial though strangely neglected fact. It happened in Afghanistan. It happened in Iraq. It's happening in the Horn of Africa. Even beyond the moral imperative of preventing a billion people from starving, for basic security reasons, we can't afford to ignore a billion starving human beings. But what is the reason for this festering crisis? And more critically, can we solve it? One obvious reason for this problem is that the U.S. government spends well under one-quarter of 1 percent of our gross national income on aid, placing us dead last among the 22 countries tracked by the Organization for Economic Cooperation and Development. Most Americans believe that we should spend about 10 times more on aid than we do, and 60 percent of Americans want to triple aid immediately, from about $25 billion to $75 billion. Simply convincing Congress to do what its constituents already desire would move us from the bottom to the top and would encourage other countries to follow our lead. For an idea of how much money we're talking about, remember that the justly lauded Gates Foundation-the world's largest private charity-spent $3.3 billion last year on all its programs. Increasing aid from the U.S. is just one part of the solution, and it must be coupled with improved aid allocation, as New York Times. columnist Nicholas Kristof discussed in his devastating case-in-point, "Year After Year, Grave After Grave".  (please read the article) The Obama administration is off to a good start on this issue. It has pledged to double development aid, and Secretary of State Hillary Clinton made a commitment at the U.N. conference in Madrid this week to "[build] a new partnership among donor states, developing nations, U.N. agencies, NGOs, the private sector and others to better coordinate policies to achieve the Millennium Development Goals [of halving global poverty by 2015]." But more must be done. In his book, Podesta proposes the appointment of a cabinet-level "poverty czar"; such a move could not come too soon. With nearly a billion people starving worldwide, having one person dedicated to overseeing the allocation of U.S. aid makes perfect sense. Obama and Clinton have laid out their priorities with the Middle East, Pakistan, and Afghanistan. How about a George Mitchell or Richard Holbrooke to deal with global poverty? In addition to overseeing U.S. aid, a new poverty czar could also work to address global poverty at its roots. This means digging past the superficial reason conventionally offered for why there is growing poverty ("food costs are rising") and recognizing that the most significant factors driving up food costs are the diversion of crops to biofuels and the growing demand for meat in developing countries, especially China and India. Last year's Nobel laureate in economics, Paul Krugman, lays out the problem: "Over the past few years the prices of wheat, corn, rice and other basic foodstuffs have doubled or tripled .... High food prices dismay even relatively well-off Americans-but they're truly devastating in poor countries, where food often accounts for more than half a family's spending." And the causes for the price spike? Some of the most important causes Krugman identifies are also the most obvious (and correctable): "the march of the meat-eating Chinese-that is, the growing number of people in emerging economies who are, for the first time, rich enough to start eating like Westerners" and biofuels, because "land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis." He adds, "We also need a pushback against biofuels, which turn out to have been a terrible mistake." World Bank president Robert Zoellick backed Krugman's analysis in a National Public Radio interview in which he explained, "You have some of those countries moving to a different diet. So more meats require more grains. You have the biofuels expansion, which is a big source of demand." He added, "Biofuels is no doubt a significant contributor. It is clearly the case that programs in Europe and the United States that have increased biofuel production have contributed to the added demand for food." Indeed, according to a World Bank report released last year, biofuel production has driven global food prices up 75 percent, dwarfing the effect of weather changes, drought, and other factors. The impact is so severe that the U.N. special rapporteur on food policy called the diversion of crops to biofuels "a crime against humanity." According to a U.N. report last April, about 100 million tons of grain and corn were turned into biofuels last year, and 758 million tons were fed to chickens, pigs, and other farmed animals. So obviously, an increase in either of those uses will drive up food costs, as noted by Krugman, Zoellick, and others. And if diverting 100 million tons of grain and corn to biofuels is a crime against humanity, how should we characterize the diversion of 758 million tons to feed chickens and other farmed animals, considering the vast inefficiency of cycling crops through animals, compared to eating those crops directly? It is important for those of us in the West to remember that although we can't do much to stop the Chinese and Indians from eating more meat, we can do a lot about our own diets. Eating less meat would push food prices down, just as growing consumption in developing countries pushes them up. As Krugman and Zoellick suggest, we should be worried about the increase in meat consumption in China and India. We should be more worried, however, about what is on our own plates. A poverty czar could and should use the position to rally the American public to support greater food aid, more efficient food aid, and a change in policies away from the promotion of biofuels and the highly inefficient meat industry. She or he could also use the bully pulpit of the position to encourage Americans to donate more to private charities and to lead by example on the issue of meat consumption. Yes, we can solve the global food crisis-if we have the will.

And there are billions without clean water.

The Stimulus Package: Too Little, Too Much or Just Right?

There has been much criticism of Obama's stimulus package from both the right and the left. The right wants it to be all tax cuts, naturally. The left wants structural reforms in the economic system. Here's the dilemma Obama faces: if he tries to do too much right off the bat, the Republicans will see to it that nothing gets done. After all they can still filibuster; the Dems weren't able to muster a filibuster-proof majority in the last election. Therefore, Obama, while recognizing the seriousness of the crisis, can't try to do everything all at once for both political and economic reasons. The political reason is that people are clamoring for relief not a wholesale repudiation of the capitalist system. The economic reason is that economists can't agree about what to do to put the economic system on the right course and solve the problems. There are problems to be solved, but nobody can agree as to what the problems are much less how to solve them. Therefore, Obama's stimulus package has to at least change the course of recent economic events and bring relief to those who are suffering rather than solving the problems all at once which is impossible. So this stimulus package can't be too ambitious or it might flop producing no results. Better to start off more modestly - and even $800 billion is considered modest according to some experts - and produce some results than to spin our wheels getting nowhere.

Robert Reich and Arianna Huffington are a little impatient with Obama for not moving fast enough in restructuring the economy, in creating a new paradigm for the economy.

Robert Reich:

Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists. These two camps are united behind the current stimulus, but may not be for long. Cyclists blame the current crisis on a speculative bubble that threw the economy's self-regulating mechanisms out of whack. They say that we can avoid future downturns if the Fed pops bubbles earlier by raising interest rates when speculation heats up. But structuralists see it very differently. The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours. When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent. What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need. That's why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It's not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation's income.)

Arianna Huffington:

The administration also needs to use the debate over the stimulus package to rethink its too-timid approach -- otherwise we are going to miss a huge opportunity to both arrest our economic free-fall and create a 21st century economy. "I support the stimulus package," Van Jones, author of The Green Economy, told me. "But when I look at it in its entirety, I fear that we may soon look back and say that we missed a huge chance to go bigger and bolder. After all, there were three flaws with the old economy that has crashed: it favored consumption over production; debt over smart savings; and environmental damage over environmental renewal. Some parts of the stimulus package seem to be more of the same -- trying to prop up the old, failed economy. That strategy simply won't work -- but we could waste a lot of money and time trying. Instead, we need a new direction for our economy. You can't jump halfway across a chasm -- you just end up falling into the abyss." Rick Levin, president of Yale and an economics professor, echoed Van Jones' call for "bigger and bolder": "First of all, there's a question of magnitude. The overall stimulus is about 6 percent of GDP. We did not exit the Great Depression without a stimulus that amounted to about 25 percent of GDP -- we called that World War II... The second problem is with the mix... Only $335 billion worth goes to job creation -- that's about 3.5 million jobs, about $100,000 a job. Three-and-a-half million jobs is only two percentage points on the unemployment rate. That's not enough. I would get rid of the tax cuts and use the entire package for job creation... There are lots of great public works projects that would be well worth supporting. And, in the near term, what about CCC-type activities that put people to work right away, cleaning up public parks, weather-stripping homes, offices, schools, government buildings?"

Obama's goal is to get the economy - any economy - moving again. Will it solve all our problems whether in terms of returning to normal or creating a whole new paradigm? No, it won't. But Obama needs some success to build on. There will be follow-on stimulus packages or facsimiles thereof. This stimulus package is not the end-all or be-all of stimulus packages. So I say cut Obama some slack and have some patience. He still needs to restructure the tax system which will be an even more contentious subject because government can't continue to borrow and spend. It already is completely overstretched in that regard. It's one thing to have enormous government spending; it's another thing entirely to pay for it. Secondly, Obama wants to reform or restructure the health care system - again an enormously contentious subject when you factor in all the corporate interests you're up against. Years and years of Republican neocon rule have created a mentality and a huge cadre of wealth-fueled lobbyists that insists on keeping the unfettered capitalist approach despite widespread job loss and freefall from the middle class. In short people on the right don't care. They would be happy with a return to normal and a concomitant increase in the homeless underclass combined with a middle class reduced in size. It would suit them just fine. The economy would just orient itself to producing more luxury goods and less middle class goods in order to get consumption back up to par. Instead of western Europe being the aspired to model, the Third World would represent the new paradigm with an enormously wealthy small upper class of multi-national citizens and a vast underclass of poverty prone peons who would be lucky to have servant type jobs serving as waiters and waitresses to the elite.

Obama needs to produce some success fast. Otherwise, Republicans will start tying him up like a spider ties up its prey. If Obama can get the ball rolling, tax reform and universal health care could be not far behind. If the Republicans can drag him down, they will. You see they are not agreed to the fact that there's an economic crisis at all. All that's necessary according to them is an economic adjustment, and that adjustment consists of rapid downward mobility for a huge chunk of the middle class which is no longer necessary for the continued functioning of the economic system and is only getting in the way of future wealth creation for the nation's elite. Unfettered capitalism is just in the process of shedding unneeded workers. After all there is a huge world wide labor pool, and, according to the law of supply and demand, the price of labor and, therefore, wages should decrease to next to nothing. Therefore, the economic model that wealthy corporate interests would like to see maintained is one similar to India in which you have a fabulously wealthy elite and a largely immiserated lower class consisting of beggars for the scraps of jobs from the table.

Obama would like to replace the unfettered capitalist paradigm with one more conducive to a prosperous middle class with a robust safety net similar to western Europe, but he can't do this overnight. I think, if he has a chance of accomplishing it, it has to be with a "first get the ball rolling" approach. Then use the momentum to propel further changes. I believe Obama's heart is in the right place. But a lot of people don't understand his tactics. He is too smart to let the Repubs "triangulate" him as they did Clinton. He has learned from history, an advantage which, unfortunately, Clinton did not have. We have experienced trickle down economics and "free trade" and have seen where that has gotten us - on the verge of the second Great Depression. What's the problem, the neocons say. Their preferred solution to the first Great Depression would have been to let the lower, impoverished class increase while doing nothing. After all, with 25% unemployment, 75% of the people are still employed. It's not even a glass half empty. That would require 50% unemployment. On the other hand, if a middle class lifestyle for 95% of the population is the goal, the unfettered capitalist paradigm needs to be changed. Obama understands that. It's just that with so many plates in the air, he can't risk accomplishing nothing by attempting to do too much too soon.

Eventually, the US will wind up with a capitalist/socialist mix more in line with western Europe and other advanced industrial countries if the Democrats have their way. The socialist component will increase. It would have too if a more robust safety net and universal health care are brought into being. The Republicans would prefer to privatize everything with the result that the US would become a nation of peons presided over by a wealthy aristocracy. That's the model that they have tried to create in the Third World. That's the model that they want for America too. A global elite with ties to multi-national corporations moving freely wherever labor is cheapest, most profits are to be made and living conditions are most conducive to a lifestyle of the rich and famous. The rich would be jet setters au max, living wherever they liked, employing workers wherever labor was cheapest and overseeing investments managed by certified wealth fund managers - not the likes of Bernie Madoff, hopefully.

Alternatively, government will have to play a larger role in the functioning of the economy. Instead of money pooling at the top, it will have to be recycled downward. That's the only way to keep the money and wealth flowing to all levels of society, and that means taxing the rich because the US cannot continue to borrow and spend ad infinitum. Any sane economic system has to be one in which the balance sheet is, well, balanced. There will still be a wide disparity of income and wealth, just not as much concentrated wealth. Marx wrote about the concentration of capital being the death knell of capitalism. He was right if the system is set up in such a way that wealth pools at the top without being recycled. Money will always flow upwards in a society in which 70% of GDP is based on consumption. When consumers consume, money flows upward because they are giving their money in most cases to large corporations controlled by the wealthy in return for goods so the money ends up in the pockets of the wealthy. Take Wal-Mart, for example. A poor person makes a purchase at Wal-Mart. The money ends up in the coffers of the Walton family of billionaires, one of the richest families on the planet. If that money isn't returned to the general economy by means of taxation, it stagnates there - end of story. If that money is recycled to the poor person, that person will continue to purchase Wal-Mart products and the cycle will continue. It's as simple as that.

Ultimately, government must be the financial recycler of last resort. If the private economy does not provide enough jobs, government must provide the jobs to make up the difference either by directly employing people or by sub-contracting out to the private economy or by direct subsidies to the poor and middle class. In order to do this responsibly, it must tax the pools of money that lay stagnant at the top of the financial scale. Money needs to circulate in order for the economy to function. Government needs to make sure it does by recirculating the money and this means taxing it or reclaiming it where it pools - at the top.

The Fight Over "Buy American"

President Obama ran on a campaign pledge that his stimulus package would include a "Buy American" provision. The basic idea is that taxpayer money should not be used to subsidize multi-national corporations that outsource jobs. Otherwise, taxpayers are subsidizing their own demise as workers. But now that Obama has won, lobbyists for the multi-nationals are gearing up a huge effort to change that provision. How can you stimulate the American economy if tax dollars are spent to support jobs overseas? I thought the idea was to create jobs here at home. Nevertheless, there are signs that under pressure from K Street lobbyists, Obama is "reconsidering" his "Buy American" pledge.

According to David Sirota:

Both the House and Senate, following the campaign promise of Obama, inserted the most basic "Buy America" provisions into their drafts of the economic stimulus package. As the nonpartisan watchdog group Public Citizen reports, these provisions, requiring that U.S. steel and iron be used for federal and state transportation infrastructure projects, "simply extends existing law (the 1982 Buy America Act)" and is therefore explicitly exempt from any corporate-written trade rules that seek to limit such policies. These provisions are critical, especially because they include language making sure they don't inadvertently undermine taxpayers interests. For example, the president is allowed to waive the Buy America provisions if applying the preference would be "inconsistent with the public interest," if iron and steel are not produced in the United States "in sufficient and reasonably available quantities and of a satisfactory quality," or if inclusion of iron and steel produced in the United States will increase the cost of the overall project by more than 25 percent. OK - so to review: Obama campaigned on the Buy America concept, Congress followed his lead and legislated them into the stimulus bill but made sure to give him enough flexibility to waive them if they ever endanger taxpayers. So has the Obama administration been cheering and applauding - thanking Congress for helping them fulfill a campaign promise? Um, not exactly. Since the provisions passed, business front groups - representing multinational corporations yet fraudulently putting the terms "American" and "U.S." in their names - have launched a major lobbying offensive to gut them. For example, the U.S. Chamber of Commerce and the Emergency Committee for American Trade in Washington are demanding Obama use his leverage to get Congress to eliminate the Buy America provisions. The groups are getting help from individual companies like Caterpillar and General Electric (not surprisingly, two of the biggest job outsourcers) as well as the usual cast of Washington's corporate-funded think tanks and private equity firms like the Carlyle Group who make the hysterical claim that ensuring American tax dollars are spent in America will somehow initiate a global "trade war." They also throw out the canard that these provisions are somehow like the Smoot-Hawley tariffs that conservatives blame the Great Depression on - somehow omitting that the original Buy American laws were passed in 1933 (well after Smoot-Hawley) and one of the New Deal policies that got us out of the Depression. The screeching has gotten so loud, that for the first time since I can ever remember, the Washington Post (whose editorial board has been one of the most strident voices for free trade fundamentalism in American politics) put a story on page A1 about trade/industrial policy.

This will come down to a fight between the US Government and the multi-national corporations and the only hope American taxpayers and workers have is that the Obama administration will honor their pledge to use taxpayer money to create American jobs - not jobs overseas in some sweatshop. Outsourcing jobs is partially to blame for getting us into this mess and continuing to outsource them will make the mess even worse. What is needed is a sane export import policy, one that reduces our trade deficit to zero and supports American industry not at the expense of the rest of the world but not one that supports the trade policies of the rest of the world at the expense of American job holders.

For one thing, since most foreign countries have nationalized health insurance while in the US employers are expected to fund employee health insurance, right there US manufacturerers are put at a disadvantage. A nationalized health insurance plan for the US would tend to level the playing field. But that's not all. Many countries export into the US market while limiting imports into their own markets. In addition they subsidize selected industries in one way or another. 

Indeed, what this is about is making sure taxpayer money keeps flowing to corporations that have no loyalty to the United States. Whether its multinational banks getting bailout money or multinational manufacturers getting Export-Import Bank grants to ship jobs overseas, K Street has done a fantastic job of making sure that you and I - the average taxpayer - keeps having to subsidize our own pink slips. And now K Street is making its first campaign of 2009 a campaign to convince Obama to drop his campaign promises and use his power to ensure that our taxpayer money keeps funding our own economic demise - even if it means, as Businessweek suggested, severely weakening the positive effects of the stimulus package. The Obama administration has responded with a very tepid reaction. Instead of Obama saying, "Damn straight, we're going to make sure stimulus money gets spent in America," the best we've gotten is Vice President Joe Biden telling CNBC, "I don't view [the Buy America provisions] as some of the pure free traders view it, as a harbinger of protectionism." That's at least a start - but from Biden's boss, the president, we haven't even gotten that. Here's Bloomberg News: President Barack Obama’s administration will examine a “buy American” requirement in economic stimulus legislation that has raised concern among U.S. trading partners, White House press secretary Robert Gibbs said. The administration “will review that particular provision,” Gibbs said today at his regular briefing. The president’s advisers understand “all of the concerns that have been heard, not only in this room, but in newspapers produced both up north and down south.” He refused to say whether the administration supported or opposed keeping that part of the legislation intact. Nor did he say what the president would do if the provision remains once the bill clears the House and the Senate. Forgive me for being not encouraged by this pledge to "review" provisions that Obama campaigned on, but c'mon - this is, well, not encouraging. Obama's first use of presidential power was a veto threat to make sure taxpayer cash keeps flowing to multinational banks and financial houses. He's negotiating with Republicans over adding new corporate tax cuts to the stimulus bill. Now, as a corporate lobbying campaign ramps up, he's signaling a willingness to "review" the most basic provisions making sure American taxpayer dollars benefit American taxpayers. At what point will he draw the line? At what point will he answer that historic question that labor always asks: Which side are you on? At what point will he firmly and proudly say "no" to the demands of moneyed interests in Washington? Is it too much to ask him to stand up and publicly defend the most basic, minimal and commonsensical form of economic patriotism that would make sure the stimulus package gets the most bang for the buck? Democrats just ran a 2006 and 2008 campaign promising to come to Washington to reform our trade and economic policies to make sure they start working for regular people. This fight over Buy America is the beginning of that battle - and if at the very beginning the head of the Democratic Party joins the economic Benedict Arnolds who have sold our country out, it could rip apart the party the same way Bill Clinton tore apart the party with his early push for NAFTA (anyone remember the '94 election?). More important, it could undermine the effectiveness of the stimulus and tell voters Democrats really were never serious about their most minimal economic pledges.

Why don't we just wake up and admit that globalization has failed. To admit that does not preclude trade among countries when that trade is based on mutual self-interest. For instance, if country A produces a product that can't be produced in country B, then it would be in the self-interest of both countries for that product to be exported from A and imported into B. That's only common sense. If A and B both produce a similar product, then there should be a balance of imports and exports for that product such that the net trade deficit for that product is zero. Take automobiles for example. Why should the US import more automobiles from South Korea than it exports to South Korea?

What the US needs is an industrial strategy that supports ongoing job creation in the US. This is similar to what most other countries already have and already do. The "free trade" mantra of the Milton Friedman Chicago School of Economics is nothing more than a policy that favors multi-national corporations at the expense of ordinary Americans. It is reponsible, in large part, for the diminishing employment opportunities of average Americans. It is responsible for the layoffs of older Americans who then can not find another job and can't afford to retire. It is responsible for the immiseration of hundreds of thousands of Americans who turn to crime and violence in their frustration of losing everything they have, everything they've worked for their entire lives. It's reponsible for killing the American dream, for breaking the bond between individuals and society.

From Meltdown Madness: The Human Costs of the Economic Crisis:

The body count is still rising. For months on end, marked by bankruptcies, foreclosures, evictions, and layoffs, the economic meltdown has taken a heavy toll on Americans. In response, a range of extreme acts including suicide, self-inflicted injury, murder, and arson have hit the local news. By October 2008, an analysis of press reports nationwide indicated that an epidemic of tragedies spurred by the financial crisis had already spread from Pasadena, California, to Taunton, Massachusetts, from Roseville, Minnesota, to Ocala, Florida

Multi-national corporations have to stop. Their profits are not more important than American jobs. Yet they continue to lobby in order to outsource jobs to countries that have sweatshop labor conditions with no unions, countries that have no environmental restrictions and countries in which they don't have to supply employee benefits such as health care and pensions. The Obama stimulus plan will be a farce if it allows this situation to continue subsidized by taxpayer dollars. The mantra has to change; the paradigm has to change - from "free trade" to "fair trade." If the intellectual capital isn't there to initiate a new policy for trade getting rid of the "free trade" mantra and all it represents, then the free traders who represent multinational corporations and right wing think tanks will win. Where is the policy speech proposing a new understanding of trade and eliciting the support of a new policy while relegating "free trade" to the dustbin of history?

So Obama better stay focused on job creation here in the US and not use taxpayer money to creat jobs overseas. We've had enough of "free trade" which has only resulted in the immiseration of the American people.