Sunday, April 7, 2013

Why Newt Gingrich Is Still On TV/Revered By the Owners (Where the Idea of Chained-CPI Came From) Right. We Wuz Robbed and It's Coming Around Again

Have you spent much time lately wondering why "our" liberal/progressive "change" President continues to push the fake deficit scam? After the noted economist Dean Baker addressed the history of this scam (and how even the tepid job growth under the weak Obama stimulus has halved it already), hasn't the stated necessity for adding a Chained-CPI requirement to minimize Social Security growth (and cure the deficits incurred by the wars and tax cuts), sustained mainly by those elderly poor who've already seen their retirement savings eviscerated by the last two financial catastrophes, seemed pretty much a bridge too far? Not really, it seems, for the very serious macho men.

I've been saying since the 90's long-term Clinton sellout of those who voted for him and against the Contract On America thugs that the Democrats have done very little economically for those at the lower levels of the wealth pyramid, who had worked so hard to replace the Reagan/Bush regime with them. And that it almost seemed like the Democrats were both deaf and dumb about economic issues. But not mute as they continued to obfuscate the real policies that they (also) support: the further enrichment (entitlement, really) of the rich. No kidding. Look around you today. See anything new?

And I've seen and heard absolutely nothing from Obama economically to change my opinion. (Granted, he's told many political lies when the occasional called for them.)

(Please forgive the emphasis marks added to the following evidence. Yes, reading about economics can get boring, but stick with it to the bottom of the essay, and you'll probably learn something new that will benefit your future planning (er, life) greatly.)

From our good friend at The Angry Bear:

It's history lesson time again.

An awful lot of talk and writing about the chained CPI has been focused on the results of its implementation on Social Security. Using this formula for figuring the cost of living ends up reducing the money citizens will receive in their SS checks. One of our commenters, Denis Drew labeled it the Cascading CPI.

That's pretty much how I see it because the formula is all about suggesting that accounting for people substituting lower priced items (lower price includes technical improvements) for the higher priced items (higher price includes earlier versions in a products history) they used to purchase means their quality of life has not changed. 

The only way to make such an argument seem reasonable is if the concept of “quality” has no meaning in the market place.

However, if “quality” accounts for something when purchasing a specified level of living, then the accounting is not of inflation but of deflation, and deflation now has to be considered to float on either side of the zero, being positive or negative. There is no concept of inflation in economics anymore.

What I'm suggesting here is that the chained CPI reasoning is a massive amount of conflation. When I start seeing concepts and perceptions being conflated, I get suspicious and start asking questions.

Usually the first question is what's behind the promotion of the conflation. What's the history and in that possibly will I find the intention? And, as I taught my daughter, life is intention.

Using Mr. Peabody's WABAC machine we set the dial for 1995. Ever heard of the Boskin Commission?  Its formal name: "Advisory Commission to Study the Consumer Price Index". It was created on the order of the Senate Finance Committee. The Senate majority leader then was: Bob Dole followed by Trent Lott. William V Roth Jr. was the chair of the committee. 

This was the time of Newt Gingrich and the “Contract with America”.  The contract included social security reform. It also included welfare reform. (Clinton gave them that part of the contract.) Both were under the Fiscal Responsibility Act. You know, balance the budget rhetoric. Specifically:  An amendment to the Constitution that would require a balanced budget unless sanctioned by a three-fifths vote in both houses of Congress...

Gee, 3/5 of congress or 60 votes, what's the difference now?

Boskin is Michael Boskin. He is this man. Rather accomplished. Held and holds some very influential positions.

He is also this man.

In 1993, Bill Clinton enacted an economic program centered around some public investment, coupled with deficit reduction with higher taxes on the rich. Boskin was very, very sure it would fail. In a Journal op-ed entered into the Congressional Record by grateful Republicans, he accused Clinton’s administration of “fundamental distrust of free enterprise.” He made a series of predictions: “The new spending programs will grow more than projected, revenue growth will be disappointing, the economy will slow, and the program will reduce the deficit much less than expected.”

Boskin repeated his prophecies of doom in a summerlong media blitz. Boskin labeled Clinton’s plan “clearly contractionary,” insisted the projected revenue would only raise 30 percent as much as forecast by dampening the incentive of the rich, insisted it would “take an economy that might have grown at 3 or 4 percent and cause it to grow more slowly,” and insisted anybody who believed in it would “Flunk Economics 101.”

With that setting here is some history by way of Fredrick Sheehan by way of The Big Picture blog:

In the early 1990s, Senator Patrick Moynihan from New York warned his fellow legislators about rising social security commitments. Then the worm crawled out of his hole, so to speak. Federal Reserve Chairman Alan Greenspan testified before the Senate and House Budget Committee on January 10, 1995. He told the Committee the inflation rate was probably overestimated by 0.5% to 1.5%.

If Greenspan was correct, this was a godsend. Social security payments are increased each year at an inflation rate calculated by the federal government: the change in the Consumer Price Index (CPI).

If the CPI could be increased at a lower rate in the future, benefits would rise more slowly, without Congressional action.

This would reduce government spending and delight politicians, who knew of the looming crisis in social security but did not want to imperil their careers by reducing benefits, or, in this case, by cutting the rate at which social security benefits were raised each year.

The Boskin Commission was duly formed. Michael Boskin was the right man for the job. He had served as chairman of the President’s Council of Economic Advisers (CEA) from 1989 to 1993, a post previously held by such government functionaries as Arthur Burns and Alan Greenspan. 
I'm starting to get a feeling here. “The fix is in” kind of feeling. Mr. Sheehan offers this quote: Greg Mankiw, chairman of George W. Bush’s Council of Economic Advisers from 2001-2003, said at the time “the debate about the CPI was really a political debate about how, and by how much, to cut real entitlements.”
From an article in the Atlantic, 1997 by Thomas L. Palley titled: How to Rewrite Economic History.

The commission is itself a delicious example of such bias:   All its members were on record prior to the establishment of the commission as believing the CPI to be overstated.

At the same time, the commission took no evidence from such well-known economists as Janet Norwood, a former head of the Bureau of Labor Statistics, and Dean Baker, of the Economic Policy Institute, who believe that the CPI provides a reasonable reading of inflation.

In effect, the commission took account of all the evidence of overstatement of inflation by the CPI and downplayed the evidence of potential understatement.
I would say the fix was in. It has just been a matter of time and timing as to when the final promise made in the Contract with America would find its way into policy. 
The Democrats implemented the welfare the Republicans wanted and now they are going to give them the Social Security. All of it can be summed up in the Contract ultimate goal: An amendment to the Constitution that would require a balanced budget unless sanctioned by a three-fifths vote in both houses of Congress...

The article, besides being a good review of the commission's report points out the ramifications of accepting an argument that the CPI has been miscalculated for years (similar to Dean Baker's points).

If cost-of-living inflation has been overstated, then the growth of the economy and real wages has been much higher than previously reported. The commission has thus solved the problem of stagnating wages, which is now revealed to be a mere fiction. Far from experiencing a "silent depression," the commission implicitly claims, American families have never had it so good.

If inflation, wages, and income have all been misstated, years of research have been conducted using incorrect data. Thus much of this research, which purportedly confirmed the profession's theoretical claims, is no longer valid.

Lowering the CPI inflation rate would therefore affect income-tax exemptions and push many middle-class families into higher tax brackets. Adopting the Boskin Commission's findings would be tantamount to imposing a tax hike that would particularly affect lower- and middle-income families.

Both Democrats and Republicans have been keen to see its recommendations adopted, because they provide a potentially uncontroversial way to achieve deficit reduction. Raising taxes is unpopular, and little discretionary government spending is left to be cut.

Restating the CPI as a measure of cost-of-living inflation offers an easy way to lower Social Security payments through reduced COLAs and raise tax revenues through reduced exemptions. The hope is that the CPI can be presented as an apolitical and boring technical issue that voters won't notice.

Revising the CPI would get the Republicans off the hook of deficit reduction, while simultaneously advancing the interests of business. This, however, would occur at the expense of working Americans and the elderly. Revising the CPI would get the Democrats off the same hook, but at the cost of another shameful desertion of the constituencies they claim to represent.

I told you there is no concept known as inflation in economics anymore.

What we have been living with Obama is very clear now. There is only the conservative ideology in play within our government. It's just a matter of degree and time in setting up the play as to when a given policy  will be implemented to achieve another phase of the goal.  Right now, it looks pretty much like the official implementation of chained CPI pretty much puts the final cog in the conservative economic machine of social order.

I asked in 2008 if Obama's appointment of Jason Furman was a qid pro quo for the DLC/Clinton et al keeping the money issues while Obama gets to be president.  We have our answer for sure. There is no need to ask anymore as to the reasoning behind the policies and offers in negotiations that is Obama. It is what he wants. We are living the continual implementation of the conservative economic and thus social ideology that came in with Reagan and fully came out with Gingrich and The Contract with America. 

And that my dear readers is where the idea for chaining the CPI came from; yesterday and today.

It is not just the pain that will be experienced by all of us (you'll get old too) with the chained CPI, it is the fact that voting away from conservative economics has not led us away from conservative economics since Reagan.  Regardless of the party of the president or the majority of congress, the nation has not been able to achieve an ideological shift.  That is a true signal of a problem with our form of democracy.

 Anyone still thinking the Dems don't know what they've done and are doing again?

Read on for your future lessons.

Biden Calls for “Creation of a New World Order” to Conference of Drug Dealing Bankers

by willyloman

by Scott Creighton
The Export-Import Bank of the United States holds a yearly conference where the global banking elite get together and talk about how the U.S. taxpayers have to fund their various neoliberal globalist schemes. It's headed up by Fred Hochberg, a former Clinton administration appointee and Obama campaign bundler who reportedly put together half a million dollars to get neoliberal Obama elected. His efforts were repaid by this appointment.
Hochberg comes from the financial aristocracy of New York. His mother, Lillian Hochberg, started the Lillian Vernon Corporation which Fred managed for 20 years after being taught the neoliberal way at the Kennedy School of Government in Harvard.
Having a silver spoon stuck up your ass at birth is a grand thing, ain't it?
He spoke at a Ex-Im Bank summit in 2011 about how the U.S. is successful because of all the people we brought into the country, not the people who's money is being taken by his bank and given to foreign companies:
"America has succeeded because we are an importer of the most talented, most creative, most industrious men and women in the world." Fred Hochberg
He also talked about understanding how importing businessmen from other countries is in his blood since he is Jewish and his own family escaped from Germany before Hitler wiped them out.
At the end of March this year, Hochberg proudly announced a $190 million dollar "loan' to El Al airlines of Israel, formerly the nationalized airlines of the State of Israel, but now privatized and owned (39%) by Knafaim Holding LLC. English speaking countries slogan: "It's not just an airline, it's Israel"
$190 million dollars quietly handed over to a privately owned Israeli company as the sequestration cuts force U.S. companies to turn away cancer patients on Medicare? "Ex-Im’s current exposure in Israel is approximately $950 million."
On the 5th of this month, VP Joe Biden went before a group of these assorted JP Morgan and Goldman Sachs oligarchs and said we needed to make sure that China is prosperous and Mongolia is prosperous and in order to do that, we had to "level the playing field" with American businesses and labor, meaning continue the trend toward devaluing U.S. workers at a record setting pace.
"We came into office facing the worse financial recession since the Great Depression. We had to unfreeze the credit markets (TARP bailout... did not do that at all) reform the financial system (which they did not do at all, in fact, it's worse now than it ever was), inject demand back into the economy (stimulus or backdoor infusion of public wealth into corrupt banking sector? Both failed miserably) and while this agenda is far from complete, we've made significant progress with all of your help... there is a need for an ambitious affirmative agenda. We strengthened and then signed 3 free trade agreements (with the fascist TPP on the way!)" Joe Biden
Remember, Biden is speaking to intelligent educated members of the elite and they know full well what he is saying. The list he runs down reminds the audience of the globalist efforts they have already made, the Obama administration's success bullet points list, and swears his fealty to them by promising even more in the future.
So what is that "affirmative agenda" Biden speaks of? Well, it's pretty obvious in what he says, the continuation and even the acceleration of neoliberal globalist economic policies. What does Biden call it in the speech?
"The affirmative task we have now, is too actually create a New World Order... the institutions that worked so well in the post WWII era need to be strengthened" Joe Biden
The post WWII era is the neoliberal era. The institutions that he is talking about, aside from the obvious, the Export Import Bank of the United States, are the IMF, World Bank, Bank for International Settlements, and of course, the institution of the privately owned central banking system.
Just as a side note, the Ex-Im Bank has gotten into trouble in the past back when regulators actually did their jobs occasionally.
When the drug cartels in Mexico were laundering money and setting up their narcotics operations with the help of the CIA and various U.S. and British banks, the Ex-Im Bank was exposed for loaning our favorite drug dealing gangs a quarter of a billion dollars. It wasn't really a loan as it was never paid back. We just used this sham agency to hand over a bunch of money to murderers and drug dealers so they could get the upper hand in the drug war in Mexico. Not only that but because the Ex-Im Bank makes these "small business loans" many times they make them to companies that don't exist...
The probe originally revealed that small business loans sponsored by the Export-Import Bank of the United States were made to non-existing companies for equipment that wasn't even real.
Now, New 8 has discovered that some of the people who got the Ex-Im Bank loans may have drug connections. The $243 million worth of bad loans were originally made to help trade with Mexico.
The loans have been linked to the Juarez drug cartel, which is known for its brutal murders. The cartel killed one dozen people and buried them in a suburban backyard across the border fro El Paso.
Another loan was linked to the Sinaloa drug cartel, whose business is smuggling heroin into the United States.News 8
Tons of money, supposedly going to put Americans back to work, going to line the pockets of people outside this country, doing nothing to help American workers and in fact probably aiding in their misery (if you happen to think flooding the country with narcotics causes misery)
This group is even less regulated now than they were under the Bush years when all of this came out. And guess what? They intend to take full advantage of it... at least that's what Obama's silver spooner Fred Hochberg said in 2011...
Who better appreciates America's values, our ideals and what our nation has to offer. And who better to inject vitality and a global vision into our economy and our business community.
That's why our goals for Global Access are both concrete and ambitious.
By 2015, we plan to:
    • Approve $30 billion in total small business authorizations
    • Double our annual small business volume
  • And add 5,000 small businesses to our portfolio
willyloman | April 7, 2013

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