Friday, November 8, 2013

Getting Rid of Blue Dogs/Fake Democrats/Rethug-Lites - An Upward Redistribution of Income, Not an Improving Economy Explains the Spectacular Drop in the Deficit

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As a further source of illumination to those who wonder why so many Blue Dog/Fake Democratic candidates were run out of office in 2010 by fellow Democrats either voting against them or staying home, our bestest buddy at Down With Tyranny enlightens us:

(Steve) Israel says he's following Rahm Emanuel's playbook to win lots of seats with conservative candidates divorced from the Democratic Party's core progressive values. The problem with that strategy - as the Democrats found in 2010 - is that once Democratic voters see the congressmen in action - voting with Republicans and with Wall Street and abandoning working families - they refuse to go to the polls to reelect them. None of Rahm Emanuel's recruits served more than 2 terms. None are still in Congress. The Democrats lost the House - by a landslide - in 2010 because all Rahm's candidates were defeated, not just by Republican voters but by disappointed Democrats who stayed away from the polls and by disgruntled independents who swung away from the faithless candidates they had voted for in 2006 and 2008.

What Kind Of Republican Candidates Is Steve Israel Recruiting To Run As Democrats Now? Not The Ones Who Have Seen The Light

Wednesday, November 06, 2013

Sunday we looked at North Carolina Republican congressional candidate Jason Thigpen's switch from the GOP to the Democratic Party. Monday evening Jason went on air with Lawrence O'Donnell to talk about his oddessey (above).

When I spoke with him over the weekend, Jason seemed to me to be a very independent-minded, thoughtful, progressive-oriented citizen with a keen understanding of a Constitution he takes very seriously. What he did not come across as is a careerist or someone likely to take walking orders from any two-bit political hack like DCCC chairman Steve Israel. Israel is happy to find malleable "ex"-Republicans and conservatives he can tell what to do. I don't expect him to embrace someone as independent as Jason. Careerists and opportunists like most of Israel's Jumpstart recruits, from Pete Aguilar, former Guantanamo com andante Jerry Cannon, anti-Choice/anti-gay fanatic Jennifer Garrison, multimillionaire self funder Sean Eldridge, Suzanne Patrick, to Domenic Recchia and Kevin Strouse.

Several months ago, I called Pete Aguilar to talk with him about where he stands on the important issues facing CA-31 voters. His campaign manager told me confidently that the DCCC hasn't told them where they stand on anything yet so he couldn't put me through to Aguilar - who had already failed miserably as a candidate for the same House seat a year ago. He said he'd call me when Aguilar had his positions figured out. He still hasn't called back. That's a typical response from Israel's recruits. It was pretty much the same response I had when I got through to Gwen Graham in Florida, another Steve Israel top recruit, and to Kevin Strouse's campaign in Bucks County, Pennsylvania. THese are issue-free, mystery meat candidates who are hoping for a national anti-Republican wave to sweep them into a nice new career.

From the outstanding Dean Baker,  co-director of the Center for Economic and Policy Research in Washington, D.C., we learn the truth behind the figures depicting how an improving economy (for whom again?) has led to a spectacular drop in the deficit, which is universally perceived as the best economic situation even though nothing else in the country is going well (other than the galloping stock market).

An Upward Redistribution of Income, Not an Improving Economy Explains the Drop in the Deficit

31 October 2013

In an article about congressional negotiations aimed at reducing the deficit and eliminating jobs, the Washington Post explained that there had been a sharp drop in the size of the deficit since the Republicans took over Congress in 2011:

"Since then [January, 2011], a series of budget deals — and an improving economy — have dramatically slowed federal borrowing. On Wednesday, the White House budget office announced that the government recorded a $680­ billion deficit in the fiscal year that ended in September, less than half the size of the shortfall President Obama inherited in 2009 when measured as a percentage of the economy."

Actually, the sharp drop in the deficit cannot be explained by economic growth over the last three years. In January of 2011, the Congressional Budget Office projected year over year growth for 2011, 2012, and 2013 of 2.7 percent, 3.1 percent, and 3.1 percent, respectively. In fact growth was 1.8 percent in 2011, and 2.8 percent in 2012. We don't yet have full year data for 2013, but GDP growth is virtually certain to be under 2.0 percent.

Since the economy has grown considerably slower than was predicted, growth cannot explain the lower than projected deficits. The explanation instead is the cuts made to the budget, as well as the ending of the Bush tax cuts for high income households. The upward redistribution of income, along with the sharp rise in the stock market, has also increased revenue.

This impact shows up not just as additional capital gains taxes, but also as a result of capital gains income being recorded as normal income. This happens every time there is a sharp increase in asset values. Growth in national income has exceeded growth in output by almost 1.5 percentage points since 2010, which is the sort of gap that would be expected given the sharp rise in the stock market over this period.

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