Voodoo Redux: $30B aid to unemployed unaffordable, $650,000,000,000 tax cuts for rich non-negotiable

From the inexhaustibly vigilant pen of Paul Krugman:

Jon Kyl of Arizona, the second-ranking Republican in the Senate, was asked the obvious question: if deficits are so worrisome, what about the budgetary cost of extending the Bush tax cuts for the wealthy, which the Obama administration wants to let expire but Republicans want to make permanent? What should replace $650 billion or more in lost revenue over the next decade?

His answer was breathtaking: “You do need to offset the cost of increased spending. And that’s what Republicans object to. But you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.” So $30 billion in aid to the unemployed is unaffordable, but 20 times that much in tax cuts for the rich doesn’t count.

The next day, Mitch McConnell, the Senate minority leader, confirmed that Mr. Kyl was giving the official party line: “There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”

How did that policy work out last time we tried it, Paul?

Ronald Reagan said that his tax cuts would reduce deficits, then presided over a near-tripling of federal debt. When Bill Clinton raised taxes on top incomes, conservatives predicted economic disaster; what actually followed was an economic boom and a remarkable swing from budget deficit to surplus. Then the Bush tax cuts came along, helping turn that surplus into a persistent deficit, even before the crash.

But we’re talking about voodoo economics here, so perhaps it’s not surprising that belief in the magical powers of tax cuts is a zombie doctrine: no matter how many times you kill it with facts, it just keeps coming back. And despite repeated failure in practice, it is, more than ever, the official view of the G.O.P.

SOURCE: New York Times.

We are Victims of our own Success

What does it actually mean to vote for or against extending unemployment benefits? In the context of seeking sustainable solutions, I'm afraid to say, almost absolutely nothing.

In practice, these stop-gap measures are indeed wasteful, as opponents cry, but only from the perspective of institutional denial of the fact that we are in the process of transitioning to the post Job Trance era.

Less than 65% of Americans (and dropping fast, due to ever accelerating increases in efficiency) current provide at least 100% of required goods and services for the entire economy. That means, 40% of Americans CAN'T BE IN THE WORKFORCE at all ... EVER.

We simply cannot, as bald pragmatic matter, let 40% or more of the population drift further and further into poverty and despair simply because of a deprecated, dysfunctional, nineteenth century industrial delusion about how the world used to work 100 years ago.

We suggest that it is time to open the floor to discussion and debate about economies as Circulatory Systems rather than distribution systems. Only hoarders and oligarchs amplify and defend the narrative of distribution, because it is their unsustainable resource skews that have gradually been the paramount unintended consequence of efficiency-addicted hyper-industrialization, thusly destroying the proper circulation of currency throughout the system as a whole.

In everyday practice, sustainable economies are like the body's circulatory system. We talk about how much currency is in circulation, not in distribution. It's time to open public solutions dialog on a subject that has been under careful study and analysis for decades: universal Basic Income, the most sustainable and adaptive means of maintaining a healthy Circulatory System, one that maintains the health of the capillaries of the economy first and foremost, where the transpiration of the real world economy takes place in everyday lives.

Without the exchange of oxygen, nutrients, and waste at the very fringes of our body's circulatory system, the heart can do no good whatsoever. To date, the measures taken to stimulate the economy have all focused on the wrong problem: shocking the heart to do more work. The moral problems and failures may be at the heart of the system, but the functional failures are at the edges and fringes of the system. Right here, in our everyday lives.

Let's be clear: nobody is demonizing free markets here; rather, we acknowledge that in the west, we are today a victim of our own particular brand of frenetic, neurotic success. As any alcoholic or drug addict who "made it to the top" will tell you, just because that dysfunction seemed to fuel success, doesn't mean that it actually helped. In sad fact, too often the very things that we thought were our best support structures can turn out to be the underlying cause of our greatest miseries.

GOP: Decreasing Homelessness and Starvation Makes Economies Worse

Thankfully, it looks like we can still count on The Atlantic to provide a platform for intellectual honesty about such matters. Special thanks to Daniel Indiviglio for saying it plain:

... the official reported unemployment rate should be reflective of labor market turmoil. In that sense, the unemployment rate as currently calculated more likely underestimates the struggle so many Americans face. The broader measure of unemployment was 16.5% for June. There are a lot of Americans who are so discouraged they have temporarily given up on finding work or can't get anything full time. The government doesn't consider them unemployed, even though they certainly are ...

A Few Comment Excerpts:

Timothy: All I have to say is what is wrong with these people ?! Do they think that what unemployment is giving us to barely survive on is great living to the point that one wouldnt want to look for work ? Are you kidding me ? I am not even getting by ! I have lost 2 homes 2 cars and demolished my credit and everything i have worked for my entire life ! So No I am not overjoyed about being on u/i. People are starving while [politicians] went on break and I find that very sad !

Jessica: The people that they are talking about, that left the work force, are those that have exhausted all their benefits. The real, live, unadjusted unemployment rate is well above 14-15%. They keep adjusting the numbers to see fit... but the people know differently. I think that it is great that all these people think that living on the unemployment benefits, are just living high on the hog.... wow the stupidity continues to amaze me...

KCSam: Now I've heard it all. Unemployment benefits boosting the unemployment rate? Aren't we blaming the victim here?

What Happens If Asia's Recovery Stalls Too? (TIME)

Posted by Michael Schuman at Time:

Now it looks like Asia, the guiding light of the post-recession world, is hitting speed bumps as well. What does that mean for the world economy? It's just more evidence that the entire global recovery may be running out of steam. Even mighty China isn't immune from the gloom.

Asia has been one of the primary engines of the worldwide rebound. If that engine cools down, even a bit, that will act as yet another drag on what is already an uninspiring global recovery. Add in the impact of misguided austerity measures and continued high unemployment, and this fragile recovery may not look like much of a recovery at all.

A Market Forecast That Says ‘Take Cover’ (NYT)

Jeff Sommer, The New York Times writes:

Along with A. J. Frost, Mr. Prechter wrote “Elliott Wave Principle,” a 1978 book that predicted the emergence of a great bull market — a forecast that was largely fulfilled. By 1987, he was widely regarded as an expert in technical analysis. Articles in The New York Times said he was known as “the market’s leading technical guru” — and more. An article in October that year said he had “emerged as both prophet and deity, an adviser whose advice reaches so many investors that he tends to pull the market the way he has predicted it will move.”

He has far less day-to-day influence now, after years spent developing a theory he calls “socionomics,” which holds “social moods” as the cause not only of market cycles but also of economic and political events. A grand cycle is ending, he says, and the time for reckoning is near.