13 March 2010

No working out today; longer swim tomorrow? My calf continues to seize up and ache at night; it feels ok during the day.

Posts (no particular order)

President Obama talks about education.

Humor:

(hat tip: Legal Satyricon)

Alan Keyes: I admit that I kind of like him; he seems to specialize in defending impossible to defend positions. I admit that I enjoy hearing him speak. Here he tries to argue that people are normalizing homosexuality in an effort to make Christianity go extinct. Someone made a comment: “Keyes is such an optimist!”

Speaking of nutbags
I sometimes think that only the United States is stuck with moronic people in its legislatures. That isn’t the case. Here, you see British members of Parliament pushing for homeopathic remedies to be covered by their National Health Service (I know..some Democrats, including one that I like, have pushed for such nonsense here).

Now that we are on the topic of healthcare

Paul Krugman: is optimistic. And yes, much of the negative stuff you are hearing about it is bunk.

Representative Alan Grayson: pushing for “Medicare buy-ins” for all. Ok, confession time: I like to see this idea, but any time someone says “gee, my bill is only 2, 3 or 4 pages long” I know that it really is a “for show” effort. Legislation is complicated because it is the law of the land, and law has to deal with a ton of contingencies, “what ifs”, and the like.

Our local paper: slams the hypocrisy of the current process. Sure it tries to come off as “even handed” but really gets to the point that Republicans are against reconciliation unless they are the ones using it:

Sometimes we wonder if election to Congress comes with an honorary – make that dishonorary – degree in hypocrisy.

The latest example has Capitol Hill Republicans in a conniption over Democrats threatening to use the parliamentary procedure known as “reconciliation” – which requires 51 votes rather than the 60 necessary to kill a filibuster – to pass an amended health care bill in the Senate. Democrats no longer have 60 votes.

“You’re talking about the exact opposite of bipartisan,” said Sen. Judd Gregg, R-New Hampshire. “You’re talking about running over the minority, putting them in cement, and throwing them in the Chicago River. … Using reconciliation in this manner on this type of an issue would do fundamental harm … to the institution of the Senate. I mean, why have a Senate? … You might as well go to a unicameral body. Be like Canada.”

My, what a difference five years makes.

Isn’t this the same Judd Gregg who in 2005, when Democrats complained about Republicans’ ultimately unfulfilled threat to use reconciliation to open the Arctic National Wildlife Refuge to oil drilling, labeled their laments “inappropriate” and said, “We are using rules of the Senate here. Is there something wrong with majority rules? I don’t think so”? Why, it sure looks like him.

Meanwhile, we don’t recall Sen. John McCain objecting so emphatically to the process he now believes will produce “cataclysmic effects” when it was being used for the welfare reform legislation he supported back in 1996, or even for the legislation he did not support, specifically the Bush tax cuts in 2001 and 2003. We do remember him telling the Heritage Foundation a year ago that, while he was not fond of the practice, “I fully recognize that Republicans have in the past engaged in using reconciliation to further the party’s agenda. … The groundwork has been laid.”

Likewise we don’t register former Senate Majority Leader Bill Frist ever calling reconciliation “arcane” and “never used” back when it was helping Republicans pass welfare reform, which we’d argue was “major” and “systemic,” Senate Minority Leader Mitch McConnell’s recent assertions to the contrary. Was it the “nuclear option” then for Sen. Orrin Hatch of Utah? “If they exercise that tool, it’s going to be infinitely more difficult to bridge the partisan divide,” said Sen. Olympia Snowe, the Maine Republican. What, like erasing partisanship is possible to begin with?

We’d acknowledge that reconciliation was originally intended for smaller, narrower purposes, but in fact it has been used for some significant measures – to cut and raise taxes, to create the Children’s Health Insurance Program, to give Ronald Reagan his expansion of the Earned Income Tax Credit, to create the COBRA health insurance option for departing employees. It has been invoked 22 times since 1980, two-thirds of those by Republicans. When reconciliation bills have been signed into law, nearly three-quarters of those signatures have come from GOP presidents.

I’ll say it clearly: we (the Democrats) won the last election. We get to try. You had your chance and did nothing. If the reforms flop, you’ll win the next elections and then get to undo it and put in what you think will work better.

Economy Robert Reich (from the “the stimulus should have been a whole lot bigger” camp) isn’t impressed.

Part of the perceived growth in GDP is due to rising government expenditures. But this is smoke and mirrors. The stimulus is reaching its peak and will be smaller in months to come. And a bigger federal debt eventually has to be repaid.

So when you hear some economists say the current recovery is following the traditional path, don’t believe a word. The path itself is being used to construct the GDP data.

Look more closely and the only ones doing better are the people and private-sector institutions at the top. Many of America’s biggest companies are sitting on huge amounts of cash right now, but that says nothing about the health of the U.S. economy. Companies in the Standard&Poor 500 stock index had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, and their earnings tripled. Why? Mainly because they’re global, and selling into fast-growing markets in places like India, China, and Brazil.

America’s biggest companies are also showing fat profits and productivity gains because they continue to slash payrolls and cut expenditures. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. Sounds terrific until you realize how it did it. By cutting 28,000 jobs – 32 percent of workforce – and slashed capital expenditures 43 percent.

Firms in S&P 500 are now holding a whopping $932 billion in cash and short-term investments. And they can borrow money cheaply. Corporate bond sales are brisk. So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds. Does this spell a recovery? It all depends on what the big companies are doing with all this cash. In fact, they’re doing two things that don’t help at all.

First, they’re buying other companies. (Walgreen last month spent $618 million for New York drugstore chain Duane Reade; Bank of New York Mellon, $2.3 billion for PNC Financial Services; Monster, $225 million for jobs.com; Diamond Foods, $615 million for Kettle Foods.) This buying doesn’t create new jobs. One of the first things companies do when they buy other companies is fire lots of people who are considered “redundant.” That’s where the so-called merger efficiencies and synergies come from, after all.

The second thing big companies are doing with all their cash is buying back their own stock, in order to boost their share prices. There were 62 such share buy-backs in February, valued at $40.1 billion. We’re witnessing the biggest share buyback spree since Sept 2008. The major beneficiaries are current shareholders, including top executives, whose pay is linked to share prices. The buy-backs do absolutely nothing for most Americans.

Bottom line: people still don’t have money to spend and, while job losses have stabilized, we need to be creating jobs and the job creators (small businesses) don’t have the money to create them.

Note that the “inflection point” of the current “job loss” curve is right when the stimulus was enacted. This is where the graph changes concavity.