An article Who Really Got What in the Tax Deal? by Mike Konczal is posted on the New Deal 2.0 web site.

There is no continuation of the Temporary Assistance for Needy Families Emergency Fund  (TANF EF) from the stimulus bill in the tax cut compromise. Regular TANF was created as part of the Clinton-era welfare reform to get people off assistance by getting them back to work. This approach becomes problematic when unemployment is high due to faults in monetary and fiscal policy, not because people choose not to work. In a Great Recession, TANF runs out of both money and conceptual scope very quickly. So this Emergency Fund, at the low cost of five billion dollars distributed to states, allowed locals on the ground to expand and continue TANF to meet the needs of fighting poverty and putting people to work.

The White House claims that “We got $238 billion and the Republicans got $114 billion out of the tax cut capitulation.”

Mike Konczal shows that the White House got $106 billion out of the deal and the Republicans got $246 billion.

Not bad negotiating for a party that has minorities in one branch of the government and nothing in a second branch of the government.  Maybe we need to stop President Obama from negotiating with himself before he negotiates with the opposition.  By the time he is finished negotiating with himself, the opposition has already got more than they had hoped for.

Whose Side is the White House On? is the headline give to this talk by James K. Galbraith to the Americans For Democratic Action on November 20, 2010.  This was before we  knew about the Obama tax capitulation.

Recovery begins with realism and there is nothing to be gained by kidding ourselves. On the topics that I know most about, the administration is beyond being a disappointment. It’s beyond inept, unprepared, weak, and ineffective. Four and again two years ago, the people demanded change. As a candidate, the President promised change. In foreign policy and the core economic policies, he delivered continuity instead. That was true on Afghanistan and it was and is true in economic policy, especially in respect to the banks. What we got was George W. Bush’s policies without Bush’s toughness, without his in-your-face refusal to compromise prematurely. Without what he himself calls his understanding that you do not negotiate with yourself.

It’s a measure of where we are, I think, that at a meeting of Americans for Democratic Action, you find me comparing President Obama unfavorably to President George W. Bush.

He goes on to fault the set of advisers and administrators that Obama chose for his administration.

The president deprived himself of any chance to develop a narrative from the beginning by surrounding himself with holdover appointments from the Bush and even the Clinton administrations: Secretary Geithner, Chairman Bernanke, and, since we’re here at Harvard, I’ll call him by his highest title, President Summers. These men have no commitment to the base, no commitment to the Democratic Party as a whole, no particular commitment to Barack Obama, and none to the broad objective of national economic recovery that can be detected from their actions.

I think back to the choice between Hillary Clinton and Barack Obama.  In Hillary we would have had the tough fighter, but one who did not really understand what she was fighting for.  In Barack Obama we seemed to have a person who really knew what we were fighting for, but he turns out to be one who doesn’t have much fight.

I wonder if some of the international policy decisions come from Hillary Clinton’s toughness in fighting for the wrong policies that contradict what Obama ran on.

I frequently remind myself that I think I may have myself financially protected enough that perhaps I won’t suffer too much if the country collapses while I am still around.  There is not much I can do after that.  A stiff deflation might actually help me with my zero long term debt policy.

For those that did not catch parts of Senator Bernie Sanders’ long speech, both Rachel Maddow and Keith Olbermann show snippets.

Below are links to the three segments of the entire 8 ½ hour speech.

Sanders Filibuster: Part 1

Sanders Filibuster: Part 2

Sanders Filibuster: Part 3

Here is something to shake us up.

Reconsidering Japan and Reconsidering Paul Krugman appears on the Truthout web site.

In the midst of the Great Recession, the United States is suffering through nearly 10 percent unemployment and 50 million people without health insurance. A new report has found over 14 percent of Americans living below the poverty line, including 20 percent of children and 23 percent of seniors, the highest numbers since President Lyndon Johnson’s War on Poverty. That’s in addition to declining prospects for the middle class and a general increase in economic insecurity.

How, then, should we regard a country that has 5 percent unemployment, health care for all of its people, the lowest income inequality and is one of the world’s leading exporters? This country also scores high on life expectancy, low on infant mortality, at the top in literacy, and low on crime, incarceration, homicides, mental illness and drug abuse. It also has a low rate of carbon emissions and is doing its part to reduce global warming. In all of these categories, this particular country beats both the US and China by a country mile.

The second paragraph describes Japan according to this article.  The article decries articles in the mainstream press and all the US pundits that declare Japan as having a lost economic decade.  They take Paul Krugman and The New Yotk Times to task.

The Truthout article links to a series in The New York Times that starts with the article Japan Goes From Dynamic to Disheartened.  The article of course discusses the well known problems in Japan since its great economic bubble burst.  Toward the end of The New York Times article there is a slight concession:

Yukari Higaki, 24, said the only economic conditions she had ever known were ones in which prices and salaries seemed to be in permanent decline. She saves as much money as she can by buying her clothes at discount stores, making her own lunches and forgoing travel abroad. She said that while her generation still lived comfortably, she and her peers were always in a defensive crouch, ready for the worst.

Not having any direct experience of Japan myself, it is hard to judge and balance these opposing points of view.  Do any of my faithful readers have any insights to share?

Robert Reich has written the piece, Why Democrats Should Disregard Bill Clinton’s Endorsement of Obama’s Tax Deal.

In his article, Robert Reich said the following:

I admire Barack Obama and Bill Clinton. I advised the former and worked for the latter. They are good men. But they have either been outwitted by the privileged and powerful of America, or seduced by those on Wall Street and the executive suites of America into believing that the Republican nostrums are necessary, or succumbed Democratic advisors who think in terms of small-bore tactics rather than large and principled strategies.

Remember that Bill Clinton fell for the advice of Robert Rubin on financial deregulation and probably the Glass-Steagall act repeal that led to the recent financial crisis.  Bill Clinton is also the President who compromised with Republicans over the objections of Democrats on issues of free trade.  Clinton has demonstrated that he does not have a good eye for detecting the long term pitfalls of what appear to be good short term compromises.

There is nothing wrong with the concepts of deregulation and free trade when applied in a sensible manner.  Bill Clinton and Barack Obama appear to believe that you can compromise with people who want to implement concepts in a non-sensical manner.  In two cases where Clinton tried this it led to disaster.

How many times can we go down this road before we run out of second chances?  How many times can you pull the trigger on a six chambered revolver with five empty chambers, before you lose the game?  With Russian Roulette, you know the number is no more than 5, but it could be as low as 1.

If you want to think outside the US box, where better to go than PressTV?

Press TV takes revolutionary steps as the first Iranian international news network, broadcasting in English on a round-the-clock basis.

Our global Tehran-based headquarters is staffed with outstanding Iranian and foreign media professionals.

Press TV is extensively networked with bureaus located in the world’s most strategic cities.

I don’t know whether to categorize the following as humor, conspiracy nuts, somewhat reformed but still deluded Reagan nuts, or a grain of truth. I’ll just present this for your viewing pleasure.

You can listen to Bill Clinton’s endorsement of President Obama’s capitulation on tax policy in the following video:

President Clinton did a lot of good things during his administration with regard to balancing the budget. However, his actions relating to the demise of the Glass-Steagall Act may have wiped out the good that he did. I consider the capitulation to the Republicans on tax cuts for the rich and tax holidays for Social Security to have the equivalent potential for destruction as the killing of the Glass-Steagall Act. Bill Clinton obviously did not recognize this, but at the time of the repeal, I knew that this was a very dangerous path to follow. I did not protest at the time as vociferously as I am protesting Obama’s capitulation. I wish I had been writing this blog at the time so I could have raised my voice more loudly.

In the book Crisis Economics: A Crash Course In The Future of Finance by Nouriel Roubini and Stephen Mihm, the Glass-Stegall Act is mentioned numerous times.

Page 74-75

In all fairness, Greenspan had plenty of company in the relentless drive toward deregulation. For the previous three decades, freeing financial markets from “onerous” regulations had been an article of faith among conservatives. It also became public policy. From the 1980s onward, tight regulations of the financial system instituted during the Great Depression were phased out or eliminated.

The most notable casualty was the Glass-Steagall Act of 1933. Part of that landmark legislation had created a firewall between commercial banks (which took deposits and made loans) and investment banks (which underwrote, bought, and sold securities). Those provisions suffered death by a thousand cuts. Beginning in the late 1980s, the Federal Reserve Board permitted commercial banks to buy and sell a range of securities. At first commercial banks could derive only 10 percent of their profits from securities operations, but in 1996 the Federal Reserve Board raised that threshold to 25 percent. The following year Bankers Trust became the first commercial bank to purchase a securities firm; other banks soon followed suit.

The catalyst for the final repeal of Glass-Steagall was the proposed merger of Travelers with Citicorp. This combination, which brought commercial banking, insurance underwriting, and securities underwriting under the same roof, forced the issue: the new financial behemoth was illegal under existing laws. Late in 1999, after intense lobbying, Congress repealed the remnants of Glass-Steagall via the Financial Services Modernization Act, paving the way for additional mergers between investment banks, commercial banks, and insurers.

One of the key players in the repeal of Glass-Steagall was Republican economist-turned-senator Phil Gramm.

Page 182

The mother of all financial crises – the chain of disasters known as the Great Depression – sparked radical reforms of financial systems internationally. In the United States, the Glass-Steagall Act of 1933 created federal deposit insurance and established a firewall between commercial and investment banking; subsequent legislation gave the Federal Reserve the power to regulate bank reserves. The government brought the stock market to heel as well: the Securities Act of 1933 required issuers of securities to register them and to publish a prospectus, and it made the investment banks that underwrote the sale criminally liable for any errors or misleading statements in the prospectus. The following year saw the creation of the Securities and Exchange Commission, which remains the agency charged with regulating the buying and selling of securities. Though many other countries adopted similar measures, the United States implemented one of the most comprehensive series of reforms.

Page 210

Not only do we need to reduce the TBTF problems by making each institution smaller, we also need to unbundle financial services within financial institutions to reduce the too-interconnected-to-fail problem: with exchanges, broker dealers would be involved only in the efficient execution of trades for clients, not in market making/dealing, which is rife with conflicts of interest, lack of price transparency, and large and systemic counterparty risk. So we need to go back to Glass-Steagall, and even beyond it, to a financial system in which both institutions and their activities are unbundled to make them less too big to fail and less too interconnected to fail.

Page 230

In the wake of the recent crisis, distinguished thinkers like former Fed chairman Paul Volcker have argued for some kind of return to the Glass-Steagall legislation of 1933, which separated commercial banking from investment banking. This firewall eroded in the 1980s and 1990s, finally disappearing altogether with the Gramm-Leach-Bliley Act of 1999. The result was the current system, where a firm like Citigroup or JPMorgan Chase can be a commercial bank, a broker dealer, a prop trader, an insurance company, an asset manager, a hedge fund, and a private equity fund all rolled into one sprawling institution.

Page 231

Many reformers have understandably counseled a return to Glass-Steagall, and as of early 2010, there are bills in Congress that would restore it in some way or another. Thanks to Volcker’s lobbying, the Obama administration was considering whether to prohibit bank holding companies-which now include firms like Coldman Sachs and other major financial players – from pursuing proprietary trading, private equity deals, and any hedge-fund activity. But industry lobbying is likely to prevent the restrictions from being implemented.

Page 233

By unbundling the financial services now combined under one roof, we can steer the financial system away from an excessive reliance on too-big-to-fail-and too-interconnected-to-fail- firms. By returning to a beefed-up version of Glass-Steagall, and by adopting reforms aimed at moving financial activity away from opaque trading strategies and onto transparent exchanges, we can create a safer, saner financial system, with the added benefit of robbing firms of their ability to extract disproportionate profits from deluded investors.

Page 272

Financial crises disappeared only after the Great Depression, a period that coincided with the rise of the United States as a global superpower. At the same time the U.S. government reined in financial institutions with legislation like the Glass-Steagall Act and shored them up by creating agencies like the SEC and FDIC. The dollar became the ballast of an extraordinarily stable international monetary system, and crises came to seem like things of the past.

Page 273

Even more radical reforms must be implemented as well. Certain institutions considered too big to fail must be broken up, including Goldman Sachs and Citigroup. But many other, less visible firms deserve to be dismantled as well. Moreover, Congress should resurrect the Glass-Steagall banking legislation that it repealed a decade ago but also go further, updating it to reflect the far greater challenges posed not only by banks but by the shadow banking system.

Simon Johnson wrote the article What Is Wrong With Cutting Taxes? for The New York Times and posted it on his web site The Baseline Scenario.

But our “fiscal space” is limited – we cannot afford to blithely increase our national debt. It can be done – and should be done given the parlous state of our economy and our disastrously high unemployment levels. But it must be done carefully, so we get as much stimulative effect on jobs as possible for our debt-increase dollars.

Cutting taxes for the very rich is an ineffective way to stimulate the economy in the short term…

In this post, he also has links to more details including his discussion with Rachel Maddow.