The actual Daily Ticker segment is headlined Fixing the Fiscal Cliff: Is Hiking Taxes on the Rich the Answer?

In this dialog, Henry Blodget is too right wing for me. He seems to be the more in agreement with Obama’s position than is Adam Task.

In his meetings this week, the president hopes to persuade Republicans in Congress to accept higher taxes on wealthy American while he works to persuade Democrats to agree to spending cuts in entitlement spending.

I’d like to see a lengthy trial of tax hikes for the wealthy being used to fund fiscal stimulus until the economy recovers. During this waiting period, there can be efforts made at finding ways to lower the costs of programs whose benefits people are contractually entitled to. There is absolutely no need to cut benefits.

The full scale Obamacare program before it got watered down by Congress would go a long way to solving the Medicare and general societal medical cost problem. There is some hope that in the ensuing years, enough voters and politicians would come to wake up to this fact and start reinstating some of the items that got lost the first time around.

As for Social Security, I have been promoting Franco Modigliani’s plan for putting Social Security on a firm financial footing with no decrease in benefits and no deficits in the plan. I know that I have been pushing for this since before 2005. See my old politics page section on Social Security.

Senator Ted Kennedy was supposed to get Franco Modigliani a hearing of his plan before Congress, but they both died before it could happen.

As long as the politicians are ignoring the two obvious fixes to our biggest potential budget-busters, then I am ignoring what the politicians suggest as alternatives.

The major cause of our economic stagnation is that the wealthy have no good place to invest their money in a down economy.  Therefore they suck the liquidity right out of the economy to “invest” it in cash or economically useless financial derivatives.

The only solution must include getting this money out of their hands and back into the economy.

Your task, Mr. Phelps, if you choose to accept it, is to find a way to accomplish the only thing that will get the economy moving again.

This blog post will not self destruct, so if you fail to take on this mission, it will be plain for everyone to see.

The Nation Of Change has the article How to Build a Grassroots Power Base.

For people fed up with bait-and-switch pitches from Democrats who talk progressive to get elected but then govern otherwise, the Occupy movement has been a compelling and energizing counterforce. Its often-implicit message: protesting is hip and astute, while electioneering is uncool and clueless. Yet protesters’ demands, routinely focused on government action and inaction, underscore how much state power really matters.

To escape this self-defeating trap, progressives must build a grassroots power base that can do more than illuminate the nonstop horror shows of the status quo. To posit a choice between developing strong social movements and strong electoral capacity is akin to choosing between arms and legs. [ssg: emphasis added] If we want to move the country in a progressive direction, the politics of denunciation must work in sync with the politics of organizing—which must include solid electoral work.
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Politicians like to envision social movements as tributaries flowing into their election campaigns. But a healthy ecology of progressive politics would mean the flow goes mostly in the other direction. Election campaigns should be subsets of social movements, not the other way around. Vital initiatives to break the cycles of capitulation and lack of accountability will come from the grassroots.

The article goes on to discuss several campaigns and lessons learned from them.

I just returned from a luncheon in Brimfield arranged by campaign activists MariaT and DickH where we struggled with ideas for how we are going to keep the activism alive in this part of Massachusetts.  I hope we can learn from other people’s experiences and come up with something that makes a difference.

The Nation of Change has published Robert Reich’s article The Next Game of Economic Chicken: Not on the Deficit But Over Taxing the Rich.

Some Democrats (and some White House strategists) figure they’ll have most bargaining leverage in next year’s deal if they do nothing now – allowing tax rates to rise automatically on everyone after the first of the year. Then they plan to offer Republicans a deal that reduces taxes on people earning less than $250,000 – which would be retroactive to January 1st.

Republicans would have to choose between a tax cut on the middle class or no tax cut at all. Democrats believe Republicans would have to take the deal. Even Grover Norquist would be hard-pressed to come up with an argument against it.
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So who blinks first? Democrats who don’t mind going over the cliff because they’ll get a better final deal – and the deal will be retroactive to January 1st so it’s not really a cliff at all but more like a little hill?

Keep that last part of the quote in mind always.  The fiscal cliff is only a cliff if the scheduled changes go into effect and the Congress never does anything in the ensuing decade to fix the problem.

This idea of the fiscal cliff fits right in as part of Naomi Klein’s thesis in The Shock Doctrine.

Based on breakthrough historical research and four years of on-the-ground reporting in disaster zones, The Shock Doctrine vividly shows how disaster capitalism – the rapid-fire corporate reengineering of societies still reeling from shock – did not begin with September 11, 2001.

The wealthy, the Republicans, and the media owned by the wealthy want to scare you so badly that you will put pressure on Congress to “do something, do anything, don’t just stand there, do something!”  What you should be saying to President Obama and the Democrats is, “Stand your ground.  Don’t cave to the scare tactics.  You have all the high cards, use them.  Call their bluff. Use the shock doctrine on them for a change.”

If you read the quotes I have chosen from Robert Reich’s article you can infer that I have left out the other side of the game of chicken.  Very clever of you.  Now go read the article to find out what the other side is.

President Obama’s full remarks are elaborated on the White House blog post President Obama: “Let’s Get to Work”.

President Obama makes a statement about the action we need to take to keep America’s economy growing, while at the same time reducing our deficits.

Here is the video of that presentation.

Where is the statement that taxes on the rich must be raised to stop their hoarding of the liquidity that the country needs to get moving again? Where is the refutation of Boner’s claim that raising taxes on the wealthy will slow the economy down? It is easy to do and it must be done that we remove all of Boner’s false claims as to why we should not raise taxes on the wealthy. It goes beyond fairness. It is a necessity to get the economy working again.

This lack is what prompted my tirade of yesterday in the post Obama Still Has No Clue On Being President – There Goes The Economy.

I am not making this up. WikiPedia has a nice explanation of the well known economic paradox called a Liquidity Trap. Well, I do have one bone to pick with the introduction to the page as quoted below. The issue is not that the injection of liquidity by the Fed fails to lower interest rates. It is that it fails to stimulate economic growth. It does not make much sense to say that “Signature characteristics of a liquidity trap are short-term interest rates that are near zero” after saying that “injections of cash into the private banking system by a central bank fail to lower interest rates”.

A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail to stimulate economic growth. A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels.

It is about time that the administration start a campaign to educate voters about real economics as opposed to the false economics fostered by Boner. Don’t tell me that it is too complicated to explain. Boner does it every chance he gets.

Thanks to HankH for suggesting this video.  It is a clip from The Daily Show titled An Avalanche on Bulls#%t Mountain.

Karl Rove disputes Fox News’ Ohio electoral math, Megyn Kelly goes for a stroll, and Bill O’Reilly pronounces the election a victory for people who want stuff.

This is especially for the devotees of Faux Noise hereby renamed as BMN – Bulls#%t Mountain News – by Jon Stewart.

Also give a thought to what Bill O’Reilly said. Maybe it was a bit of a loss for people who have so much stuff already that they don’t know what to do with their money and power except to rape and pillage the poor just for sport.

But as President Obama has shown today, he’ll pretend to fight the losers, but will soon capitulate to them anyway.

It is time for the public to start yelling bloody murder.

I have just watched President Obama give up on taxing the wealthy without a fight.

I was looking for a news story to use as a reference to show you what I mean.  I found it in The Los Angeles Times news story Obama says budget deal must include higher taxes on the wealthy.

Allowing the tax rates on higher income levels to go up in the new year would hurt small-business owners, Boehner argued, which “would slow down our economy.”

The president said he “was encouraged to hear Speaker Boehner agree that tax revenue has to be part of this equation,” and would look forward to discussing plans in detail next week.

Here is a perfect example of the President continuing his failure to communicate that has been his downfall over the last 4 years.  The Boner of The House is addressing the electorate with propaganda that has sunk in with his and other Republican’s repetition.  The President is addressing Speaker Boner without even offering a story to the public to counter the propaganda wallop that Boner delivered.  Boner knows where the power is.  Despite going to Harvard to learn where the power is, the President apparently did not learn much.  You could dismiss my griping as coming from a country hick who knows nothing about power if you hadn’t already observed this kind of travesty many times yourself.

The wealthy and the big corporations are drowning in so much excess money that they don’t know where to invest it.  They are not investing it in making jobs to produce more goods since the middle-class does not have enough money to buy the goods that the currently employed and currently open factories can produce.  What foolish capitalist would invest money to produce goods for which there are no customers and there are not going to be customers?  Instead the wealthy are putting their money into financial finagling trying to see which one can gain an advantage over the other.  As a side line, they are buying up troubled companies, selling off the assets that could have been used to create future jobs, and increasing their share of the country’s wealth.  They are stealing the workers’ pension funds and health care accounts to add a little more to their wealth.

Look at the above comparisons, if you think I am kidding.

• For poor and median households, Great Recession wipes out 20 years of net worth accumulation
• For the rich, only small decline

The net worth of the rich and the poor are in terms of today’s depressed values. If and when the values come back, the wealthy will have gotten even farther ahead of the middle-class and poor.  Even without the recovery of values, the share of the shrinking pie that is owned by the wealthy is skyrocketing.

Taxing the wealthy and using that extra government revenue to buy infrastructure, education, health care, retirement benefits, basic science, and a myriad of other things the society needs will increase jobs and make further deficit spending unnecessary.  In other words increasing the taxes on the wealthy and not cutting spending is what we need, while Boner tries to justify the exact opposite policy.  Where is the public outrage going to come from if the President won’t explain this?

Whatever liquidity that the Fed has been pumping into the economy to boost its performance has been sucked right back out of the economy by the hoarding of wealth by the rich.  The only way to break this cycle is to tax this wealth out of the hoarders’ hands and put it back into the economy as the Fed intended.

Do you think the President could get the public to put pressure on Boner and the other Republicans if he explained all of this to the public and asked for their help?  Instead, the President is treading lightly so as not to offend Boner who has on his Army boots and is stomping all over the President.

What can we do, when the President we just re-elected is too weak to stand up for us?  If we don’t rise up in a second Occupy movement, then we will get what we deserve for our inaction.

I am issuing this call from this blog.  How many of you can help me spread the word?  The longer you wait, the less chance we have of overcoming the forces of the wealthy.

Lest you think I am only complaining about what the wealthy are doing to me, I need to say that my personal net worth history looks more like the right hand graph than it does the other two. I have learned a little about how to play the game with the rules cast as they are. However, for the good of the country, I am hoping that things can be made more even. There is every likelihood that I will do OK unless the greed of the wealthy takes us all into a depression. Then even my skills may not be enough to protect me. That is my real worry.

Of course, how my descendants might fare is another worry. I may have enough cushion to protect Sharon and me (I hope), but I doubt it is enough to protect anybody else.

The Nation Of Change has published Robert Reich’s article Obama’s Next Economy: Why He Must Take This Opportunity to Reframe the Economic Debate.

His victory and the pending “fiscal cliff” give him an opportunity to recast the economic debate. Our central challenge, he should say, is not to reduce the budget deficit. It’s to create more good jobs, grow the economy, and widen the circle of prosperity.
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Any “grand bargain” on deficit reduction should contain a starting trigger — and that trigger should be when the economy can safely be assumed to be back on track. I’d make that trigger 6 percent unemployment and 3 percent economic growth for two consecutive quarters, and make sure that trigger was in the legislation.

The first part of the quote describes how the debate must be reframed.

The second part of the quote is a way to agree to deficit reduction, but makes it clear when is the time to do it and when is not the time to do it.  If this wording makes it comfortable for the opposition to realize that the President is not saying that the deficit should not ever be cut, then we should put in those words.  These words are only an explicit statement of what President Obama’s policy has always been.  The words are also an answer to the claim by the opposition that if we do not cut the deficit now, there are no plans to ever cut the deficit.

Mitt Romney, even before his unexpected  switch to being a pseudo-moderate Democrat in the campaign, agreed that cutting the deficit too soon would be bad for the economy.

I might add that another part of the Grand Bargain is the statement that changes to Social Security and Medicare will not be planned in detail until after we see how the increase in taxes on the wealthy and the recovery of the economy effects the long term outlook for these insurance programs.

When you pay for an insurance policy, you are entitled to the benefits you paid for.  Nobody calls the monthly payments of a private annuity  an entitlement.  Why should they call the monthly payments of a public insurance policy, the Social Security Annuity, an entitlement?