Ok, I admit it, I am partisan!

Financial Reform legislation is on the brink of passage. As one might expect, the bill is less than perfect, as some of the worst practices permitted during the Bush "market-based" years have survived the push for new regulatory powers for the people of this nation. I haven't read the bill, but only press reports, and I can't pretend that I would have understood much of it anyway. However, I do think I understand the partisan politics associated with the negotiations.

The Boston Globe reported today that our junior Senator, Scott Brown, is withholding support, "citing $19 billion in new bank taxes inserted at the last minute". As far as I knew, the bill always included some kind of attention to revenue, but I suppose it was a surprise to him. With this in mind, I fired off the following missive to him this morning:

I am displeased with your opposition to taxing big banks and hedge funds. Do you recall that taxpayers bailed out the former? Is it possible that your ties to Mitt Romney, and by extension to Bain Capital, might have something to do with your desire to protect hedge funds? Were I to run against you in 2012 I would certainly make that charge.
I know that you and your party are deficit hawks. But how can we reduce the deficit to pay for your party's 2 wars and 8 years of lax regulation unless revenue is raised? With this opposition you once again confirm what I have believed about you all along: you are a doctrinaire, conventional Republican. I am not disappointed, however, as this is what I expected from you.

Let's see: a tax on hedge funds - does the average middle-class voter care about a tax imposed on an industry that serves the interests of the richest of the rich, the group who most benefitted from the Bush tax cuts? I doubt it, but nice try, Sen. Brown.

Welcome Walmart shoppers

As we are addicted to oil, so too do we have a monkey on our back in our lust for Chinese manufactured goods. And despite lead in the toys and toxic chemicals in their foodstuffs, nothing slows the rising tide of Sino-goods. But 99cent mops and other such cheap folderol comes at a very high price, as China does not play fair. Through currency manipulation it manages to effectively maintain high tariffs on imports while at the same time subsidizing its own exports. My favorite economist explains how this policy works in the New York Times today.

I've worried about this issue for a long time. Just as manufacturing jobs disappeared from New England to move to the South, they have now left the South to low-wage nations around the world. It is impossible to end recessions without an abundance of such jobs, and they of course require markets, both domestic and foreign. China, the world's biggest market, is an old-fashioned mercantilist society. And we don't care?

So I proudly display my 1990, Hand Made in Somerville, Massachusetts, Fat City Cycle Monster Fat mountainbike. However, you can't buy one. The company went out of business in the 90's -seems bike customers preferred to save a few bucks by buying imported bikes from.....you guessed it.... China.

My deficit reduction plan

Comparative defense spending (courtesy of a Wolfram/Alpha search)


The news that General McChrystal has been called home to Washington for his recent intemperate remarks is certain to generate some chauvinistic fervor among America's right-wing. Republicans and Blue-dog Democratic politicians will shower us with platitudes about respecting the flag, supporting the troops, and listening to the Generals. In this highly-militerized society of ours, patriotism is often associated with complete support for whatever the military and defense contracors desire. But just as President Truman needed to remind Douglas MacArthur that the Constitution makes an elected official the Commander-in-Chief so too must President Obama take McChrystal to task.

In this atmosphere it is useful to revisit President Eisenhower's prescient remarks about military spending. He extolled us to be wary of the power of the military-industrial complex, and he was not wrong. At a time when we are running huge deficits, American taxpayers are supporting the largest defense structure in the world. No other nation comes close, as the map above demonstrates. And this offers our best hope for deficit reduction.

A recent bi-partisan study demonstrates with great clarity that this can be accomplished. We have a military desgned to defeat the Soviet Union. We have weapon systems that are little more than pork-barrel earmarks, un-needed and un-loved by the Defense Department but favored by Congress. We have too many generals, admirals and other officers. We do not defend our borders bu we protect Europe from..... (exactly what threat?). We chose a military response to 9/11 rahter than treating it as police matter. And in an act fdefying logic, we truned that into an invasion of Iraq. Enough is enough: if we are serious about taming the budget deficits we must tame the Defense Department. Perhaps McChrystal trip to the wood shed can be the beginning.

Will we ever do the right thing?

Forty years ago, when I was a senior in high school, the two great issues we faced were Vietnam and the environmental crisis. The first Earth Day neatly juxtaposed environmental activism with anti-war sentiment. Five years later, the war was over, and the great pro-envirnoment legislative agenda of the day had been enacted. Clean Water, Clean Air, Endangered Species... the future looked bright. But in retrospect, our optimism should have been tempered by our failure to learn anything from the great energy crisis of 1973-74.

President Carter tried, of course, but he was ridiculed for his efforts by the Republicans and their standard-bearer of the 80's, Ronal Reagan. And the GOP convinced a majority of voters, again and again, that there was no need to sacrifice for a better future. Just keep on drilling, became their mantra, to be replaced with the execrable "drill, baby, drill" chant of McCain-Palin.

The disaster in the Gulf of Mexico will be repeated, as the age of Easy Oil has clearly come to an end. To satisfy the world's demand for the precious stuff, more dangerous and difficult sites must be developed, as the easy ones are now depleted. Conserve? Drive smaller vehicles? Walk or ride a bicycle? Be serious - this country is not prepared to give an inch on this 19th century energy economy.

As proof, here are the new car sales for May 2010, as compared to last May. Luxury SUV's lead the way, as the recession is showing signs of abating. Until we see hybrids leading the pack, I think it is clear that we have yet to understand the depths of our troubles.

We need to increase the price of gasoline at the pump. The best way to do this is with a significant tax increase: at least a $1 a gallon. In other words, we need to move closer to the world price for gasoline. The revenue should be dedicated to energy research. It should not be diverted to deficit-reduction. That is a worthy objective, perhaps, but that can best be accomplished by bringing the troops home from the Bush-era wars.