Archive for September, 2008

September 30, 2008

THIS WEEK’S SYNDICATED COLUMN: MAD MONEY

A Broke America Can’t Afford Wars, Tax Cuts

Credit has dried up. The stock market is disintegrating. Unless someone pours money into capital markets, everyone agrees, we could wind up like people in Baghdad, fondly remembering the day five years ago when they pushed the handle and their toilets still flushed. Only one “someone” has enough cash to fix the problem: the U.S. government.

The Bush Administration and Congressional Democrats want taxpayers to pay $700 billion to bail out failing banks. Progressives would prefer to bail out homeowners facing the imminent foreclosure of their homes, as well as those in danger of being foreclosed upon during 2009, at a cost of $1.3 trillion.

Never mind which approach is better. Where will the government find the money?

There are two elephants in the room: war and Bush’s 2001 and 2003 tax cuts. We can’t afford either. Yet, to abuse the animal metaphor, everyone acts like they’re sacred cows.

When you think about it, it’s sheer madness. The city marshal is at the door, brandishing a shotgun, ready to evict you and your family for nonpayment of rent. But while your kids are screaming in terror, you’re at the computer, wasting thousands on online gambling. You could pay off your landlord instead. You could make the marshal go away. All you have to do is stop. But you keep on keeping on. Click, click. More money squandered.

What the hell is wrong with you? What the hell is wrong with us?

In 2007 the non-partisan Congressional Budget Office estimated that the final cost of our biggest national compulsion, the wars against Iraq and Afghanistan, could total $2.4 trillion, or $8,000 per man, woman and child in the country. That’s twice as much as the Korean, Vietnam and Gulf Wars combined. It’s also two-thirds the cost of World War II. Yet no one–not the Republicans, not the Democrats, not the media, not even the left–insists that we get out.

To paraphrase Lloyd Bentsen, I’ve studied World War II. World War II was a worthwhile war, one that freed millions from tyranny and set the stage for the U.S. to dominate he global economy and become the wealthiest nation in history. Iraq and Afghanistan? They’re no World War II. As wars go, they’re not as worthwhile as the invasion of Grenada.

“The CBO estimates assume that 75,000 troops will remain in both countries through 2017, including roughly 50,000 in Iraq,” reported USA Today. If anything, that’s a low-ball estimate. More than a half century after the fighting ceased, we still have 37,000 troops in one tiny country, South Korea. And both McCain and Obama promise to send more troops to Afghanistan. That means more taxpayer money.

Nearly two out of three Americans think invading Iraq–where the lion’s share of war funding is being spent–was a mistake. The Afghan resistance is kicking our butts. Both wars have been a complete, total waste of money, effort and lives. As surely as the sun will rise in the east, we will lose both. At a total cost of at least $2.4 trillion. Ridiculous.

$2.4 trillion is nearly twice the $1.3 trillion it would take to save every home in danger of foreclosure. That would keep many banks afloat, and act as the biggest economic stimulus in history. Can anyone sane tell us why we shouldn’t bring our troops back home? Can anyone justify wasting $2.4 trillion at a time when the U.S. economy is staring into the abyss of total collapse?

The other national obsession is the tax cuts Bush pushed through in 2001 and 2003. “The surplus is not the government’s money,” Bush said at the time, apparently unaware that the economy was already in a recession. “The surplus is the people’s money.” Remember surpluses? Such a Clintonian word. Anyway, Democrats in Congress–still in full-on wuss mode following 9/11–went along with Bush’s tax cuts. But, bless their wimpy little heads, they did manage to extract a concession: In 2011, tax rates would revert to what they’d been in 2001.

Believe a Republican once, shame on you. Believe a Republican twice, what were you thinking? Now so-called conservatives are complaining that “the largest tax increase in history” will occur in 2011 if Bush’s tax cuts are allowed to expire.

Making the Bush tax cuts permanent would codify the most regressive tax change in history. “After-tax income would increase by more than six percent for households in the top one percent of the nation’s income distribution, two percent for households in the middle 60 percent, and only 0.3 percent for households in the bottom 20 percent,” found a Brookings Institution study.

Making the rich richer will cost the Treasury an arm, a leg, and the better part of a torso.

“Combined with a minimal but necessary fix to the government’s Alternative Minimum Tax, making the tax cuts permanent would reduce federal revenues by almost $1.8 trillion over 10 years–and that’s in addition to the $1.7 trillion of revenue losses already locked into law.”

$1.8 trillion. Again, allow me to remind you: $1.3 trillion is the amount we need to stave off imminent financial catastrophe.

That sound you hear is the door breaking down. The marshal is coming down the hall. Get off the computer. Fix the problem. Get out of Iraq and Afghanistan. Let the tax cuts expire.

COPYRIGHT 2008 TED RALL

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September 29, 2008

Cartoon for September 29

Weeks after Sarah Palin became vice presidential nominee to a man who would become our oldest president in history, she still hasn’t fielded questions at a press conference.

September 27, 2008

Cartoon for September 27

We still have money for our nation’s top priority: torture.

September 25, 2008

The Morning After

Actually, the evening after. After the election, that is.

I’ll be joining Lizz Winstead and other pundits to discuss the bloody aftermath at the 92nd Street Y on the Upper East Side of whatever’s left of Manhattan. Info, including advance ticket purchase, is below:

“We Have a Winner”
Wednesday, November 5
8:00 PM
92nd Street Y
New York NY
Moderated by “The Daily Show” co-creator and acclaimed political humorist Lizz Winstead, “We Have a Winner” will take a look back, forward (and sideways) at the Presidential Election and State of the Union with some of the most insightful and hilarious political minds today – with Roseanne Barr, Monica Crowley, Robert A. George, Baratunde Thurston and Ted Rall.
Click here to buy tickets.

September 24, 2008

Cartoon for September 25

People need help. Banks get it instead. The only nice part is, it’s interesting to see rank capitalism, and its perverse relationship with government, exposed in all its glory.

September 23, 2008

THIS WEEK’S SYNDICATED COLUMN: BUSH, CONGRESS PARTY LIKE IT’S 1929

Save People, Not Bankers

Seat belt laws embolden drivers to drive faster, causing a net loss of life. It’s the law of unintended consequences, also known as the Peltzman effect: the safer you feel, the more risk you take.

Sam Peltzman, the economist after whom said effect is named, says that government bailouts like the Bush Administration’s $700 billion attempt to stave off economic collapse are no more effective than “pouring money down a rat hole.” Moral hazard–rewarding reckless people and companies while allowing responsible ones to fail (hello, Lehman Brothers) may avert one economic crisis while planting the seeds of a worse one down the road.

“In the long run,” says Peltzman, “you’re just laying the groundwork for more because you’re giving people an incentive to take too much risk, where a big part of the risk gets laid off on the taxpayer.”

I don’t think much of the laissez faire, magic-of-the-marketplace, let-’em-eat-flat-screens school of Darwinian economics flogged by the University of Chicago, where Milton Friedman once reigned supreme and Peltzman is a professor emeritus. But I think he has a point here–with a twist. Government intervention is appropriate and necessary during tough economic times. But not if you bail out corporations.

The 1979 Chrysler bailout is a perfect example. Jimmy Carter’s $1.2 billion loan sent an unwholesome message to Detroit: don’t change a thing. If you get into trouble, the government will rescue you. The Big Three kept selling gas guzzlers. Nimble foreign automakers that spent the 1980s and 1990s developing hybrid technology are crushing them now.

More recently, the government bailed out the airlines after 9/11, notably by limiting negligence lawsuits by relatives of victims. It’s hardly a coincidence that the major carriers haven’t done much to improve security. Similarly, it’s hard to see how U.S. taxpayers will benefit by lending my former employer Bear, Stearns $29 billion to facilitate its sale to JPMorganChase. Bear’s corporate culture, reeking of the testosterone-drenched arrogance of its seven-figure-salaried executives, led it to fib about the worth of the collateralized debt obligations that supposedly guaranteed the payment of its subprime mortgage hedge funds. When traders learned the truth, confidence in the firm collapsed, sealing its fate.

Or would have, if the feds hadn’t come along. Letting Bear go under might have prompted caution among future wannabe Masters of the Universe. If capitalism survives this debacle, we’ll see more like it as a result.

Democrats are asking for some laudable amendments to Bush’s plan. They want to give bankruptcy court judges the power to reduce monthly mortgage payments, cap executive salaries, and increase Congressional oversight of the financial services companies involved. Good ideas, but none go far enough. Besides, they’d expire at the end of 2009. Does anyone think the economy will be booming by then?

At least four million people–nine percent of all homeowners–have fallen behind on their payments or are in foreclosure. And 6.5 million more could go down the tubes next year. “People with poor credit have been defaulting on mortgage payment in large numbers for more than a year,” says Douglas McIntyre, an editor at 247wallst.com. “Now the problem has moved to homeowners with reasonably good credit.”

Each family that loses their house creates a ripple effect. Empty homes lower their neighbors’ property values. Some dispossessed workers, unable to find a new place near their jobs, become unemployed. Savings are wiped out. Forced to move, parents pull children out of school, disrupting their education in ways that will hurt them and society decades from now. Banks are burdened with the costs of maintaining property they don’t want until they can unload it at a reduced price–further depressing real estate prices. Society, even renters, has an interest in preventing foreclosures.

The unpredictable nature of the current real estate price plunge has created another set of problems. Tobin Harshaw of The New York Times sums up a complicated mess as nicely as anyone I’ve read: “There are a whole bunch of mortgage-backed securities, the value of which is not known, because nobody knows what the default rates on the underlying mortgages are likely to be.” Investors can’t set prices, much less invest, without reliable information. So credit markets have seized up.

Americans are peering into the abyss, a.k.a. the End of Everything As We Know It. So whom are we counting upon to save the day? The same Bushist dead enders and Congressional layabouts who let Osama bin Laden live and New Orleans die.

So yeah, we’re toast. But let’s talk about what should be done:

1. Declare a Bank Holiday. As FDR did in 1933, Bush should shut down the financial system–banks, stock and currency exchanges–for a week or so to avoid panic selling, cool down market volatility, and give Congress time to craft carefully considered legislation rather than the spend-a-thon slapped together over the last Black Weekend. It bodes ill that liberals and conservatives alike have so little faith in the plan. Take some time; get it right.

2. Reinstate the Glass-Steagall Act. The current mortgage meltdown couldn’t have happened without Senator Phil Gramm, now a key economic advisor to John McCain. In 1999 Gramm led the repeal of the Depression-era legislation that had separated commercial from investment banks, allowing Citigroup and other companies to sell mortgage-backed securities that blurred the line between Main Street and Wall Street. Let the financiers handle derivatives, structured investment vehicles, and other arcane financial instruments. Banking should return to its dull, staid roots as a business that pays interest on deposits and collects interest on loans without imperiling those deposits.

3. Bail out homeowners, not lenders. Stop doling out hundreds of billions, even trillions, of dollars, to a few banks and issue the cash to the disaggregated tens of millions of Americans who will spend the money and stimulate the economy instead. Which brings us to…

4. Abolish predatory interest rates. Millions of people in danger of losing their homes would not be in trouble if their banks weren’t charging usurious interest rates. Every primary homeowner should be automatically refinanced to a floating 30-year mortgage, with the interest rate set at 1/4 percent point above the fed funds borrowing rate. Similarly, all consumer credit card debt should be refinanced to prime plus 1/4. The same goes for student loans. Secondary and vacation homes don’t qualify. Unemployed homeowners can apply for hardship deferrals, allowing them to skip mortgage payments until they find a job. Payday loans ought to fall under similar guidelines. In Utah, the average interest rate on payday loans is 521 percent! Of course, reforms will cut deeply into lenders’ earnings. Many banks would be at risk of going under, which is why…

5. Banks that fail should be nationalized. As should investment banks and any other institution that needs federal taxpayer money to avoid failure. If we the people fund ’em, we the people own ’em. If and when the economy recovers, the Treasury collects the spoils and cuts our taxes.

6. Withdraw from Iraq and Afghanistan, and slash defense spending. Christopher Whalen, managing director of Institutional Risk Analytics, tells USA Today the government may have to cover $1.4 trillion in bad mortgage debt. That’s a lot of money, but I have good news: we can get it. In 2007, the Congressional Budget Office estimated that the occupations of Afghanistan and Iraq would cost at least $2.4 trillion through the next decade–even more if Obama or McCain keep their pledges to send more troops to Afghanistan next year. Cutting our losses and cutting the $515 billion a year Defense Department appropriations budget would help finance the clean-up of the mortgage meltdown.

(C) 2008 Ted Rall, All Rights Reserved.

September 22, 2008

Cartoon for September 22

If I were John McCain, I wouldn’t turn my back on my extremely ambitious running mate.

September 20, 2008

Cartoon for September 20

Just wait…a few years from now, we’ll look back at George W. Bush and wonder why we were so hard on him.

September 18, 2008

TED RALL GETS ANIMATED

Here it is–my first animated editorial cartoon: “President Obama’s First Day.” It is also available at YouTube.

I wrote, drew and designed the characters for “President Obama’s First Day,” a tongue-firmly-in-cheek look at liberal Democrats’ fantasies of how an Obama Administration would instantly change things for the better.

The animation was done by David Essman (see biography below).

There are some great Flash-based edittoons out there, but they take a different approach than I do. I see each animated cartoon as a skit, as a mini TV show. I hope people enjoy watching ‘Obama’s First Day’ as much as David and I enjoyed making it.

I plan to continue releasing Web-based animated cartoons.

Bios, for those who care:

Ted Rall, 45, is President of the Association of American Editorial Cartoonists. A nationally-syndicated editorial cartoonist for Universal Press Syndicate, Rall’s cartoons have appeared in The New York Times, Washington Post, Village Voice, Los Angeles Times, Time, Newsweek and more than 200 other publications. He was a Pulitzer Prize finalist in 1996, and twice won first place in the Robert F. Kennedy Journalism Awards.

David Essman is a 22 year old animator, currently studying at The
School of the Art Institute of Chicago. His films have been screened
across the country at film festivals including San Francisco Shorts,
Animation Block Party, and the St. Louis International Film Festival.

September 18, 2008

Welcome to New York, Sarah Palin.
posted by Susan Stark

I just read the morning paper on my way to work. It appears that Sarah Palin is going to visit my fair city. She will have her hair done, and dine at many fine restaurants here.

In honor of her visit, I would like to recommend two venues that she simply cannot miss.

One is the Museum of Natural History. There, she will see and wonder in awe at a stunning display of evolution at work. Roughly a million schoolchildren visit the museum each year, and they benefit from it tremendously.

The second venue takes place during the night. I highly recommend Ms. Palin attend a Session of Exhibitionism. There, she will watch people having sex without pregnancy as a consequence of such activity. It will truly be an eye-opening experience for her.

Many of the young women and men who perform at exhibition shows are putting themselves through college, and could benefit from her support.

Have a great time, Sarah!