The Talking Dog

December 22, 2011, Profiles in political courage

Usually, I devote the "profiles in political coverage" tag to "my party" doing things that I oppose (such as implementing totalitarianism in the name of "national security"). In the present case, I'll note, for a change, the somewhat unusual occasion of "their party" caving under immense political pressure, in this case, the House Republicans agreeing to a compromise two-month extension of the "payroll tax holiday." The Republicans, of course, are supposed to be the party of reduced taxation; this little wing-ding, however, demonstrated that the Republicans have no problem adding to the tax burden on labor-- they only want income not earned by human effort, (such as from "investment," or more specifically, from rentier activity, inheritances, financial-sector-theft, fraud and so forth..). that kind of privileged income shouldn't be taxed at all, sayeth the Republicans.

Alas, the House Republicans learned that, even in the United States, as popular as this sentiment might be in Palm Beach, the national sense of... what's that word... oh yes... FAIRNESS... dictates that a policy of effective tax increases on all working people (even rich ones), while simultaneously refusing any increased tax burden on those in the best position to pay such taxes (and who have, in a wildly disproportionate way, been the only people to benefit from what's left of our ersatz economy)... is politically "bad."
So bad, that the President, who was finally the worse for wear in terms of approval polling numbers, suddenly got a dramatic bounce (there is no corresponding "reduction" in Congressional Republican approval ratings, which are pretty much in the single-digits by this point).

As wage earners, of course, even we at Stately Dog Manor were already facing the possible additional hit of expiration of the social security "tax holiday" (though, we are, at least, more fortunate than perhaps 22% of the workforce, we at least remain employed). But let's not kid ourselves: our economy is doomed, and it's doomed simply because capitalism in the United States is now dead (along with the health of, and hence any hope in, our political system.)

The great Charles Hugh Smith gives us an excellent example of the mechanisms of just why and how capitalism is dead, specifically, the decoupling of risk from those who should properly bear it, in this case, the context of student loans as debt peonage. The proper risk on lending is best borne by... wait for it... the lender. The lender is duly rewarded for assuming this risk (which the lender is in the best position to assess by examining credit-worthiness, collateral, etc.) with its interest rate. Alas, in two of the largest categories of lending in this country, home mortgage borrowing and student loans (the latter having recently exceeded even credit cards in dollar volume), the federal government has interfered in both, in insidious ways. Of course, the first way-- decoupling mortgage loan risk from reward-- was an integral part of the 2008 financial meltdown that, we were told, required a multi-trillion dollar bail out of the financial sector. And, as Charles observes, similar decoupling of proper risk, from the lender to students (and ultimately, taxpayers), with the inability to discharge the loans in bankruptcy to boot, and, thanks to the federal interference in the operations of the market, absurdly overpriced higher education (overpriced because of the plethora of federally backed debt to pay for it)... we are looking at a "lost generation" of student debt serfs. Of course, I could go on and say that this "risk/reward decoupling" is the fundamental problem with virtually all government-funded services that are not provided directly by employees of the government, be it military contractors like Halliburton, Bechtel or Blackwater, or private Medicare/Medicaid providers, or the myriad of consultants that now do everything that government employees used to do, are obscene and inappropriate government interferences in the market, because (1) government services by government employees
ARE ACTUALLY CHEAP AND EFFICIENT because they need not have executive bonuses, shareholder dividends and so forth built in to their cost, and (2) no business should be entitled to a guaranteed income... "business" is supposed to be about seeking market rewards for taking market risks and not about politically connected insiders getting sweetheart can't-lose contracts. [Solyndra, I ESPECIALLY mean situations like you...] And of course... no comment on the bank bailouts.

But I digress. We must not forget that this country was founded largely on the basis of a tax revolt. We can fast forward a couple of hundred years, and let's just say that 160 million Americans who would be effected by a higher payroll tax are, surprise, surprise, pissed that the party that only exists, it would seem, to lobby for tax reduction... actually seems to want to increase increase their taxes. Needless to say... the politics of that were "bad."

And so... this has been... "profiles in political courage."