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Partisanship: Blame Grover Norquist, Not The Founders

Everyone recognizes that Washington is not working the way it should. This  has led some on the left, like Harold Meyerson, to question whether the Founders “screwed  up.”

Many on the right, meanwhile, are promoting radical changes to our  constitutional system. They talk about a version  of a Balanced Budget Amendment, which would require a super-majority for most  changes in financial policy. This would enshrine in our Constitution the right’s  do-little government philosophy.

But the Constitution is not the problem. If we want to get  Washington working again, we should listen to the Founders — not blame them for  problems of our own making or change the ground rules of the system of  government they bequeathed to us.

True, the Founders established a deliberative democracy, with a series of  checks and balances designed to prevent the majority from running roughshod over  the rights of political minorities. But these checks and balances have served  our nation well.

The problem is not the democratic system bestowed upon us by George  Washington, Alexander Hamilton and James Madison. The problem is the additional  obstacles to action – the filibuster, hyper-partisanship,  and special  interest pledges – that our Founders would have found abhorrent.

Our Founders struck a delicate balance  between the promotion of majority rule – the essential predicate for a  democratic government of “We the People” – and the desire to protect minority  rights and prevent the “tyranny of the majority.” The Constitution is designed  to delay and temper majority rule while allowing a long-standing majority to get  its way.

So, for example, the Constitution staggers the election of senators so that  only one third of the Senate can change hands in any one election. As a result,  it usually takes more than one election for any one party to gain a governing  majority.

Modern politicians have placed layer after layer of lard on this deliberative  system of government, ultimately producing the gridlock now plaguing Washington.  The Senate Republicans now use the filibuster rule as a virtual requirement.  Every piece of legislation must enjoy a super-majority of 60 votes in the Senate — meaning a determined minority can permanently stop the majority from getting  its way.

President George Washington, in his farewell  address to the nation, warned about just such “alterations” to our  constitutional system. He said this would “impair the energy of the system.”

Washington also decried political parties. He passionately warned the nation  against any effort “to put in the place of the delegated will of the nation the  will of a party.”

While political parties were forming and solidifying even as Washington  uttered these words, our modern politicians have enshrined hyper-partisanship  through tricks like the “majority of the majority” rule, whereby the House  speaker will only bring to the House floor legislation that has the support of  the majority of his political party.

It is hard to imagine a more powerful example of the precise  party-over-country danger Washington warned us about.

Washington may have had the likes of Grover Norquist in mind when he warned  that some men “will be enabled to subvert the power of the people and to usurp  for themselves the reins of government.”

Even anti-tax Republicans, like Sen. Tom Coburn (R-Okla.) and Rep, Frank  Wolf, have now decried the oversized role Norquist’s no new taxes pledge played  in forcing the debt ceiling showdown and helping to prevent any solution that  would have included new revenues. Coburn and others have warned their colleagues  against putting Norquist’s “no–tax” pledge over their oath to support the  Constitution and to serve “we the people” – not Norquist or any other special  interests.

Washington today has serious problems, but we should not blame the city’s  namesake for them. Rather, politicians of both parties should support a reform  agenda designed to remove from our political system the modern procedural  obstacles that have produced our current gridlock.

Maybe even in these divided political times we can all agree that when  casting blame for what ails Washington, the fault it not with George Washington  and our other Founding Fathers. It’s with the causes of our current gridlock – including figures like Norquist and his no-tax pledge.

By: Doug Kendall, Opinion Contributor, Politico, October 22, 2011

October 24, 2011 Posted by | Class Warfare, Congress, Democrats, Elections, Equal Rights, GOP, Government, Ideologues, Ideology, Lobbyists, Middle Class, Republicans, Right Wing, Teaparty | , , , , , , , , | Leave a comment

State Loan Program That Rick Perry Touted Had To Be Bailed Out

Gov. Rick Perry has anchored his presidential campaign to his claims of  creating jobs.

With no business record of his own, Perry must contrast his ability to create  jobs with public money against the records of two front-runners, Mitt Romney  and Herman Cain, who tout credentials as private employers.

His GOP opponents already have sniped at his gubernatorial record, saying  Perry inflates his job-creation numbers and takes credit for a business climate he inherited. Perry’s efforts to create jobs and spur agribusinesses as the state’s agriculture commissioner during the 1990s might provide even more fodder for the opposition.

Over his eight years as Texas’ farmer-in-chief, Perry oversaw a loan guarantee  program with so many defaults that the state had to stop guaranteeing bank  loans to startups in agribusiness and eventually bailed out the program with  taxpayer money.

The state auditor panned Perry’s claims of creating jobs and criticized Perry  and his fellow board members at the Texas Agricultural Finance Authority for  not following their own lending guidelines.

In some instances, the auditor said, Perry and the authority guaranteed loans  to applicants with a negative net worth or too much debt. Citing growing debts, the auditor finally suggested that state officials consider dismantling the program.

Even as the first alarms were sounded, Perry defended the program, saying no  taxpayer money was at risk, blaming others and claiming he had fixed it.

It only got worse.

By 2002, Perry’s successor, Agriculture Commissioner Susan Combs, a  Republican, stopped making loans as the percentage of bad loans neared 30  percent.

By 2009, her successor, Agriculture Commissioner Todd Staples, also a  Republican, asked the Legislature to pay off the loan guarantees with a $14.7 million appropriation. The finance authority could no longer afford the $541,000 to cover the annual interest on the bad debts, almost all of which dated back to Perry’s tenure.

“It’s bad,” Staples told the American-Statesman at the time. “Unfortunately,  taxpayers are on the hook for something that happened as long ago as 1987.”

In effect, Perry, as governor, signed his own government bailout when he  approved the 2009 appropriations bill.

The Perry campaign did not respond to questions about whether Perry, as  president, would use public money in economic development programs and what  lessons he learned from his experience guaranteeing risky business loans  with public money.

Mired in partisan politics

When the Legislature created the Texas Agricultural Finance Authority in 1987,  the intent was to boost the state’s agricultural economy by selling state-backed bonds to guarantee bank loans to entrepreneurs who could not get commercial loans. The goal was to create small businesses and jobs by  processing — rather than simply growing — Texas agricultural products.

The program immediately got mired in partisan politics, with Agriculture  Commissioner Jim Hightower, a Democrat, on one side, and the Republican  members of the finance authority appointed by Gov. Bill Clements on the  other.

The impasse ensured that no loans were made during Hightower’s term.

In 1990, Perry campaigned on a promise to create jobs and expand the rural  economy by making loans to agribusiness startups that would process the  state’s agricultural products.

Clements’ appointees to the finance authority board gave Perry, a board  member, sole authority to guarantee loans before newly elected Gov. Ann  Richards, a Democrat, could replace them.

Under the program, the state would guarantee 90 percent of a lender’s loan — up to a maximum of $5 million — to an applicant.

Entrepreneurs lined up for money to spin cotton into yarn, process meats,  develop cotton insulation, market canna bulbs to wholesale nurseries and sell pinto beans as a ready-to-eat frozen meal, to name a few.

‘This has not cost Texans money’

Perry had made four loan guarantees for $5.8 million by the time the attorney  general ruled that he had to share that authority with his fellow board  members. Even then, Perry and his staff drove the decisions.

Mary Webb, a Richards appointee who joined the finance authority as chairwoman  in 1992, said the part-time board members had to rely on Perry’s staff at  the agriculture department when screening loan applications.

“They did the legwork,” she said. “We looked at the deals to  see if they fit with the legislation: Would they create jobs and help the  agriculture community?”

By the time Webb left the board in 1995, she said she knew a couple of loans  were in trouble. She said she learned only later the scope of the problems with other loans.

The first loan guarantees were financed by selling $25 million in bonds.

Twice, in 1993 and 1995, Perry campaigned for voters to approve more bonding authority.

Perry claimed the first two years of the program had created 4,100 jobs and  pumped $390 million into the economy by guaranteeing loans to 47 companies.  He predicted more than 40,000 jobs could be created with the additional  bonding authority.

He didn’t mention troubled loans as he touted the program’s virtues at a 1993  Capitol press conference: “We think that this Texas Ag Finance  Authority is, without a doubt, one of the finest programs that the Texas Legislature, that the citizens of Texas have ever gone forward with.”

At another stop, Perry said, “We can truly say it has not cost the taxpayers of Texas any money.”

Voters turned him down in 1993, but Perry finally won an extra $200 million in  bonding authority two years later.

“This is one of the few government programs that truly has worked,”  Perry said. “This has not cost Texans money.”

In January 1997, State Auditor Lawrence Alwin first alerted state officials,  saying Perry and the board had violated their own lending guidelines.

He said 10 of the 48 companies had defaulted, and six more were in trouble.  The first bad loans were written off as uncollectible in 1995, according to  records.

Alwin also debunked a $40,000 report by a state-paid consultant claiming the  program had created or retained more than 5,000 jobs at a cost of $412 per  job as well as contributing $600 million to the economy.

The consultant’s data, which Perry submitted to the Legislature, were “unverifiable,  incomplete, untimely, and inconsistent” and based on unrealistic  assumptions about job creation, Alwin concluded.

A year later, Alwin warned that the situation had gotten worse. The program  was $5.7 million in the red because of bad loans.

The issue hit the newspapers.

Perry and his lieutenants defended the program.

Deputy Agriculture Commissioner Larry Soward told The Dallas Morning News that  the audit reflected a number of bad loans made early in the program to  farmers and ranchers trying their first business ventures.

“The business acumen of the people behind them might not have been as  strong as possible,” Soward said.

But he insisted the program would rebound: “The fact that there is a negative balance does not mean the program is in trouble.”

Perry echoed a similar refrain in a guest column in the Amarillo Daily News.

“By their very nature, TAFA loans are considered higher risk. Because of  this, some defaults were inevitable and a negative balance was expected in the early years of the program,” he wrote.

He blamed the problems on “some unfortunate decisions made by the previous TAFA board early in the program.”

Perry promised the problem was fixed. “Today, TAFA is on solid footing with a positive balance projected by 2010,” he wrote.

He reminded readers that the loans were funded by debt — commercial paper: “No  taxpayer money has ever been used to make TAFA loans.”

In 1998, Perry was elected lieutenant governor, and Combs succeeded him as  agriculture commissioner.

She talked of expanding the loan guarantee program to other borrowers beyond  food and fiber processors. But she asked Alwin to do a follow-up audit.

His warning was prescient. He said a program that guaranteed loans to people  who typically couldn’t qualify for commercial loans would have a hard time  finding enough good loans to generate the income to offset the losses from the bad ones.

In 2002, Combs and the agricultural finance authority bowed to that reality,  suspending any new loans.

Twenty-nine of 102 guaranteed loans defaulted, almost all of them during  Perry’s tenure, according to the records provided this month by the agriculture department.

While the majority of the loans were in good standing, the majority of the  original $25 million — $14.7 million — was bad debt. Just as the auditor  warned, the income from the good loans could not generate enough cash to  make the program self-sustaining.

“We hit a brick wall,” Staples said in 2009.

By: Laylan Copelin, American-Statesman Staff,, October 22, 2011

October 24, 2011 Posted by | Banks, Conservatives, Corporations, Elections, GOP Presidential Candidates, Public, Republicans, State Legislatures, States, Taxpayers, Teaparty, Voters | , , , , , , , , , | Leave a comment

“Angry And Unstable”, The Birthers Eat Their Own

Say what you will about the birthers, but don’t call them partisan.

The people who brought you the Barack Obama birth-certificate hullabaloo now have a new target: Sen. Marco Rubio of Florida, a man often speculated to be the next Republican vice presidential nominee. While they’re at it, they also have Bobby Jindal, the Republican governor of Louisiana and perhaps a future presidential candidate, in their sights.

Each man, the birthers say, is ineligible to be president because he runs afoul of the constitutional requirement that a president must be a “natural born citizen” of the United States. Rubio’s parents were Cuban nationals at the time of his birth, and Jindal’s parents were citizens of India.

The good news for the birthers is that this suggests they were going after Obama, whose father was a Kenyan national, not because of the president’s political party. The bad news is that this supports the suspicion that they were going after Obama because of his race.

When I heard of the birthers’ latest targets, from a participant in my online chat, I figured it was a joke. But, sure enough, Alex Leary of the St. Petersburg Times reported that various bright lights of the birther community – Mario Apuzzo, Charles Kerchner and Orly Taitz – were casting doubt on Rubio’s eligibility.

“Senator Marco Rubio is not a natural born citizen of the United States to constitutional standards,” Kerchner writes on his blog. “He was born a dual citizen of both Cuba and the USA. He is thus not eligible to serve as the president or vice president.” A few months ago, Kerchner used the same logic to proclaim, “Jindal is NOT a natural-born citizen of the United States. His parents were not U.S. citizens when he was born.”

This relies on a rather expansive interpretation of “natural born.” At this rate, it is surely only a matter of time before birthers begin to pronounce candidates ineligible if they were born by C-section, or if their mothers were given pain medications during childbirth. Will Donald Trump demand to see their medical records?

The absurd accusations of the birthers by themselves won’t stop Jindal or Rubio from becoming president. There are far more serious impediments in their way—most recently a devastating report by The Post’s Manuel Roig-Franzia proving false the central narrative of Rubio’s political rise: that he is the son of exiles who fled Cuba under Castro. In fact, his parents left the island, apparently for economic reasons, 21/2 years before Castro came to power.

But the wild new turn the birthers have taken should serve as a timely reminder to Republican leaders that they need to push back more forcefully against the angry and the unstable in their ranks. Too often, they have done the opposite. Jindal, for example, encouraged the birthers this year when he announced his support for legislation that would require candidates for federal office to show proof of their U.S. birth before being allowed on the ballot in Louisiana. It was, as many pointed out, a sad gesture for a man born Piyush Jindal.

Similarly, few of the Republican presidential candidates have condemned the spectators at the presidential debates who applauded the death penalty, the idea that those without health insurance should be left to die and the sentiment that the jobless are to blame for being unemployed. And it seems doubtful that we’ll hear from Republican leaders about Tea Party Nation’s new effort to get business leaders to pledge not to hire people until the Democrats’ “war against business” ends.

Of course, extremism isn’t a uniquely Republican problem. My colleague Jennifer Rubin, noting a number of anti-Semitic messages seen at Occupy Wall Street events, asked last week: “Respectable politicians and media outlets, where is the outrage?” There’s no evidence that the demonstrators blaming Jewish bankers for the nation’s troubles are anything but a small minority. But that doesn’t excuse public figures from an obligation to push back against the extremes.

The higher prominence of loons of all stripes is a natural consequence of a political system that has lost every last vestige of a political center. But in the Obama age, this is particularly a problem for Republican lawmakers who are cowed into silence by the fear that any criticism of the crazies will invite a primary challenge. Now that the birthers have begun to eat their own brightest prospects, perhaps Republican lawmakers will finally feel compelled to say something.

By: Dana Milbank, Opinion Writer, The Washington Post, October 21, 2011

October 24, 2011 Posted by | Bigotry, Birthers, Conservatives, Democracy, Donald Trump, Elections, GOP, Ideologues, Ideology, Media, Racism, Right Wing | , , , , , , , , | Leave a comment

The GOP’s Latest Tax Gimmickry: Soak The Poor

It’s one of the strangest things in our politics: The only “big” ideas Republicans and conservatives seem to offer these days revolve around novel and sometimes bizarre ways of cutting taxes on rich people.

Given all the attention that Herman Cain’s nonsensical and regressive 9-9-9 tax plan has received, the Republican debates should have as their soundtrack that old Beatles song that droned on about the number nine.

Now, Texas Gov. Rick Perry hopes to pump up his campaign with a supposedly bold proposal to institute a flat tax, which would also deliver more money to the well-off. Perry plans to outline his proposal this week, but he has already touted it as a sure-fire way of “scrapping the 3 million words of the current tax code.”

There is absolutely nothing new about this idea, and candidates who pushed flat taxes in the past saw their campaigns flat-line, most prominently businessman Steve Forbes in 1996 and again in 2000. Politically, the idea falls apart rather quickly when middle-income voters realize that its main effect is to cut taxes on the financially privileged while usually raising them on Americans who have more modest incomes.

Note to Perry: Voters are shrewd in figuring out whether tax proposals really benefit them. That’s why raising taxes on millionaires — the exact opposite of what Cain and Perry want to do — wins support from a broad majority.

But the more interesting question is: Why are today’s Republicans so enthralled by tax gimmicks? Their party, after all, was once innovative in thinking about affirmative uses of government. The Grand Old Party instituted the Homestead Act and created land-grant colleges, the interstate highway system, student loans, the Pure Food and Drug Act and even a prescription drug benefit under Medicare.

It was Richard Nixon who supported laws establishing the Environmental Protection Agency and the Occupational Safety and Health Administration. In signing the OSHA bill, Nixon called it “one of the most important pieces of legislation, from the standpoint of 55 million people who will be covered by it, ever passed by the Congress of the United States, because it involves their lives.” Yes, government regulations save lives, a view now heretical in the GOP.

Republicans have boxed themselves into a rejection of both their own traditions and the idea that government can do any good. Thus they have confined themselves to endless fiddling with the tax code. Almost everything conservatives suggest these days is built around the single idea that if only government took less money away from the wealthy, all our problems would magically disappear.

There is a history to this. The Republican fixation on taxes dates to the mid-1970s, when supply-side economics began taking hold. The late Jude Wanniski, an editorial writer for the Wall Street Journal who campaigned indefatigably on behalf of lower marginal tax rates, came up with the “Two Santa Clauses” theory. He argued that if Democrats earned support by giving voters benefits through government programs, Republicans should play Santa by giving people tax cuts.

Wanniski sold his tax ideas to Jack Kemp, one of the most ebullient political figures of his generation, who in turn sold them to Ronald Reagan. Reagan made Kemp’s 30 percent tax cut (co-sponsored with Sen. Bill Roth) a centerpiece of his 1980 campaign. The political scientist Wilson Carey McWilliams perfectly described the result in a 1981 essay. “After years of learning that ‘you don’t shoot Santa Claus,’ ” he wrote, “the Republicans decided to nominate him.”

But Republicans have a problem now. In the Kemp-Reagan days, they were selling across-the-board tax cuts. Most of their benefits flowed to the rich, but almost everyone got a piece. Today, many Republicans complain resentfully that less prosperous Americans don’t pay enough in taxes — overlooking the fact that citizens who don’t pay income taxes still shell out a significant share of their earnings in payroll, sales and (directly or through their rents) property taxes.

Reagan’s optimism has thus been replaced by crabby put-downs of the less affluent. Perry said it directly in his announcement speech: “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.” Considering the other injustices in our society, this seems an odd and mean-spirited obsession.

“Tax the poor” is a lousy political slogan. That’s why Cain’s 9-9-9 plan  and Perry’s flat tax are doomed to fail. Among conservatives, Santa Claus has given way to Scrooge.

By: E. J. Dionne, Opinion Writer, The Washington Post, October 21, 2011

October 24, 2011 Posted by | Class Warfare, Congress, Corporations, Democrats, Economic Recovery, Elections, GOP, GOP Presidential Candidates, Government, Ideologues, Ideology, Income Gap, Middle Class, Right Wing, Taxes, Teaparty, Voters | , , , , , , , , | 1 Comment

Job Creation: Small Isn’t Always Beautiful

I challenge you to find a stump speech by a politician running for any office from dog catcher to president that doesn’t invoke the importance of small businesses.

That’s not necessarily a bad thing. It’s a hat tip to American entrepreneurialism, evoking images like that of Steve Jobs planting a seed in his garage that grew into an amazing Apple orchard. Besides, don’t most people work for small businesses, and aren’t such businesses the engine of job growth?

Actually, no. In what may be the most misunderstood fact about the job market, although most companies are small — according to 2008 census data, 61 percent are small businesses with fewer than four workers — more than two-thirds of the American work force is employed by companies with more than 100 workers. You can tweak the definitions, but even if you define “small” as fewer than 500 people (as the federal government does, basically), you still find that half the work force is employed by large businesses.

It’s even more stunning when it comes to payrolls: 57 percent of total compensation is paid out by companies of 500 or more employees, with most of that coming from the largest, those with at least 10,000 employees. And new research by the Treasury Department finds that small businesses — defined as those with income between $10,000 and $10 million, or about 99 percent of all businesses — account for just 17 percent of business income, and only 23 percent of them pay any wages at all.

But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.

It’s unlikely such findings will change politicians’ speeches trumpeting small businesses. But if we want to get our job market back on track, they should inform our policy thinking. For example, it’s not only the case that start-ups are of particular importance to robust job growth. They’ve been creating fewer jobs over the last decade. Employment at start-ups fell by almost half, and those losses predated the “Great Recession” — probably one reason job growth was so lackluster over the last decade’s expansion.

Economists do not yet have a good answer as to why start-ups and surviving young companies are creating fewer jobs, but it may have something to do with “allocative inefficiency.” Too many resources flowed to financial engineering in the last decade, and too few went to R & D and innovation outside of the financial sector. The decline of American manufacturing plays a role here as well, as the sector has historically accounted for 70 percent of job-creating private-sector R & D, often in partnership with start-ups and small suppliers.

This isn’t to say that public policy should abandon small businesses. Many face distinctive hurdles compared with large businesses: they have tighter profit margins and thus less room for mistakes, they have diminished access to credit markets and, even with creditworthy borrowing records, many say they’re not getting the loans they need. Small manufacturers often have less access to export markets, and, with emerging economies growing a lot faster than advanced economies, that’s a big disadvantage.

Yet the sector’s primary lobbying group — the National Federation of Independent Business — tends to fight less for these pragmatic policies and more for the standard conservative agenda of lower taxes and deregulation. Indeed, the group has become a purely partisan operation, fighting more for Republican electoral victory than small-business growth. For example, it opposed the president’s jobs bill, even though independent analysts estimated it would significantly increase economic demand, and the federation’s own survey shows that “poor sales” — a k a weak demand — is a much bigger problem for its members than taxes or regulations.

The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it’s really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise — and too often, noise that has little to do with what this economy really needs.

By: Jared Bernstein, Op-Ed Contributor, The New York Times, October 23, 2011

October 24, 2011 Posted by | Big Business, Congress, Conservatives, Corporations, GOP, Middle East, Republicans, Right Wing, Teaparty | , , , , , , , , | Leave a comment


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