The Weiner Component #147 Part 1 – Development of Money & Its Uses

Various Federal Reserve Notes, c.1995. Only th...

Various Federal Reserve Notes, c.1995. Only the designs of the $1 and $2 (the latter not pictured) are still in print. (Photo credit: Wikipedia)

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Probably the most misunderstood entity that exists today is money, currency, what it is and all the ways it works in the existing societies.  The problem with money is its history, what it was and is, and how the concept is generally understood by most people today.

 

Originally money was an object of value like gold, silver, or some other precious entity.  Presumably, in places like early Phoenicia, well over two thousand years ago, goods were traded for precious metals.  This was done with scales; gold or silver would have a fixed value and an equal value of goods would be traded for a set amount of the precious metal.  Eventually someone or a group of someones came up with the idea of stamping a set weight on the gold and coins came into existence.  They were gradually refined, as time went on, with stamped pictures of the rulers profile and with these specific coins with set amounts of money came into existence.  From this, over the centuries, with occasional breaks in the sequence, the concept and use of money, set amounts of gold or silver, developed.  It was until the end of the first third of the 20th Century an exchange of value for value, the goods and services for the coins (money).  Money was as good as gold because it was gold.

 

The problem that developed over time was that the amount of gold and silver available for currency was dependent upon mining discoveries or exploitations of different parts of the world.  For example in the 16th Century Spain gutted the New World of its gold supply causing a 90 year period of inflation in Europe that lasted through most of the fifteen hundreds.  By the 17th Century there was again a shortage of the gold supply in Europe and not enough money (gold coins) available to supply all the monetary needs for economic growth on the Continent.  Consequently the value of gold rose and periods of deflation occurred, the value of the gold coins increased.

 

The problem here was that there were two totally different processes which were supposed to balance each other but never did.  Precious metals had to be discovered and mined at the same rate that business between and within nations expanded.  This never happened.  Added to this were economic systems like mercantilism, which hoarded gold by creating royal monopolies within European nations.  Economically much was not understood then.  And the amount of gold was never enough to cover all the needs for monetary growth.

 

The use of paper came into existence largely during the Renaissance with letters of credit, which allowed simple transfers of large amounts of currency.  This would eventually become paper money and checks.  Paper money was initially issued by banks and could, presumably, always be exchanged for gold or silver.  Of course if everyone decided to exchange their paper money for gold at the same time there would be a run on the bank and it would go bankrupt since generally they issued a lot more paper than they had gold.

 

Paper money was also issued by governments during times of crises when gold was in short supply, like the United States government did during the Revolutionary War or the Northern and Southern Governments during the American Civil War.  They did not have adequate gold or silver supplies to pay the cost of the wars.  Since the South lost the Civil War its money became worthless while the Northern greenbacks were eventually redeemed for gold coins.

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Up until 1933, when Franklin D. Roosevelt had assumed office as President, money was mostly gold and silver.  Other metals like nickel and copper were used for smaller coins.  The paper one and five dollar bills could be redeemed for silver; they were silver certificates.  The larger denominations were presumably redeemable for gold; they were Federal Reserve Notes.

 

Actually after 1933, the use of large bills being exchanged for gold ceased.  In the U.S. the Roosevelt administration collected all gold coins, melted them down into gold bars, issued paper gold certificates that were held by the Federal Government, and issued paper money starting with the ten dollar bill and going up.  These were Federal Reserve Notes which the banks distributed then and thereafter.  They were used in place of the gold coins.

 

The gold standard was essentially a fiction.  In 1933 the money supplied was doubled as the value of gold was legally doubled, going from $16 an ounce to $36 an ounce.  This essentially paid for Roosevelt’s New Deal.  Similar actions would also be done in other industrial nations.  The problem that existed was that there still was not enough money in circulation to meet the actual needs of most nations.  There would not be enough money available until World War II when it tended to be freely printed by the various governments.  During the war, since most production was going toward the war effort, there was more money available than the goods and services that could be purchased.  People worked double shifts in the factories and earned lots of currency, far more than they could spend.  At the end of the war there would be a large buying splurge that would create jobs for a good percentage of the returning veterans.

 

In 1969, under President Richard M. Nixon, the last limited amount of stored gold behind the dollar would be removed and the Federal Government would sell a large percentage of its gold supply.  It would cease to legally buy all gold mined within the country.  Gold would within a relatively short period of time, several years, go from $36 an ounce to $800 an ounce.  It would later go to well over $1,000 an ounce and eventually rise to $1,800 an ounce.  At this time one of the agencies in Texas would buy gold and set up its own depository.  Later, gold would drop down to around $1,100 an ounce, where, with continued slight oscillations in price, it would remain in 2016.

 

This entire process has been going on for the last 46 years.  The value of gold is determined by the economic laws of supply and demand.  The value of gold, silver, platinum, titanium, and other precious metals are determined by the amount of supply and the demand for that supply.

 

In 1969 the silver would also be removed from new coins and all money would become tokens, generally copper sandwiches, having almost no value within themselves.  All money became a valueless instrument for the exchange of goods and services, having no real innate value in itself except that of the word of the nation issuing it.

 

Today money of one country has to be exchanged for that of another when one visits Europe or Asia or, for that matter anyplace else that isn’t part of one’s country.  With very few exception it has no relevance in another country but it does have an exchange value in the banks of other countries, where generally, for a small fee, it can be exchanged for the currency of that particular nation.

 

Money is no longer as good as gold, there is no longer any gold behind it.  The metal has become too expensive and its supply is too limited to be used for a base for currency.

 

This in a nutshell is a short simplified history of money and its uses.

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Now, in terms of the modern world what is money and what are it uses?  Today money serves a myriad of purposes.  While it is no longer an object of intrinsic value it still serves as an object of inherent value.  It is, first of all, a form of score-card which demonstrates ones’ standing in the overall society, like Donald J. Trump the billionaire.  Mainly it allows the traditional exchange of goods and services within the society and between nations.  But in addition to this money also functions within the nation in relatively new ways.

 

According to most economists there are various forms of economics.  For our purposes the two more important ones are Microeconomics (small) and Macroeconomics (large).  Everything that has so far been considered falls into the area of Microeconomics (small economics).  In essence an individual has so much wealth (gold) or earnings that comprises what he/she possesses and earns.  That can be spent to satisfy needs and wants or saved for a future time of need or desire.  Some of it can be used as a commodity and invested in income gaining property or stocks and bonds or anything that will pay an income.

 

Virtually every individual or family unit fits into this category.  So also do government entities like municipalities and individual states.  Their incomes would be comprised of taxes and fines.  If any of these people or entities need more money than they are taking in or have then they can borrow.  For individuals and families there are banks and credit unit loans or credit cards.  For municipalities and states there are short and long term bond issues.  These eventually must be paid off with interest.  This is usually tax free for state and local governments and ridiculously high for credit cards.

 

Of course the object with individuals and families is to live within their incomes.  There are big-ticket purchases like automobiles and homes that generally do require long term payments or occasional emergencies like a large auto repair bill or a sick child.  With cities and states the taxes are supposed to be high enough to cover their expenses.  But they also have long term expenditures like roads and bridges which are inordinately expensive and must also be paid off over the long term.

 

The problem that comes up with individuals and families is when too many short-term expenses are charged to credit-cards, much more than can possibly be paid off in a billing cycle.  Then the recipients are paying 18 or more percent interest on these loans and life becomes an uncomfortable struggle to survive.  Particularly since the standard of living for many people will continually exceed their incomes.  This is not unusual with many families.

 

With municipalities and states the same pattern can occur.  The entities income does not match their expenditures.  This can be caused by a large number of reasons besides irresponsibility on the part of the city fathers.  Industry can move out of the area drastically reducing the tax base or other changes that drastically affect the tax base such as a natural disaster or a recession or depression.

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All this, prior to 1933, would also include the individual nations.  They would also be funded by their incomes in taxes and fines.  But from that point on, by changing from money being precious metals to printed paper, the situation became different for all the industrial nations that had switched to paper money.  And in the United States, particularly since 1969, all printed money is just that, official paper with numbers stamped upon it which in itself has no real value; it has become merely a means of trading goods and services for goods and services.

 

Federal or Central Governments still follow the age old practice of Microeconomics, collecting taxes and issuing fines for different forms of misbehavior.  But, more importantly, now in addition they also practice Macroeconomics, wherein they attempt to control the amount of money continually present within the nation.  They tend to try to keep inflation low and economic growth at a steady pace of about 3 to 4%.  Countries like modern China prefer a growth rate of 8% which they are no longer able to maintain.

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Economics is concerned chiefly with the description and analysis of the production, distribution, and consumption of goods and services.  What we have mainly looked at so far has been Microeconomics, dealing with individuals, families, local and state governments.  Macroeconomics deals with the National or Federal Government and applies these principles to the entire economy of the nation.  Its ultimate purpose is to use this knowledge to positively regulate the economy of the entire state in order to avoid economic downturns and keep the nation at its level of highest efficiency.

 

Consequently Macroeconomics (Big Economics) is now, in addition to collecting, controlling revenue, and attempting to maintain a regular level of growth a regulatory device, attempting to even out the overall incomes of the majority of the population.  Income taxes are graduated, that is, the more the individual earns the higher is his/her tax rate.  This is truer in European and Asian nations than in the United States where the graduated income tax rate is currently toped-off at $400,000 and the percentage of income paid at that amount stops rising regardless of how high the income is beyond that amount.

 

It would seem that the bulk of the Congressional Legislators, particularly the Republican legislators, have no real knowledge of modern economics and are still functioning with only an awareness of Microeconomics.  Some of the far-right, Tea Party, legislators have publically stated that they totally understand economics because they have raised families.  Consequently their reaction to economic downturns is to use a “common sense” approach which, in turn, worsens conditions.

 

It would seem that in the United States the one occupation that requires no knowledge of economics or government is that of a Republican Congressman.  Since taking over the House of Representatives in 2011 they have just passed one bill in 2015 that applied Fiscal Policy; and that was a continuation of a law that expired which added a small tax to the purchase of gasoline that has been used for road maintenance.  Every other bill dealing directly or indirectly with employment actually decreased it, adding to the level of unemployment within the nation.  One can safely say they have been penny wise and dollar stupid.  They have favored government economizing over growing employment.  And even here they have not been consistent, going on mad spending splurges like the 1.145 Trillion Dollar Funding Bill of 2015.

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Basically the Central Governments issues paper money as it is needed by their particular society.  The National Debt is itself partly a fiction since the Government owns the majority of its own National Debt and will use it at times to adjust conditions within the nation.  The amount of money in circulation within the society is supposed to be the full amount needed for the nation to operate at its highest level of efficiency.

 

The Agency, in the United States, that does this is the Federal Reserve.  It continually monitors the entire economy throughout the fifty states and territories belonging to the nation.  On a constant basis it is supposed to continually fine tune the overall economy.  The Federal Reserve has twelve districts that cover the entire nation.  To a certain extent its powers are limited.  It can make adjustments to the economy but the changes or corrections it makes generally are slow in coming about.  Even though its’ Board of Directors meet once a month and carefully considers what is happening in the overall economy it can miss or misconstrue important economic changes within the society.

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The Democrats, the political party begun by Thomas Jefferson in the late 18th Century which still persists, during the Great Depression of 1929 took control of the Federal Government in 1933.  They tended to totally dedicate themselves to helping the public pull out of the Great Depression.  They dedicated or rededicated themselves to helping the ‘forgotten men” survive in what had become almost overnight an alien world.  They became responsible for the welfare of all their citizens, creating what Franklin D. Roosevelt called a “New Deal” for everyone, caring for those who could no longer properly care for themselves.

 

Freedom to the Democrats meant freedom from want and need.  President Barack Obama’s Affordable Health Care (Obamacare) meant an extension of these rights.  To the Republicans, on the other hand, freedom means government withdrawal from the public lives, giving them, among other things, the right to starve, freeze, and die.

 

In solving societal problems the Federal Government in 2009 and 2010, with the Democrats controlling both Houses of Congress and the Presidency, saved the banks and the United States auto industry by extending them massive loans and the Public by enacting Affordable Health Care.

 

According to Mitt Romney, speaking for the Republicans during his 2012 Presidential Campaign, he would have done neither of these.  It should be noted that the Affordable Health Care Law was modeled after a similar law which Romney had signed into law during his one term as governor of Massachusetts.

 

The probability would have been in 2009, if Republican actions were taken by the Republican candidate, John McCain that the United States and the industrial world would have fallen into a depression far greater than that of 1929.

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What we are dealing with here is Macroeconomics (Big Economics).  The application of vast amounts of money to parts of the economy to avoid an economic disaster that would affect everybody in the U.S. society.  President Obama did this upon assuming office over a two year period.  At the end of that time two important events occurred: first, for various reasons during the Midterm Election of 2010 the Republicans achieved a majority in the House of Representatives and second, 2010 was a census year in which the seats in the House of Representatives were reapportioned to adjust for the increase in the national population.  In those states which the Republicans controlled they gerrymandered the new voting districts to their advantage whereby they were able to get enough seats in the House to maintain control of that body.  In fact they were able to get and keep their majority in the House even though more votes were cast for Democrats throughout the United States in the next Midterm Election.

 

What followed from 2011 on was that no fiscal policy bills were passed.  In fact what the Republicans did in Congress was to shrink the size of the Federal Government when possible and actually increase the unemployment problem by decreasing funding for both federal and state governments.  The chairman of the Federal Reserve at this time was Ben S. Bernanke.  After unsuccessfully requesting that Congress pass Fiscal Policy laws numerous times he came up with Creative Monetary (Money) Policy.

 

Both Bernanke and Obama were able to work through the Great Recession and point the country toward recovery by the use of massive blocks of spending, adding large amounts of currency to the National Cash Flow.  What was being dealt with here is called Macroeconomic (Big Economics), the Federal Government controlling the economics of the nation and freely spending money in order to avert disaster.

 

The question arises: How much currency can the Federal Government print and distribute without destroying the economy?  That’s an interesting question?  Remember the money itself has no inherent value.  Theoretically any amount can be printed and issued.  But if it is done endlessly growing inflation will occur and the value of the currency will systematically decrease until it becomes valueless.

 

The limitation in terms of the amount issued would be determined then by the rate of inflation.  Once inflation reaches some single digit point, say 5 or 6%, then the limit would be reached.  But this limit was never reached.  Inflation stayed at 2 to 3%.  In 2009 President Obama added well over a trillion dollars through bank and auto loans, plus other forms of expenditure and the inflation rate stayed at its original level.  Later in the Presidency the FED for a period of well over two years added 85 billion dollars a month to the Nation Cash Flow, $45 billion buying up pieces of mortgage paper and adding $40 billion directly to the National Cash Flow. The FED added well over a trillion dollars.   Again there was no change to the inflation rate.

 

Interestingly, with all this cash being added the indication was that the country had a phenomenal need for additional money to circulate so that economic growth could occur.  Congress should have been the agency applying most of these funds.  If they had the monies could have been more focused on upgrading the dated infrastructure of the United States.  Instead over half the funds resolved the Housing Dilemma created by the deregulated banks from the 1980s on.

 

It should be noted that the money spent on mortgage paper, unlike the bank and auto loans which were repaid with interest, was never directly recovered.  The mortgages in all 50 states had been fractionalized into well over a hundred parts each and applied to many different Hedge Funds.  The record-keeping that the banks had set up to expedite the financing and refinancing was unbelievably sloppy.

 

In essence no one owned a fair percentage of those houses because it was almost impossible to put enough pieces of mortgage paper together to make up over 50% of the ownership in these properties.  Consequently how could anyone foreclose on any of these homes?  The spread sheet or sheets that the government would need to determine when it owned enough of any property would probably cost more to generate than the properties were worth.  In any event the Federal Government was more interested in solving the Housing Problem than in collecting on its debt.

 

In addition all those people would no longer be deducting their interest payments on their income taxes.  And a percentage of the home owners suddenly had more disposable income which they spent on short term activities like more eating out, infusing the additional currency into the National Cash Flow which, in turn, increased productivity and employment in the nation.  The government would indirectly get a good part of this money back in increased taxes across the nation.  Here the Federal Government was spending vast amounts of money, which Congress refused to do, upgrading the entire nation.

 

 

 

 

The Weiner Component #146 Part 2 – The Republican Party & the Future

English: Woodrow Wilson.

English: Woodrow Wilson. (Photo credit: Wikipedia)

4 U.S. Presidents. Former President Jimmy Cart...

4 U.S. Presidents. Former President Jimmy Carter (right), walks with, from left, George H.W. Bush (far left), George W. Bush (second from left) and Bill Clinton (center) during the dedication of the William J. Clinton Presidential Center and Park in Little Rock, Arkansas, November 18, 2004 (Photo credit: Wikipedia)

Franklin Delano Roosevelt, 1933. Lietuvių: Fra...

Franklin Delano Roosevelt, 1933. Lietuvių: Franklinas Delanas Ruzveltas (Photo credit: Wikipedia)

One of the effects of the American Civil War was the industrial concentration of large groups of people needed to manufacture the goods required by the military confrontation.  This slowly began the movement which would become, through the rest of the 19th and early 20th Centuries, known as the Rise of the Cities. This Industrial Revolution would increase after the War, people would leave the rural areas and numerous immigrants would come to the ever-growing cities and the United States would become mainly an urban nation.

 

From 1877 on, when the Southern occupation or Reconstruction by a Northern army of occupation ended as a result of a deal made during the disputed Presidential Election of 1876 in which the Republicans got the presidency and Reconstruction ended, with the South becoming freely again a part of the Union.  The Senate barely remained Republican and the House had a Democratic majority.

 

A Republican, James A. Garfield was elected in 1881.  He was assassinated four months into his term and was replaced by his Vice President, Chester A. Arthur, who served out the four years.  The Senate had an equal number of Republicans and Democrats and the House had a Republican majority.

 

There were an equal number of Republican and Democratic presidents after until you get to the reform presidents, Theodore Roosevelt and William Howard Taft, who are both Republicans.  They are followed by the Democrat, Woodrow Wilson, and World War I.  He will be succeeded by three Republican Presidents: Warren G. Harding, Calvin Coolidge, and Herbert Hoover.  At that point we have the Great Depression of 1929 which lasts until World War II.  The Congress will generally follow the lead of the reigning president.

 

The next President in 1933, by a landslide, was the Democrat, Franklin D. Roosevelt.  Both the House and Senate maintained a Democratic majority during his terms in office.  He is reputed to have brought unemployment down from 25% to 2%.

 

After his death, during his fourth term, his Vice President, Harry S. Truman, served the rest of his fourth term and an additional one of his own through 1953.  During his last two years in office the Congress had a Republican majority.

 

Republican President, Dwight D. Eisenhower, during his eight years in office, intermittently had both Democratic and Republican majorities in both Houses of Congress.  Democratic Presidents, Kennedy and Johnson had Democratic majorities in Congress.  The same is true of Republicans, Richard M. Nixon and Gerald Ford.  From January 1977 to 1981 President Jimmy Carter had Democratic majorities in both Houses of Congress.  Ronald Reagan had Democratic majorities in the House and mostly the same in the Senate.  George H.W. Bush had to work with Democratic majorities during his four years in office while Bill Clinton had them only during his first two years in office.  George W. Bush had both during different times and Barack Obama had a Democratic majority only during his first two years, then a Democratic Senate and a Republican House, and a Republican majority in both Houses of Congress during his last two years in office.

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In the post-Civil War period, as earlier, recessions and depressions came, at the best, every few years or at the worst, almost successively, with occasional major downturns like the Bankers’ Panic of 1907 at the New York Stock Exchange.

 

On December 23, 1913 Congress passed and President Woodrow Wilson signed the Federal Reserve Act bringing financial regulation into existence in the United States.  Prior to this time Adam Smith’s “invisible hand,” which he defined as the motivating force behind the Market System, determined which way the Stock Market would run.  The “invisible hand,” self-interest, individual greed, had historically caused continual large fluctuations in the Stock and other Markets.

 

The mission of the Federal Reserve was through Monetary (money) Policy to maximize employment, keep prices stable, and moderate long term interest rates.  This purpose was extended with bank regulation during FDR’s New Deal.  In the 1980s the Reagan administration canceled the bank regulation.  This, in turn, led to the Real Estate Bubble two decades later.  And because of the banking-caused Real Estate Debacle of 2008 the Federal Reserve’s purpose was again expanded to supervising and regulating banks, maintaining stability of the financial structure, and providing financial services to depository institutions, the United States Government, and foreign official institutions.

 

Of course the banks objected to the 2009 reforms and in the 2014 Federal Government’s Finance Bill, Citibank was able to slip in a section into this 1,600 page law limiting this power.  This was done the night before the bill had to be voted upon.  Naturally the banks object to any regulation that limits them.  I would also suppose that their executives would equally object if any of them were sent to jail for illegal activities instead of having the bank just paying fines as they have been doing since 2009.

 

In the 2012 Presidential Election the Republican Candidate, Mitt Romney, publically stated, more than once, that after he was elected he would do away with the Dodd-Frank Banking Reform Bill that was passed in 2009.  His statements called for a return to the good-old-days before the 2008 Real Estate Crash when the banks and bankers were making inordinate amounts of money and getting phenomenal compensation packages.

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If we look at the economic patterns that occurred during the last hundred and some years what emerges is the fact that the major economic downturns were preceded by Republican Presidents.  The three presidents during the last three major downturns were: Theodore Roosevelt, Herbert Hoover, and George W. Bush.

 

While they were not individually responsible for the depressions it was both the Republican policies and the general ignorance of how the economy works that brought the economic collapses into being.  In 1907, there was no central bank, money, in the shape of gold coins, moved freely according to the needs of the nation.  The Panic of 2007, also known as the Banker’s Panic, more or less, began in October of that year when the New York Stock Market dropped about 50%.  There had been an assault upon the Stock Market that blew up the economy and there was no Central Bank at that time to infuse currency into the National Cash Flow.  A few years later in 1913 this depression brought about the establishment of the Federal Reserve.

 

For 1929s depression, and all the minor recessions up to that time, there was a bland reliance upon the forces of the Marketplace to continually determine what had supposedly been long term prosperity.  In essence the Market forces, the “invisible hand,” self-interest, was the determinate.  After years of pushing stock prices upward the Stock Market was severely overpriced.  This could not go on forever and it collapsed in 1929 dropping to a fraction of what it had been earlier, and in the process bringing the entire economy down.

 

In 1933 the new Democratic President, Franklin D. Roosevelt, doubled the money supply by collecting all the gold coins, melting them down into gold blocks, burying them in depositories like Fort Knox, legally doubling their value, and issuing paper money presumably backed by gold.  It was a fiction that lasted until 1969 when, then President Richard M. Nixon took away the last bit of gold supposedly behind the dollar.

 

This action by Roosevelt, doubling the money supply easily paid for the New Deal but it wasn’t enough to offset the 1929 Depression.  It would have taken four to eight times the money then in circulation to end the economic situation.  Unfortunately the problem wasn’t understood properly at that time and it took a major war from 1939 to 1945 to offset and end the Great Depression.

 

The explosion of the 2008 Real Estate Bubble toward the end of that year also occurred during a Republican presidency.  Here the next President, Barack Obama, applied all the money needed; and what could have been a Greater Depression than that of 1929 became a major recession that should have been resolved in a year or two with applications of both Monetary and Fiscal Policy.  But the Republicans, following their historic philosophy which had caused most of the economic downturns, exacerbated the situation by refusing to pass any Fiscal Policy laws.  Virtually every economic move they made tended to worsen economic conditions.  It took the efforts of the President and the Federal Reserve to keep a depression from happening.

 

If the Republicans had been solely in charge, not only the United States but the entire world would currently be in a Great Depression that would  make 1929 look like a weekend holiday.

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Much has been learned and understood as to how National Economies work from the latter half of the 20th Century on.  Economic changes like recessions and depressions can be lightened or even avoided.  The National Economies are not like wild animals that inevitably rear their heads and bring about indiscriminately varied levels of misery to their populations.  In 2009 a multi-gigantic depression was avoided by actions of the Central Government.  Economic catastrophe or lack of prosperity can be avoided and controlled.  It was in 2009 by President Obama and his administration.

 

Yet none of these practices are or have been accepted by the members of the Republican Party.  They still follow Adam Smith’s late 18th Century work, An Inquiry into the Wealth of Nations, which in itself was, in part, a reaction against the 16th Century economic practice known as Mercantilism.  Smith defined the Free Market controlling entity as the “invisible hand,” self-interest.    What Smith did not foresee was that the Free Market led to Monopoly and Oligopoly, which led to societal economic decision-making by the few who were still motivated by self-interest.

 

This is the Free Market in which Ronald Reagan and the Republicans believe.  This is what the Reagan and his administration utilized for their newly discovered Supply Side Economics.  Lower taxes, particularly for the upper echelon of society (the rich), and they will automatically invest that new income in new industry, creating new jobs, and new productivity which will supply new goods and jobs for everyone.  And everyone will live happily ever after.  A nice fairy tale!  It never happened.

 

What did happen was that a very large percentage of the people who benefited from the tax cut gave these new savings to financial experts who invested them in old productivity, stocks and bonds.  New startup companies, when they came into existence and had proved their durability, tended to be financed by the large banking houses.

 

The theory was nonsense.  It never worked.  But the 2016 Republican candidates for the presidency are all still adhering to it.  They want to cut taxes for the very rich which currently stops being graduated after their income reaches $400,000, with the percentage the Federal Government receives staying fixed no matter how many millions or billions it goes into.

 

Why is it important for the Republicans to be Supply Siders?  Because these people are their main financial contributors.  They are the ones who pay for their political campaigns.  And the Republicans are very good at combining need (endless contributions) with political philosophy.

 

This is also true with most pharmaceutical companies.  Their products can be purchased at lower prices outside of the United States.  Congress has passed laws fixing their prices in this country and not allowing any government agency to negotiate with the pharmaceutical industry.  They are large contributors to political campaigns, particularly Republican political campaigns and Republican Congressmen are utilizing the principle of self-interest.

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Of the two major political parties in the United States the Republicans are the minority party; there are far less of them than there are Democrats.  But they are far more vociferous than the Democrats, never ceasing their loud complaining about the other party.  While the Democrats seem to keep a more or less polite silence.  The Democrats are blamed for everything wrong with the country, particularly those items caused by Republican actions.  The Republicans never take responsibility for any adverse action; they are either ignored or blamed on the Democrats.  Their theories of economics are self-serving and absurd.  And ultimately in percentage of the population they are actually shrinking in number as time moves forward and they become slowly an ever-decreasing minority.

 

They, the Republicans, have been successful politically in the last six years mainly through voter apathy and disgust.  They have done far better in Midterm Elections than in Presidential ones when a good percentage of the citizenry in disgust or disappointment for what has not happened during the last two years don’t bother to vote.  This has been added to by various forms of voter suppression in states the Republicans control.  In essence they have greater political victories when more people stay home on election days.

 

In addition to this in order to gain the support of the evangelicals the Republicans have incorporated the concept of the holiness of life from conception onward into their philosophy.  Statements have been made about passing an amendment to the Constitution giving the fetus full Constitutional rights from conception on.  This will never happen but it gives them a certain credence with the far right evangelicals.

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In the 1973, the Supreme Court found, by a 7 to 2 decision, in the Roe v. Wade case that abortions were legal; that women had a right to make their own decisions about their own bodies.  The evangelicals (religious right) have resisted this decision from the beginning.  At some point the Republicans latched onto this cause and made it their own, gaining the support of this group.

 

To many Republicans today, women are not capable of dealing with their own bodies.  They state and believe there should be no abortions allowed, not even in cases of rape, incest, or where the pregnancy endangers the woman’s life.  It would seem that they have and are trying to endanger women’s lives, both psychologically and physiologically.  In their view women are not capable of making certain decisions concerning their own lives.  It must be done by elderly white men who make up the bulk of the Republican Party.  This is, without question, War on Women,

 

In addition to this the Republicans are an extension of the National Rifle Association.  They tend to be against any laws regulating weapons, ammunition, and magazine size in any way.  No atrocity will deter them from this belief.  A goodly percentage of their blue collar membership, more or less, holds this belief.  To many members of the NRA the fact that this hasn’t happened is proof that it will happen if they allow any changes to occur to the gun laws.

 

It seems, if we consider the group in Oregon which has recently taken over the Malheur National Wildlife Refuge, that having weapons, like thousand dollar plus assault rifles, will keep the Government respectful.  Of course the fact that the Federal Government doesn’t want another blood bath is beside the point.  They have been there since January 2, 2016 and the few that have not been arrested and are still remaining there have stated that they will stay until the Federal Government gives the land to the original owners, the local ranchers.  It must be nice to just sit around indefinitely and wait for the Federal Government to give the land to the local ranchers.  Of course following their argument the land really belongs to the local Indians who have inhabited the area for at least the last two thousand years and claim it as their own.

 

It would seem that the Republican battle cry for a large number of its members is God and Guns, or is it Guns and God?  It’s often hard to tell which should come first.  I suppose it depends upon which Republican you ask.

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The American society has needs which have to be handled by necessary legislation.  These societal needs have been avoided by the Republican dominated legislature and in many cases by Republican dominated state law making bodies.  Congress has attempted to deal with these problems by ignoring them, especially since 2011 when the Republicans, by gerrymandering the states where they had a majority in the legislatures, gained control of the House of Representatives.

 

If anything what the House of Representatives has done is to shorten its meeting days until 2016 when they were reduced to 110 days for the year, to a three day week with holidays.  This allows the new Speaker, Paul Ryan, to spend four days a week home with his family: wife and two children, in Wisconsin and three days in Washington, D.C., as Speaker of the House.  A good job, if you can get it!

 

The Republican dominated Senate will meet a bit more often for the year.  Both Houses of Congress are ignoring the needs of the people within the nation and expect to maintain their majorities in both Houses of Congress after the 2016 Presidential Election and get a Republican elected to the presidency.  And they believe they can do this by antagonizing most of the other minorities and the one remaining majority, the women of the United States.

 

Speaker Paul Ryan has stated that after having passed a law doing away with Affordable Health Care (Obamacare) which the President vetoed, they will continue to pass laws embarrassing the President by forcing him to veto them.  They do not have enough votes to override his vetoes.  And in that way they, the Republicans, will show the public what they will get in the way of new laws in 2017 if they elect Republicans in both Congress and the Presidency.  I would imagine that if Donald J. Trump were to become the next President of the United States then all bets are off!

 

So much for Republicans!  They are, after all, the minority party which tends to win elections when only a minority vote in Midterm Elections.  2016 is a Presidential Election.  The majority of the population will be voting in that election.  The probability is that the Republicans, at best, will retain the House of Representatives; and that is because in 2011 they gerrymandered the Districts within the states they controlled.  In this way they choose their own voters instead of having the voters choose them.  Remember in the 2014 Midterm Election well over a million more votes were cast throughout the United States for Democrats in the House, but the Republicans still retained control of that body.

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It should also be noted that large, and, in some cases almost unlimited, contributions give immediate access to legislators and Congress by those making them.  These contributors to elections can and have influenced legislation or the direction the government is going.  The Republicans have integrated into their psyches the desires or needs of most of these individuals or corporations. For example, the Koch brothers of Wichita, Kansas, who are involved with oil, have had their state pass legislation against green energy.  Citibank has written financial regulation which has been inserted into Congressional Bills and become laws.

 

The Republicans are after all the party of business and of the individual.  They believe in everyone having as much freedom as possible.  Their solution to adding jobs is to increase pollution and other unsafe conditions.  No one forces anyone to take a job.  Everyone has choices, even the choice to starve or live in the street.

 

Finally it should be noted that even with voter suppression the Democrats are the majority party.  States like Texas have been able to limit rural voters by two or three hundred thousand by making it very difficult and expensive for these people living in rural areas, mostly, if not all, Democrats, to get proper identification and/or register to vote.  This was proven in the last Midterm Election of 2014.  But even so, the probability is that the Democrats will gain back the Senate and keep the presidency.  The probability is that the House is the one body the Republicans may still be able to control.  If my prediction is correct we will have total gridlock in the Congress for an additional four years.  It’s a depressing thought!

The Weiner Component #144 – The Federal Reserve & the Rising Interest Rate

English: President George W. Bush and Presiden...

In late 2008 the major banking houses in the United States, like the Bank of America, Wells Fargo, JP Morgan Chase, and others by their reckless and irresponsible actions during the prior 28 years, virtually destroyed the Real Estate Industry bringing it to a giant crash.  Not only Real Estate but also the major banking houses themselves, like the like those already mentioned and numerous other banks stood upon the edge of total disaster.  Many of the banking houses were initially saved by President George W. Bush during his last year in office and then, with restrictions, by President Barack Obama.

 

(The CEO of Bank of America complained venomously about the restrictions, cutting executive salaries well below a million dollars.  He wanted to pay-off the government debt so executive salaries could get back to normal.)

 

For the first year of Obama’s Presidency the Fiscal Policy applied by the Democratic Congress dealt mostly with bailing out banks and other industries.  President Obama also saved the auto industry in the United States.  Ford was able to just make it without any government help but its stock tanked to under $5.00 a share for a period of time and then went up to over $14 a share.  General Motors took government loans and its stock, in a bankruptcy suite, was declared valueless by a judge.  Bail out funds and a new issue of stock saved the company.  The original stock holders lost their investment.  Chrysler was saved by a bail out.

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Household property values dropped like large bombs and exploded.  During 2008, when all the indicators foretold oncoming disaster, the bank executives were in denial, in order to continue, financing and refinancing, they raised loan values on properties to 125% of appraised value.  When the Crash came, in September of that year, a goodly percentage of the home mortgages were far above the newly appraised value of the homes.

 

Many of the banks were overextended, too much money had been invested in mortgages which had not yet been converted into fractional pieces and sold to hedge funds.  Many homeowners suddenly discovered that their homes carried greater loans than they were suddenly worth.  A number of them decided to start over and walked away from their properties, leaving empty houses behind.  Values dropped overnight; employment across the country fell significantly.  There was massive unemployment and it was continuing to decrease.  The nation was in a deep recession ready to continue falling into a deeper depression than that of 1929.  It would take at least a decade or more for the housing crisis to be resolved and for the banks to be willing to finance new construction again.

 

At first the banks generated documents on properties they administered but did not own, selling these houses, and keeping the profits for themselves.  This went on until the Courts realized or discovered what was happening; then the different banking houses stopped the illegal process.  The ownership of these homes had been so fractionalized that no one really owned them.  The records on these structures had been so sloppily put together by the banks that it was impossible to establish ownership on many of these structures.

 

The banks, in their rush to make profits, had been in such a hurry to finance and refinance their numerous deals that tracing the ownership of many of these houses was like going through an impossible maze.  They could not find fifty plus percent of the mortgage ownership.  These empty houses would be sold in a few years for back taxes.  The original hedge fund owners lost their investments as their hedge funds became valueless.

 

Many who were able to hold onto their homes would eventually see their properties rise in value.  And many who held on to their homes would eventually lose them by not being able to afford the monthly payments.  It was an impossible mess!

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From 2009 to 2010 the Federal Government had a Democratic majority in both Houses of Congress and was able to apply Fiscal Policy.  In those two years Congress with the aid of the President, Barack Obama, was able to pass Fiscal Polity bills and make executive decisions that slowed down the recession gradually turned the country in the direction of recovery.

 

After the 2010 Midterm Election the Republicans achieved a majority in the House of Representatives.  From 2011 on no Fiscal Policy Bills were passed by the House of Representatives.  In fact, at one point they refused to fund the government, effectively shutting it down for a period of time, and costing the taxpayers several billion dollars in this process.

 

The prospective of the Republicans tended to be and generally still is, what’s happening right now, this minute.  The future to them seems to be an abstraction that they do not deal with.  They seem to be penny wise and dollar stupid.  Immediate savings would be the limit of their understanding.

 

They have wasted millions on pointless hearings such as on investigating Benghazi and other causes which seem to be mainly political, attempting to embarrass a Democratic leader or cause.  And they seem to like to hold their government refinancing bills to the last moment where the bill must be passed or the government will face some sort of disaster.  In 2014 they spent over a trillion dollars financing the government for 2015 and including earmarks for every other cause they supported with friendly legislation all combined into one giant bill of over 1,000 pages that cost the government billions of dollars.  For 2016 they spent 1.25 trillion dollars effecting a 2,200 page compromise bill with the Democrats.  So much for fiscal responsibility!

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In dealing with the 2008 Real Estate Crash the Federal Reserve utilized Monetary Policy.  What happened with the Crash is that the value of a dollar dropped to five or ten cents virtually overnight.  Many people lost their employment.  Most people were also confused as to what was happening.

 

The Chairman of the Federal Reserve at this time was Ben Bernanke.  He had been originally appointed by President George W. Bush.  One of the first things he did was to lower interest rates that the FED charges banks to 0%.  The current Chairperson is Janet Yellen.  On December 16, 2015 she and her Board, which consists of the Presidents of the twelve regional Banks, raised the interest rate from 0 to ¼ of 1%.  They had held it at zero for about seven years.  The average bank account in the U.S. was receiving interest at the rate of 1/10th of 1% per year.  Generally that is not even enough yearly interest to have taxes paid on it.  Most accounts received under $10 a year.  This amount was too small to be reported to the IRS which requires a ten dollar minimum.

 

The object of this move, after the 2008 Real Estate Crash, was to make money very inexpensive to borrow.  Theoretically it was to encourage the banks to loosen their lending policies and encourage economic expansion and thus reverse the Great Recession.  That didn’t happen.  Suddenly the banks became super cautious with their lending policies.  What the banks seemed to go into at this time was investing in the futures market.  This is buying items like food crops that are still growing and assorted raw materials that have not yet been mined months in advance of their coming on the market for sale and then selling these items when they came on the market with a goodly amount of profit added to them.  Here the virtually free money lent by the Federal Reserve to the banks, actually by the taxpayer indirectly, allowed them, the banks, to raise prices on much of the goods the public needed to survive and make a goodly profit on it.

 

It should also be noted that during this period the banks were also paying millions in fines for illegal practices they were and had been engaging in.  I don’t think any of the major banking houses escaped paying numerous multimillion dollar fines.  In all, these fined added up to billions of dollars; but no one went to jail for these breaches of the laws.

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Both Bernanke and Obama had tried to get the Republican House of Representatives to pass Fiscal Policy, laws that would create jobs.  President Obama had presented them with a plan for infrastructure improvement which would create jobs and Chairman Bernanke had stated the need in numerous Congressional hearings and public speeches.  Congress not only ignored them, it passed various measures shrinking the Federal Government and actually exacerbating the recession by causing more unemployment.

 

As the cheap money policy wasn’t working on a large enough scale to noticeably affect the overall economy what was needed was a new plan to encourage economic growth. This was a new creative use of Monetary Policy and the FED came up with one that would loosen currency in the economy and end the “Housing Mess” created by the banks.  This was Creative Monetary Policy.

 

We don’t know who deserves credit for it, whether it was the President, the Chairman of the Federal Reserve, or members of his Board, or for that matter a combination of the three.  But we do know that it worked.  What they did for a period of well over two years was to add 85 billion dollars each month to the National Cash Flow or the available amount of currency in the entire economy, ending the process in 2015 by decreasing the amount by 10 billion monthly until it reached 0.  Of this money 45 billion was used to buy mortgage paper and 40 billion was just added to the existing currency in circulation.

 

In all the Federal Reserve spent over 2 trillion 7 hundred billion dollars in getting rid of the “Housing Mess” created recklessly by all the major banking houses.  If we add to that another 2 trillion dollars we get an image of what the Federal Government spent through the Federal Reserve turning the country around toward economic recovery.  These are the profits the banks and their executives made from the 1980s to late 2008.

 

Somehow I don’t remember anyone in the banking industry publically expressing any remorse.  Particularly I don’t remember any banking executive being sorry about the 2.7 trillion dollars that the public paid indirectly to end the Housing Disaster in a relatively short time.  The only public complaints that came from banking executives was that, under President Obama, they had to take enormous cuts in their million or multimillion dollar compensation packages.  The fact that millions lost their homes and savings was immaterial to them.

 

The weakening of the Dodd-Frank Bill that was passed in 2009-2010 to do away with the causes that had brought about the 2008 Real Estate Crash was going to be done away with when Mitt Romney became President in 2013.  Romney lost that election.  When the Republican dominated House of Representatives passed the bill in 2014 funding the government for the oncoming year on December 11, the Thursday before the yearly Congressional session ended, one of the measures added to the Bill slightly weakened the Dodd-Frank Law.  I suspect they had originally hoped to do completely away with the legislation in 2015 with the last minute Finance Bill that year but it got dropped at some point in the negotiations between the two political parties.

 

Why is it that I feel like a victim from both the banks and Congress?

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In all the Federal Government added trillions of dollars to the currency in circulation and rather rapidly, in a little over two years resolved the “Housing Mess” created by the banks.  By 2015 there were very few houses empty houses in the country and new construction was occurring within all 50 states.  Conditions had moved in the direction of normalization and unemployment had dropped to 5% in the United States.

 

Of the 45 billion dollars that was spent buying up fractional pieces of mortgages throughout the fifty states each month there was no direct way for the Federal Government to ever directly recoup this money.

 

Originally the banks did not like having the properties having to be registered in the counties where they were situated; it was too slow a process.  They set up their own registration agency to handle all these exchanges and were able to get the Congress to pass the legislation that they needed in order to do this.  Their major problem was that the agency was not large enough to handle all these transactions throughout the fifty states.  There had to be at least a 20% error margin; it was probably much higher.  Either the agency was too small to properly record everything or it was too understaffed to properly do this and the assorted banks were not paying enough to fund it properly, or it was a combination of these.  In any event the records were rife with inaccuracies.  It would have taken an incalculable amount of time to straighten out the mess.

 

What the government bought for its 45 billion dollars in mortgage paper a month was billions of fractional pieces of mortgages that were virtually impossible to sort.  Further these came from houses situated throughout the entire United States and its territories.  There was no way sense could have been made out of these.  What the government was doing was buying up the “Housing Mess” that the banks had created and removing “the Mess” from the market where the banks had dumped it.  They were removing “the Mess” from the society and absorbing the loss.

 

The former owners of these houses who were still living in them and paying their property taxes but making no mortgage payments were living in houses that nobody owned and upon which nobody could legally foreclose.  They were, in essence, living for free in these homes that they had formally owned.  They could keep the house for the rest of their lives.  They could even sell the property if they could find a bank that would put a mortgage on the house.  Basically they could spend the rest of their lives in these houses without paying another cent on the original mortgage as long as they paid their taxes.

 

The problem here was that no one knew who really owned those houses.  It could be the Federal Government or it could be a mortgage company or, for that matter, it could be a bank.  It could also be an individual who had purchased the full mortgage from a bank.  If an individual or a mortgage company owned the entire property they would eventually make their presence known and resolve the ownership problem.  But if the mortgage had been fractionalized it was either the government or a defunct hedge fund and impossible to determine ownership.

 

Generally the behavior of these people, who were making no more mortgage payments, was to live well.  Suddenly they had more disposable income and they tended to spent much or all of it.  The result was that this money added significantly to the amount of currency in circulation and helped to eradicate much of the results of the 2008 Real Estate Crash.  It can also be stated that these people who were paying no mortgage could no longer deduct the interest on their housing loans.  Consequently nationally the IRS collected additional billions in taxes from these people across the nation.

 

This was the creative Monetary Policy that the Federal Reserve and its Chairman, Ben Bernanke, came up with.  It worked and with some Fiscal Policy applied by Congress could have totally returned this nation to full economic health.

 

Instead the nation is still at 5% unemployment.  The Republican candidates, like Jed Bush talk about doing away with the Environmental Protection Agency (EPA) as a mean of increasing employment in the United States.  It would seem that they would like to see parts of the U.S. look like some of the Chinese cities, dark with smog at noon, filled with unbreathable air.  But they believe this would increase employment in the country, even if it does shorten lives.

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It should also be noted that the interest rate that the Federal Reserve charged banks was at 0%.  In December of 2015 the new Chairperson, Janet Yellen, announced that they were raising it to ¼ of 1% that is .025%.  That will mean that the banks will raise the interest they pay on bank deposits from 1/10th of 1% to possibly 3/10th of 1%.  For the last seven or so years the public has been funding the banks practically for free.  With this increase the interest paid by the banks might rise enough so that some people, but not too many, will have to pay the IRS a few dollars in taxes on their bank deposits in 2016.

 

We, the public, have been funding the banks with our funds, checks and so forth, practically for nothing.  These monies, up to ½ million dollars per account are guaranteed by the Federal Government through the FDIC, but the banks can and do use the money they continually receive from us in almost any way they see fit for their own profit.  In 2015 the banks are reporting significant profits.  Their executive salaries are in the millions and multi millions.  And for contributing these monies the public ends up not only paying endless fees to the banks but also considerable amounts as middle men in the Futures Market.  The banks freely take a share of the money you earn and spend for your food and other necessary products as the Middle Men in the sale of many of the items people need to survive.

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It should also be noted that with 0% interest paid by the banks mortgage rates dropped to, in some cases, below 3%.  With the Federal Reserve’s action of raising the interest rate charged banks a fraction mortgage rates still dropped.  The amount the banks now pay to the FED is minuscule.  I would assume that they will continue to rise, at least, at the same rate as the first increase.  The public does deserve some return for letting the banks use their monies.

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As a sort of footnote we should remember that the banks are necessary for the national and international economies to properly work.  But we should also note that the major reason for all the banks is to serve the public.  Today it would seem that the major banking houses of the United States and much of the Industrial World serve mainly themselves.  The public seems to be exploited for the benefit of their self-interest, profit.  We, as a nation, might be better off if there was an alternative to the current privately run banking houses in this country.  If nothing else giving the public an alternative to the current banking situation might generate a certain amount of humility in the current banking houses.

 

An alternative does exist; and that is the Federal Reserve.  All the Congress has to do is extend their powers so that they can also deal directly with the public.  They are a government agency that was created in on December 23, 1913 as a result of numerous financial panics.  Their major objective is to serve the public; that is still their major purpose.  The FED has undergone an evolution, particularly in the 1930s after the Great Depression.  If the Congress were to extend their powers they could easily take on the same functions as the private banking houses and allow the public to have a positive banking experience that would operate for the benefit of the public.

 

There are twelve Federal Reserve Districts covering the entire United States.  They can easily establish banking facilities throughout the nation.  This would also give them more ability to positively control the economy.  And they need not totally replace the current private banking houses; they could function alongside them giving the public a choice of where they want to do their banking.  Their existence in this fashion would also insure that the public gets a reasonable return on their banking accounts and it would force the private banks to stay honest.

 

It should also be noted that finances in most industrial nations are run by state owned public banks, like the bank of England or France.

The Weiner Component #142 – Terrorism in the World Today

September 11, 2001 attacks in New York City: V...

September 11, 2001 attacks in New York City: View of the World Trade Center and the Statue of Liberty. (Image: US National Park Service ) (Photo credit: Wikipedia)

FBI mugshot of Timothy McVeigh.

FBI mugshot of Timothy McVeigh. (Photo credit: Wikipedia)

Terror is to be afraid of or fearful of something.  Terrorism is, for a group or population, to be intensely frightened of something equally unpleasant.  Usually what is being considered here is some form of death or mayhem!

 

It is a weapon that has been used innumerable times over the centuries to attempt to achieve a political goal usually by minorities over a much larger population.  Usually within a society a group or groups that are not powerful enough to make their will or position known will use the tactics of terror to propagate their beliefs.  In Elizabethan England during the 16th Century, Catholics in this country that had decades earlier reluctantly turned Protestant under King Henry VIII secretly used this strategy to voice their objections during the reign of his daughter, Queen Elizabeth.  During the late 19th Century in Russia and Austria-Hungary, whose population was a polyglot of different Balkan ethnic groups, protest was illegal.  Revolutionaries in both these countries used terror as a form of protest, forcing their will upon the Central Governments by assassinating government officials.  This included rulers in both nations.

 

Generally when a political group is too strong to be forcibly obliterated but not powerful enough to openly influence the existing government they seem to resort to the use of terror.  The direct cause of World War I was the assassination of the heir to the Austro-Hungarian throne, Frances Ferdinand, in 1914.  Later in the 20th Century the concept of war was broadened to include the entire population of a nation and terror then covered the entire population.

 

In the case of the world today we are dealing with total war, this can cover the entire population of a nation or a group of nations.  Mayhem/ human destruction, terrorism anywhere in a nation is an act of war.  The action can be caused by some individual or groups within the nation or by people from other countries or areas of the world.

 

In the United States in 1995 Timothy McVeigh, an American terrorist detonated a truck bomb in front of a federal building in Oklahoma City on April 19th, killing 168 people and injuring over 600 others.  Presumably McVeigh was getting even with the United States for the Waco siege in 1993.  At that time the Branch Davidians, a sect that separated in 1955 from the Seventh-day Adventist Church, was led by David Koresh and lived at Mt. Carmel Ranch in Elk, Texas.  The group was suspected of weapons violations and forcibly refused to allow a search and arrest warrant by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.  Because of armed resistance, and the presence of women and children at the Ranch, a 51 day siege resulted.  It ended with a tear gas attack by the FBI, in which a fire engulfed the Ranch.  76 people died that day, including David Koresh.  Timothy McVeigh had been driving to Waco to show support for the Branch Davidians.  Two years later he would explode his home-made bomb.

 

Terrorists can be either citizens of the country where the atrocity is perpetrated or come from other parts of the world to punish a particular nation.  McVeigh was an American citizen seeking revenge for the Branch Davidians.  Whether this was because he had mental problems or not is academic.  He was at heart a terrorist who resented his own government and his killing of people was an act of terror.

 

A number of the mass shootings that seem to become commoner and commoner in the United States seem to be perpetrated by people who have mental problems and should have no access to weapons.  According to an article in the L.A. Times as of Friday, December 4, 2015, there were up to 353 mass shootings in 2015 in the nation.  The problem seems to be that In the U.S. every state has different gun laws, and weapons that are illegal in one state can be easily acquired in another state, particularly at gun shows where no background check is ever required.

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It should be noted that in the case of the world today al-Qaeda, ISIS and other groups from the Middle East and North Africa, make up the majority of the terrorist groups. Their rational is that they are punishing the world for not giving in to them.  In fact the President of the United States and the government of a number of European nations have declared war upon ISIS.  Most of these groups come from nations that until shortly after World War II were colonies or protectorates of Europe and or the United States.  Among the reasons for the uses of terror this fact seems to be one of the causes for their actions.

 

The colonial imperialist empires continued after the Second World War.  It was from the 1950s on that these countries/colonies began rebelling and it became too expensive for the European nations like England, France, Holland, among others, to keep their possessions.  It was far more practical to give them their independence and trade with them.  In this way most of these nations suddenly became ready for independence.

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In the United States on September 11, 2001, the Twin Towers in New York City, the tallest buildings in the world were destroyed killing 2,700 people in the collapsed two buildings, the Pentagon in Washington, D.C. was also hit killing 184 individuals, and in a plane crash in Pennsylvania where 40 people died trying to take back control of the jet.  The fuel on the airplanes were the bombs that burst into flames and exploded when the jets crashed into their targets.  Each plane carried as passengers a crew of suicide terrorists, nineteen on all of them, who took over the planes shortly after takeoff on the East Coast and piloted the jets to their targets crashing them, in the first two cases, into the structures.

 

Osama bin Laden the leader of al-Qaeda chose these targets because he believed the United States was a “paper tiger, an easy and inept target.”  His reasoning followed the pattern of U.S. withdrawal from Viet Nam in 1975, leaving Lebanon after a bomb in Beirut in 1983 at the marine barracks killed 241 servicemen, and the withdrawal of American forces from Somalia in 1993 after the deaths of 18 servicemen in Mogadishu.

 

While al Qaeda was highly functional after the attack on the Twin Towers it wasn’t until after the election of Barak Obama as President of the United States that it was effectively gone after.  Using drones the U.S. continually went after its leaders, killing a large number of them.  What eventually became the dominant militant terrorist force was ISIS or ISIL.

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The Boston Marathon is held yearly on Patriots Day.  It is open to anyone from 18 years on who qualifies.  On April 15, 2003 the brothers Tamerlain and Dzhekhar Tsarnev placed two separate backpacks in separate areas near the finish line.  They exploded killing 3 people and wounding 264 others.  Both brothers were born in a Muslim area of Russia and migrated to the United States.  One died in a shootout with police and the other was taken prisoner, tried, condemned to death and executed.  At one point he publically apologized to his victims.  It would seem from the evidence released that these two acted on their own; they were not affiliated with any terrorist organization.

 

To my knowledge there has been one other cases of foreign terror in the U.S. since then, the recent shooting by the young terrorist couple in San Bernardino, California. This couple also largely acted on their own.  The reason, as I understand it, for this small amount of foreign terrorism has been the relentless protection provided by the F.B.I. and other law enforcement services.  Unfortunately there has been assorted terrorist killing in the United States but these have been by our own deranged citizens.  There are no real restrictions, as we’ve seen, on anyone acquiring automatic assault weapons. Freedom to buy guns seems an axiom of Republican Congressmen who will not even require background checks upon the purchasers.

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In the United States the Caucasian population no longer makes up the majority of the population.  They are one of the large ethnic groups but no longer one that is the majority.

 

In terms of religion there are today a multitude of largely different beliefs now existing in the United States.  Traditionally the country was mainly Christian, having mostly Protestant Sects, some Roman Catholics, with a relatively small Jewish population.  There was also a nonreligious group operating as a religion, Ethical Culture.  Today there are also Hindu temples, Moslem mosques, plus numerous other groups existing in the country.  The country has undergone a large number of people coming from other parts of the world for political or other reasons.

 

One of the major causes for the problems that currently exist is that society has gotten complex.  Unfortunately today to economically function successfully in our society one needs a decent education; people need to understand that nothing is simply black and white; that societal and other problems do not have just simple “common sense” solutions.

 

Not too long ago a young, high school dropout, Dylann Roof, who apparently found high school too difficult but who admired former South African apartheid, at age 21, went into a Black Church in South Carolina and, after sitting and watching a Bible class for a while, shot nine people, killing them; then stated that he had to do it because Black people “rape our women” and “are taking over our country.”  His lack of intelligence created a simplistic bigot who, incidentally at the shooting, mostly killed women.

 

Over the last fifteen years there’s been a goodly increase in hate crimes, and at the same time it has become more difficult for a large number of people, with low or no specific skills, to become gainfully employed.  It is easy to find such a reason in demographic change, particularly in a country with a Black President.  The U.S. has had an increase in homegrown domestic terror.  But the Jihad still exists.  ISIS has declared war on all opposing nations in the Middle East, Africa, Europe, and on the United States.  Evidence of their behavior is evident, practically every day.  There are acts of terror around the world or ISIS is beheading people, both Muslim and non-Muslim in areas it controls.

 

Probably in 2015 the most devastating Terrorist attack or attacks were in Paris, France on November 13th.  Since then the governors of 20 states in the U.S. have stated that they will not accept refugees from Syria.  Legally they don’t have that power but they may forcibly try to stop the process.  President Obama has committed the U.S. to bringing in 10,000 Syrian refugees.  Donald Trump wants to stop any Moslems from coming to the U.S.

 

It is important to remember that Syria has a multi-sided Civil War that has been going on for a number of years with no solution in sight.  ISIS is only one of main rebel groups that controls a fair section of the country.  The current president of the country holds a fair section of the nation and currently has the support of Russia and Iran.  The population has been caught in-between all this fighting and well over a million citizens have been killed.  A percentage of the civilian population has and is continuing to flee the country and flooding Europe.

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In Paris, late Friday, November 13th three well-coordinated simultaneous terrorist attacks in different areas of the city killed 130 people.  There were six random shootings of anyone who happened to be in range by three teams of suicide killers who wore sophisticated explosive vests.  There was no way they could or would be taken alive.

 

As far as we know the Paris attacks were planned in Syria and organized in Belgium.  ISIS has claimed credit for the killings and has promised that the next raid and killings will be in Washington, D.C.  Apparently their actual next raid in the U.S. was in San Bernardino, California.  On December 2, 2015 a married couple attacked an end of year company party, where the man worked, killing 14 people and wounding 22.  They were both killed in a car chase.  The man had been born in the United States of Moslem parents and the woman, his wife, was born in Pakistan.

 

In terms of France the November 13th killings were not the first attacks in France.  Nearly a year earlier there was an attack on the French satirical publication “Charlie Hebdo” that had come out with one edition that had a representation of Mohammed on its front page.  Several staff members were killed.  Not too long afterwards a Jewish Supermarket was attacked either by al-Qaeda or ISIS members.  Several people were killed before the French police assaulted the facility, freed the hostages that were being held, and killed the suspects.  In addition people who swore allegiance to ISIS in several instances ran their automobiles into crowds killing and maiming numbers of people.  There seems to be a strong animosity between extreme Muslim radicals and the French government.

 

Most of the people killed in al-Qaeda or ISIS attacks have been and are Muslims, both in the Middle East and in North Africa.  ISIS (Islamic State of Iraq and Syria) or ISIL (Islamic State of Iraq and Levant) is a Sunni sect.  The other major Islamic sect is the Shiites, which ISIS considers anathema or blasphemous.  The Middle East is divided mostly by these two sects, of which Shiites are in the majority.  The Shiites are the civilians in ISIS areas who are usually beheaded.

 

Sunni ISIS considers the Shiite and most other interpretations of their religion blasphemous.  They see nothing wrong with attacking their co-religionists as infidels, even during their religious services, with suicide bombers.  If the prophet, Mohammed, were to come back today he would be both shocked and appalled at much of what ISIS is doing in his name.

 

The United Nations holds ISIS responsible for human rights abuses and war crimes.  Amnesty International has charged the group with ethnic cleansing on a massive scale in northern Iraq.  Around the world Islamic religious leaders have condemned ISIS’s ideology and actions arguing that the group has strayed from the path of pure Islam and that its actions do not reflect Islam’s true teachings or virtues.  The U.N. has designated it a terrorist organization.  The European Union and all its member nations, the United States, India, Indonesia, Israel, Turkey, Saudi Arabia, Syria, Iran and other countries, over sixty in all are directly or indirectly waging war against ISIS.

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As a result of the last Paris attack the French and also the British have joined the United States in bombing attacks on ISIS strongholds.  Will all this be effective?  ISIS, the Islamic State of Iraq and Syria is holding large tracts of land in both Syria and Iraq.  The Iraqi government has not been able to mount strong enough ground offensives against them to force them out of their country.  In Syria there well are over a dozen revolutionary groups fighting President Assad and his government, plus each other.  They all have, including ISIS, different versions of what they want for their country.  It is an impossible situation that has been going on for five years.  ISIS holds large tracts of land in the country.  Both Russia and Iran support Assad’s government as the legitimate one.  The United States wants to remove Assad and work out some sort of compromise between a number of the less radical Revolutionary groups.  Millions of Syrian citizens have left the country looking for safety by going west into Europe as refugees, looking to start life over again where they can be safe.

 

For the United States or a European nation or nations to send an army in to help either Syria or Iraq is not a good idea.  There are too many people there who remember the colonial era.  And ultimately which group or groups do they support in Syria?  For that matter which of the Revolutionary group or groups do they really approve of or can trust after they arm them?  It is currently an impossible situation.

 

For the United States or any other Industrial country to send in troops would be an act of utter stupidity as we saw in Iraq where the U.S. sent in any army to dispose of one dictator only to generate another corrupt government that just about expelled the American army.  U.S. troops were not popular no matter what they did.  The same was true for Afghanistan where a small number of Americans were shot by their allies.

 

The situation in the Middle East is a mess.  The only real solution is to have the countries of the Middle East come to the rescue of their own people.  But they don’t seem to want to do that.  But then again they don’t have to with the United States and other Western nations continually intervening.

 

In Iraq incidentally the government, which the U.S. helped to set up, seems to be largely corrupt and very pro-Sunni; about 95% of the country belongs to this Muslim sect of Islam.  The government doesn’t necessarily have the support of its own people, at least not to the point of dying while militarily fighting its enemies, like ISIS for example.

 

If the United States or France or England and Germany, for that matter, were to send troops in either or both Iraq and Syria they would risk keeping them there indefinitely without the support of the people in either of these countries.  The people’s sense of values is completely different from those of the Western nations.  In both Pakistan and Iraq, when the U.S. had a presence in those countries during the administration of President George W. Bush, some of the local military ended up shooting some of the Americans.  It is quite a frustrating dilemma!

 

Currently President Barak Oboma stated, in a national speech made on television in early December of 2015, that the bombing raids by the U.S., that have been going on now for well over a year, in coordination with local military operations have kept ISIS from gaining additional territory in either Syria or Iraq.  The President stated that the Islamic State militants have not waged a single successful major offensive operation since 2014 in either of the two countries.  Currently France and England are also conducting bombing raids against ISIS targets.  Saudi Arabia is also involved in air raids against the Islamic State.

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ISIS has threatened that its next attack will be in Washington, D.C.  Of the American born man and his Pakistani born wife who killed 14 people in San Bernardino, California on Wednesday, December 8, 2015, in a shooting rampage at the Inland Regional Center.  The man, Syed Rizwan Farook, aged 28, attended a party with his fellow workers; he quietly slipped away   his jacket draped over a chair.  Then he returned with his wife, Tashfeed Malik, aged 29.  Both were dressed with body armor and unleashed a terrorist attack.  They were at the Center for Disabled People, where his company had rented a large room for their yearly social event.  They killed 14 and injured 21 people.  They were both killed in a police chase, leaving a 6 month old baby with his mother.

 

The annual event was known as a GEM (general education meeting), run by the San Bernardino Health Department.  It began at 8 a.m. and would end about 4 p.m.  It was held in a conference room that was designed to hold around 500 people.  Mr. Farook was there from the start of the meeting.  He had worked for the Department for five years.  At some point he got up and went out.  When he returned with his wife the drama began.

 

They had automatic weapons which had been legally purchased.  The man’s parents had been born in the Middle East and immigrated to the United States, becoming citizens.  His wife was born in Pakistan.  Both were college graduates and both were radicalized enough so that they left a six month old baby with his mother.  Presumably the mother, who lived with them, was told by the woman that she had a doctor’s appointment.

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What emerges here is an interesting point.  In the United States if we compare terrorist shootings, killings and woundings with American shootings, killings and woundings, the mayhem caused by the terrorists numerically is barely noticeable.  Terrorist acts get lots of publicity while American shooting are statistics barely covered by the media.  Republican Congressmen and many others are very conscience of terrorist acts but ignore other shootings because in order to limit American shootings they would have to limit the availability of guns.

 

A solution among many Republicans is to keep Muslims, followers of Islam out of the country.  The problem here is that there are a large number of followers of Islam already in the country.  This is in addition to the number children of immigrants who were born in this country.  There are also the Black Muslims who converted or whose parents converted in the last half of the 20th Century.  They are largely the descendants of slaves that were brought to this nation as prisoners and sold as slaves in the 18th and early 19th Centuries.  They converted originally as a protest to Christianity, the major religion of white America.  How will the Republicans handle them?  By putting them into reeducation centers?

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There is a legitimate fear with the terrorists.  That is that somehow they will smuggle into the U.S. bacteriological disease creating materials that can be easily put into the water supply.  Another possibility is that a stolen atomic bomb can be brought in and exploded in the center of a major city.  All this makes a good plot for Hollywood films.  But is this danger real?  Currently, it seems that the FBI has 900 open cases it is investigating.  This does not include all the other cases that are being worked on by other law enforcement agencies.  Also the possibility of acquiring any of these weapon is almost nonexistent.

 

What should our attitude be toward the current Syrian refugee problem?  Currently under the Obama administration it takes from eighteen months to two years of investigation for any Syrian refugee to be able to settle in the United States.  To the Republicans in the House of Representatives and the Republican governors of twenty some states this screening is inadequate, they want to extend it even further.  One of the terrorists from San Bernardino was born in the United States and was a citizen.  France despite its recent attack has overwhelmingly voted to take in Syrian refugees.  It seems that the Republicans who overwhelmingly believe in all kinds of gun ownership and availability would change our principles about refugees because they do not trust their government to properly monitor refugee immigration from the Syria and the Middle East.  They seem to be fearful for the sake of being fearful.

The Weiner Component #141 – Fiscal, Monetary Policy & the Republican Party

English: James Earl "Jimmy" Carter

English: James Earl “Jimmy” Carter (Photo credit: Wikipedia)

English: United States mean duration of unempl...

English: United States mean duration of unemployment 1948-2010. Data source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average (Mean) Duration of Unemployment [UEMPMEAN] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed August 14, 2010. (Photo credit: Wikipedia)

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

Historically and in the present, Fiscal and Monetary Policy are the two major tools that the Federal Government is supposed to use to continually fine-tune the American economy.   Fiscal Policy is used by the Congress passing specific economic enhancing laws signed by the President and Monetary Policy is used by the Federal Reserve continually adjusting the U.S. money supply to maintain a healthy economic national environment.

 

During the Presidency of Jimmy Carter (1977 – 1980) unemployment rose to 7%.  This was also the post Viet Nam War period.   From 1977 on the government engaged in an expansive fiscal policy; there was an expansion in Public Works strongly supported by the President.  It averaged $4.38 billion per quarter.

 

At that period I was teaching Social Science classes at a High School in Southern California.  The School District was asked by representatives of the Federal Government to make a wish list of what they would like for the District.  A list of ten items was prepared by District officials and, as an afterthought, someone suggested a second or girl’s gymnasium and it was added to the bottom of the list.  The government officials choose the girl’s or second gymnasium as the item that would create the most jobs.

 

I remember that the high school got a second gym which was gray, the color of the concrete.  The money that paid for the gym ran out at that point and it was a few years before the School District came up with the funds to have the building painted.

 

It seemed that all the tasks and labor involved in building the gymnasium, both directly and indirectly, would create the maximum employment possible for the expenditure of the funds required for the project.  I suspect that Troy High School in Southern California is one of the few secondary schools in the country that has two separate gymnasiums.

 

To understand how this expenditure works for the benefit of the overall economy we have to trace the money and see what happens to it.  Usually money spent is actually spent six to eight times; it is a volatile substance.  For example, in producing and packaging the concrete used in the building the manufacturer has to pay his employees.  They, in turn, have to pay rent or a mortgage or, for that matter, buy food.  The landlord, bank, or supermarket continues the same process, and on and on for six to eight times becomes part of the natural flow within the economy.  This occurs with everyone directly or indirectly involved in producing that building.

 

Every million dollars the government spends creates six to eight million dollars in the exchange of goods and services.  To use an analogy, a child throws a rock into a quiet lake.  There are a large number of ripples spreading out in all directions from where the stone hits the water.  They spread out and dissipate as the stone drops to the bottom of the lake, infinitesimally raising the level of the water.  Consequently the $4.38 billion that the government added quarterly to the economy of the United States was actually generating a little over 26.3 to 35 billion dollars in new productivity every three months.  This also gives us an idea of the volatility of new money added to the National Cash Flow.  Of course if the reverse were to occur for any reason, such as the 2008 Real Estate Crash, the 26.3 to 35 billion dollars would be removed from the National Cash Flow.

 

In 1977, when Jimmy Carter became President, the 95th Congress was elected.  In that Congress the Democrats had a majority in both Houses of Congress; in the House of Representatives they had 292 elected Democrats to 143 Republicans and in the Senate there were 61 Democrats to 30 Republican Senators, a super majority which made the Senate filibuster proof, as only 60 votes are needed to end a filibuster.  The Democrats could pass any legislation they felt was needed and they applied, among other things, fiscal policy to the post Viet Nam War period.  Unemployment during the Carter period was considered high, running from 6.9% to 5.8%, and ending in 1980 at 7%.

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From the beginning of President Lynden Johnson’s acceleration of the Viet Nam War inflation slowly began to increase in the country.  The country was both fighting a war and allowing the public to maintain their peacetime standard of living.  By 1980 it had reached two digits and would that year eventually rise to about 15%.  The economic situation that occurred was labeled, stagflation.  It consisted of both stagnation, high unemployment, and inflation, prices rapidly rising because of shortages brought about by having fought a major war, maintaining the military during the Cold War, and supplying all the needs of the American people at the same time.

 

Generally during a period of inflation there are not enough goods and services available to match the demand and prices rise until a new equilibrium is reached of the goods and services offered.  If anything there should be lower unemployment.  But in this case there was also stagnation; there were not enough jobs for everyone able to work and wanting employment.  This was stagflation, the concurrent existence of two economic opposites.

 

There was a way to break this economic condition by having the Federal Reserve raise interest rates far higher than they were, raising the rate of inflation until it exploded.  But this would throw a lot of small businesses and even some large companies into bankruptcy.  This action would bring about immediate adverse economic conditions for a large number of people; it would bring about a short term depression which would temporarily increase unemployment.

 

President Carter had the Federal Reserve Chairman, Paul Volker, begin this process but then after receiving innumerable complaints President Carter backed off.  The next President, Ronald Reagan, allowed Volker to carry out this policy.  It took about a year and a lot of human misery to break this economic cycle.

 

When this came about, early in the Reagan administration, the President got on national television holding a copy of the Sunday New York Times Business Section and said something to the effect of there were umpteen pages of jobs available according to the newspaper and that if there were no jobs where the people lived then they should go to where there were jobs.  This presentation exacerbated the problem because suddenly there were old jalopies crisscrossing the country, being driven by people looking for employment, following whatever rumor promised jobs somewhere else.  This so-called friendly advice or thoughtless act created the homeless problem in the United States.

 

This policy, by the Federal Reserve which was necessary that broke the inflation cycle which had been begun by President Lynden B. Johnson in the 1960s, created an instant depression but ended the stagflation.  Interest rates dropped to a low single digit where they remained until 2008, when they dropped even further almost approaching zero, where they remain today.

 

As a footnote it should be noted that the people who pay for this low interest are the people in the United States who deposit their money into the banks and receive an interest payment on most of their deposits of one tenth of one percent per year.  The amount of interest most people get on their bank holdings is so low it is not even taxable.

 

Fiscal Policy with other economic remedies ended this economic crisis.  The other equally important economic remedy was Monetary Policy.  This is controlled by the Federal Reserve.

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Monetary Policy is the process that the Federal Reserve uses to control the supply of money, its availability, and the cost of money or its rate of interest in the country.  Its objective is aimed at the growth and stability of the economy.

 

The Federal Reserve (FED) has twelve regional banking districts, each with a major regional bank and each with a possible auxiliary bank covering the entire United States, with the major one in Washington, D.C.  It is a private government banking system that controls all the public banks in the country.

 

The FED’s major function is to regulate the private or public banks and to help control economic growth and stability, as well as maintain low unemployment and maintain predictable exchange rates with other currencies.

 

The tools the FED uses are:

(1) Its Open Market operation, constantly buying and selling bonds to increase or decrease the amount of money available in the National Cash Flow.  Here it works from the Public or National Debt, increasing or decreasing it to fine-tune the economy.

2) Adjusting the Discount Rate, setting the interest rates in the private banks by the amount it charges them interest.  The private banks determine the interest they charge the public based upon the interest they pay the FED.  They have to make a reasonable profit above what they pay to the FED.  The higher the FED’s interest rate the more expensive the money is and the less is borrowed.  Conversely the lower the interest rate potentially the more will be borrowed and used for economic expansion.  And the more employment will occur.  Since the 2008 Real Estate Crash the interest rate has dropped to almost zero (one tenth of one percent), and expansion has very slowly occurred.  In fact we are still, seven years later, in the process of recovering from that crash.

(It should also be noted that since 2011, when the Republicans took control of the House of Representatives there has been no Fiscal Policy.  In fact the House has forced through bills increasing the unemployment level and exacerbating the recession.  They have been very good at worsening economic conditions and then blaming the Democrats for it.

3) The third method is raising the Reserve Requirements that the banks are required to observe.  The public banks have to keep a certain percentage of their deposits for every loan they make.  But regulating the amount that the bank has to keep the Federal Reserve can significantly increase or decrease the amount of money that a bank can lend.

 

Among all the dollars deposited in the banks this would also include demand deposits (checking accounts).  Most people deposit their paychecks and reserve funds in banks which pay them a token interest for these funds.  People can at any time withdraw part or all of their money.  Meanwhile the banks lend out this money.  By law they must keep a small percentage, about five percent.  The banks can then lend out or invest ninety-five percent of the money deposited.  This expands the amount of money in circulation.  If the FED were to raise the Reserve Requirement to ten percent this would lower the amount that the banks can lend out by 50%.

The actual amounts that the banks have to keep in reserve are: up to 14.5million 0%, over 14.5 million to 103.6 million, 3%, over 103.6 million, 10%.  It should also be noted that after a bank lends out all its available funds it can deposit its loan papers with the FED and lend out the money all over again under the same conditions.  It should be noted that once the money lent out is redeposited into the banks 95% of it can again be loaned out.  Interestingly the FED is now considering raising the current reserve requirement.

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Using their Reserve Requirements, up to the end of 2008, the major banking houses in the United States had created trillions of dollars in real estate value by constantly mortgaging and remortgaging individual properties at higher and higher rates throughout the 50 states.  This collapsed virtually overnight towards the end of 2008.  President George W. Bush, at the very end of his presidency bailed out the major banking houses which were then facing bankruptcy.  This process was continued by the new president in 2009, Barak Obama.  While a few banking houses went under and were absorbed by other banking houses the Federal Government had no choice but to bail out most of the banks.  For one thing all the commercial banks had all their deposits insured up to ½ million dollars each by the Federal Insurance Deposit Corporation (FDIC).  The Federal Government would be liable for all this money if most of the banks failed.  In addition most of the business transactions in this country are paid for by either checks or credit cards that are all processed through the banks.  If the major banking houses like the Bank of America, JPMorgan Chase, Wells Fargo and most other bands were to suddenly disappear the movement of money throughout the United States would practically cease and the country would face a depression that would make the Great Depression of 1929 look like a weekend disruption.

 

Interestingly the potential 2016 Republican presidential candidates in their Third Debate, on November 10, 2015, mostly stated that if they were elected to the presidency one of the first things that they would do would be to get rid of the Dodd/Frank Bill that was passed to avert a possible repetition of the 2008 Crash and, if there were to be another economic crash they would not bail out the banks, that nothing is “too big to fail.”

 

What this 3d Republican Debate illustrated was that these people are blatant liars who will say anything to get elected or that they are totally ignorant of Macroeconomics or any other type of economics.  I don’t know which position is worse?  I was also shocked that the “media,” who seems very conscious of “fact checking” didn’t pick up on any of this.

 

If another Banking Crash were to occur and one of them were President of the United States at the time he/she would be forced by their own advisors to again bail out the banks.  For one thing it would probably cost the Federal Government and taxpayers directly more money to not bail them out and the following economic breakdown of the society would last for well over a decade, which is how long it took for the Great Depression to end.

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President Barak Obama’s major problem, after he assumed office in 2009 was dealing with the Real Estate Crash that he inherited from the Bush Administration.  For his first two years in office he had a Democratic majority in both Houses of Congress that cooperated with him.  The Republicans at this point at a meeting agreed to oppose everything he did and make him a one term president.

 

In 2006 Ben Bernanke was appointed Chairman of the Federal Reserve by President George W. Bush.  Bernanke replaced Alan Greenspan.  Bernanke working with President Obama utilized creative Monetary Policy to essentially pull the country out of a major depression without being able, after 2011, to get any cooperation from the House of Representatives.  Up until 2015 there was no Fiscal Policy applied.  Toward the end of 2015 both Republican dominated Houses of Congress passed a bipartisan bill to extend Federal Funding on road construction and maintenance throughout the nation which had initially been passed into law before the Republicans took control of the House and was due to end.

 

Initially after 2011 Bernanke innumerably called for Congress to enact Fiscal Policy legislation.  Obama even presented a proposal for much needed infrastructure improvements which would also create a large number of jobs.  This proposal never even reached the floor of the House.  If anything the Republican House of Representatives cut Federal Government funding to a multitude of programs and decreased, on a number of levels, government jobs actually worsening unemployment under the guise of economizing.

 

The FED then came up with a creative twist to Monetary Policy.  One additional major problem that came with the Real Estate Crash was who owned the properties/homes that then had mortgages on them of greater value than the property was worth.  The mortgages had been divided up into fractional shares, distributed to innumerable hedge funds, and the banks had reorganized record keeping on a very sloppy basis.  It was, in many cases almost impossible to discover who owned 50.1% of many if not most of the properties.  This was a dilemma that would ordinarily take two or more decades to clear up.

 

The FED’s solution to this problem and the shortage of money in the National Cash Flow that was causing the massive unemployment was to add 85 billion to the economy every month for a period of over two years.  45 billion was used to buy mortgage paper (fractional pieced of mortgages) in all fifty states and forty billion was used to buy back debt paper (government bonds).  This added one trillion twenty billion dollars to the National Cash Flow a year.  It was gradually phased down and ended in 2015.

 

Currently it looks like interest rates for the public will remain at almost zero for at least the balance of 2015.  But unemployment has dropped nationally to around 5%.  Creative Monetary Policy had turned a possible great depression into a recession and brought the country well in the direction of economic recovery.  All this has been done under the administration of President Barak Obama largely with no cooperation from the Republicans in Congress.

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Issues are never simple cause and effect actions.  There are always multitudes of variable affected in addition to the major outcome desired.  Everything consists of hard choices.  These should be made by experts who are aware of all the possible outcomes.  Or, at the very least, it will be people who will listen to experts and act accordantly.

 

In November of 2016 a major election is coming up, the next Presidential Election.  Both major political parties will be presenting a host of candidates for the Presidency and Congress.  The entire House of Representatives will be up for election and also one third of the Senate. In addition there will be major elections in all 50 states.  The people will speak by voting or not voting.  If the Republicans maintain their majorities in both Houses of Congress and in the majority of the states then very little will be done in the next four years.  The public by their action or inaction will decide what the future will hold.

 

 

 

 

 

 

 

 

The Weiner Component #140E – Assorted National Problems Not Dealt With by the Republican Congress

The western front of the United States Capitol...

Development, Relief and Education for Alien Mi...

Development, Relief and Education for Alien Minors Act (Photo credit: Wikipedia)

With his family by his side, Barack Obama is s...

In addition to what we have been dealing with for the last four blogs there are other serious problems that the Republican led Congress, particularly the House of Representatives, have ignored.  The first of these is guns, both pistols and assault weapons.  Another, which can seriously hurt Republicans in the 2016 Presidential Election, deals with immigration policies.  Still another immediate problem, which will be coming up at the latest in early December, is funding the Federal Government for the oncoming fiscal year.  And still another is a Declaration of War against ISIS and possibly a debate about what to do about Syria.  We’ve mentioned their compensation packages and days of work over the year but it might be worthwhile to reconsider these.  Also there is the fact that Congress has passed a law automatically giving themselves raises unless they pass another law stopping that particular raise from happening.

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President Obama and others have stated that gun violence is much worse in the U.S. than in other advanced countries.  Italy comes next with less than 20% of what occurs in the U.S.  Below that comes Canada, then Sweden, then Germany.  By the time we reach Germany the level is well under than 10% of the U.S. level.  The other industrial nations are far below that.

 

The problem with gun violence seems to be that Americans are much more likely to own guns than their peers around the world.  It seems that the more guns there are in the society then also the more homicides that occur in the society.  According to President Obama Americans kill each other with guns at a rate 297 times more than Japan, 49 times more than France, and 33 times more than Israel.

 

Following is a gun violence estimate for 2015 based upon actual shootings and prior years.

Total shootings                              47,071

Deaths                                           11,868

Children to age 11                              632

Teens 12-17 injured and killed       2,354

Mass shootings                                 303

Officer involved shootings              3,923

Home invasions                              2,029

Defensive shootings                       1,088

Accidental shootings                      1,694

The problem is an extensive one that Congress has totally ignored.  If nothing else it should be debated in Congress.  Presently it is largely invisible to the general public because the media tends to ignore the general information.  While the information is available one has to dig to find it out.  What is shocking about this is that these facts seem to make the terrorist threats minor in terms of the pointless loss of life that continually goes on.

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Another major problem that Congress should be dealing with is Immigration.  This is far more complex than just having foreigners illegally living and presumably working in the United States.  On and off Congress has ineptly been dealing with this problem for the last fifteen years.  Currently they are ignoring it and suing the administration for President Barak Obama’s executive order dealing with “dreamers,” children who were brought to the United States by their parent(s) and raised in this country

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The reason this issue is complicated is that we are not just dealing with aliens, foreigners who are illegally is this country, but also with their families, some of whom may be citizens.  Sending their parents or one of the adults back to their country of origin breaks up the family.  Among others, there is one adult Hispanic legislator whose father disappeared when he was a small child and he never saw him again.  There has to be something wrong with this.

 

First there are alien couples whose children were born in the United States and are therefore citizens of the U.S.  Do we ship the parents back to their country of origin but leave the children here?  There are children who were brought to this country and may have none or very little memory of their country of origin.  They have been educated in the U.S. and think of themselves as Americans.  Some have served in the military.  Do we send them to a country of which they have no knowledge?  There are also the Dreamers, (Development, Relief, and Education for Alien Minors,) who were 16 or younger when they were brought into the U.S.  The estimate is that there are about 1.8 million of these, many are college graduates.  There are married couples of which one is a citizen and the other an alien.  Do we separate these couples by sending one of them back to their country or origin?   There should, at least, be a debate about this in both Houses of Congress but the subject has not been brought up..

 

An important point, which the Republican candidates in the 2016 Presidential Election seem to be ignoring is that according to the 2010 Census there were 50.5 million Hispanic or Latinos counted.  That is 16% of the overall population.  They had increased 13% since the 2000 Census.  For the 2016 Election the number will have increased at least another 7%, that’s about another 4 million potential voters.  In 2012 President Obama got the majority of those voters.  What will happen in 2016?

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Starting in the Twentieth Century a quota system was devised that set the quota or number allowed in the U/S. from each country.  Interestingly both my parents came to this country indirectly from the Russian Ukraine in the early 1920s shortly after World War I.  My father and his younger brother crossed Europe and emigrated from England.  My mother signed a one year contract to work as a maid in Canada.  This paid for her passage across the Atlantic Ocean.  At the end of the year she came to the United States as an immigrant from Canada.  There were very high quotas for Northern Europe and Canada.  For Eastern Europe one had to sign up and wait for their turn.  A college friend of mine’s parents came from Greece.  The wait there had been seven years.  Someone had signed up and then when their turn finally came they changed their minds.  A neighbor and his wife took their name and their place.  My friend had been their child.

 

Quotas had never been fair.  They were set based up attitudes or prejudices toward the countries involved.  Low, in so called undesirable countries and high in desirable ones.  These same principles have essentially carried over to today.  Mexico, Central and South America have low quotas.  Asian countries would also have fairly low quotas.  Northern European quotas are never reached.

 

And then there is the concept of refugees, people who are fleeing disastrous conditions at their original homes.  In Asia a number of these people became refugees because they sided with the United States, like in Viet Nam after the U.S. left there in 1975.  Others left intolerant or dangerous conditions behind to find safe conditions for themselves and their children.  One of the places to which they fled was the United States.  Were they all upright, honest citizens?  Mostly; but they also included a criminal element.  That’s how, for example, the mafia got a foothold within the U.S.  Does that mean that we stopped letting in people from Sicily and Italy?  No.  Does it mean that we should not allow people from Syria to immigrate to the United States because some terrorists might sneak in that way?  That’s an interesting question.  It should be honestly debated in Congress and not just have Congress pass a bill practically excluding all Syrians.  After all, these people are the victims of civil war and terror.

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An immediate problem that Congress has to immediately resolve prior to December 11th is funding the Federal Government for at least the oncoming year.  If a bill is not passed prior to that day the Treasury will run out of money with which to pay the government’s bills and interest rates will go berserk and the Federal Government will again shut down.

 

The issue prior to the former Speaker, John Boehner’s retirement, was the House of Representatives refusing to pass a funding bill unless funding for Planned Parenthood was removed from the bill.  If this were done the President said he would veto the bill.  While the Republicans currently have a majority in both Houses of Congress they do not have enough of a majority in either House to override a veto.  By resigning Boehner got the bill kicked up from the end of October to December 11th.  President Obama stated that he wanted a clean bill that would fund the government for the next two years or he would veto any future bill.  This time the Republicans in the House want to keep Syrian refugees from entering the United States because a few terrorists might also sneak in and they still want to defund Planned Parenthood.  The reality of keeping out Syrians is questionable because it currently takes Syrians from 18 months to two years of screening before they are legally admitted into the country.  The House would add a further step and have each Syrian also individually approved by the head of the FBI.

 

What will happen is any bodies guess.  Will the Federal Government be functioning after December 11th?  A government shutdown would probably hurt Republicans in the 2016 Election and cost the government additional millions if not billions of dollars.  Paul Ryan, the Speaker of the House of Representatives seems poised for a dramatic showdown on December 12.

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There is still the question of a new war powers authorization which President Obama has requested for the fight against the Islamic State terror organization, ISIS, which was made last February.  Congress has not bothered using its War Powers given to it by the Constitution.  As far as they seem to be concerned his executive actions in immigration for the Dreamers are unconstitutional but his actions in going after ISIS are currently legal.  They, Congress, don’t need to act.  Is this attitude valid or does Congress need to act?

 

We also have the question of Syria.  What should our actions there be?  Congress and the country need a debate to clarify that issue if it can be clarified.  Should we continue with just air force action against ISIS?  Should there be American troops on the ground as some of the Republican candidates have stated?  There are innumerable forces involved in the revolution there.  Are there any group or groups we can support?  Russia is now also involved with support for Syria, supporting President Assad, while supposedly bombing ISIS, but according to the U.S. actually bombing Assad’s enemies.  Is it a war we can win or will we be stuck there for decades if not longer?  Congress is ignoring this problem completely.

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With the upcoming election next year, plus the fact that the Republicans have a Democratic president who they don’t like and with whom they have problems cooperating, both Republican Houses of Congress have given themselves a light schedule for 2016.  In fact the new Speaker of the House of Representatives, Paul Ryan, has called the President “Untrustworthy.”  After the Thanksgiving Recess the House of Representatives plans on twelve more days of business this year.  In that time they will have to pass a bill funding the government.   Next year looks to be a very light legislating time.  The Senate plans to spend 143 days in session and the House of Representatives is planning only 111 days in Washington, D.C.

 

I would assume that there are numerous other problems that have not been mentioned that Congress will and/or should probably be dealing with.  Fiscal policy laws are still needed both to enhance employment within the country and modernize the infrastructure.  Emergencies may well come up in terms of the security and safety within the United States.  Sequestration, in those many areas that have not so far been removed from the sequester in 2015, will automatically come up in early 2016.  They will present additional hardships as funds in entitlement and other programs diminish.  Will Congress ignore these problems or make adjustments in some of them?

 

The country needs a Criminal Justice Reform Bill to lighten the load on the over-filled prisons in the United States.  Presumably both parties agree on this.  Will any action be taken?  Will there be time to take any action?  A Mental Health Bill is needed to deal with, at least, a part of the current surge in violence in the nation.

 

The Republicans will have to give the impression that they have a positive program if they are to maintain their majority in both houses of Congress.  They also have to support the policies of whoever is their final choice of a Presidential Candidate.  It could take some tricky maneuvering to achieve all this.

 

To also be fair, all the members of the House of Representatives and 1/3d of the Senate will be running for reelection next year.  Presumably they will need more time in order to campaign even though in the prior year the 114th Congress had shortened its term in Washington, D.C.

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In the oncoming election year early national party conventions will mean that the Congressmen will be taking the second half of July off without giving up their traditional August recess.  October through mid-November will be cleared for campaigning for the November 8th general election.  Will they have time to deal with any of these problems?

 

The Congressional behavior also reflects the tensions between President Obama and the GOP Congressional leaders.  There are, of course some necessary bills that will have to be passed like funding the government so it can pay its bills for the oncoming year; but outside of that Congress may plan to do almost nothing, strongly hoping for a continued majority in both Houses of Congress in 2017 plus a Republican president.

 

For close to seven years President Obama has bent backwards trying to get some cooperation from the Republicans in Congress.  In this he has largely failed.  Under Paul Ryan’s inspiration they have attempted to force him to support their agenda by tying bills necessary for the functioning of the nation with causes they wished to become part of the laws.  This has resulted in a government shutdown and a number of bills going to the brink, generally being passed on the last possible day.  This has lowered the credit rating of the United States and cost additional billions of dollars.

 

At this point, with a little over one year left to serve as President, I would imagine Barak Obama has had it.  He will play no more games with Congressional shenanigans.  The government has to be funded for the oncoming year well before December 11, 2015 or the dollar may again be downgraded and interest rates for loans may unnecessarily jump.  This bill was pushed up to December in October and the President said he will veto any more short term passages.  He wants a clean two year bill.  What will happen?

 

The Republicans, who prior to October wanted to defund Planned Parenthood in order to fund the government now have threatened to add a section to the bill requiring that every Middle East refugee be personally approved by a high official in the U.S. government before they can be accepted into the country.  President Obama has stated that the current screening system is adequate for all immigrants from the Middle East.  Currently it takes 18 months to two years for a Syrian to be allowed to settle in the U.S.  While he has not specifically stated it the probability is that he will veto the spending bill if it contains that measure.  And there is also the probability that he will veto this specific bill, which recently was passed by the House of Representatives that requires a guarantee from a high government official for each Syrian emigrating to the U.S., if it is passed by the Senate and comes up before him.  It seems that the President is no longer open to attempted blackmail in order to get necessary legislation passed.  The person who came up with this tactic is now Speaker of the House of Representatives.   It should be an interesting 13 months!

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As a footnote: In just about every occupation the employee is continually evaluated as to how well he or she performs on their job.  If they are continually below a certain level then they are terminated.  This seems to be true for all occupations except for those Republicans elected to Congress, particularly for those elected to the House of Representatives which has been essentially nonfunctional since 2011 when they achieved a majority in the House of Representatives.  This is the period during which we’ve had gridlock in Washington, D.C.  Here inefficiency or inability to function seems to be the quality needed to function and keep your job.

Congress & the Problems of the United States: Are We Getting Our Money’s Worth?

English: Breakdown of political party represen...

English: Breakdown of political party representation in the United States House of Representatives during the 112th Congress. Blue: Democrat Red: Republican This SVG file was originally hand-written. It contains comments suggesting how to amend it to reflect future changes in Congress. Inkscape reads this file as corrupted, thus changes must be made with a text editor or other program and checked with a browser. (Photo credit: Wikipedia)

There are 435 members of the House of Representatives.  Their combined salaries, taken together is $73,950,000 taxpayer dollars per year.  Of these 247 currently are Republicans.  They receive $41,990,000 taxpayer dollars in compensation for serving in the House of Representatives.  Of these 247 House members 40 belong to the Freedom Caucus.  They make up the ultra-conservative far right end of the party.  These people understand compromise as the other side coming to their position; to them anything else in largely unacceptable.

 

On the issue of passing a bill to continue to fund the government the Freedom Caucus, which is made up of Tea Partiers, plus a number of other Republicans had refused to act until funding Planned Parenthood was removed from the bill.  If Planned Parenthood were removed from the bill President Barak Obama stated he would veto the proposed new law.  This brought about the resignation of the Speaker of the House, John Boehner, at the end of September, effective October 31st.  A bill was brought through the Senate and later, the House, continuing the funding of the government through December.  In each case with heavy Democratic participation.  There were not enough Republicans supporting it in either House for the bill to pass without Democratic support.

 

As an aside, the evidence presumably proving Planned Parenthood was guilty of breaking the law in performing abortions and selling fetus tissue for research was highly edited video tapes that were the equivalent of a man entering a house, then in the next scene he or someone entered an apartment, greeted a woman, the camera would switch to an image of a bedroom, and finally the man would exit the house, presumably in the morning.  This was the level of the edited video evidence presented against Planned Parenthood, which the anti-abortion groups took as absolute proof.  In addition some of the video were made by paid actors, hired by an anti-abortion group, discussing the sale of fetus parts.   Planned Parenthood has been investigated numerous times by Congressional Standing Committees and others and has never been legally proven of doing anything illegal.

 

To get back to our primary subject, what we spend on Congress and what we are now getting in return.  If we include the Senate in the cost we are adding an additional $170,000 one hundred times, that’s 17 million dollars.  This does not include the fact that each congressperson in either House has a staff in Washington that can employ up to eighteen permanent members and have an office in their home state.  We are spending well in excess of ½ billion dollars annually upon our law-makers.  For this, especially since they take an oath to uphold the Constitution, we should be able to expect them to do their jobs.  Are they passing laws that help the country develop and prosper?  Are they doing things to lower unemployment?  Is the country moving forward to a better tomorrow?  Are they repaying the taxpayers for electing them to office or are they serving their large contributors who have funded their political campaigns or are many carrying out their own specific agendas?

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My impression is that most, if not all, of the Republicans elected to Congress have no real understanding of what makes up economics; that they think of the Federal Government functioning on the same level as their households, that so much money comes in every month and once that’s gone the government has to borrow money to spend more, and that additional money has to eventually be paid back.  That is how Microeconomics (small economics) works but that is not how the Federal Government works.

 

The Federal Government, all national governments for that matter, operate under the principles of Macroeconomics (Big Economics).  There is today nothing behind the dollar but the word of the National Government; they own the printing presses.  Money has no intrinsic value today; the government can print any amount it wishes.  They do this by legislating the amount that can be printed and the Federal Reserve determines when, if, and how much to release to the banks.  Money to the Federal Government is a tool that is supposed to be used to enhance productivity within the country.  Its expenditure has nothing to do with its taxable income.  The true value or wealth of the country is the goods and services produced within a fiscal year determined in terms of dollars and cents.

 

If the members of Congress do not understand this concept then they are working against the welfare of the nation.  They are not doing what they were elected to do, run the country positively.  What has existed since the House of Representatives achieved a Republican majority in 2011 has essentially been inaction, or when legislation occurred it has been mainly to hamper economic recovery.

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From the year 2008 on the major banks, first in the United States and then throughout most of the Industrial world, were suddenly on the point of collapse.  In the U.S. one trillion dollars of real estate value disappeared virtually overnight.  The major banking houses were suddenly facing ruin, were ready to go under.  They had speculated in real estate from the 1980s on to the point of insanity in late 2008.  Overnight there was massive unemployment; many people’s homes had larger mortgages than they were then worth.  The country was on the brink of a massive depression.  Banking in the U.S. could conceivably diminish to a trickle.

 

First in 2008, when this madness, brought about by the large banks, both commercial and investment banks occurred, George W. Bush and his Treasury Secretary, Hank Paulson, made massive loans to the banking houses; then this was continued by President Barak Obama in 2009.  Some investment and commercial banks were allowed to go under, their loans and deposits taken over by other big banking houses; but most were saved with additional loans.  (If you’re interested in the specifics of what happened Ben Bernanke the former chairman of the Federal Reserve, has just published a book dealing with all of this.)

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What have the Republicans achieved?  In 2011, through a process known as gerrymandering, favorably setting up voting districts in states they controlled politically, based upon the party registration of the voters, they were able to gain control of the House of Representatives, and they have kept it ever since.  In the Senate they gained control in 2014.  They could conceivably lose it in 2016 when 1/3d of the Senate will run for reelection.

 

The Republican prospective in dealing with the Real Estate Disaster has been to ignore it.  Mitt Romney, when he ran as the Republican Candidate in 2012, spoke about doing away with the banking reform bills passed after the 2008 Crash.  It seems that one of his goals was to bring America back to where it was before the 2008 Disaster.  Fortunately he didn’t get elected or we might be back to the Crash now with the major banking houses again destroying the economy.

 

Since they gained control of the House of Representatives in 2011 the Republicans in the House of Representatives and, for that matter, also in the Senate have strictly followed a policy of Microeconomics (small economics), attempting to run the country as they each run their own households.  The result of this from 2011 on has been to exacerbate the recession, costing additional hundreds of thousands of jobs lost throughout the United States in the federal and state governments and in the general population from monies not spent by these unemployed former government employees.  They have done everything possible to worsen the overall situation.  Luckily the President and the Federal Reserve, despite the Republican actions, have been able to generally put the country well in the direction of economic reform.  The cost of this has been a 53% increase in the National Debt spent by President Barak Obama during his first six years in office.  This included an economic stimulus package, both cutting taxes and extending unemployment benefits to avoid another Great Depression.  He has also increased defense spending and brought about the Parent Protection and Affordable Care Act (Obamacare).

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The National Debt is now 18.4 trillion dollars.  If we go back to the Republican Presidency of Ronald Reagan we get a good idea of why it is so high now.  When Reagan became President in 1981 the National Debt was just under one trillion dollars.  His great fear was that the Soviet Union was militarily ahead of the United States.  He wanted to militarily catch up to them and possibly get ahead of them.  In eight years he added 1.86 trillion dollars, over 100% to the 998 billion debt level bringing it up to well over 2 trillion dollars.

 

In point of fact we actually were well ahead of the Soviet Union in our military preparedness.  The Soviet Union bankrupted itself trying to keep up with the United States.  The problem with the U.S. was that the leadership instinctively knew how well armed the Soviets were and that the contrary information that the government intelligence agencies could provide was supposedly inaccurate and ignored.

 

Under George H.W. Bush, through faulty or stupid use of diplomats, the President of Iraq, Saddam Hussein, got the impression that he could invade Kuwait and the United States would ignore the incident.  After the invasion we had operation Desert Storm.  This war could have been avoided with proper use of diplomacy.  Bush Sr. added 1.554 trillion dollars to the National Debt, an addition 54% in just 4 years as president.

 

Interestingly, I would suspect in reprisal, Saddam Hussein attempted to have George H.W.  Bush assassinated.  The attempt failed.  But apparently his oldest son never forgot this fact.

 

The National Debt increased under Bill Clinton but during the last year of his second term he not only balanced the budget he also reduced the Debt slightly.

 

Shortly after George W. Bush became President he got the U.S. involved in two wars: one in Afghanistan as a result of the destruction of the Twin Towers in New York City and another one in Iraq because, I would suspect, to get even with Saddam Hussein for attempting to kill his “daddy.”  The intelligence agencies in the U.S. felt, I understand, that the “weapons of mass destruction” theory or belief was pure fantasy.  Bush Jr. in eight years added 5.849 trillion to the National Debt increasing the National Debt 101% during his eight year period as president.  A good part of this money was spent fighting a pointless war which destabilized the Middle East and brought into existence such groups as ISIS and what seems hopeless confusion and endless civil war that we are stuck with today in the Middle East.

 

While Obama increased the Debt another 53%, 6.167 trillion dollars, during his first six years in office he did so to keep the country from falling into a deep depression, which had been gradually brought about by doing away with banking restriction laws that had been passed from 1933 on, during the years of the Reagan Presidency.  Reagan and his group apparently believed in a Free Market economy; with all economic decisions being made by the actions of the market.  He allowed the big banking houses, with no Government controls to create a maelstrom.

 

Despite all the Microeconomic moves of the Republican House of Representatives during the first six years of the Obama Presidency he has largely worked the nation toward economic recovery.  Had the Republicans understood basic economics the country could now be undergoing a period of full employment with a much higher tax base that might even be high enough to start reducing the National Debt.

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Other questions loom up here: What exactly is the National Debt?  How does it affect the nation?

 

According to a member of the Freedom Caucus who was interviewed on MSNBC he would vote for Paul Ryan as the new Speaker of the House of Representatives when the current one, John Boehner, leaves at the end of October 2015 if he would acknowledge the seriousness of the National Debt, over 18 trillion dollars, and work to reduce it rather than allow the country to continue to move toward bankruptcy.

 

This seems to be a basic value of most Republicans.  They don’t acknowledge that their party was mainly responsible in raising the National Debt to where it is today.  They seem to blame it on the Democrats and want to reduce Federal Government nonessential spending, particularly spending on the poor and aged.

 

This attitude keeps the country on the edge of disaster seemingly going from legislative crisis to legislative crisis.  The Debt Limit bill that was passed with strong Democratic help after the Speaker, John Boehner resigned from the House of Representatives.  In it Congress had to raise the current Debt Limit or face default by legally running out of money with which to pay its bills.  The Treasury Department had stated that Congress must raise the debt limit beyond 18.1 trillion dollars or not be able to meet all its bills by November 3, 2015.  That crisis was resolved in both Houses of Congress with help from the Democrats.  Also in both Houses of Congress funding the Federal Government will come up again in December.  Will Planned Parenthood again create a crisis there?

 

Former Speaker Boehner was able to get such a bill raising the National Debt through Congress before his Speakership ended and only with Democratic help.  The same holds true with the Senate.  The bill was for two years.  President Obama had stated that he will veto any short term bills.

 

The National Debt consists of two parts, one public and one private.  The public part of the Debt is owned in various ways by the Federal Government and is held by the Federal Reserve and such entities as Social Security that currently holds probably over 3 trillion dollars’ worth of these securities, Medicare, the Federal Savings and Loan Corporation Resolution Fund, as well as a number of other government agencies.  These debts held by governmental accounts represent cumulative surpluses, including interest earnings of these accounts.  In 2012 there were at least two direct transfers of 89 billion dollars from the FED to the Treasury that constituted interest paid on the National Debt.

 

The Federal Government admits to owning 40% of its own debt.  The probability is that it is more like 50% or 60% of the money it owes.  For example, besides massive unemployment and the loss of value of the dollar in the 2008 Real Estate Crash there was an intense mortgage problem: since a very large percentage of the mortgages issued had been broken up into microscopic size and the pieces issued by innumerable Hedge Funds into countless securities, the question that arose was who owned all that mortgage paper?

 

At first the bank computers generated documents and most of the banks foreclosed upon homes they did not own.  After this was discovered the banks stopped the foreclosures.  Then the question arose: Who did own these properties?  The answer was no one.  Each property could have been divided into hundreds of pieces, each issued to a different Hedge Fund.  It should have taken twenty of more years to straighten out this mess.  The housing industry, both old and newly constructed homes, would have been in a state of practical nonexistence.  Many older homes whose mortgages were far above their actual value had been deserted by their former owners and stayed empty, and construction companies would have found it nearly impossible to fund their projects.

 

By the Federal Reserve stepping into this problem and dealing with it they were able to largely resolve it in a period of just a few years.  I would guess that the price of resolving this problem cost the Federal Government well over ½ trillion dollars.  What the FED bought was trillions of fractional pieces of mortgage paper that the banks had created over a thirty year period.  Sorting them out would have been unbelievably expensive and probably totally impracticable.

 

Using imaginative monetary policy Ben Bernanke, the Chairman of the Federal Reserve, over a period of several years, solved this problem by pumping billions of dollars into the economy.  For a period of well over two years.  The Fed pumped 85 billion dollars into the economy monthly.  Forty billion bought back Government loans and Forty-five billion bought mortgage paper from all 50 states, literally trillions of mortgage pieces each month.   What happened to all this mortgage paper?  The probability is nothing.  It would have been prohibitive to sort all these microscopic pieces of mortgages.  An even then it would have required over 50% of the pieces for any action to be legally taken against the homeowner.  The banks had been in such a rush to continually refinance these properties that record keeping became farcical.

 

I would suspect that after two or three years most, if not all, of the deserted homes were sold for back unpaid taxes.  As for the people who stayed in their homes and couldn’t afford the continued payments, they probably waited for foreclosure that never came.  These people could no longer legally deduct their home interest from their income taxes but they still had quite a bit of extra income which they freely spent adding to the National Cash Flow, and encouraging more employment, within the United States.

 

The private section of the National Debt, the forty billion spent monthly, is money previously borrowed for short to long periods of time by the Federal Government from individuals, both in the United States and foreign countries, by foreign nations, and by numerous other entities.  By this action the Federal Government both allowed long term purchasers of this government paper to purchase long term paper at higher rates of interest and cash them out almost at will.  This process allowed the Federal Government to add all this money to the National Cash Flow continuously for this period.

 

The amount of money available to the public grew at an expediential rate.  Interestingly there was no inflationary increase with all these billions of dollars added to public spending.  Instead this Creative Monetary Policy of the Federal Reserve largely solved the bank mortgage disaster of 2008, made more cash available for economic growth, and moved the nation well into the direction of economic recovery by 2015 from the Real Estate Disaster.

 

It is also well to keep in mind that pretty much the same result could have been achieved, probably at a lower cost, by Congress passing fiscal policy as was requested by President Obama during the third year of his presidency, 2011.  This bill and others that could have been passed later would also have modernized much of our infrastructure and moved this country into the 21st Century.  But the Republicans in Congress have done nothing to really help the country or the bulk of its population.  If anything they have been penny wise and dollar stupid.

 

If the question were raised: Have we as a nation gotten our money’s worth from the ½ billion or so we spend to keep Congress functioning?  The answer is definitely negative.  In fact the situation seems to continually get worse.  With the retirement of the current Speaker of the House of Representatives will the new Speaker, Paul Ryan, be able to get positive legislation passed?  Being a very conservative Republican will he want to do this?

 

The question is currently up in the air.  The Republicans have 247 representatives out of 435.  But 40 of them belong to the Freedom Caucus.  The majority of them presumably support Ryan.  But they are far more conservative than the very conservative 207 other conservative Republicans.  In order to elect a new Speaker 218 affirmative votes were needed.  Ryan was willing to be Speaker if the Freedom Caucus  backed him as Speaker.  The majority of them have voted for him.  What will happen?

 

Meanwhile what about the bill funding the government that has to be passed before the middle of December?  The Treasury will not be able to legally pay the Governments bills unless the funding bill is passed by December of 2015.  It has been kicked down the road for three months.  If the Republicans insist that funding Planned Parenthood be removed from the bill President Obama will veto it.  Also if it is again a short term bill the President will also veto it. What will Ryan do?  What will he want to do?  It was Ryan who originally proposed using the leverage of necessary bills to force its agenda upon the President.

The Weiner Component #140A – Congress: How it Works & Doesn’t Work

English: First page of Constitution of the Uni...

According to the United States Constitution, Article I: the legislative, law making power, is given to a bicameral, law-making, Congress that consists of two Houses: the Senate and the House of Representatives.  Only they have the power to make laws that have to be identical when passed by both Houses of Congress and then signed by the President.

 

Originally the House was directly elected by the people and the Senate, which was supposed to represent the states, was elected by the legislatures of each individual state.  In 1913 this was changed by the 17th Amendment to the Constitution which had the people of each state directly elect the Senators, making them directly responsible to all the people of their respective states.

 

In the Constitution all financial bills have to originate in the House of Representatives.  This was put in so that the direct representatives of the people who paid the taxes could feel responsible for all government expenditures.  Even though the 17th Amendment changed this the power still rests with the House as the new Speaker of the House of Representatives recently stated in an interview.

 

House members serve for a two year term and then have to be reelected for another two year term.  Senators are elected for a six year period and can then stand for reelection if they so desire.  All members in both Houses are currently paid $170,000 a year for their services.

 

Today the number of legislators in the House of Representatives is fixed at 435.  Every ten years an enumeration of the population is taken and the seats are reassigned to the election districts within the states based upon increases in and/or population changes which may then redefine the election districts both in number and size within the individual states.  This was last done in 2010 and those states that had Republican legislator majorities redrew their districts in terms of their political favor by blatantly gerrymandering.  In fact in the 2012 Election over a million and ¼ more Democrats voted nationally for House Representatives but the Republicans emerged with majority representation in the House of Representatives because of favoring their party in creating the allowable number of election districts within their states.  Currently there are 247 Republicans in the House and 188 Democrats.  Each of the smaller states, even if their entire population is below the count for representatives in the larger states ate entitled to at least one representative in the House.  There are also six non-voting members representing Washington, D.C and most of the territories belonging to the United States.

 

In the Senate there are 100 members representing the fifty states.  The number of senators can be increased if additional states are added to the union.  As stated the Senators today represent the people of the entire state they come from and are elected by the entire voting population of each individual state.

 

One of the basic concepts of our country is the concept of compromise.  Without this ability our founding fathers would never have been able to bring forth the Constitution.  A document that established a government between the 13 states that were both free and slave, large and small, based with beliefs and basic values that were literally miles apart.  The current Congress seems to have lost that ability.  In fact if the current congressmen had to write a constitution today they would be unable to do it and the country would end up at best as a group of small federations.

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What always struck me as a basic concept of our form of government was best stated in a quote from Benjamin Franklin, which he wrote in all seriousness.  “In free governments the rulers are the servants and the people their superiors and sovereigns.  For the former therefore to return among the later was not to degrade but to promote them.”   Somehow this concept has become lost, particularly to many of the current Republicans in both Houses of Congress.

 

All of our members of Congress, according to Article VI of the Constitution take an oath, upon becoming a member of Congress, to uphold the Constitution.  Somehow, of late, I get the impression that many of our legislators have either forgotten or never understood this concept.  I also get the feeling that in the minds of many of our Republican legislators that the people’s function is merely to keep them in office so that they can force their will or agendas upon the nation.  And if these hard-core Republicans cannot get what they want then what exists is total gridlock, which is what seems to exist in the House of Representatives at the current time.

 

To the Tea Partiers among the Republicans in the House of Represenatives the country will function their way or not at all.  The fact that they and possibly their constituents constitute a minority of the population is immaterial.  Even though a Democratic Republic is supposed to be ruled by the will of the majority of the population they believe absolutely that they are right and everyone else is wrong or misinformed.  This is all very reminiscent of the old Communist Party where all the members had to follow the party line, or be expelled from the party.  In their hearts these people, the Freedom Caucus in the House of Representatives, the 40 hard-liners know what is right for the American People and they will have their way or nothing will happen in Congress.

 

John Boehner, the Republican Speaker of the House, has resigned both as Speaker and as a member of the House, effective October 31st.  His immediate replacement, Kevin McCarthy, the House Whip has withdrawn as a candidate for the Speakership.  He did not have the votes within his own party.  The one other possible replacement, Paul Ryan, has initially turned down the offer of assuming that role.  Presumably the price of taking it was to support numerous positions that he found unacceptable.  Boehner said he will stay in office until a replacement is found.  After a little over a week of negotiating and also being cajoled Paul Ryan accepted the Speakership.  He got the support of most of the Tea Party and the majority of the other Republican House Congressmen.

 

The Freedom Caucus, which seems to hold the balance of power among the Republican House members, were thrilled at presumably getting rid of Boehner.  If they did achieve this it was a pyrrhic victory.  They may have gotten him to resign but now Ryan is the new Speaker and in order to get him to accept the position most of the House Republicans have sworn allegiance to him.  This includes the majority of the Freedom Caucus but not the entire group.

 

There was also a move at the end September to “Ditch Mitch.”  Many far right Republican Senate members do not consider him aggressive enough to run the Republican Party in the Senate.  Louisiana Governor and Presidential Candidate Bobby Jindal has called upon Senate Majority Leader Mitch McConnell to resign.  They want someone who will stand up to the President and take some risks.  McConnell has too much support from Republicans in the Senate to be in any danger in terms of being forced out of the Senate.

 

The frustration for these hard-liners seems to be that they, the Republicans, have the majority in both Houses of Congress but their particular group doesn’t have the votes to stop legislation if it is also supported in both Houses of Congress.  The fact that this situation exists in Congress would indicate the epitome of dysfunctionality.

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The basic question, in terms of Congress, comes down to: What is the main purpose of the Government?  And the answer to that question, most simply stated is answered in the preamble to the Constitution:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

This is what the members of Congress have taken an oath to do.  Is this what they, particularly the Republicans in the House of Representatives and the Senate, are doing?

 

Currently the House of Representatives has a new Speaker as its presiding officer.  There are currently 247 Republicans in the House and 188 Democrats.  The majority party has easily elected a new speaker if all the Republicans vote for whoever is running for that position.  But on the far right of the conservative party is the Freedom Coalition.  These are the 40 ultra-conservative hardline Tea Partiers.  To them the rest of the Republican Party is not far enough to the right.  Presumably they will not support anyone who will go against their agenda.  They want to get rid of Affordable Health Care and defund Planned Parenthood.  I suspect many of them may also be racial bigots.    I imagine this feeling goes beyond this specific group to many other Republicans in Congress.  Has any of this changed with the election of Paul Ryan?

 

If 40 votes are subtracted from the 247 currently elected Republicans they do not have enough votes to pass legislation if the 40 and the 188 elected Democrats do not support their move.  Basically what this means is that the Speaker of the House and the Senate Majority Leader both have to get the support of the majority of Democrats in order to pass bills that a percentage of their party will not support.

 

John Boehner has faced this situation since becoming Speaker of the House in 2011 and Mitch McConnell will face this situation for the next fourteen months.  Will Paul Ryan have to face this same situation?  The Republicans may have the majority in both Houses but it will take a coalition of both political parties to run the country.  This has to be the ultimate irony and could well lead to the formation of a new national political party after the 2016 elections.

 

The nation is now at the point of crisis.  Legislative actions will have to be taken or the functioning of the government could be forced to cease.  The Debt Limit Crisis has been averted by negotiations between the President, the Senate Republican leadership and the former Speaker, John Boehner, raising the Debt limit for the next two years.

 

There is also funding the Federal Government.  This could stop the Federal Government if Congress does not pass a bill by December.  John Boehner was able to avoid a Federal Government shutdown by resigning as Speaker and quitting the House effective October 31.  But that pushed the deadline from September to December.  It will again be reached in December of 2015.

 

This major problems still must be dealt with this year but there are numerous others that will be coming up early in January of 2016 like the automatic cuts of about 5% across the board on federal and discretionary spending if Congress does not act to stop some or all of this spending.  That is sequestration, which stays in existence until 2023.

 

This does not count infrastructure problems like hundred or more year old bridges, some of which seem to be ready to collapse at some near future point or intercontinental train tracks which are having innumerable accidents particularly oil tankers that are jumping tracks and burning for days on end, causing massive evacuations from the deadly toxic smoke of towns and large sections of cities.  This country is filled with infrastructure that was built in the first half of the Twentieth Century or earlier which needs to be replaced and/or modernized to meet the needs of today’s population.

 

There are also an obscene number of people being shot every day by people who, for mental reasons, should never be allowed to purchase guns.  We can follow the advice of Presidential candidate Jeb Bush who after the shooting of innocent students at a college said, “Stuff happens.”  A week later, after another similar shooting, he kept his mouth shut.  I expected him to say, “Stuff still happens.”  Mentally disturbed people should not have easy access to weapons.  Somehow, even with the NRA, Congress needs to deal with this problem.  It is time we stopped leading the industrial nations of the world in gun homicides.

 

There are other problems, including everyday things, like fiscal policy, the War against ISIS, the other crises in the Middle East, China, and Russia that require participation by Congress.  None of this is being dealt with by Congress.  They seem to be getting paid $170,000 each for taking vacations and leaving the country to go its own way without their participation.  In fact the House of Representatives will meet for 111 days in 2016.  No work week for them exceeds three days.  Most of the fighting going on by the U.S. Military has never been authorized by the Congress.  The Constitution clearly makes them the arbiters of war and peace.  Congress has left these decisions completely in the hands of the President.  They have refused to take any action.

 

In essence Congress is dysfunctional.  Speaker, Paul Ryan, in his acceptance speech has defined Congress as broken.  He says he will start anew.  But Speaker Ryan is himself not far to the left of the Freedom Caucus.   Will there be positive changes or will the House fall back into non-functionality?  Will the House shut down the Government again?   The political future should be interesting.

The Weiner Component #139B – Paul Ryan as the New Speaker of the House of Representatives

With the retirement of John Boehner, brought about by the Tea Party or otherwise, Paul Ryan will be the new Speaker of the House of Representatives.  At his election on October 29, 2015 he received a majority of Republican votes to become Speaker.

 

The 44 year old Ryan has been in Congress since 1999.  He is from Wisconsin’s First District and became Chairman of the House Ways & Means Committee in early January of 2015.  Prior to that he was Chairman of the House Budget Committee, from January 3, 2011 to January 3, 2015.

 

From what I understand he was not anxious to have this position since it has traditionally been a dead-ended one.  Historically no one has gone on from it to become President of the United States.  It would seem that since Ryan ran in 2012 as Mitt Romney’s Vice Presidential candidate he has been looking toward eventually running for the presidency.

 

Next to the Speaker the Chairman of the Ways & Means Committee is the most powerful position in the House as that Committee both makes the committee choices and writes the agenda for all the meetings of the House of Representatives.

 

Ryan did not originally want the Speakership because up until this point it has been an almost impossible job.  The Republicans in the House of Representatives, all 247 of them, meet as a single caucus generally before the entire House meets to conduct actual business.  But in addition to this the Republicans also meet in three smaller specific caucuses.  On the ultra-right are 30 Tea Party members, the Freedom Caucus, who have generally voted on all issues exactly the same.  Then there is the far-right Republican Caucus and finally the extreme-right caucus.

 

Up until Wednesday, October 28, 2015 the Speaker of the House could never depend on the Freedom Caucus and some of the other members of the overall Republican Caucus to put through necessary legislation.  On some occasions he even had to negotiate with Nancy Pelosi, the Democratic Minority Leader, in order to get necessary legislation passed.  This situation had existed since the 2011 Congressional session when he was first elected Speaker.

 

This behavior of dealing with Democrats to a large number of Republican members on the far right, like the Freedom Caucus, has been a betrayal of Republican principles.  In addition the former Speaker, John Boehner, once played a game of golf with President Barak Obama.  This was an unforgivable sin to the members of the Freedom Caucus.

 

In order to not shut down the Federal Government former Speaker Boehner in late September resigned, effective the end of October, and got a bill passed with Democratic help that funded the Government through December.  Apparently he felt he had to do this in order to not shut down the Federal Government by having the Republicans refuse to fund it over the issue of funding Planned Parenthood.

 

On Wednesday, October 28, 2015 former Speaker Boehner, after negotiating with the leaders of the Senate and the President, got another bill through the House raising the Debt Limit for the next two years.  Without this new bill the Federal Government would not have been able to spend money after November 3, 2015.

 

Ryan’s major upcoming task will be to pass legislation through the House of Representatives that would allow the Federal Government to pay its bills after the middle of December.  I would assume that this bill is one of the conditions of Paul Ryan accepting the Speakership.  However a large number of Republicans are dedicated to the idea of doing away with the subsidy to Planned Parenthood.  They might still insist on this in December.

 

President Obama has stated that if this is done he will veto the bill and there are not enough Republicans in either House to override his veto.  He has also stated that he will veto any future short term solution to this problem.  Even with promises from his caucus of all the Republicans this bill will apparently be the new Speaker’s big test.  If he needs Democratic help to get the bill passed Paul Ryan will continue his speakership on the same level as John Boehner suffered through.

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With Boehner’s resignation and Kevin McCarthy, the Republican Whip not being able to get the votes needed, Paul Ryan seemed to be the only member of the House of Representatives who might be able to secure a large enough majority of Republican support to get elected.  He apparently didn’t really want the job but was probably later convinced that no one else could get enough votes to be elected Speaker.  And with no Speaker the House of Representatives couldn’t meet.

 

In the end Ryan set conditions under which he would accept the position.  It would seem that the Freedom Caucus and others also had conditions.  All these were negotiated leading to, among other things, rule changes in running the House of Representatives.  One apparent rule was that nothing would be brought to the floor of the House that did not have a majority of Republican support.  Another was that Ryan would spend his weekends with his family instead of raising money for the Republican Party.  There was also a rule, propagated by the Freedom Caucus, allowing an individual lawmaker to force a vote ousting the speaker at any time.  Obviously there were other changes that we will learn about later on.

 

When he announced his candidacy for the Speaker’s job Ryan said he wanted endorsements from all three Republican Caucuses.  This should guarantee he will emerge as the unity candidate of the House Republicans.  He doesn’t want to risk being in the middle of the intraparty unrest under which former Speaker Boehner lived in since 2011.  The Tea Party, Freedom Caucus, fell short of a formal endorsement since that would have required 80% agreement.  The group was not able to achieve this level, but Ryan accepted their majority vote as a show of Republican unity.

 

What will happen?  That’s a good question.

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It is important to remember that Paul Ryan, when he ran with Mitt Romney as his Vice Presidential candidate, was considered by many to be the most conservative Vice Presidential candidate to run for that office since the turn of the 20th Century.

 

Originally he was a follower of Ayn Rand, who in her few books, particularly in “Atlas Shrugged,” advocated extreme individualism with the masses being an unfeeling horde.  He grew up with these beliefs, to the point of making his staff read her books.  This persisted from his teen years, when he discovered her writing, until April 2012 when he was criticized by the Georgetown University faculty.  At that time, being a good Catholic he rejected her philosophy as being “atheistic.”  He called the reports of his advocating Rand’s perspective an “urban legend,” (Whatever that means.) and stated that he was strongly influenced by his Roman Catholic faith and by the writings of St. Thomas Aquinas.

 

There are numerous other instances where Paul Ryan suddenly totally changed his position.  It seems that his attitudes were flexible, changing with the needs of the time.  It would appear that in August 2012, soon after Romney choose him as his VP, that the Tea Party wanted a nominee other than Romney.  It had gotten one of its ideological heroes in second place.

 

Ryan voted for the two Bush tax cuts in 2001 and in 2003.  He supported the 2003 bill that created the Medicare Part D, prescription drug benefit and the $700 billion bank bailout.  He was one of the 32 Republicans in the House to vote for the auto industry bailout.  In the past conservative commentators have criticized Ryan for deficit causing policies during the George W. Bush administration.

 

Paul Ryan existence became public knowledge over his financial plans or Ryan budgets.  His proposals outlined negative changes to entitlement spending that, among other things, would replace Medicare with a voucher program for those under the age of 55.  This 2008 bill never made it out of committee.  In 2009 he introduced a bill that in addition to his earlier one would impose a five year freeze on all discretionary spending.  It would also allow taxpayers, if they so choose, to opt out of the Federal Income Tax system and pay a flat 10% income tax on adjusted gross incomes up to $100,000 for couples and $50,000 for singles.  Any earnings above this amount would be taxed at 25%.  The bill was rejected in the Democratic controlled House by a vote of 293 to 137, with 18 Republicans in opposition.

 

In 2010 he released a modified version of his earlier bills.  He has released spending bills just about every year.  All of them cut entitlement spending and will supposedly balance the Federal Budget in about a decade.  In 2015 the same pattern is followed with even deeper entitlement cuts.  The overall evaluation is that his budget proposals would increase middle-class taxes while cutting taxes for the upper percentile of the population.  In terms of balancing the budget in ten years they are all wishful thinking.

 

It is worth noting that the Center on Budget and Policy Priorities has been highly critical of Ryan’s budget proposals, stating that they would shift income to the wealthy while increasing poverty and inequality.

 

Ryan in 2004 and 2005 got the Bush administration to propose privatization of Social Security.  He’s a supporter of private school vouchers.  In 2011 Ryan supported using the federal debt ceiling as leverage to reduce Federal spending.

 

Paul Ryan has described himself as being “as pro-life as a person gets.”  He has co-sponsored 18 bills in the Congress that restrict abortions.  He believes that all abortions should be illegal, including those resulting from rape or incest, and he only makes an exception in cases where the woman’s life is at risk.

 

Ryan has recommended that Medicaid be converted into block grants with the Federal Government’s share of the cost being cut by $800 billion over the next ten years.  Medicaid is administered by the individual states under a strong level of Federal control.  The problem with a blanket block grant is that there is no control over how the state will use the money.  Block grants in the past have often been used for other purposes than for what they were issued.

 

In his 1998 campaign for the House of Representatives Ryan expressed his willingness to allow states to criminally prosecute women who have abortions.  He would let each state decide on the extent of the penalties.

 

In 2009 he cosponsored the Sanctity of Life Act, which would provide that fertilized eggs ”shall have all the legal and Constitutional attributes and privileges of personhood” and would have given Congress, …the authority to protect the lives of all human beings residing in its respective jurisdictions.”

 

Ryan has voted against continued federal aid for Planned Parenthood and Title X family planning programs.  The partial funding of these programs were originally signed into law by the Republican President, Richard M. Nixon.  Ryan supported legislation that would impose criminal penalties for doctors who perform partial birth abortions.  He opposed the government paying for over the counter emergency contraceptive pills.  He also opposed same sex marriage and had supported a constitutional amendment that would ban it.

 

Paul Ryan has supported the rights of gun owners and opposed stricter gun control measures.  He voted against a bill for stronger background checks and is for purchases at gun shows.

 

Originally Ryan supported legislation that would have allowed some illegal immigrants to apply for temporary guest worker status.  This included a bill that would provide a pathway to permanent residence status.  More recently Ryan has adopted a firm anti-amnesty enforcement stance on illegal immigration.  He voted against the Dream Act which was a bill that would provide conditional permanent residency to illegal immigrants who were brought to the United States as children if they mainly attend college or serve in the military.

 

Ryan does not believe in climate change; he accuses climatologists of using “statistical tricks to distort their findings and intentionally mislead the public on the issue of climate change.”  He has criticized the Environmental Protection Agency’s (EPA) classification of carbon dioxide as a pollutant.  Ryan also supports a ten year $40 billion tax break for the petroleum industry and has proposed cutting funding for renewable energy research and subsidies.

 

He has made recommendations to enact cuts to welfare, child care, Pell grants, and several other federal assistance programs like food stamps and housing aid.  His argument being that these program serve as an incentive for the poor not having to work.

 

In 2001 and 2004 he voted to end the embargo in Cuba.  Later Ryan reversed his position and since 2007 he has voted for maintaining the embargo.  He called Obama’s 2009 “reset” of relations with Russia as “appeasement.

 

He voted for sequestration in 2013, across the board cuts in almost all government programs, because President Obama and the Democrats would voluntarily refuse to cut discretionary (nonmilitary) programs.  This is a ten year program that automatically make significant cuts every year unless Congress passes specific legislation to stop some of it.

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This is the new Speaker of the House of Representatives, the man who has replaced former Speaker John Boehner.  He was overwhelmingly elected to his new position.  He received 238 out of 247 Republican votes.   Nine Republicans, apparently from the Freedom Caucus, did not vote for him; they apparently felt he was not conservative enough.  Ryan needed 218 votes to be elected.  If he can maintain that majority he will not need Democratic help to get legislation through.

 

The question arises as to how he will lead.  He’s been a bit of a chameleon in the past, sometimes changing his position to adhere to the party line.   If he continues in this mode there will be another Federal Government Shutdown before the 2016 Presidential Election.  But if he acts more moderately will he retain the overall support of all his fellow Republicans in the House?  Which position will he adhere to?

 

In December he still has to fund the Federal Government.  At the beginning of January the remaining sequestration cuts automatically go into effect unless Congress passes a bill(s) and the President signs it/them.  The military aspect of the problem has been solved with the current bill that squeaked through Congress at the end of September that raised the Debt Limit for two years and also funded the military.

 

Paul Ryan, the 54th House Speaker, in his acceptance speech, stated that: “Let’s be frank.  The House is broken.  We are not solving problems.  We are adding to them.  And I am not interested in laying blame.  We are not settling scores.  We are wiping the slate clean.”

 

“If there were ever a time for us to step up, this would be that time.  The cynics will scoff and say it’s not possible.  But you better believe we are going to try.  We will not duck the tough issues.”

 

Will any other needed legislation come into being?  Since the midterm Election of 2014, when the Republicans gained a slight majority in the Senate (54 Republicans to 44 Democrats and 2 Independents) the Republican dominated Congress has accomplished almost nothing.

The new debt ceiling bill was passed by Boehner with heavy Democratic support, thus “cleaning the barn” in Boehner’s words.  If Ryan has to also use the Democrats he will alienate a lot of Republican House members.  It should be interesting and possibly depressing to find out what will happen!

 

 

The Weiner Component #137A – John Boehner’s Resignation & the House Republican Party

Planned Parenthood volunteers help bring the f...

Planned Parenthood volunteers help bring the fight for health insurance reform to the Ohio Statehouse in Columbus. (Photo credit: Wikipedia)

One day after a visit to Congress by the Pope, wherein he spoke to a joint session of the legislature, and, among other things, shook hands with the Speaker of the House of Representatives John Boehner, John Boehner handed in his resignation as Speaker of the House and as a member of Congress, effective October 31, 2015.  He is currently 65 years old, a good time to retire.

 

Boehner had originally been the Republican minority leader in the House of Representatives and became Speaker of the House in 2011 when the Republicans achieved a majority in the House of Representatives.  Over the past five years he has been categorized as one of the worst Speakers in the history of the United States, having no real control over his own party and having to get the support of Democrats in the House in order to pass a good deal of the legislation he espoused.  He is also known for legislation he ignored and never brought up.

 

What has happened over the last decade or so is that The Tea Party has come into existence as a far right arm of the Republican Party.  Many of them have been elected to Congress over the years.  They and the Evangelicals have gotten together and formed the extreme right end of the Republican Party.  Seemingly they control a good percentage of the Republican election funds which they will withhold from any candidate that does not follow the party line, their line of no compromise.  Consequently they have a lot of power in the House of Representatives which they have continually exercised.

 

Speaker Boehner stated, when he was interviewed on television, after he had handed in his resignation, that these far right Republicans know that a large number of their goals are totally unrealistic, that they cannot be achieved, but they insist on them just the same.

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There is an interesting note of irony here.  The original Tea Partiers who operated during the late colonial period of our history were the merchants who ran the General Stores in the colonies of Boston, New York, and several other cities at the time.  Among other items they sold tea, which was the national drink.  The British East India Company brought the tea over and sold it to the colonial merchants.  It was fairly expensive and heavily taxed by the British government.  The colonial merchants did not appreciate the high price of the tea nor the tax so they bought much cheaper smuggled tea.

 

Shortly before the Revolutionary War the British East India Company was at the point of bankruptcy.  Since many members of Parliament owned shares in this company they passed a law lowering both the cost of the tea and the taxes on it.  The official price of this tea, including the taxes placed upon it, was now cheaper than the price of the smuggled tea.  The men who dumped the crates of tea into the harbors of Boston and New York were the merchants who all had a large stock of smuggled tea in their warehouses.  They rubbed red ocher over their bodies and performed the action after dark.

These were the patriots that the modern Tea Partiers have named themselves after.  I sometimes get the feeling that the nomenclature is as apt today as it was in the late 18th Century.

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John Boehner, as Speaker, has operated between their whims and sanity.  He is not a Tea Partier.  He has been forced at times to get Democratic support for some of his bills so he could get them passed.  His job as Speaker has been a very difficult and frustrating one.  How do you lead a group that is essentially marching backwards, sometimes in several different directions at the same time and has no real understanding of government?  They have shut down the government at the cost of many millions of dollars.  They have passed a bill doing away with Affordable Health Care over fifty times that never even once reached the Senate.  Where they have been successful they have passed legislation that has massively increased unemployment during a time of recession, one example would be the sequester law, which is supposed to be an economizing measure, but that is basically choking this nation.

 

The Republicans were threatening to shut the government down again.  The first shut-down was about getting rid of Affordable Health Care; this time it was over the issue of continuing the funding of Planned Parenthood, accusing them of being a national facility for committing abortions.  Even though no federal funds can be used for abortions by any group the Republicans are pushing the fact that since this organization performs abortions it should not be funded.  Planned Parenthood is a women’s and to some extent male medical facility.  Many people who cannot afford medical care receive that there free or for a payment of what they can afford.  Abortions are about 3% of what they do for the poorer women of the United States.  Cancelling this organization by defunding it would strike a heavy blow against the poor and needy of the country.

 

The Republicans present Planned Parenthood as an abortion clinic, period.  It is over this issue that the far right of the Republican Party and the Evangelicals in Congress want to shut down the Federal Government.

 

In fact Carley Fiorina has made an exaggerated and fabricated image of an abortion the cornerstone of her 2016 presidential campaign.  She has sent out robocalls using this message as an appeal and request for funds.  She describes a living born fetus kicking its legs as Planned Parenthood sells its brain for medical research.  The woman, who gave birth to this fetus which was still-born denounced Fiorina for misusing her dead child as an example of a Planned Parenthood action.  Planned Parenthood had nothing to do with the false image that Fiorina supposedly based her statement upon.  It was a blatant fabrication, a lie, and she used the child without getting permission from the mother who has protested over this act.

 

Interestingly the Republicans keep looking to find Planned Parenthood guilty of breaking the law.  There have been four Congressional investigations by a Standing Committee in Congress.  None of them have found any evidence of illegal activity.  As a result of all this Congressional bashing more of the general public have come to support Planned Parenthood.

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With the October 31 resignation of John Boehner this issue of closing down the government of the United States has gone away, at least until December of 2015.  A short term funding bill has gone through the Senate, espoused by the Republican Majority Leader, Mitch McConnell, and supported by the Democrats and enough Republicans to end a filibuster by Senator Ted Cruz.  Obviously there can be no filibuster in the House of Representatives and the bill was later brought up there by an unpressured Speaker and passed by the Democrats with a small number of Republicans voting for it.  The issue will not come up again until December when the new Speaker of the House of Representatives will have to again deal with this issue of funding the government.  Will the issue of Planned Parenthood come up again?  Will the Republicans find another excuse to close down the government?  After all the Tea Party tends to find the entire National Government repressive.  They seem to want to hurt it.

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By resigning as Speaker John Boehner, in a manner of speaking, has held up his middle finger to the far right in his party.  He will be in power for a short period of time.  The Tea Partiers can no longer pressure him to do anything.  There will be no immediate government shutdown.  Ted Cruz, who is very brave leading other people to take risks will be ineffective here.  The far right Republicans do not have a majority within their own party in the House.  They cannot elect one of their own as the new Speaker.  And the election for a new Speaker will not take place until November 1, the day after John Boehner is no longer Speaker of the House.

 

The way it looks at present is that the next Speaker will be Kevin McCarthy, the current majority leader.  He was first elected to the House in 2008, became majority leader in 2014 when Eric Cantor lost the election to a far right member of the Tea Party.  Politically McCarthy comes from an overwhelming Republican District in Bakersfield, California.  While not a Tea Party member he has signed a pledge sponsored by Americans for Prosperity promising not to vote against any climate change legislation that would raise taxes on affected companies. McCarthy is pro-life.  He has voted against Patient Protection and Affordable Health Care.  During his eight years in the House there are no real bills he has originated.  Where does he stand in relation to the Tea Party?  If he’s elected we’ll find out in November of this year.

 

A strange thing about Kevin McCarthy is that he occasionally has a problem in a public speech expressing a coherent sentence.  He also mispronounces words adding letters to them and his sentences sometimes become a flow of words that are meaningless to everyone, possibly except for himself.  In addition from what he’s said he feels that the House Minority Leader, Nancy Pelosi, always looks at him contemptibly.  Many members of the far right feel he is too liberal to be their Speaker.

 

Recently [n a moment of exultation Kevin McCarthy, while being interviewed on Fox News, without being asked, proudly stated that Hillary Clinton’s popularity numbers had been very high but after testifying four times before a Standing Committee on Benghazi her popularity dropped considerably.  He implied strongly and happily that these appearances lowered her popularity significantly.  There is also a fifth Benghazi hearing coming up since the prior four have not been able to place any blame on her.  He confirmed what the Democrats had been saying since they started that these hearings are politically motivated.  Of course McCarthy tried to step back from what he said a day or two afterward.

 

In one sense this is very sad because these four hearings are estimated to have cost the American taxpayers about four million dollars.  This is a strange way for a political party that prides itself upon reducing government spending to spend four million dollars to achieve a so-called political point.  If he is elected Speaker of the House of Representatives it should be interesting if not strange.  His tenure may be very short.

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John Boehner is currently a free agent.  No one can bring any pressure upon him.  He has stated that there will be no government shut down.  If he wished to do so he could deal with the problem of immigration that this country has been facing and ignoring for a number of years.  There are other legislative items that need to be dealt with.   He would have the Democratic votes and probably enough Republican votes to pass almost any bill.  If he does this what the Senate will do is an open question, but McConnell might very well go along with him.  McConnell has stated that the Republican majority will show the country that it can govern.

 

For the first time since his election as Speaker of the House of     Representatives John Boehner is a free agent.  No one can now bring pressure or make demands on him.  He has about a month left to serve in this position and then he is retired from the House.  At the age of 65 he can go back to Ohio and actually retire if he so desires since he currently is estimated as having a net worth of about five million dollars and a generous retirement program from Congress, having served in the House since 1991, 24 years.

 

Instead, if he so desires, he can serve one or another large corporation as a lobbyist and earn additional millions of dollars.  Eric Cantor, when he lost the 2014 election to a more reactionary Tea Partier and was no longer Majority Leader of the Republican’s in the House, took a highly lucrative position earning over a million dollars a year.  Boehner can do the same thing.  The problem here is that once he takes the job he has to follow orders and he is lobbying for the interests of a large corporation.  This is not necessarily a good thing; it somehow resembles selling your soul for money.

 

On the other hand John Boehner can offer his services to a low dollar entity like the Catholic Bishops or to a people oriented enterprise like the movement to end violence against women.  There are many such organizations that would love to have his help as a Washington lobbyist.  He could get a great deal of fulfillment working for one or even several of these.

 

Besides keeping the government functioning how does Boehner’s retirement affect the House of Representatives?  First off many House Tea Partiers consider it a victory for themselves because he was never one of them.  He has occasionally played golf with President Obama, who they consider the enemy.  But the new Speaker will not be a Tea Partier; they don’t have enough votes for that.  Will they be able to control the new Speaker?  Will they be able to shut the government down in December of this year?  Presumably the Congressional Tea Partiers in the Senate would also like to get rid of Mitch McConnell, force him to resign from the Senate.  Among some conservatives there is a “Ditch Mitch” campaign.   Will they be able to do any of this?  If they were somehow to succeed in carrying out their nefarious agenda what will happen?  Those are interesting questions.

 

In my estimation if they were to succeed in any of this, particularly in a Presidential Election year they would probably discredit themselves, particularly the House of Representatives, before the voting public and could conceivably, even with gerrymandered voting districts and some suppressions of the vote, end up with a Democratic majority in the House of Representatives.  John Boehner may have started a roller-coaster going with ever-increasing speed downhill for the Tea Party.  We will see where it ends.

Official portrait of United States House Speak...

Official portrait of United States House Speaker (R-Ohio). (Photo credit: Wikipedia)