Fiscal Cliff Primer

Kevin Drum has an excellent overview of the fiscal cliff.  Go read it.  You really should.  But, if you are short of time, here is a two minute version.

If Congress does not act by Jan 1, 2013, three major things will happen:

·         (a) Automatic spending cuts (defense and domestic discretionary spending) will kick in

·         (b) Bush era tax-cuts for the middle class and wealthy will expire, and

·         (c) Payroll holiday, and extension of unemployment benefits will also expire.

Letter To My Congressman

The elections are over, and the democrats won big.  The stunned reactions from Republicans after the election night gives a clue to the echo-chamber nature of the right wing universe.  Redistricting helped the republicans (I will write a detailed post about that later), maintain control of the house.  I think it is important to let your congressman, particularly if they are Republican, your views about issues as a personal letter.  A letter, hopefully will let the Congressman know that there are alternate points of view.  

Even if he/she does not agree with your point of view, at the very least, it might help him/her to tone down the harsh rhetoric that the right wing has adopted in recent years, and make a conversation possible.  This is good for all of us. 

Here is my letter to my Congressman Mr. Pete Olson about the fiscal cliff.  He was re-elected with a comfortable margin in 2012 from a carefully redistricted TX-22.  Please do write to your congressman stating your position.  It simply cannot hurt.

-- Begin

Congressman Olson,

Congratulations on your re-election to represent the people of the US Congressional district TX-22.  I am one of your constituents.  I do not know if you would read this letter, or one of your staffer would put it in a pile of ‘for’ or ‘against’ letters.  I am writing this letter to express my concern regarding the upcoming ‘fiscal cliff’.

I work full time, and have worked all my life.  I pay my taxes.  I put money into retirement funds, set aside money for college education for my kids.  In 2008, I watched my retirement accounts/college education funds diminish substantially in value and the American banking system came to a grinding halt because of the risky gamble that wall-street financiers took with my money using instruments such as MBS, CDO, etc. 

I am afraid that a similar financial catastrophe can happen in less than six weeks if we fall off the so-called ‘fiscal cliff’.  Without cohesive action from the Republican congress, Democratic Senate, and the President, automatic spending cuts, as well as tax increases will go into effect on Jan 1, 2013.  Non-partisan, CBO has released a considered analysis today (Nov 09^th, 2012) that found that if we drive off of the fiscal cliff GDP will shrink by 0.5%, and unemployment would soar to 9.1%.

On the other hand, if we can agree on one thing, e.g., just eliminate the tax-breaks for individual incomes > 200,000 per year (250,000 for couples), it would increase:

(a)  Full Time Equivalent (FTE) employment by 2.7 million jobs (range: 0.8 - 4.5 million jobs), and

(b) Boost real GDP by 2.2% (range: 0.6% to 3.9%)

Both President Obama, and Governor Romney made the arguments for and against restoring the tax-rate for the top 2% to the levels during Clinton era during this election season. People heard those arguments ad nauseam during the recent campaign from both sides and re-elected Obama.  The CBO study also points out that eliminating some tax cuts will spur economic activity, and create much needed jobs.  More importantly, it removes uncertainty in policy in the short term, and spurs investments, as we continue to work to reduce long term deficits.

A deep recession affects all Americans, Republicans and Democrats alike. I know that you would be under tremendous pressure to tow the party line as advocated by a vocal minority within the Republican Party. 

 As your constituent, I want you to know that I strongly support the idea of compromise and finding common ground, even if it includes tax hikes for the very wealthy.   

Sincerely,

xxx

-- End

Kari

Michael Medved's Advise to GOP

Michael Medved has some dubious advise to GOP in the wake of their 2012 election.  Medved is trying really, really hard to somehow diminish Obama's re-election. 

Here is his first para (in italics, and my comments in non-italics):


"Barack Obama broke another barrier with his re-election: becoming the first president in the history of the republic to win a second term with less support in both the popular vote and the Electoral College than he received the first time he ran. "

Talk about cherry picking data. If Medved wants to claim that all re-elected presidents had secured more electoral college votes as well as a greater percent of popular vote compared to their prior election, then by that measure, FDR also fails.  FDR secured 57.4%, 60.8%, 57.7%, and 53.4% of the popular vote in 1932, 36,40, and 44 respectively.  His popular vote margin declined for his third and fourth terms, compared to the first and the second terms.  Similarly, his electoral college vote margin also declined (472, 523, 442, and 432) in the third and fourth terms compared to first and second.


When all ballots are counted, at least eight million Americans who backed him in 2008 will have either switched to Mitt Romney or failed to show up at the polls. 

Barack Obama's 2008 margin is an all-time high in presidential popular vote, for understandable reasons.  In 2012, for some reason, the total number of ballots cast were lower than in 2008.  Yes, Obama, secured fewer votes in 2012, than in 2008.  There could be two potential reasons for this. His 2008 margin was super charged by the abysmal performance of George W Bush - the person he ran against.  Secondly, the voter turnout for 2012 may end up lower than that it was for 2008* (perhaps due to Sandy).    Let us look at another way. John McCain secured around 60 Million votes in 2008, and in 2012, Romney (after spending almost twice as much as McCain) got only 56.4 million votes!  Why did not John McCain voters, not show up for Mitt Romney?   

Two important states that went for him last time—Indiana and North Carolina—reverted to their Republican roots and many others—Ohio, Wisconsin, Minnesota, Colorado,Virginia and Florida—chose the president by only the slimmest of margins.

By what measure, are Indiana and North Carolina important states? Obama beat Romney in MN, IA, WI, MI by at least 5%  - not the slimmest of margins.   With respect to FL, in 2008 he carried FL by a squeaker (2.7%), and he might pull this off again in 2012. The real question is why was that Romney could not pick up any more of the battleground states despite incredible amounts of money that was spent on behalf of his campaign - when the unemployment was over 7%?

In contrast to the solid 52.9 percent of the electorate he carried in the hope-and-change campaign of 2008, Obama looks likely to fall below 50 percent of the popular vote this time, joining George W. Bush (first term), Bill Clinton (both terms), Richard Nixon (first term), John F. Kennedy, Harry Truman, Woodrow Wilson (both terms) and many others who earned the dubious distinction of serving as “minority presidents.”

Incorrect.  In 2012, it looks like Obama will secure about 51% of the popular votes, and may have about 3 million + vote margin against Romney.  If 52.9% of the votes is 'solid', then 51.x% is just as solid.  In fact, the vote margins are roughly similar to what George W Bush (both in terms of the popular vote % and vote differential) had against John Kerry.  With just 278 electoral votes, GWB claimed a mandate.

All this misdirection was just in the first para. I know why Medved is trying so hard.  Within the Republican bubble, Obama should have lost the election, and lost big.  When the reality is different, they have a tough time accepting it.  Mr. Medved is trying to give them some lollipops to soothe the disruption caused by the intrusion of reality into their bubble world, by concocting some reasonable sounding phrases.  Too bad, Mathematics is reality based, and it really does not work.

Here are the simple facts about 2012 election that Republicans should keep in mind:

The country re-elected Obama

Electoral vote margin : 332-206 (126 vote margin)

Popular vote margin : Between 2.6-3.0 million votes*

Popular vote % margin: 2 - 3 %*

Obama has secured more than 50% of presidential ballots cast (in each of his two elections).

In the Senate, democrats picked up a net of two additional seats.

Democrats gained a few house seats.

Republicans lost the presidency, lost Senate seats, lost Congressional seats.  Republicans outspent the Democrats by at least 100 million dollars in a handful of states.  And they lost.  Those are simple facts.  People did not buy what republicans were selling. 

First, Medved should accept reality.  Then he should consider dispensing advise to fellow GOP.

Kari

* Votes are still being counted.