Hollande: Europe Needs More Bureaucracy, More Spending and Higher Taxes

The ‘Growth President’ Has an Epiphany

Hi guys! You won't believe what great idea I had…

You can't keep a good énarque down. Faced with an economy that is no longer merely circling the drain but gurgling down it at great speed, Francois Hollande has discovered what Europe needs to fix its ailments.

Perhaps not surprisingly, his epiphany, revealed to the press after his first 150 days in office, consisted of the recognition that what the EU urgently needs is yet another layer of centralized bureaucracy, complete with its own taxing power and 'harmonized' taxes (this is the codeword for 'everybody's taxes should be as high as those in France, i.e., the highest possible') across the continent.

That will fix things. For sure.

According to a Reuters report: 

“French President Francois Hollande called on Thursday for an economic government for the euro zone with its own budget, the right to borrow, a harmonized tax system and a full-time president.

At a 150-minute news conference marking his first year in office, a day after economic data showed France had slipped into recession, the Socialist leader defended his record on economic reform and budget discipline and told the French people they would have to work "a bit longer" for a full pension in future. Rebutting criticism that France has lost its leadership role in Europe because of its dwindling economic competitiveness, Hollande said he wanted to create a fully-fledged political European Union within two years.

"It is my responsibility as the leader of a founder member of the European Union… to pull Europe out of this torpor that has gripped it, and to reduce people's disenchantment with it," Hollande said. "If Europe stays in the state it is now, it could be the end of the project."

He acknowledged he could face resistance from Germany, Europe's dominant power, which opposes mutualising debt among member states. Berlin is also reluctant to give the euro zone its own secretariat for fear of deepening division in the EU, between the 17 members of the single currency and the 10 others. Non-euro Britain's government already faces growing domestic pressure to hold a referendum on leaving the bloc.

Hollande said he wanted Britain to stay in the EU but added: "I can understand that others don't want to join (the single currency). But they cannot stop the euro zone from advancing."

Speaking in Berlin before the French leader announced his initiative, German Chancellor Angela Merkel said her relations with Hollande were good, and she was "very optimistic" France would strike a balance between growth and budgetary rigor.

Hollande said a future euro zone economic government would debate the main political and economic decisions to be taken by member states, harmonize national fiscal and welfare policies, and launch a battle against tax fraud.

He proposed bringing forward planned EU spending to combat record youth unemployment, pushing for an EU-wide transition to renewable energy sources, and envisaged "a budget capacity that would be granted to the euro zone along with the gradual possibility of raising debt".

The Rise of the Megacity

If megacities are such shitholes, why are so many people running toward rather than away from them?

By DOUGLAS RAE

The stupid ones have gathered in a field in the center of the town. Every now and then a truck comes by, and all the men in the field rush to it with their hands outstretched, shouting “Take me! Take me!”

Everyone pushed me; I pushed back, but the truck scooped up only six or seven men and left the rest of us behind. They were off on some construction or digging job—the lucky bastards. Another half hour of waiting. Another truck came. Another scramble, another fight. After the fifth or sixth fight of the day, I finally found myself at the head of the crowd, face-to-face with the truck driver. He was a Sikh, a man with a big blue turban. In one hand he held a wooden stick, and he swung the stick to drive back the crowd. 

“Everyone!” he shouted. “Take off your shirts! I’ve got to see a man’s nipples before I give him a job!”

He looked at my chest; he squeezed the nipples—slapped my butt—glared into my eyes—and then poked the stick against my thigh: “Too thin! Fuck off!”

Aravind Adiga’s wonderful novel of India, White Tiger, won the 2008 Man Booker Prize for passages like the one you’ve just read. Adiga’s protagonist, Balram Halwai, is an urban newcomer, recently arrived from the “Darkness” of village India. He counts himself among the “stupid ones” because he hasn’t yet given up (and won’t, even after he finds an abusive employer and ultimately murders him). The “smart ones”, recognizing their powerlessness, have given up already. 

In The Real Population Bomb, P.H. Liotta, a member of the 2007 Nobel Prize-winning panel on climate change, and James Miskel, a former director of defense policy and arms control for the National Security Council, draw us into places filled to overflowing with people like Balram. They gather in the millions, facing one another in places controlled neither by themselves nor by the authorities nominally in charge. Those authorities are very often poorly paid, avidly corrupt and accountable to nobody. 

Ireland has spared the old but robbed the young

The ‘jilted generation’

By Eamonn Moran

The Irish are thought to be a compassionate people who care about human rights, but we are also capable of appalling selfishness towards our own citizens. A report this week from the Economic and Social Research Institute suggests that few developed nations have committed the level of intergenerational theft we have witnessed in Ireland since the financial crisis began.

The headline finding of the report, by Petra Gerlach-Kristen, is stark. “The younger age group on average spent 20 per cent less per week in 2009/2010 compared with five years earlier. Over the same period, those aged over 45 managed to keep most of their bubble-era gains, spending 31 per cent more each week than they did in 2004/2005.”

In a very short period, two groups in society have experienced a huge disparity in spending power. These groups are separated not by class or occupation or education but by the timing of their births.

In James Joyce’s Portrait of the Artist as a Young Man Stephen Dedalus declares, “Ireland is the old sow that eats her farrow.” That was written in 1914, but it seems we continue to fail in our efforts to form a republic in any meaningful sense because of clientelism and self-interest at the very highest levels.

The total number of job losses in the Irish economy since the economic crisis started is more than 300,000. Yet the number of people over 35 who are employed is now back above the level it was before the crisis. The unemployment burden has fallen squarely and almost exclusively on those aged 35 and under.

A recent report on food poverty in Ireland by Caroline Carney and Bernard Maître showed that young people between 18 and 30 are three times more likely to be at high risk of food poverty than people over 61. Between 2007 and 2011 some young people had their jobseekers’ benefit cut by 46 per cent while some pensioners saw their pensions increase by 10 per cent. Ireland’s youth unemployment, among 15- to 24-year-olds, has gone from one of the best rates in Europe, at 5 per cent, to about 30 per cent, and might be worse than that of Greece or Spain were it not for emigration.

The Jobs Question

Work Is A Human Right

BY WALTER RUSSELL MEAD

Pretty much everybody understands at some level that the question of jobs is at the heart of America’s politics today. An old world of stable, reasonably well paid jobs in manufacturing (stuff processing) and in corporate or government bureaucracies (information processing) is passing away. What comes next is up in the air, but as things stand we see growing insecurity, inequality and a darker outlook for youth.

The argument about how to address the jobs question is the single political issue that has the most to do with how the country will develop for the next twenty years. Political disputes over hot button social policy issues like gay marriage or affirmative action often get more attention, but underneath the noise it is the question of jobs that will shape the way our institutions and policies develop. After all, creating the best possible conditions for large numbers of Americans to make good livings and achieve their personal goals engages the electorate’s attention year in and year out. Scandals and controversies come and go, even long wars come to an end sometime, but in times like ours when people aren’t sure that the economy will allow them to make a good living, the job question never really goes away.

But if the debate over jobs is central, it is also confused. As a nation, we haven’t thought very deeply about what an information economy will look like, much less thought about what kinds of government policies can help or hinder the growth of an information-based middle class.

There seem to be two main kinds of confusion at work: the widget fallacy and a skewed idea about what work is and how it relates to human life overall.

The widget fallacy is the idea that only the production of concrete objects really matters. It leads many people to deny that mass prosperity under an information economy is even possible. For this crowd, if you aren’t bashing metal in a noisy place, you aren’t really working. If America isn’t “making things,” these people say, the economy will wither and die.

That may be true, but the jobs question isn’t about whether “America” is making things, but about whether people or machines are making the things “America” or any other country makes. You can have, indeed we have now, a healthy industrial economy that doesn’t create many jobs because factories increasingly use robots and computers rather than human beings. There are going to be fewer and fewer people in the widget works even as widget production hits all time highs. The world’s factories are going to be spewing out widgets like nobody’s business in the next generation, but there won’t be many people involved.

Bernanke Says Pessimists Wrong as Innovation Spurs Growth

Don't Sell Innovation Short

By Steve Matthews & Jeanna Smialek

Federal Reserve Chairman Ben S. Bernanke said technological change will remake fields like health care and belie predictions that innovation will fade and economic growth will wane.

“Pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world,” Bernanke said today in a speech at Great Barrington, Massachusetts. “Both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.”

The Fed chairman, who didn’t comment on policy or the U.S. economic outlook, rebutted the view of academics such as Northwestern University professor Robert Gordon, who predicted U.S. growth may stall over the next century in a paper published by the National Bureau of Economic Research last August. Innovation’s contribution to higher standards of living will slow, and headwinds such as an aging population and increased inequality will reduce growth, he said.

The pessimists’ view is “sort of depressing,” Bernanke said in a commencement address at Bard College at Simon’s Rock.

“As trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly,” he said.

Commercial applications of personal computers and biotechnology have “arguably thus far only scratched the surface,” and they could contribute to a surge in productivity in health care, Bernanke said.

“A strong case can be made that the modernization of health-care IT systems would lead to better-coordinated, more effective, and less costly patient care than we have today,” he said. “Such advances could lead to another jump in life expectancy and improved health at older ages.”

Bernanke is the father of a Simon’s Rock alumnus, father-in-law of an alumna, and his wife, Anna, is a member of the school’s board of overseers. 

Give Them Our Huddled Masses

Why America should swap its retirees, patients, and students for skilled immigrant labor

BY AADITYA MATTOO, ARVIND SUBRAMANIAN

Immigration reform is back on the policy agenda. Can it help get the United States out of the economic pickle in which it finds itself these days? The global financial crises reinforced the long-term trend of stagnating incomes, shrinking wealth, and diminishing opportunities for the U.S. middle class. Both ends of the age spectrum have been hit: Today, only 45 percent of those between the ages of 16 and 24 are employed, while an increasing number of baby boomers are retiring with reduced savings and pensions. Meanwhile automatic budget cuts and future fiscal tightening will overwhelmingly affect the infirm, retirees, and students. High long-term growth, obviously, is one solution. But that's easier said than done. There's a more straightforward way to revive the U.S. economy and put money in people's pockets. To borrow from the 19th century U.S. politician Horace Greeley: Go South, Americans!

Already, Americans are spending more time in the economically dynamic developing world. Patients are traveling to Thailand for treatment. Retirees are enjoying the low costs of living in Latin America, while students are enrolling in medical schools in the Caribbean.

These trends should be embraced and enhanced. This new form of globalization will boost the purchasing power of U.S. consumers by providing greater and cheaper access to key services -- such as health and education -- whose costs will likely grow in the future. 

Additionally, if U.S. emigrants and medical or education tourists seek opportunities overseas, other countries could help convince the United States to relax its barriers to foreign entrepreneurs, scientists, doctors, and engineers. Greater skilled immigration would boost domestic innovation and growth.

To start, consider retirees. The Congressional Budget Office estimates that the unfunded pension liability of the state and local governments in the United States ranges between $0.7 trillion and $3 trillion (depending on how assets and liabilities are valued.) Since the net worth of the median household has also declined by 35 percent over the last decade, the prospects of current and future retirees who stay in the United States are dim: They have fewer savings, and their pension incomes will become less reliable.

One dollar will buy twice as much in Costa Rica, and three times as much in Thailand as it does in the United States, as well as the opportunity to hike in Monteverde and sunbathe in Phuket. According to the Social Security Administration, about 350,000 U.S. retirees (about 1 percent of the total) already live abroad, a quarter in developing countries. Between 2008 and 2010, 35 percent of U.S. retirees who moved abroad headed for the developing world, double the rate of the preceding seven years. If the fraction of those choosing to live overseas were to increase to 2 percent by 2020, and 3 percent by 2030, nearly 3 million U.S. retirees could be living abroad within two decades. Retirees relocating to developing countries would not only continue to draw Social Security benefits, but they would maintain their current standard of living.

Taxes on some wealthy French top 100 pct of income

News From The Class Struggle in France

by Leigh Thomas

More than 8,000 French households' tax bills topped 100 percent of their income last year, the business newspaper Les Echos reported on Saturday, citing Finance Ministry data.

The newspaper said that the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 million euros ($1.67 million).

President Francois Hollande's Socialist government imposed the tax surcharge last year, shortly after taking office, to offset the impact of a rebate scheme created by its conservative predecessor to cap an individual's overall taxation at 50 percent of income.

The government has been forced to redraft a proposed bill to levy a temporary 75 percent tax on earnings over 1 million euros, which had been one of Hollande's campaign pledges.

The Constitutional Council has judged such a high rate of taxation to be unfair, leaving the government to rehash it to hit companies rather than individuals.

Since then, a top administrative court has determined that a marginal tax rate higher than 66.66 percent on a single household risked being considered as confiscatory by the council.

Les Echos reported that nearly 12,000 households paid taxes last year worth more than 75 percent of their 2011 revenues due to the exceptional levy

The ‘New’ Confusion About Planning

T. Boone Pickens and Energy Public Policy

by Robert Bradley Jr.

“[A]s my father liked to tell me, ‘Son, a fool with a plan can beat a genius with no plan any day.’ Right now, when it comes to America and our effort to achieve greater energy security, we’re a foolish nation without a plan.

If it were up to me, America’s energy plan would have ….”

            - T. Boone Pickens, “Leadership Absent on Energy Plan,” Omaha World-Herald, May 1, 2013.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine the can design.”

            - F. A. Hayek, The Fatal Conceit: The Errors of Socialism (1988), p. 76.

T. Boone Pickens, the author and marketer of three national energy plans (see yesterday’s post), is a “man of system,” to use Adam Smith’s phrase from the mid-18th century.

Pickens’s grandiose scheme to use the powers of government to implement wind-for-natural-gas in  electrical generation and natural-gas-for-oil in transportation (Pickens I) inspired Carl Pope, then head of the Sierra Club, to state back in 2008: “To put it plainly, T. Boone Pickens is out to save America.” [1] Plans II and III dropped wind (when business Boone did) to just push natural gas in the transportation market.

To plan or not plan–that is the wrong question in the realm of human action. Purposeful human action is planning. A central plan enforced by government (which by definition has a legal monopoly on the initiation of force) precludes planning on the individual and group level done by voluntary means.

Thus T. Boone Pickens has fundamentally misconstrued the question of planning which is who will plan: the market through private property, voluntary exchange, and the rule of law or government through its “experts” and legal monopoly on coercion.

Early Warming: Adam Smith

One of the oldest fallacies of economics is that the only plan is the central plan, devised by experts and implemented by common-good government.

Adam Smith warned against the “man of system” in The Theory of Moral Sentiments (1759) presciently recognizing that the quest to correct alleged market failure was prone to two other types of error: analytic failure (expert error) and government failure. In his words:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it.

The Perils of Energy Technocracy

Picking 'Winners' and Losers with no skin in the game  

by Donald Norman

“There is no evidence that government scientists and engineers are better at forecasting the future and know how the future will play out better than the scientists and engineers in private companies. Technocrats ignore the fact that private companies also hire scientists and engineers, (not to mention MBA’s and economists) and make investments based on their outlook for the future.”

The technocracy movement that arose in the early part of twentieth century advocated turning over the reins of governmental decision making to scientists, engineers and other “technocrats”. It was argued that the expertise of technocrats would result in better decisions than those made by private companies.

The idea of technocracy was embedded in the concept of central planning and was heralded by Thorstein Veblen and embraced by the Soviet Union. In the early years of the Great Depression the movement enjoyed renewed popularity, the belief being that technical, rational and apolitical expertise could revive the economy.

As an aside, one of the advocates of technocracy was M. King Hubbert who later developed his theory of Peak Oil production. Hubbert also proposed that energy certificates be issued to replace conventional money. These certificates could be divided equally among all members of a North American continental “technate.” Hubbert went on to become a geoscientist at Shell Oil.

A Comeback in Energy

Interest in the technocracy movement waned as the 1930s wore one, but surprisingly it is making a comeback in the area of energy. The Obama administration’s belief that the government can pick winning energy technologies is something that has a lineage reaching back to the technocracy movement.

Despite F. A. Hayek’s explanation as to how markets transmit information and coordinate decision making by individuals in the private sector, many in the current administration, along with its supporters, believe that Nobel Prize winning scientists like Secretary of Energy Steven Chu are better positioned to put the economy on the “correct” path to the future and do so faster than the market.

A Culture of Intimidation

It’s not possible to prevent people, particularly people whose goal is power, from abusing it

By Rand Simberg 

In the wake of the Abu Ghraib prison scandal in Iraq during the Bush administration, the default assumption of the media was that it was a direct consequence of White House policies. Those who were particularly Bush/Cheney deranged imagined that the vice president himself probably spent his recreational time personally torturing Iraqi prisoners. But even more thoughtful people  ^[1] accused the administration of creating the environment in which the abuse could occur:

Defenders of the administration have argued, of course, that there is no “smoking gun”–no chain of orders leading directly from Defense Secretary Donald Rumsfeld to Pfc. Lynndie England and her co-conspirators. But that reasoning–now largely accepted within the Beltway–betrays a deliberate indifference to how large organizations such as the military actually work. In any war, civilian leaders set strategic aims, and it falls to commanders and planners at successively lower levels of command to refine that guidance into executable orders which can be handed down to subordinates. That process works whether the policy in question is a good one or a bad one. President Bush didn’t order the April 2003 “thunder run” into Baghdad; he ordered Tommy Franks to win the war and the Third Infantry Division’s leaders figured out how to make it happen. Likewise, no order was given to shove light sticks into the rectums of Iraqi prisoners at Abu Ghraib. Nevertheless, the road to the abuses began with flawed administration policies that exalted expediency and necessity over the rule of law, eviscerated the military’s institutional constraints on the treatment of prisoners, commenced combat with insufficient planning, preparation and troop strength, and thereby set the conditions for the abuses that would later take place.

Similarly, while we still don’t know what the White House knew and when it knew it (and the president’s non-responsive answer to a question that wasn’t asked on Thursday ^[2] not only failed to clarify the issue, but increased cause for suspicion), the administration certainly created an environment in which IRS functionaries might have thought it was their job to go after his political enemies. If they weren’t doing literally to them what the Abu Ghraib rogue soldiers were doing to individual Iraqi’s fundaments, they were certainly doing it figuratively. This is particularly true because by the very nature of their job, and the ideology of the limited-government groups, many of the IRS employees probably viewed them as their own political adversaries.

Watching Obamacare Unravel

The “Affordable Care Act” is becoming an unsustainable mess. It’s time to scrap it entirely

by Richard A. Epstein

On Friday, May 10, President Obama ventured into Ohio to give a Mother’s Day defense of the sagging fortunes of his signal achievement, the misnamed Patient Protection and Affordable Care Act. The law, the President assures us, “is here to stay”—a comment that is best regarded as a threat and not a promise. His conclusion was not coincidental; support for the ACA has dropped from 42 percent to 35 percent between November 2012 and April 2013.

This recent drop in popularity is not a function of some detailed analysis of the ACA’s key provisions. Rather, the public seems to feel that the sheer complexity of the program makes it highly unlikely that it will be able to take effect in any form by its ostensible January 1, 2014 start date. The most obvious difficulty in implementation stems from the unwillingness of many states to participate in its two gargantuan initiatives, even with heavy federal support: the private exchanges (now called “marketplaces”) for individuals, and the Medicaid extension to additional individuals.

Growing Pains for the ACA

The most up-to-date report from the Kaiser Family Foundation reveals extensive resistance on both fronts. The ACA’s new marketplaces are said to allow ordinary individuals to shop for their own policies. This modest goal sounds easy, but it is not. As the current rules demand, all enrollment must be possible online, in person, by phone, fax, and mail. In addition to a website, the exchanges must provide “culturally and linguistically appropriate assistance,” along with a navigator program to promote public awareness. They must offer seamless linkage with other public initiatives, and accurate information on premium tax credits and cost-sharing subsidies, all under a program whose key provisions are not yet fully worked out. Already, HHS has distributed over $3.6 billion to states for implementation, with more to come.

Yet for all of these Herculean efforts, at present, only 18 states have opted to create their own exchanges, and seven are planning for a partnership exchange in cooperation with the federal government. A whopping 26 states have defaulted on their option, leaving the feds to pick up the pieces. Similarly, only 29 states have opted into the ACA’s Medicaid extension program, even though it promises substantial federal support early on. Twenty states have already opted out of the program and two are weighing their options.

Wilhelm Roepke and the Liberal Ideal

An introduction to Roepke's third way

by Ralph Ancil

Much of Wilhelm Roepke’s work can be understood as an exposition of the essence of Western, Occidental thought, a contribution to civilization that can be summed up in the word “liberal” properly understood. It means balanced respect for all the spheres of human personality and activity, multiplicities that can only be fully pursued in the spirit of individual freedom within a framework of individual moral restraint. And this also means an openness to transcen­dence, to divine revelation, a fact which limits and conditions thought and action in this world. Opposing this attitude is the largely Eastern gnostic or immanen­tist thinking which is characterized in a closed, self-contained system of thought, tending to absolutize one thing, be it art, politics, science, or a technological or religious form, and render it autonomous. This warfare between two trends of thought, the liberal and the immanentist, is found throughout European history and is arguably the main key to understanding this history.

Two prominent cases are the religious attitudes toward art and beauty, and economy and wealth. In the following, the liberal ideal of balanced respect for the varying allocations of the human spirit, as Weaver called it, is highlighted by looking at some of the differences between Protestant and Catholic views in the light of several authors including Richard Weaver, Wilhelm Roepke, Thomas Mann, and Francis Shaeffer, and others. Comparing these two spheres, beauty and wealth, should illuminate Roepke’s ideal of a humane econo­my which is inseparably linked to his vision of the humane society. In the end it should be clear that his vision is thoroughly European in the best tradition, common and ancient.

The Problem of Beauty

At the beginning of his chapter on art in his Visions of Order, Richard Weaver quotes from Thomas Mann’s Death in Venice, the story of an artist’s moral decay. The quote reads:

And does not form have two aspects? Is it not moral and amoral at once – moral in that it is the result and expression of discipline, but amoral, and even immoral, in that by nature it contains an indifference to morality, is calculated, in fact, to make morality bend beneath its proud and unencum­bered scepter? (Mann, 17)

My Generation’s Disease

Millennials are going out of their way to deserve their sad fate

By Benjamin Brophy

I have closely watched the up-and-coming generation, known as The Millennials, for 29 years now. That is the advantage of being part of a generation, I suppose. Joel Stein wrote an extensive piece on Millennials in the most recent issue of Time and he remains rather bullish on our potential.

I hesitate to share his optimism because of a paradox we seem to exhibit: Namely, that there are more avenues for us to entertain ourselves than ever before, yet we are more bored than ever before. It is this boredom that has led to a pervasive ennui amongst us.

Consider that 75 percent of Millennials have a social network profile and one in five has posted a video of himself online. Consider also that 78 percent of teens now have cellphones — with 48 percent of those phones being smartphones — and 95 percent of teens use the Internet. As of 2010, 67 percent of households had an individual who played videogames. In 2011, consumers spent $24.75 billion on video games, hardware, and accessories.

Entertainment has never been more diversified. We have more cable channels, critically acclaimed television shows, and formulaic movies than ever before. Beyond the small screen, Internet providers like Hulu and Netflix allow instant viewing of almost any movie or television program ever created. Kindles make any printed product accessible anywhere and iTunes allows for infinite music (as well as movie and TV) options.

Next to these technical amusements, there are of course, the old vices. Some are packaged in new ways, like pornography instead of “free love” or whatever the hippies called it. According to a 2009 study, single men watched pornography three times a week for an average of 40 minutes, while men in relationships watched it 1.7 times a week for around 20 minutes. That same study could not find a single man in his 20s who had never looked at porn. Millennial women aren’t off the hook either, as their consumption of pornography has increased as well. So while levels of premarital and promiscuous sex are slightly falling among Millennials, they are instead indulging in Internet-packaged sex at a level unheard of for other generations.

In IRS scandal, echoes of Watergate

Not even divided government is safe government, but it beats the alternative

By George F. Will

“He has, acting personally and through his subordinates and agents, endeavored to . . . cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner.”

— Article II, Section 1, Articles of Impeachment against Richard M. Nixon, adopted by the House Judiciary Committee, July 29, 1974

The burglary occurred in 1972, the climax came in 1974, but 40 years ago this week — May 17, 1973 — the Senate Watergate hearings began exploring the nature of Richard Nixon’s administration. Now the nature of Barack Obama’s administration is being clarified as revelations about IRS targeting of conservative groups merge with myriad Benghazi mendacities.

This administration aggressively hawked the fiction that the Benghazi attack was just an excessively boisterous movie review. Now we are told that a few wayward souls in Cincinnati, with nary a trace of political purpose, targeted for harassment political groups with “tea party” and “patriot” in their titles. The Post has reported that the IRS also targeted groups that “ criticized the government and sought to educate Americans about the U.S. Constitution .” Credit the IRS operatives with understanding who and what threatens the current regime. The Post also reports that harassing inquiries have come from other IRS offices, including Washington.

Jay Carney, whose unenviable job is not to explain but to explain away what his employers say, calls the IRS’s behavior “inappropriate.” No, using the salad fork for the entree is inappropriate. Using the Internal Revenue Service for political purposes is a criminal offense.

The Trick To Suppressing Revolution

Keeping Debt/Tax Serfdom Bearable

The 30 million whose labor funds the parasitic status quo don't have to rebel; they simply have to stop going to work, stop starting enterprises, stop being productive.

by Charles Hugh-Smith

Parasites must balance their drive to maximize what they extract from their host with the risk of losing everything by killing their host. This is the dilemma of the parasitic partnership of the central state and financial Elites everywhere: to extract the maximum possible in debt payments and taxes without sparking rebellion and revolution.

I have often commented on the current class structure, which paradoxically unites the interests of the top 1/5% of 1% and their political-class toadies and the bottom 50% who are drawing transfer payments/benefits from the state: both support the status quo because both receive direct benefits from it.

The 20% who pay most of the tax and service much of the debt are in the middle, a political minority of debt/tax serfs who finance the status quo, i.e. cartel-crony capitalism owned and operated by the financial and political Elites:

The Three-and-a-Half Class Society (October 22, 2012)

Entitlements, Taxes, Inequality and Three-Way Class Warfare (September 20, 2010)

Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010)

Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens (August 18, 2010)

The numbers of Americans drawing benefits from the state are astounding: almost 11 million people drawing lifetime disability from Social Security (The Number Of US Citizens On Disability Is Now Larger Than The Population Of Greece); Social Security (SSA) has 61 million beneficiaries as of March 2012; Medicare had 49.4 million beneficiaries in 2012, and Medicaid has over 50 million beneficiaries (another source puts the current number at 58 million, but the Kaiser Family Foundation says roughly 7 million "dual-eligibles" receive both Medicaid and Medicare, so let's use the data point of 50 million Medicaid-only recipients.)

This aligns fairly well with the 48 million drawing SNAP (food stamp) benefits: Food stamp Recipients Hit Record (Zero Hedge). Those qualifying for one program likely qualify for the other.

This means roughly 110 million people are drawing significant direct benefits from the Federal government (central state) while the number of full-time workers is 116 million--about a 1-to-1 worker-beneficiary ratio.

The problem is two-fold: the entitlement programs are running massive deficits even though the Baby Boom has barely started to enter the programs, and the number of workers earning enough to pay significant income taxes is remarkably limited.

As I detailed in The Fraud at the Heart of Social Security (January 17, 2011), the program paid out $707 billion in 2010 and collected $631 billion in taxes, a $76 billion shortfall for 2010. The current program (2012) cost is $817 billion, a leap of $100 billion in a few short years as Baby Boomers flood into the program.

Of the roughly 142 million workers in the U.S., 38 million earn less than $10,000 per year, 50 million earn less that $15,000 a year and 61 million earn less than $20,000 annually. All these numbers are drawn directly from Social Security Administration payroll data.

100 million wage earners, or 2/3 the entire workforce, earn less than $40,000 per year.

Most of the heavy-lifting in terms of paying income taxes falls to about 30 million people, the top 20% of wage earners.

As for debt-serfdom, the status quo has widely distributed huge debt loads via home mortgages and student loans. A trillion here and a trillion there and pretty soon you're talking real money: