*Who's Your Sugar Daddy?

WHO'S YOUR SUGAR DADDY?....Is the massive U.S. stimulus plan sucking up all the liquidity in the world, preventing developing countries from stimulating their economies? Apparently this is the complaint du jour at Davos, but Daniel Drezner is unimpressed:

To be generous, these complaints are not completely without foundation. They are a little odd, however. If the United States does not engage in greater stimulus, then other countries are going to have to pick up the slack, or this recession will last a long time. Indeed, count me in the Martin Wolf/Brad Setser camp of those who would love to see other countries — *cough* China, *cough* — starting to boost their own consumption as a means for igniting global growth, because that would also help to redress the macroeconomic imbalances that are at the heart of the current predicament.

To date, however, the efforts by most of these other countries have been underwhelming. [What about China?–ed. Their stimulus has targeted investment rather than personal consumption, so yes, them too.] If I were Obama, I wouldn't trust other countries to provide the locomotive power necessary to get the global economy moving again. So I don't see how they can blame the United States for doing what they are choosing not to do.

Agreed. But we still need a long-term plan to address those macroeconomic imbalances eventually.

Root Causes

ROOT CAUSES....Ryan Avent, plugging a blog that will remain nameless because it inexplicably continues to host anonymous posts, a practice I despise, says:

This week, the blog is hosting a discussion among economists on IMF economist Olivier Blanchard's suggestion that pervasive uncertainty is at the root of the crisis....

Sounds like a fine discussion. But just as an aside, why do people so frequently insist on trying to root out the cause of the crisis? Can't it be a liquidity crisis and a solvency crisis and a confidence crisis and a regulatory crisis all at once? Who says there has to be one true cause?

LOGO-Boy-Scouts-USA.gif
From the San Francisco Chronicle:

"The Boy Scouts had to suffer the consequences for sticking by their moral values," said Eugene Grant, president of the Portland, Ore., Cascade Pacific Council's board of directors. "There's no question" that the Scouts' anti-gay, anti-atheist stance has cost the organization money, he said. As a result, he said, "every council has looked at ways to generate funds. . .and logging is one of them."

According to an investigation by the Chronicle and four other Hearst papers:

  • Scout councils have ordered the logging of more than 34,000 acres of forests--perhaps far more as forestry records nationwide are incomplete.
  • More than 100 scout groups--one third of all Boy Scouts councils nationwide--have conducted timber harvests.
  • Councils logged in or near protected wildlife habitat at least 53 times.
  • Councils have authorized at least 60 clear-cutting operations and 35 salvage harvests, logging practices that some experts say harm the environment but maximize profits.

I was a Scout as a kid, and this is not the Boy Scouts that I used to know. It's sad that an obsession with what should be an irrelevant social issue has sabotaged their core principles. We've seen the same thing happen with other organs of the Religious Right as churches that should be doing good works have become obsessed with gay marriage and abortion. But while many evangelicals have begun moving back toward the center--look at Creation Care--the Boy Scouts are inexplicably going the other way. Let's just hope their vast land holdings aren't destroyed as they they slowly implode.

Trader Joe's, Whole Foods, WinCo, and Houston's restaurants are just a few of the 5,000 establishments pledging to boycott Canadian seafood.

Why, eh? We thought you'd ask. The ban is a part of the Humane Society's ProtectSeals campaign to curb commercial seal hunting in the Great White North—the world's largest massacre of marine mammals.

Says Whole Foods: "(We're) suspending any purchase of seafood from the areas where the brutal killing of baby seals is taking place until the fishermen commit to stopping this practice."

According to HSUS's countdown clock, 2009's hunt is due to commence in a mere two months. Last year, seal hunters promised a more humane approach—but as Mother Jones' Julia Whitty noted, it was far from humane.

If you too care about protecting the seals, you can sign a pledge not to buy Canadian seafood, urge your local grocer to join the boycott, or purchase products like this adorable T-shirt:

save-seals.jpg

—Nikki Gloudeman

Funding the Feds

FUNDING THE FEDS....Via Matt, Pete Davis reports on a lunch talk yesterday from spending guru Alice Rivlin:

Her most striking remarks were how forcefully she warned that we should undertake long-term deficit reduction measures now. Without them we will face rising interest rates before the economy has enough time to recover as foreign purchasers of U.S. Treasury debt balk at buying a lot more of it. She boldly asserted "Now is an excellent time to fix Social Security and Medicare."

....Rivlin predicted we will need a new revenue source to cope with our long-run deficit problem, a value-added tax. I'm biased on this subject. I formulated House Ways and Means Chair Al Ullman's VAT proposal in 1979. There's no way to protect the poor and the elderly from such a tax, and it could become quite a money machine for a lot of government spending I would prefer to avoid. Rivlin has promoted a VAT for a long time because it is a more efficient tax and because it would harmonize our trade with the rest of the world, almost all of which has a VAT.

I have a lot of sympathy for Rivlin's view. Here are a few random comments to add to what she says:

  • I'm all for fixing Social Security now if it will get the issue off the table once and for all. It's a distraction. What's more, the fixes needed are fairly minor and doing it while Democrats have a big majority is good timing. But — although the fixes can be legislated now, they should be scheduled to phase in slowly starting around ten years from now. The last thing we should be doing is pouring more money into the trust fund right now.

  • If we're looking for a new revenue source that won't hit us in the pocketbook immediately (while we're in a recession), but will provide a medium and long-term funding source, how about passing cap-and-trade? Even if we move full speed ahead, the machinery takes a while to implement, which means it won't start up until 2012 or so. And even if part of the revenue is rebated to low-income families, it still provides a steady and growing revenue stream after that.

    Oh, and it helps to keep us from destroying our planet, too. Just a little side benefit.

  • I'm a big fan of using a VAT (in addition to the payroll tax and other existing funding) to fund national healthcare. Economically, it's a pretty good tax; it can be made progressive if it's properly implemented; and it's a universal tax for a universal program. More details here.

  • I am, oddly enough, not really in favor of vastly increased funding for other social programs. Some increased funding is OK, but it should be kept under pretty strict scrutiny — and not just on the generic grounds that all spending ought to be monitored carefully to make sure it's effective and pruned away when it's not.

    Here's why. I'm obviously more open to high government spending than most conservatives, but even liberals think there's a limit to how much of the economy ought to be under government control. Speaking for myself, I'd put that limit at 40-45% of GDP. Somewhere in the low 40s, anyway. Currently, total government spending (state/local/federal) is in the low 30s, which means we can afford to increase spending by about 10% of GDP. I figure that changes to Social Security will eat up about 2% of GDP and funding a true national healthcare plan will eat up around 7-8%. That doesn't leave room for very much more, and even reductions in defense spending only give us another point or so to work with. So we should be pretty careful with other long-term spending commitments.

That's my take, anyway. This is a pretty good time to be talking about these changes, even if they don't get phased in immediately. We desperately need credible plans for future reductions of our current account deficit (which is tied to the federal deficit), and this is a good time to do it even if the plans don't get phased in immediately. I expect Obama to kick off a rollicking discussion of this stuff later this year.

Beta Testing MoJo

BETA TESTING MOJO....Next week (we hope!) we'll be relaunching MotherJones.com. Gone will be the cluttered layout that you see here and the clunky code that we deal with. If you'd like to take a sneak peek, and along the way help us with load testing and bug targeting, go to http://www.motherjones.com. The login is mojo and the password is fearless (all lower case). Once you're in the site, you can read about why we did what we did, poke around, register and pimp out your profile, etc. Please bear in mind, however, that:

  1. Your username will stay valid after the new site launches, so choose wisely....

  2. The content is several weeks old and is there for testing purposes only. Don't worry, we'll get the latest articles and all the comments moved over when we launch.

  3. Comments you leave on the beta site will be overwritten when we switch over. Please do leave comments and try out the discussion system, just remember that if you've written any great pearls of wisdom, you should save a copy elsewhere.

  4. Any questions, bug reports, or general input about the site, please leave a comment on our inaugural blog post, or email us at web-feedback@motherjones.com.

We're eager to hear what you have to say. (And yes, we know it's slow, we're running compression programs....)

Obama Splits From Bush, Slams Wall Street

Wall Street is slowly learning that it's a new era in Washington.

In the wake of a report showing $18.4 billion in bonuses will be paid to Wall Street employees this year, President Obama slammed the behavior of the financial industry as the "height of irresponsibility" on Thursday. The $18.4 billion figure is down by almost half from last year, but still represents the sixth-highest bonus total on record. The bonuses were granted despite the fact that Obama just went to Congress to beg for the second $350 billion installation in TARP funding that will be used to bail out Wall Street.

In a move the previous administration never would have dreamed of, the President lit into Wall Street when asked for comment:

Economic Update

ECONOMIC UPDATE....You will be unsurprised to learn that the fourth quarter of last year sucked:

The U.S. economy shriveled at the end of 2008, shrinking by the most in 26 years....Gross domestic product fell at a seasonally adjusted 3.8% annual rate October through December, the Commerce Department said Friday in the first estimate of fourth-quarter GDP.

....Federal government spending helped the economy....Also preventing the economy from sinking further were inventories, which rose at the end of 2008. On a down note, the inventory increase was likely unintended — the result of companies getting stuck with unwanted merchandise because demand has tailed off in the recession....Inventories increased by $6.2 billion, after going down $29.6 billion in the third quarter and $50.6 billion in the second quarter. Inventories added 1.32 percentage points to GDP in the fourth quarter.

In other words, if not for the unwanted inventory buildup, GDP would have shrunk something like 5.1% or more. Yuck.

Obama Weighs In On Super Bowl

superbowl-43-logo.jpg To follow up on my post arguing that all good liberals ought to support the Steelers this Sunday, I thought I'd bring you the President's thoughts. From a press appearance Thursday:

Q: The Steelers or Cardinals, sir?
THE PRESIDENT: I have to say, you know, I wish the Cardinals the best. Kurt Warner is a great story and he's closer to my age than anybody else on the field, but I am a long-time Steelers fan. Mr. Rooney, the owner, was just an extraordinary supporter during the course of the campaign. Franco Harris was campaigning for me in Pittsburgh. So --
THE VICE PRESIDENT: Coach signed up with you, too.
THE PRESIDENT: Right, Coach Tomlin was a supporter. So I -- you know, I wish the best to the Cardinals. They've been long-suffering; it's a great Cinderella story. But other than the Bears, the Steelers are probably the team that's closest to my heart.

Our President, by his own admission, doesn't get too high for things. But from what I can tell, the man has Steelers fever. My prediction: Steelers 20, Cardinals 13. (This is your final Super Bowl-related post, I promise. Unless they win, in which case the blog will be covered in drunken exultations. Stillllers Win!!!!1!11)

Army Suicides Reach Historic High

The US Army has announced that the soldier suicide rate has reached an all-time high, surpassing the civilian suicide rate for the first time. At least 128 soldiers—and perhaps as many as 143—took their own lives in 2008. The Associated Press puts this into perspective:

The new suicide figure compares with 115 in 2007 and 102 in 2006 and is the highest since current record-keeping began in 1980. Officials expect the deaths to amount to a rate of 20.2 per 100,000 soldiers, which is higher than the civilian rate — when adjusted to reflect the Army's younger and male-heavy demographics — for the first time in the same period of record-keeping...
Yearly increases in suicides have been recorded since 2004, when there were 64 — only about half the number now. Officials said they found that the most common factors were soldiers suffering problems with their personal relationships, legal or financial issues and problems on the job.

Army Secretary Peter Geren declined to characterize reasons underlying the growing number of suicides, but assured reporters that "we're committed to doing everything we can to address the problem." Along those lines, the Army is actively recruiting psychologists and psychiatrists to treat soldiers for symptoms associated with severe brain injuries and Post-Traumatic Stress Disorder (PTSD), "the defining injuries of this generation of servicemen," says Bill White, president of the Intrepid Fallen Heroes Fund, a non-profit dedicated to improving care for wounded soldiers.