Trickle-Down Economics: Four Reasons Why It Just Doesn't Work
By Mehrun EtebariJuly 17, 2003

We’ve all heard the claims that cutting tax rates for the richest Americans will improve the standard of living for the working class. Supposedly, top-bracket tax breaks will result in more jobs being created, higher wages for the average worker, and an overall upturn in our economy. It’s at the heart of the infamous trickle-down theory.

The past 40 years have seen a gradual decrease in the top bracket’s income tax rate, from 91% in 1963 to 35% in 2003. It went as low as 28% in 1988 and 1989 due to legislation passed under Reagan, the trickle-down theory’s most famous adherent. The Clinton years saw the top bracket hold steady at a higher rate of 39.6%, but under the younger Bush’s tax-cut policies, the rich are once again paying less. The drastic change in tax policy that has taken place since the early 1960s gives us a great opportunity to study and evaluate the claims that lower taxes for the rich translate to more wealth for the average American.

We can compare changes in the top tax rate with the real GDP growth rate (a measure of the growth of the entire U.S. economy), and three measures of how life is for the average working American: annual median income growth, annual average hourly wage growth, and job creation. If cuts for the rich were really the magic elixir for the economy and the middle class that the Republican consensus claims it is, we would see an increase in the four indicators whenever the tax rate dropped. However, this is not the case. Such a trend occurs sometimes, but the opposite happens at other times!

Let’s look one by one at comparisons of key economic indicators to the top tax rate.
1. Cutting the top tax rate does not lead to economic growth.

This graph shows the fluctuations of the real GDP growth rate over the period, indicating the performance of the U.S. economy as a whole. It is true that growth increased drastically after the 1982 tax cut, reaching as high as 7.3% in 1984. However, as the Reagan-Bush, Sr. administrations went on and taxes for the rich were slashed even further, growth fell to negative levels during 1991, at the heart of the last recession. And, two of the three years with the highest growth were during the 1950s, when the top tax rate was 91%. Overall, there seems to be no close relationship between the top tax rate and the GDP growth rate, and statistical analysis backs this up: the correlation coefficient between the two variables is 0.03, meaning that there is essentially no connection. (If tax cuts were strongly related to GDP growth, we would see a coefficient close to –1.) So much for upper-class tax cuts boosting the economy; now it’s on to median income growth.

2. Cutting the top tax rate does not lead to income growth.

Again, we see inconclusive evidence for the power of tax cuts. We do see small peaks in median income growth, a good measure of how the average American household is doing, after top-bracket tax cuts in the mid-1960s and early 1980s, but we also actually see income decreases after the tax cuts of the late 1980s, and strong growth after the tax increase of 1993. It is true that in the year with the worst median income decrease (3.3% in 1974), the top tax rate was 70%. However, it was also 70% in the year with the highest median income growth (4.7% in 1972)! Once again, the lack of connection between the two measures is backed up by a correlation coefficient near zero: 0.06, to be exact. And yes, yet again, the coefficient is positive, indicating that income has gone up slightly (though negligibly) more in years with higher taxes. Two strikes. How about hourly wages?

3. Cutting the top tax rate does not lead to wage growth.

Not surprisingly, we have mixed results yet again! Growth in average hourly wages did increase during the 1980s following the first Reagan tax cuts, albeit two years after the cuts took effect. But, just like GDP growth and median income growth, hourly wages decreased following the late 1980s tax cuts, and spiked upwards after the 1993 tax increase.
Furthermore, wages grew at a level of at least 1%, and usually much more, all throughout the period when the top income tax rate was 91%. In fact, it isn’t until 1972 that we see a wage growth rate of less than 1%. However, if we look at the 19 years of the study period when the top tax rate was 50% or less, we see that 8 of the years saw an increase in wages of less than 1%. Thus, it seems that hourly wages grew more when taxes were higher – indeed, the correlation coefficient is 0.34, indicating a mild positive relationship between higher taxes for the rich and higher hourly wages. This finding flies in the face of the conservative theory. As if that's not enough, now let’s see about what President Bush claimed would be the biggest result of tax cuts – job creation.

4. Cutting the top tax rate does not lead to job creation.

Here, we see the change in the unemployment rate laid against the top tax rate from 1954 to 2002. Thus, negative values signify a decrease in unemployment -- in essence, job creation. Once again, while the top tax rate trends downward over the period, the annual change in unemployment doesn't seem to trend at all! Although the largest increase (2.9%) did occur in 1975, when the top marginal tax rate was 70%, three of the four largest decreases in unemployment occurred in years when the top rate was 91%. The mixed results do not bode well for those who see tax cuts for the richest as a sparkplug to incite job growth. The correlation coefficient between the variables here is 0.11 -- meaning that there have been slightly more jobs created in years with lower top tax rates, but this pattern is negligible -- nowhere near strong enough to signify a relationship.

So, can you tell what our conclusion is yet?

Overall, data from the past 50 years strongly refutes any arguments that cutting taxes for the richest Americans will improve the economic standing of the lower and middle classes or the nation as a whole. To be sure, the economic indicators examined in this report are dependent on a variety of factors, not just tax policy. However, what this study does show is that any attempt to stimulate economic growth by cutting taxes for the rich will do nothing -- it hasn't worked over the past 50 years, so why would it work in the future?

To put it simply and bluntly, Bush's top-bracket tax cut is an ineffective attempt at stimulus that will not cause any growth.

(Source)

Afghanistan in Turmoil: 330+ Killed in One Week, U.S. Bombing Raids Continue, Taliban Seizing Control in Southern Region
- Select hyperlink to listen to full segment.

In Afghanistan, more than 330 people have died over the past week in some of the heaviest fighting since the war began almost five years ago. Taliban have moved out of the mountains and seized large areas in the south.

On Monday U.S. A-10 fighter jets and Apache helicopter gunships bombed homes in the village of Azizi, west of Kandahar.
The air strikes, which lasted for hours, killed about 100 people including as many as 30 civilians. U.S. officials said the raids targeted Taliban fighters who were involved in a series of deadly attacks last week.

The increase in fighting comes just two months before the United States is scheduled to hand over command of southern Afghanistan to NATO forces.
Fighting has greatly increased in Southern Afghanistan as the Taliban have moved out of the mountains and seized large areas of the region.
Last week the U.S. commander in Afghanistan, Army Gen. Karl Eikenberry, admitted that the Taliban are now better trained, armed and organized than in the past. He said the Taliban has adopted tactics used in Iraq including suicide attacks and roadside bombs.
(Source)

Pat Robertson: God Says Tsunami Possible For U.S.

Pat Robertson, God's personal confidant, says that God has told him that storms and possibly a tsunami will hit America's coastline this year.
The founder of the The 700 Club, the Family Chanel and the Christian Broadcasting Network (CBN) claims that the revelations came to him during his annual personal prayer retreat.

"If I heard the Lord right about 2006, the coasts of America will be lashed by storms," Robertson said on May 8.
He later added:
"There well may be something as bad as a tsunami in the Pacific Northwest" .

Robertson has come under intense criticism recently for suggesting that the U.S. Government should assassinate Venezuelan President Hugo Chavez, his exact words were,
"We need to take him out".

He has also been criticized for his assertion that Israeli Prime Minister Ariel Sharon's stroke was divine retribution for Israel's pullout from the Gaza Strip.

He's also suggested that the Hurricane Katrina aftermath was the result of a "sinful nation", and that we should "nuke" the State Department to "shake things up a little"

But that's not where his goofy utterings end, the dopy leader of the 700 Club maintains that he can leg press 2000 lbs.
Yes, 2000 lbs! That's the wight of an average automobile.
Pat Robertson claims that he can leg press a Ford Mustang!
This amazing claim can be found on his CBN Website.

When is America going to catch on to this of this half witted false prophet and stop paying attention to his doltish musings ?

For more of Pat Robert's idioc proverbs, click HERE

Justice or Profit?

The notion of private prisons as more efficient than public run facilties has an appealing quality to state legislatures and other law makers. But is this a true supposition or a flimsy assumption?
The argument that privatizing our prisions is an advantage to the tax payer has been disuputed by the very government that advocates for it.

According to the U.S. Government Accounting Office, the economic difference between operating a private penal facility and a public one is very small. Therefore, the very existence of private prisons raises an ethical issue:
What are the implications of basing the operation of a prison on a purely profit motivation?

Private prisons are a relatively new phenomenon. They began to appear a little more than twenty years ago, but have rapidly proliferated throughout much of the United States. Their upward surge is the result of ongoing "tough-on-crime policies" that have swollen the population of incarcerated men and women to the near two million mark. Once private prisons are built, states pay the firms to operate them—the two giants are the Wackenhut Corporation and the Corrections Corporation of America (CCA). It is to the advantage of these companies, and a few others, to keep the prison beds filled. For example, CCA has been a corporate member and a major contributor to ALEC (an influential conservative think tank) and an active member of its Criminal Justice Task Force.

As a result, the task force has modeled bills which , ALEC claims credit the widespread adoption of Truth in Sentencing and Three Strikes/Habitual Offender legislation. It's no wonder, with such lobbying power, that since the inception of private prisions we have seen an explosion in prison population. In 1970, there were approximately 300,000 people in prison and jail in the U.S.; by 2000, that number had grown by over 500% to nearly two million, or 25% of the world’s prison population in a nation that holds just 5% of the world’s people. Along with that enormous growth, we have seen sharp increases in racial disparities, in the number of women and youth behind bars, and in the proportion of people behind bars for non-violent (especially drug) offenses. African-Americans now make up 47% of state and Federal prison populations, but just 12% of the general population. Latinos make up at least an additional 16% of the prison population (not all states count Latinos separately from whites).

Consequently, critics of private prisons have increasingly challenged their use. Marc Mauer, assistant director of the non-profit Sentencing Project in Washington, D.C., maintains that private prision actually create an incentive for legislators to promote prison expansion because, “with private corporations building the facilities at their own expense—legislators can bypass having to go to voters for the approval of bond issues to obtain the needed construction funds. As an added incentive for their construction and use, many rural areas struggling with high unemployment rates clamor for prisons, public or private, because they mean jobs; and local legislators are often anxious to gratify these wishes—whether or not another facility is needed”. “By the late 1990s, about forty states had passed versions of truth-in sentencing similar to ALEC's model bill. Because of truth-in-sentencing and other tough sentencing measures, state prison populations grew by half a a million inmates in the 1990s even while crime rates fell dramatically. The result: more demand for private prison companies like CCA” (Source)


Therefore it is not a coincidence that prison population has exploded since we have allowed privitazation of our criminal system. The prisons populations will continue to expand as long as we allow our legislatures to use our tax dollars to line the pockes of CCA and Wackenhut executives.
This is a system that survives because of our apathy and it feeds on ignorance and greed.

Contact Congress now, only you can stop this feeble, half-baked corrections model.

The End of Retirement

The baby boomer generation -- they gave us pease, pot and microdots, the turbulence and successes of the 1960’s social movements, the micro-computer, arena rock and Reaganonimics. Love or hate them, they’ll be with us for decades. Now they're a generation facing retirement, and many of them will see that a life of retirement is going to bring new challenges, challenges that Americans have not seen since the Gilded Age of industry when retirement from work was only for the wealthy or the criminally insane.

Those who enjoy good health and longevity will be faced with the sobering conclusion that Social Security is not enough to maintain their current lifestyles and their 401K plans will not fill the disparity gap of income. The burden of deficient retirement funds will not only affect the Baby Boomers, it will have an impact on the American Economy as a whole. The millions of working citizens who will retire within the next ten years will have to drastically decrease their consumer spending and release many of their assets in order to afford the basic necessities of living. They simply will not have enough money to maintain their current lifestyles. The necessary decrease in consumer spending from the boomers could start with a ripple and end with a tidal wave, forcing companies to produce less goods and services and forcing workers out of their jobs. The trend in recent decades to shift the cost of retirement pensions from corporations to employees has forced millions to manage their own retirement plans, and consequently the majority of middle income earners are doing a lousy job at it.

How could this happen?

In 1978 a little know tax clause, the 401K, was amended to the IRS tax code as a measure to protect the retirement investments for executives at the Eastman Kodak company. The 401K, named after the section of the tax code in which it appears, is cash deferment program in which an executive can have his or her pre-tax contributions qualify towards an employer sponsored retirement supplemental plan. In short, the 401K clause was meant to be a supplement retirement plan for business executives.
The plan caught on, and by 1981 the 401K clause was expanded to include all employees who wish to participate, not just the executive staff. The plan that was designed as a suppliment to retirement becamce a release valve for employers, who up until then spent about 8% of payroll on retirement benefits for employees. The new plan put the burden of retirement on the worker, forcing the worker to make much larger contributions for retirement, in most cases the worker inputs 50% of the total retirement contributions, as well as forcing the worker to manage the progress of his or her investments plan - a daunting task for anyone.

Before 1981, employers paid and managed the retirement plans of its workers. But the traditional defined benefit system grew up in a very different socio-economic era. In the old days, American companies had little competition; America was king of the industry. American companies owned very large segments of business markets (market share), so naturally profits were high and the long term commitments of retirement plans were painless. It was, and still is, cost effective to provide subsidies for your employees, as a return the company is repaid with loyalty and dedication, and at that time most American companies were doing the same thing. Then a shift in competition, we were caught off of our guard. Towards the late 1970’s American companies began competing more with overseas firms, and the term "Made in Japan" began to have an imbedded quality previously unknown to us. American companies lost market share. The painless employer contribution retirement plans began to become a liability. Additionally, at this time, and to this day, many of our competitors did not have to provide their employees with long-term retirement benefits as those benefits are provided adaquatly by their governments through higher taxes. So when the opportunity presented itself to release corporations from the burden of the traditional defined benefit system, by and large most companies jumped.
Fast forward to 2006, about 15% of all private employees have a defined benefit (cradle to grave) retirement package, before 1981 the number of workers with a defined retirement benefit was as high as 60%.

Since the 401K plan we've seen a major shift in retirement resource allocation. So how is the 401K system doing? Not so well.
According to the Employee Benefit Research Institute; fewer than 50% of workers have access to a 401K plan and those who do have access do not set enough money aside required for the necessary returns to fund retirement. There is also the problem of poor fund management; many do not understand the nuances of investing, not to mention that durring the 2001 recession millions of people lost much of thier investments due to stock market fluctuations -- by no fault of there own. There are also are significant differences in pension coverage by gender and by race. According to a new government study, in 2003, only 27% of workers in small companies (less than 25 workers) had plans as compared to 50% at medium-sized companies (up to 99 workers) and 68% at larger companies (100 or more). Black, Hispanic and other non-white workers were less likely than whites to have a plan, and less than 30% of the lowest-income workers has plans as compared to over 70% of the highest-income workers. These inequities will only spell one thing: trouble for retirees.

According to a recent PBS Frontline report there are far too many retiring and far too few with enough money for the essential necessities, housing, food, clothing, utilities. The newer corporate bankruptcy laws which allow corporations to defer their defined retirement packages to the tax payer, coupled with the lack of 401K supplements, is going to spell disaster for the Baby Boomer generation and those of us in their wake. There simply will not be enough money in the economy for the Baby Boomers to relax in their final years. They’ll have to keep working. Will this be the end of retirement? It certainly is the end of retirement as we know it.
In the years to come Baby Boomers will have a lot of unanswered questions about retirement, with the exception of one:
Would you like fries with that?

Clean Elections - What is it? How does it work?
This post corresponds to a Podcast that I participated with called Citizens Against Lies. The Podcast is titled Spygasm -- Podcast #52 ; to listen click HERE.


The Clean Money, Clean Elections (CMCE) approach is designed to provide a clear alternative to the current system of raising and spending largely special-interest money to finance election campaigns. It allows qualified candidates to run for public office without compromising their independence since they won't have to ask for money from those with a vested interest in public policy.
The system is completely voluntary and candidates who do not wish to participate are able to raise and spend private money for their campaigns, as they do today.

Qualification -- Candidates first must meet ballot access requirements, and then must meet the eligibility threshold for Clean Money funding. Most CMCE proposals require candidates to collect, during a pre-defined qualifying period, a prescribed number of signatures and $5 qualifying contributions from registered voters in their state or district. To cover minor costs during the qualifying period, candidates are permitted to raise a limited amount of seed money from private sources in amounts not exceeding $100 per contributor.

Primary funding -- Candidates who meet CMCE requirements and agree not to raise or spend private money during the primary and general election campaign periods receive a set amount of money from the Clean Money fund.

General election funding -- Candidates who win their party primaries and qualifying independent candidates who agree to the voluntary restrictions receive a set amount of general election funding from the Clean Elections, Clean Money fund.

Non-participating candidates and independent expenditures -- In order to maintain a financially level playing field, Clean Money, Clean Elections candidates who are outspent by privately financed opponents, or targeted by independent expenditures, are entitled to a limited amount of matching funds.



To Learn More About Clean Elections Click HERE.

Thanks Shelly! You're the best!!

And Now For Something Completely Different

Study: Alligators Dangerous No Matter How Drunk You Are
May 10, 2006

BATON ROUGE, LA—In a breakthrough study that contradicts decades of understanding about the nature of alligator–drunkard relations, Louisiana State University researchers have concluded that people's drunkenness does not impair the ancient reptiles' ability to inflict enormous physical harm.

Alligators exhibit the potential to inflict serious harm, regardless of the blood-alcohol levels of their victims.
"Our data strongly indicates that human intoxication does not transform an alligator into a docile creature that enjoys wrestling," said professor Ryder McCrory, chair of the Wildlife Taunting Department of LSU's prestigious Center For Bullying And Hazing Studies. "Despite its slow-witted demeanor and tendency to bask motionlessly in the hot sun, it's a mistake to believe that an alligator will passively tolerate a half nelson, no matter how much Southern Comfort is fueling it."
McCrory said the study yielded statistics that speak for themselves.

(Full Story)

How the GOP Became God's Own Party
By Kevin Phillips


Now that the GOP has been transformed by the rise of the South, the trauma of terrorism and George W. Bush's conviction that God wanted him to be president, a deeper conclusion can be drawn: The Republican Party has become the first religious party in U.S. history.

We have had small-scale theocracies in North America before -- in Puritan New England and later in Mormon Utah. Today, a leading power such as the United States approaches theocracy when it meets the conditions currently on display: an elected leader who believes himself to speak for the Almighty, a ruling political party that represents religious true believers, the certainty of many Republican voters that government should be guided by religion and, on top of it all, a White House that adopts agendas seemingly animated by biblical worldviews.

Indeed, there is a potent change taking place in this country's domestic and foreign policy, driven by religion's new political prowess and its role in projecting military power in the Mideast.

The United States has organized much of its military posture since the Sept. 11, 2001, attacks around the protection of oil fields, pipelines and sea lanes. But U.S. preoccupation with the Middle East has another dimension. In addition to its concerns with oil and terrorism, the White House is courting end-times theologians and electorates for whom the Holy Lands are a battleground of Christian destiny. Both pursuits -- oil and biblical expectations -- require a dissimulation in Washington that undercuts the U.S. tradition of commitment to the role of an informed electorate.

The political corollary -- fascinating but appalling -- is the recent transformation of the Republican presidential coalition. Since the election of 2000 and especially that of 2004, three pillars have become central: the oil-national security complex, with its pervasive interests; the religious right, with its doctrinal imperatives and massive electorate; and the debt-driven financial sector, which extends far beyond the old symbolism of Wall Street.

President Bush has promoted these alignments, interest groups and their underpinning values. His family, over multiple generations, has been linked to a politics that conjoined finance, national security and oil. In recent decades, the Bushes have added close ties to evangelical and fundamentalist power brokers of many persuasions.

Over a quarter-century of Bush presidencies and vice presidencies, the Republican Party has slowly become the vehicle of all three interests -- a fusion of petroleum-defined national security; a crusading, simplistic Christianity; and a reckless credit-feeding financial complex. The three are increasingly allied in commitment to Republican politics. On the most important front, I am beginning to think that the Southern-dominated, biblically driven Washington GOP represents a rogue coalition, like the Southern, proslavery politics that controlled Washington until Abraham Lincoln's election in 1860.

I have a personal concern over what has become of the Republican coalition. Forty years ago, I began a book, "The Emerging Republican Majority," which I finished in 1967 and took to the 1968 Republican presidential campaign, for which I became the chief political and voting-patterns analyst. Published in 1969, while I was still in the fledgling Nixon administration, the volume was identified by Newsweek as the "political bible of the Nixon Era."

In that book I coined the term "Sun Belt" to describe the oil, military, aerospace and retirement country stretching from Florida to California, but debate concentrated on the argument -- since fulfilled and then some -- that the South was on its way into the national Republican Party. Four decades later, this framework has produced the alliance of oil, fundamentalism and debt.
Some of that evolution was always implicit. If any region of the United States had the potential to produce a high-powered, crusading fundamentalism, it was Dixie. If any new alignment had the potential to nurture a fusion of oil interests and the military-industrial complex, it was the Sun Belt, which helped draw them into commercial and political proximity and collaboration. Wall Street, of course, has long been part of the GOP coalition. But members of the Downtown Association and the Links Club were never enthusiastic about "Joe Sixpack" and middle America, to say nothing of preachers such as Oral Roberts or the Tupelo, Miss., Assemblies of God.

The new cohabitation is an unnatural one.
While studying economic geography and history in Britain, I had been intrigued by the Eurasian "heartland" theory of Sir Halford Mackinder, a prominent geographer of the early 20th century. Control of that heartland, Mackinder argued, would determine control of the world. In North America, I thought, the coming together of a heartland -- across fading Civil War lines -- would determine control of Washington.

This was the prelude to today's "red states." The American heartland, from Wyoming, Colorado and New Mexico to Ohio and the Appalachian coal states, has become (along with the onetime Confederacy) an electoral hydrocarbon coalition. It cherishes sport-utility vehicles and easy carbon dioxide emissions policy, and applauds preemptive U.S. airstrikes on uncooperative, terrorist-coddling Persian Gulf countries fortuitously blessed with huge reserves of oil.

Because the United States is beginning to run out of its own oil sources, a military solution to an energy crisis is hardly lunacy. Neither Caesar nor Napoleon would have flinched. What Caesar and Napoleon did not face, but less able American presidents do, is that bungled overseas military embroilments could also boomerang economically. The United States, some $4 trillion in hock internationally, has become the world's leading debtor, increasingly nagged by worry that some nations will sell dollars in their reserves and switch their holdings to rival currencies. Washington prints bonds and dollar-green IOUs, which European and Asian bankers accumulate until for some reason they lose patience. This is the debt Achilles' heel, which stands alongside the oil Achilles' heel.
Unfortunately, more danger lurks in the responsiveness of the new GOP coalition to Christian evangelicals, fundamentalists and Pentecostals, who muster some 40 percent of the party electorate. Many millions believe that the Armageddon described in the Bible is coming soon. Chaos in the explosive Middle East, far from being a threat, actually heralds the second coming of Jesus Christ. Oil price spikes, murderous hurricanes, deadly tsunamis and melting polar ice caps lend further credence.


The potential interaction between the end-times electorate, inept pursuit of Persian Gulf oil, Washington's multiple deceptions and the financial crisis that could follow a substantial liquidation by foreign holders of U.S. bonds is the stuff of nightmares. To watch U.S. voters enable such policies -- the GOP coalition is unlikely to turn back -- is depressing to someone who spent many years researching, watching and cheering those grass roots.

Four decades ago, the new GOP coalition seemed certain to enjoy a major infusion of conservative northern Catholics and southern Protestants. This troubled me not at all. I agreed with the predominating Republican argument at the time that "secular" liberals, by badly misjudging the depth and importance of religion in the United States, had given conservatives a powerful and legitimate electoral opportunity.
Since then, my appreciation of the intensity of religion in the United States has deepened.

When religion was trod upon in the 1960s and thereafter by secular advocates determined to push Christianity out of the public square, the move unleashed an evangelical, fundamentalist and Pentecostal counterreformation, with strong theocratic pressures becoming visible in the Republican national coalition and its leadership.


Besides providing critical support for invading Iraq -- widely anathematized by preachers as a second Babylon -- the Republican coalition has also seeded half a dozen controversies in the realm of science. These include Bible-based disbelief in Darwinian theories of evolution, dismissal of global warming, disagreement with geological explanations of fossil-fuel depletion, religious rejection of global population planning, derogation of women's rights and opposition to stem cell research. This suggests that U.S. society and politics may again be heading for a defining controversy such as the Scopes trial of 1925. That embarrassment chastened fundamentalism for a generation, but the outcome of the eventual 21st century test is hardly assured.

New CIA Chief?

On May 5th, President George W. Bush dropped the bomb on Washington. No need to worry about depleted Uranium though; this bomb was purely political. Last Friday the President accepted the resignation of CIA Director Porter J. Goss, and announced his replacement, Air Force General Michael V. Hayden.
Hayden, Deputy Director of National Intelligence (NSA) and aggressive proponent of warentless wiretaps, will likely be the new leader of the Central Intelligence Agency.

Recently General Hayen had an exchange with a reporter, not atypical for Washington insiders, but this particular exchange is worth revisiting. You can see the video HERE.

Jonathan Landay of Knight-Ridder’s news service asked General Hayden to comment on his support for the President’s controversial eavesdropping program.

Here’s an excerpt of the exchange:

Landay: "...the Fourth Amendment of the United States Constitution specifies that you must have probable cause to violate an American's right against unreasonable searches and seizures...

"Gen. Hayden: "No, actually - the Fourth Amendment actually protects all of us against unreasonable search and seizure."Landay: "But the --"Gen. Hayden: "That's what it says.

"Landay: "The legal measure is probable cause, it says."

Gen. Hayden: "The Amendment says: unreasonable search and seizure.

"Landay: "But does it not say 'probable cause'?"

Gen. Hayden [exasperated, scowling]: "No! The Amendment says unreasonable search and seizure

."Landay: "The legal standard is probable cause, General --

"Gen. Hayden [indignant]: "Just to be very clear ... mmkay... and believe me, if there's any Amendment to the Constitution that employees of the National Security Agency are familiar with, it's the Fourth. Alright? And it is a reasonableness standard in the Fourth Amendment. The constitutional standard is 'reasonable'" ( h/t Dale)

Here’s the Forth Amendment:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized

The letter and the spirit of the Forth Amendment seem very clear. The Constitutional standard is for no "unreasonable searches and seizures" without a warrent, the warrant is the obvious mandate. Yet the Director of the National Security Agency falls flat when defending his position on the Forth Amendment.


As Keith Oberman put it:
“Well, maybe they have a different Constitution over there at the NSA”

GDP Up - Real Wages Down

GDP (Gross Domestic Product) is a measure of goods and services produced by an economy; it represents the size and growth of an economy. Essentially, GDP is the market value of goods and services which are produced with in a specific period of time.

The formula for calculating GDP is Consumption+Investment+Government Spending+(Exports-Imports) or Net Exports.

Here’s a news release from the Bureau of Economic Analysis:
“Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- increased at an annual rate of 4.8 percent in the first quarter of 2006, according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real
GDP increased 1.7 percent”. (Real GDP factors in the element of inflation)

So GDP is up by 4.8 percent, which is a significant increase. This should be good news for all of us, however, there’s a chink in the armor.

Real Wages have been down for some time now, and in fact have been declining steadily since the early 1970’s.
More recentlythough, since early 2001, gross domestic product per person in the U.S. has expanded 8.4% after adjusting for inflation (Real GDP). However, the average American family has not benefited from this growth, not yet anyway. The average weekly wage has edged down 0.3%, since 2000. That contrast may explain why so few believe the Bush Administration’s claims that our economy is doing well.

The root cause is simple; the trickle-down theory of economics is not working.

Since the end of the recession of 2001, growth in GDP has translated into profits, not wages. This reflects workers' lack of bargaining power in the face of high unemployment. Another factor holding down wages is employer-paid health benefits, pensions, executive compensation, and payroll taxes; with the lions share of that increase being in employee health benefits.
These components combined are making employers less generous with wages

Historically when unemployment is low and growth is steady, the American family will see its income increase. As that happens Americans' optimism will rise, but until then, Americans will maintain a dim view of our economy.

What Happens When the Dollar Collapes?

When foreign investors stop investing in dollars, U.S. bond prices will drop, then U.S. interest rates will rise. Mortgage and credit card rates will soar, bursting the housing bubble. Home prices will decrease by 50% or more in a matter of months, bankrupting millions of over-extended, over mortgaged homeowners.

But this is just the beginning, The Treasury will attempt to float the economy by printing more currency, in turn, reducing the value of the dollar even more. Those who have their live savings in CD’s, cash or Bonds backed by the U.S. dollar, will loose it all. While gold and other commodities will rise in value – we are already seeing a steady rise in gold values.
Most U.S. consumer finance companies will be bankrupt as there will be few who can pay the interest rates. Then the crisis goes global. We will no longer be able to purchase foreign goods, they will become far too expensive. At that point the rest of the world has a recession – the U.S. consumer will no longer be able to buy Chinese electronics and Japanise cars, instead we will have to buy cars made in the U.S. However, it’s not likely that we’ll be able to buy anything at all.

Our foreign counter parts will make an attempt to stabilize the global economy. They will cut interest rates and buy dollars with their own currencies, This will flood the world with euros and yen the way the U.S. now floods the world with dollars. The result of these “competitive devaluations” will be the death of the fiat currency,
Eventually European and Japanese bonds will collapse as the U.S. dollar.

Our best hope, and looking less likely, is a gradual decline in the value of the dollar. This will generate a significant drop in exports to the U.S., but may bolster our ability to export abroad. However, anyway that you look at the problem of the dollar, the outcome and recovery are going to be difficult.
Brace for impact!

Four International Articles on the Weak dollar

Once-Dependable Dollar Now Down and Out (Source)
By Yuriy Humber Staff Writer
Confidence in the U.S. dollar has slumped to a new low, as a series of political and economic statements last month questioned Russia's reliance on the world's most convertible currency.
Within a month, the U.S. currency was called "unreliable as a reserve currency" by Finance Minister Alexei Kudrin, made a taboo word by the Public Chamber and centrist politicians, and ditched by the general public amid reports of its imminent depreciation.
The U.S. dollar has fallen to its lowest rate against the ruble in a year, 27.2424, with signs that further drops are likely, prompting analysts to propose that the time to save or speculate in rubles has come.
"In the short to mid-term, the choice has to be for the ruble," said Yaroslav Lissovolik, chief economist with investment bank Deutsche UFG.

`E. Asia must prepare for possible dollar collapse' (Source)
TOKYO: With the U.S. trade deficit at a record high and global interest rates rising, East Asian economies need to be prepared for a possible `collapse' of the dollar, the Asian Development Bank warned on Tuesday.
"Any shock hitting the U.S. economy or the global market may change investors' perceptions given the existing global current account imbalance,'' said Masahiro Kawai, ADB's head of regional economic integration. "Our suggestion to Asian countries is: do not take this continuous financing of the U.S. current account deficit as given. If something happens then East Asian economies have to be prepared,'' he told reporters on a trip to Japan.
Because of the highly interdependent nature of the East Asian economies, if countries worked together to allow their currencies to collectively appreciate against a tumbling dollar then the cost of adjustment would be spread, he said. "The possibility of a U.S. dollar collapse or sharp decline may be small at this point but it would generate very significant turmoil so East Asian economies... ought to be ready for that,'' Mr. Kawai said.
The Manila-based ADB is working on several indices of Asian currencies that could be helpful to monitor exchange rate movements in the case of a sharp dollar decline, though its main aim is to help develop regional bond markets. — AFP


Dollar continues to weaken against rivals
Canadian dollar reaches 30-year high against U.S. counterpart
E-mail Print Disable live quotes
By Wanfeng Zhou, MarketWatch
Last Update: 5:12 PM ET May 2, 2006
NEW YORK (MarketWatch) -- The dollar remained under pressure Tuesday as investors continued to digest CNBC's day-earlier report about Federal Reserve Chairman Ben Bernanke's comments and awaited his Wednesday speech for more clues on the U.S. interest-rate outlook.
At the same time, the euro and pound were lifted after solid euro-zone and U.K. manufacturing data.
Strong economic reports out of the euro zone and the U.K. "are fueling gains on the European currencies," said Mike Malpede, senior currency analyst at Man Global Research. "The technical dynamics still are pointing towards a weaker dollar."
In late New York trading, the euro strengthened to $1.2621, up 0.5%. The dollar weakened to 113.25 yen, down 0.4%. The British pound was fetching $1.8406, up 1%, while the dollar changed hands at 1.2368 Swiss francs, down 0.4%.
"The euro/dollar remains grossly overbought in the near term, but the momentum of the trend may carry it higher still before a more serious retracement kicks in," said Boris Schlossberg, senior currency strategist at FXCM, in a note.

Euro Advances After Manufacturing Expands by Most in Five Years (Source)
May 2 (Bloomberg)
-- The euro rose, approaching an 11-month high against the dollar, after an industry report showed euro- region manufacturing expanded at the fastest pace in more than five years last month.
The euro has risen 6.7 percent versus the dollar this year as signs of faster growth prompt speculation the European Central Bank will increase its pace of interest-rate increases while the Federal Reserve prepares to end an almost two-year cycle of boosting borrowing costs.
``The European economy is doing better, propelled by Germany's good performance,'' said Masaki Fukui, a senior market economist and currency analyst in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest lender by assets. ``This will all reinforce expectations of further ECB rate increases, pushing up the euro.''

Published on Wednesday, May 3, 2006 by Media Citizen
McCurry Sells Out to AT&TDeceiving the Public Is Business As Usual for Washington Insider.
by Timothy Karr

How can you tell when corporations are running scared? When they wind up their coin-operated front men to unleash a tide of untruths upon the public.
For evidence, go no further than gasbag-in-chief Mike McCurry. The latest blast from this former Clinton press secretary is a frantic bid to re-align public opinion behind his new bosses at AT&T and Verizon.
The issue in question is whether Congress should preserve a concept called "net neutrality." Net neutrality is the Internet's First Amendment; it's a principle that guarantees that all Web sites and online features have unfettered access to the Internet regardless of the size of their bank accounts.
McCurry -- who is now a partner at the influential DC lobbying firm Public Strategies -- is being paid by AT&T and Verizon to spread bad information about net neutrality. In his Huffington Post piece on Monday, he attempted to paint net neutrality supporters – a left-right coalition of consumer groups, public advocates, small businesses, Internet gurus, and bloggers -- as ranting lefties seeking to smother the Internet with regulation.
"The Internet has worked absent regulation," McCurry huffs, "and now you want to introduce it for a solution to what?"
This sentiment was eerily echoed in a Washington Post online op-ed by Robert E. Litan of the Brookings Institution: "Let's hope our policy-makers in Washington can resist the siren song of 'net neutrality' and keep government out of Internet regulation so that the future that beckons becomes a reality," Litan writes.
Lies and Extortion
Despite these high profile comments, this really isn't about more regulation of the Internet. That's a convenient lie being spun by McCurry and his bosses. In reality, this debate pits economic innovators, free speech advocates and anyone who enjoys Internet freedom (regardless of party) against AT&T, Verizon and their PR henchmen who are seeking government permission to re-plumb the Internet, control online innovation and stifle diversity.
In their commentary, both McCurry and Litan, have buried the lead. They fail to point out that it's precisely because of net neutrality rules that the Internet has become a revolutionary force for economic innovation, civic participation and free speech.
We've had this fundamental protection in place to guarantee nondiscrimination in the law since the birth of the Internet. At least, we used to have these rules. In the summer of 2005, an industry-friendly FCC pulled a fast one. Without any fanfare or press coverage, the FCC made a new rule that allows companies like AT&T and Verizon to discriminate, to decide what content and applications go fast, slow, or not at all.
Equality and the free market be damned.
Now, McCurry and his cohorts are attempting to paint efforts to maintain net neutrality as new and excessive government interference. In reality, the most radical regulations to have ocurred over the last year were implemented on behalf of -- not in spite of -- AT&T, Verizon and other network giants.
That's right. In the midst of the online revolution, the FCC gutted the Internet's most fundamental operating principle and handing telephone and cable companies the right to discriminate against Web sites depending on who pays them the most money. In the nine months since, the demise of net neutrality, these network owners have declared that they intend to do just that: Implement a business model based on malfeasance, extorting money from online content and applications providers in order to have their sites operate smoothly via the Web.
Given their near monopoly control of broadband access, content companies will have little choice but to pay up. Those of us who can't afford the price will be shunted to the Internet's side roads.
AT&T and Verizon's predatory scheme has little to do with free market dynamics, writes Columbia Professor Timothy Wu. It's more akin to a mafia shake down. "While it's one way to earn cash, it's just too close to the Tony Soprano vision of networking: Use your position to make threats and extract payments" Wu writes.
The Grassroots Fire
This scam is only now coming to the attention of the American public. And they're letting their elected officials know that Internet freedom cannot be sold out.
As part of a vote on new telecommunications legislation last Wednesday, House Energy and Commerce Committee members defeated an amendment by Rep. Ed Markey (D-Mass) that would have protected net neutrality.
What's remarkable about last week's defeat is the shift that occurred on Capitol Hill in the week prior to the vote. An unlikely coalition has banded together at SavetheInternet.com and sent more than 500,000 letters to Congress. This sparked an Internet revolt among thousands of bloggers who heaped scorn upon any member of the House who dared side with companies like AT&T and Verizon.
As the legislation moves to the House floor and Senate in the coming weeks, every member of Congress has been put on alert by an awakened and angry public: Momentum is shifting away from the corporations and toward the public.
Whereas before, the big telephone companies and their McCurry-men were confident that Congress would simply roll over, today, no member of Congress can vote with the telecom cartel without suffering repercussions.
Playing Favorites, Stifling Innovation
Over the last decade, the telephone lobby has stuffed hundreds of millions of dollars into the pockets of lobbyists (including McCurry's company) and campaign coffers of politicians in an effort to radically rewrite communications legislation.
Now, companies like AT&T are asking Congress to fast-track a bill that grants them a monopoly right to play favorites with the content that flows online – determining what users do, where they go and what they watch online.
If Congress allows this to occur, the only sites that will enjoy "open" access are the large corporations that can afford AT&T's toll. The Internet's true innovators – small guys working out of their basements on the next big Internet idea – will be shoved aside.
The telco cartel, with the help of industry sock puppets like McCurry, would like to write this extortion into law, gutting the "net neutrality" guarantees that gave all comers equal access to the Internet.
That McCurry has emerged from behind smoke-tinted glass to throw rabbit punches at groups representing the public's interest is testament not only of the success of SavetheInternet.com, but also to the utter bankruptcy of his over-funded position.
Timothy Karr is the campaign director of Free Press.

I urge all of you who enjoy bloging to contact Congress and demand that Net Neutrality stay intact. The Democratic future of the internet depends on your action.

Happy Days Are Here Again?

A recent poll showed Democrats with a gaping 16-point lead over Republicans this fall. Seizing on the issues of corruption and incompetence, the party might even take back the House or the Senate -- or both.

Conventional wisdom in Washington that the Democrats have no idea what they stand for has recently been put to the test in persuasive ways. In the May issue of The Washington Monthly, Amy Sullivan demonstrates that the Democrats have in fact become a disciplined and effective opposition party. Strarting with their Social Security victory to George W. Bush’s backing down on his post-Katrina changes to the Davis-Bacon law to the Dubai ports deal, the Democrats have dealt the administration a series of defeats. In addition to that the Democrats do have ideas; it’s just that no one in the media bothers to cover them. The party has developed discipline and a more than respectable roster of policy proposals waiting for debate should Democrats win a majority in the November elections. This is very different from three years ago when the Democrats were fresh out of ideas and tactics.

The most important thing that the Democrats should remember is their own past. They should not become the complacent party that they were from the 1930's to the late 80's. They will need to continue to make government more efficient, while providing the needs for a society to have the mobility necessary to compete in the modern world. The real challenges facing our government will be the War in Iraq, the reimergence of the Taliban in Afgnanistan, the lack of new manufacturing plants and good paying jobs in the U.S., our rising healthcare and education costs and our rising poverty levels.

One thing that we know for sure, which ever party wins in November will certainly have it's work cut out.