How to Quit Worrying and Love the Chained CPI

Do we see George W. Bush or Rush Limbaugh in these pictures?

First, the Difference Between CPI and COLA 

from the "horse's mouth"

In this case the "horse's mouth" is the Social Security Administration.  You can read the whole article here.  It's important to have a good look at the official version before we start in with the "slightly different" versions being bandied about in our Congress.     

• Old-Age, Survivors, and Disability Insurance (OASDI, Social Security) benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power implied by inflation. In the absence of such indexing, the purchasing power of Social Security benefits would be eroded as rising prices raised the cost of living. Recently, the Consumer Price Index used to calculate the Cost-of-Living-Adjustment (COLA) for OASDI benefits has come under increased scrutiny. Some argue that the current index does not accurately reflect the inflation experienced by seniors and that COLAs should be larger.
• Others argue that the measure of inflation underlying the COLA has technical limitations that cause it to overestimate changes in the cost of living and that COLAs should be smaller. This article discusses some of the issues involved with indexing Social Security benefits for inflation and examines the ramifications of potential changes to COLA calculation.

Summary

OASDI benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power implied by inflation. In the absence of such indexing, the purchasing power of Social Security benefits would be eroded as rising prices raise the cost of living. By statute, cost-of-living adjustments (COLAs) for Social Security benefits are calculated using the Bureau of Labor Statistics (BLS) Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Some argue that this index does not accurately reflect the inflation experienced by the elderly population and should be changed to an elderly-specific price index such as the Experimental Consumer Price Index for Americans 62 Years of Age and Older, often referred to as the Consumer Price Index for the Elderly (CPI-E). 

Others argue that the measure of inflation underlying the COLA is technically biased, causing it to overestimate changes in the cost of living. This argument implies that current COLAs tend to increase, rather than merely maintain, the purchasing power of benefits over time. Potential bias in the CPI as a cost-of-living index arises from a number of sources, including incomplete accounting for the ability of consumers to substitute goods or change purchasing outlets in response to relative price changes. The BLS has constructed a new index called the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) that better accounts for those consumer adjustments.

Price indexes are not true cost-of-living indexes, but approximations of cost-of-living indexes (COLI). The Bureau of Labor Statistics (2006a) explains the difference between the two:

As it pertains to the CPI, the COLI for the current month is based on the answer to the following question: "What is the cost, at this month's market prices, of achieving the standard of living actually attained in the base period?" This cost is a hypothetical expenditure—the lowest expenditure level necessary at this month's prices to achieve the base-period's living standard. . . . Unfortunately, because the cost of achieving a living standard cannot be observed directly, in operational terms, a COLI can only be approximated. Although the CPI cannot be said to equal a cost-of-living index, the concept of the COLI provides the CPI's measurement objective and the standard by which we define any bias in the CPI.

Just a Little More About "Chaining"

The fundamental idea of the COLA was an adaptation to the also fundamental idea that the standard of living in the United States would continually improve.  Without the COLA seniors receiving Social Security benefits would gradually find themselves once again approaching "poverty conditions" in two ways. 

First, because the lower and lower buying power of Social Security benefits without COLA adjustments would gradually move recipients below the "dignity" idea simply because the rest of the country, comparatively, prospered more and more.  If this were to occur, those currently contributing pay roll taxes to Social Security would be less and less convinced that it was a good deal.

Second, the country had accepted the more or less inevitable currency inflation.  With prices inflating, again, Social Security benefits which couldn't "keep up" would look less and less attractive to those currently paying into the system.

The very first part of this discussion about "chaining" is important.  As long as the over all standard of living continued to improve, COLA, in a sense, already amounted to "chaining."  The reason we might not at first think so is because  previously standards of living were always increasing.  Now, however, we find standards of living decreasing.

If we were willing to accept the idea [and the public relations damage] of negative COLA's based on the continuing contraction of the economy, the "chaining" idea would simply become superfluous.  In this modern case that idea is introduced to revive the capacity to decrease Social Security benefits as the over all standard of living decreases.

Automatic Cost-Of-Living Adjustments

July 1975 -- 8.0% July 1976 -- 6.4% July 1977 -- 5.9% July 1978 -- 6.5% July 1979 -- 9.9% July 1980 -- 14.3% July 1981 -- 11.2% July 1982 -- 7.4% January 1984 -- 3.5% January 1985 -- 3.5% January 1986 -- 3.1% January 1987 -- 1.3% January 1988 -- 4.2% January 1989 -- 4.0% January 1990 -- 4.7% January 1991 -- 5.4% January 1992 -- 3.7% January 1993 -- 3.0% January 1994 -- 2.6%

January 1995 -- 2.8% January 1996 -- 2.6% January 1997 -- 2.9% January 1998 -- 2.1% January 1999 -- 1.3% January 2000 -- 2.5% January 2001 -- 3.5% January 2002 -- 2.6% January 2003 -- 1.4% January 2004 -- 2.1% January 2005 -- 2.7% January 2006 -- 4.1% January 2007 -- 3.3% January 2008 -- 2.3% January 2009 -- 5.8% January 2010 -- 0.0% January 2011 -- 0.0% January 2012 -- 3.6% January 2013 -- 1.7%

The above list of COLA calculations from 1975 to the present illustrates this idea of never having a "negative COLA."  After remaining below around 4% increases through the Bush autocracy, COLA suddenly increased to almost 6% in 2009 when the economy was attempting to stagger back to its feet.  With the 2009 COLA, Social Security benefit recipients found themselves "doing better" than other Americans who still had jobs and pay checks.  Additionally, the high COLA in 2009 was stimulus -- it pumped cash and liquidity back into the wreckage remaining after the Bush era looting. [COLA table source: http://www.ssa.gov/cola/automatic-cola.htm ]

Next, when we look at COLA for 2010 and 2011, we see that Social Security benefits were showing a stability which was absent in much of the rest of the economy.  Had there been a cost of living adjustment in these two years  -- 2010 and 2011 -- it would have been negative.  Predictably, many younger Americans who should have, according to our traditional pattern, been starting jobs and careers were returning home to older parents whose Social Security benefits were higher than what they could have earned.

The more enduring aspect of this side of the economy's collapse centers on this exact point.  Younger workers in more stable times began to accumulate wealth when they reached this age, but during the Great Republican Recession of 2008, many of those young Americans were deeply in debt and without much of a prospect for any kind of decent job.

The toxic Bush "regulation-free episode" not only wrecked the EU and also deeply wounded Asia and Arabian wealth as well, but here in the US there were no new cars or even relatively nice used ones for the 20-somethings.  Even the normal rate of marriages tapered away after facing the prospect of making love with one's new wife in the same bed where one had first enjoyed the hushed sex of his teen age years.

The 20-somethings were still interested in sex, of course, but in the post-Bush economy they had also become much more interested a warm place to live,  in food and in the angry banksters on the line calling about their student loan defaults.  Only the most fool hardy had ambitions which included buying a house.

The mighty engine which was the American consumer economy had suddenly found itself under attack during the autocracy of the unelected President.  The American middle class found itself without Congressional defense, and it took some incredibly serious hits.  We are presently "absorbing" the massive looting and the economic damage it caused.

As a note:  The primary reason that our democratic institutions are currently in such a precarious, dangerous state is precisely because too many American voters have still never accepted the gravity of the horrendous economic damage which was done during the Bush years.  When we consider economic matters such as the topic of this posting, we need to remember to require a little durable optimism.  Things here may, actually, have gotten about as bad as they are going to get for the foreseeable future.

When the tea bags in the House of Representatives keep demanding "entitlement cuts," they are referring to out right reductions in Social Security benefits.  They want these changes so the repayment of the incredible debt they incurred against the Social Security Trust during of the immense borrowing of, again, the Bush Administration can be delayed until they are out of office.

Thankfully, voter opinion is beginning to turn on this issue, too. Until now the tea bags have been given a "more or less fact free ride" by the commercial media -- which has steadfastly reported just enough of the tale to assuage the low information voter among the GOP base. However, the Republicans, especially given the election disaster they have just endured, suspect that the hypnotic veil is lifting.

Decreasing Social Security benefits has long been a "dog whistle" to the low income Republican base convinced that it is supporting its dead beat neighbors.  This deception has now, quite clearly, begun to crumble in its foundation.

The full thrall of the spell is not entirely broken, but it is breaking.

Austerity and the Basic Idea Behind the COLA

Of course not everyone in the US lives under the same conditions.  The differences in various standards of living are practically one of the "axioms" which justify the "free enterprise" system.

Because of this, no one expected the folks who live primarily on income from their Social Security benefits to necessarily be inhabiting the top percentile of the standard of living. Quite the opposite, Social Security was designed to provide a lower level "backstop" with respect to how poor Social Security recipients would be.  The program was, famously, designed to provide dignity during one's later years, and in this case, "dignity" meant a better standard of living than abject poverty.

Elderly poverty was rampant after the First Great Republican Depression in the 1930's, and Social Security was devised as a means to mitigate that horrible poverty.  When Social Security became law, the lives of seniors improved enough that the life expectancy began to climb.  With respect to everybody, poverty kills.  With respect to older Americans, poverty really kills.

The material [above] from the Social Security Administration explains at least the prevailing supposition of how the COLA - Cost of Living Adjustment - was intended to work.  It should also provide a fairly persuasive suggestion that the calculation of things such as the COLA and the CPI are quite empirical.

In other words there are "legislated rules" which direct the calculation of such things.  If this were not the case, whoever controlled the Congress would be able to simply set the COLA and the CPI where ever convenient.

Let's just say that this brief discussion has "broken the ice" just a bit.  In no time we find ourselves facing some truly perplexing questions. 

We have all heard the repeated litany of conceptually divorcing Social Security from the debt and deficit discussions.  Over and over, Ronald Reagan's historic explanation that "Social Security has nothing to do with the budget deficit." has been proffered up by all sorts of players, remarkably, almost exclusively Democrats.

Yet, here we are again.  The House tea bags, still tragically blinded by their ideological hatred of Social Security, have demanded cuts to "entitlement spending" as the required ante for their cooperation in matters such as raising the debt ceiling, increasing tax revenues and overall "shrinkage in government spending."

This behavior of passionately and desperately attacking the wrong problem is a common trait of addicts and alcoholics -- even when they are behaving more or less honestly.  With the House tea bags, the same trait is strikingly and unilaterally "self-defining" even when they are not acting honestly, which now is most of the time.

Social Security as an Economic Factor

The statement that Social Security has nothing to do with causing the budget deficit is true.  Politicians from Ronald Reagan to Bernie Sanders have unequivocally said exactly this -- even when they knew we were listening.  However, the Social Security program does, actually, have a good deal to do with how the economy is  functioning.

During times of grave recession, monthly Social Security benefit checks act as a "buffering stimulus."  Although the same checks were also being cashed during better economic times, during a recession they represent a direct infusion of literally billions of dollars worth of cash into the nation's economy every month.

When the economic problem is, unmistakably, a demand side problem, more cash in the pockets of Americans creates demand immediately.  Further, those receiving Social Security benefits, by and large, spend those benefits basically as quickly as they get them.

Republicans have always obsessed over the huge pile of money in the Social Security Trust.  In fact, this obsession prompted Ronald Reagan to make his famous statement about Social Security playing no part in the budget deficit.  Reagan went ahead to strike a bipartisan deal to double the revenue to the Social Security Trust to accommodate the increased demands of the population bubble we call the "baby boomers."

The constant refrain from the Republican "economy experts" is that the size of  the Social Security Trust is the "problem."  Their perennial solution has remained unchanged for decades.  The Trust Fund must be removed from the control of the Social Security Administration and placed in a Wall Street "casino" investments where it will accrue funds more rapidly.


Although the program which issues the benefit checks is entirely solvent for decades, it does present a pressing economic problem for Republicans right now.  They really are now the official owners of the huge debt from the money they borrowed from the Trust.  Although the form of the loans was in a sort of "special Treasury note," debts must still be repaid sooner or later.

As a political Party clearly bereft of any particular plan for economic policy and  governance, all that currently occurs to the Republicans is to reduce the monthly benefit payments sufficiently to relieve the growing pressure to repay the money they borrowed during the Bush years.  A straightforward legislative solution to simply solve the fiscal problem would involve raising taxes and, hence, would be unthinkable for them.

There may be also something to say about the economic impact of raising the "ceiling" of income which carries the Social Security tax from its current [2013] base of $113,700.  The obvious solution -- if one is even required -- is to simply raise this ceiling so more income is taxed.

If this ceiling were raised, the increased Social Security revenue would be extracted from, in this case, income over $113,000.  The question for the economic impact of such a change is whether or not a Social Security tax dollar withheld just above the $113,000 mark diminishes economic demand as much as a Social Security tax dollar withheld from, say, a $40,000 income would.

MeanMesa is convinced that the burden should be shared even more than it is now.  The ceiling for paying the Social Security tax, if we want to roughly compare it to the period in the COLA chart above, has increased from $14,100 in 1975 to the current $113,700 in 2013.

Contribution and benefit bases, 1937-2013

Year Amount 1937-50 $3,000 1951-54 3,600 1955-58 4,200 1959-65 4,800 1966-67 6,600 1968-71 7,800 1972 9,000 1973 10,800 1974 13,200 1975 14,100 1976 15,300 1977 16,500 1978 17,700 1979 22,900 1980 25,900 1981 29,700 1982 32,400 1983 35,700 1984 37,800 1985 39,600

Year Amount 1986 $42,000 1987 43,800 1988 45,000 1989 48,000 1990 51,300 1991 53,400 1992 55,500 1993 57,600 1994 60,600 1995 61,200 1996 62,700 1997 65,400 1998 68,400 1999 72,600 2000 76,200 2001 80,400 2002 84,900 2003 87,000 2004 87,900 2005 90,000

Year Amount 2006 $94,200 2007 97,500 2008 102,000 2009 106,800 2010 106,800 2011 106,800 2012 110,100 2013 113,700

Payroll deductions for Social Security do, in fact, remove "demand creating" money from the economy, but the benefit payments actually, in fact, increase demand because they are almost entirely spent by benefit recipients.  When just about all the "demand creating" processes in the economy had faltered in 2008, Social Security benefits were still pumping money into the economy, yes, stimulating it. [Read the entire article: http://www.ssa.gov/oact/cola/cbb.html ]

Also importantly, the money being "pumped into the economy" was "paid for money," not inflationary stimulus rolling off the printing presses in Washington, D.C.

Obama the Social Security Chess Player

The President, for the second time in the last 24 months and in another notable episode of apparent "self-contradiction,"  has once again placed Social Security "on the table" while dealing with House Republicans.  In both instances Republican "extortionists," unable to coherently formulate any kind of economic policy to solve the disaster they created in 2008, are again threatening to eliminate unemployment insurance, Pell Grants and a number of other programs during "negotiations" about deficits and debt.

Violence against any of these "targets" they are now threatening would further aggravate the already horrible "demand side" crisis. 

So, how does the President entice these profoundly unstable ideologues to the bargaining table?

Don't freak out.  Our guy is playing chess.

The only thing that will get creatures such as Ryan, Boehner or Cantor to even answer the Congressional phone is a ghostly insinuation of caving in to the Republican base's favorite "red meat" and "dog whistle" wet dream: cutting entitlements.

Cutting Social Security benefits.

By the way, the "Ryan-Cantoresee" tea bag Mafia version of "cutting Social Security benefits" includes continuing to collect Social Security taxes from poor and middle class Americans at the same rate as now after benefits are reduced.  The "Ryan-Cantoresee" plan would further injure the economy and, according the CBO, also further increase the national debt.

The President had to hint that he might be willing to "cut entitlements" to get the Republicans to pass the debt ceiling increase -- rather than default -- in 2011.  Now, the bullies in the GOP House "boys only" club have doubled their threat.  If the President doesn't cave in on "entitlement cuts" this time, two hostages will be castrated then decapitated by the GOP -- first the fiscal cliff, then following that up, another wildly crazy refusal to increase the debt ceiling.

See, as Americans, we own the cliff.  Going over the cliff would be an entirely self-imposed injury.  The GOP doesn't own the cliff.  The GOP may have built the cliff during the autocracy, but they gave it to us as quickly as they could once they were through looting. This hand off is sort of like the young, proud, new father instantly placing his "bundle of joy" into the hands of his wife when his son poops.

All the things that Republicans are anxious to do to "save the economy" have to be considered in light of the fact that these are the same Republicans who wrecked the economy!  And, not just the same Party, either.

THE SAME MEN! 

THE SAME NAMES!

THE SAME FACES!

MeanMesa is not worried about the COLA chaining, entitlement cuts or even the fiscal cliff.  Barack Obama has our back. Trust him.

MeanMesa's compliments to the President.

The Myth of Growth

What Does "Fixing" the Economy Mean?

Anyone who has heard anyone reporting on the US economy has heard a "common theme" running through the stories.  To validate any of the media's myriad forms of economic fear mongering, we find a common thread:  growth.  Gosh, if we just had more economic growth, every possible aspect of the economy would be all fixed up in nothing flat!

We might pause for just a moment here, delaying our descent into the actual economic growth issue --  remember, we've been told growth is everything -- to discuss what is meant by "common theme."  And, exploiting one of MeanMesa's "tried and true" big picture literary gimmicks, we shall explore this "common theme" from the unquestionably objective point of view of an alien race observing the situation from a carefully sequestered space ship in orbit above us.

An Alien View of the Planetary Economy

After analysing all the media traffic about how bad things are, our thoughtful aliens, all very well respected members of IHOPPPES [the "InterPlanetary Harmonious Office for Primitive Planetary Populations Economic Subcommittee"] immediately held a large conference of all the most highly esteemed, most experienced, very "top line," best thinkers among them.  The conclusion of this scholarly, orbital symposium was that it would be necessary, as a first step, to carefully form a conjecture of exactly what this planetary economy would be like if it were not the "worst possible thing since the Great Depression."

The orbital IHOPPPES conference. (image source)

That is, "If what was being observed was how the economy should not run, what would be observed if the economy were running the way it was intended to run?"

Being the product of advanced cultures from each of their respective advanced home planets, the subcommittee members were not at all misled by the flurry of "supply side" solutions being suggested by those in charge of the disaster on the Earth below.  Everyone unanimously agreed, right off the bat, that what they were seeing was definitely a "demand side" problem.

Further, the Subcommittee quickly "sized up" the basics of the planetary economy which had now begun failing so miserably.

In its normal state, the parameters of the system were clear to them.  Human babies were created at a rate which more than compensated for the planetary death rate.  These babies were then nurtured into a predictable adulthood at which point, each of them would begin to work for "discretionary money" which could then be spent to create the demand required to sustain the planet's economy.

However, this particular planet had imposed an unusual "extra burden" on the very most basic idea of what "sustaining the economy" meant.  This was the commonly held infatuation with "growth."  In order to "sustain" itself, the planetary economy had to perpetually grow larger and larger.

In fact, every media story about "what's wrong with the economy" relentlessly presented this very issue, that is, the "growth" issue, as "the burning question of the day." 

Having supplied themselves with this very comfortable and very available idea of limitless growth as an absolute necessity for their economy, the Earth humans very naturally looked at this foolish idea as the only possible way to ever possibly get their planet's economy "on the right track" again.

Although the economic mess had completely dumbfounded the Earth's planetary economic experts, the immediate solution was clear to the more technologically advanced members of the IHOPPPES council.  Literally only a few minutes later, all agreed that the simplest, most trustworthy solution would be to increase the rate at which babies were being produced on the planet below.

To this end, the IHOPPPES High Committee authorized the space ship's captain to saturate the entire surface of the Earth planet with the ship's FEAR system [the "Fecundity Enhancement Assistance Ray"].  At once, enjoying the "enhanced fecundity" of the ray's influence, millions and millions of "extra" babies would be born to happy couples all around this troubled world, each birth bringing with it a tiny part of the necessary increase to the economic "demand" side of the equation, and, in this way, completely correcting the planet's "demand side" deficit.

In the council chamber a great feeling of well deserved "pride of accomplishment" flooded every member present.  The council chairman, in fact, ordered the ships galley to prepare a special celebratory feast of the intergalactically famous IHOPPPES strawberry pancakes, each one drenched with the very best, very pure Vermont Maple Syrup for every member present.

As the great space ship departed Earth orbit for its next economic recovery mission, spirits were high after another, such highly satisfying, successful intervention.  All the diverse aliens in the council "high fived" each other and sang "See?  Everybody wins!"

A Cooler, Colder Look at "Growth"

If we continue to look at the present economic calamity with more realistic eyes, we see countries all around the world now horrified that they have "suffocated" growth with too much debt.  Although at the "first taste" this proposition just "glides" down one's throat like a bite of a strawberry pancake drenched in Vermont maple syrup, a closer scrutiny begins to reveal some unsettling facts.

Perhaps there is, after all,  a "Vermont guppy" in the batter.

In theory, any Earth bound nation will unavoidably enjoy a certain level of "investment surplus" emerging from the work and products of its economy.  It is precisely this "investment surplus" which will, when properly applied, result in the gradual refinement and growth of improving conditions in such a nation's conditions of life.

Considering such a system as the rational approach for a country's efforts to gradually improve its condition, just where does all this debt enter the picture?  Why borrow money to accomplish those things which such a system will otherwise gradually accomplish anyway?  That is, gradually accomplish in a more "organic" manner, one which is financed by the "investment surplus" at a realistic rate rather than by borrowing?

At a "realistic rate" which can be sustained without borrowing?

The answer to such questions is sickeningly simple: "cultural and political impatience."  The gradual application of a country's organic investment surplus, at least in modern times, does not meet the popular speed commonly desired for  improving conditions.

For this reason, often called the "growth requirements" of a social culture for such improvements, economies find themselves needing to borrow money to finance critical projects such as roads, schools, hospitals and the like.  However, this borrowed money is often diverted to what are painted as day to day expenses and used "to make ends meet."

Of course, all this borrowing may be often be disguised as nothing more than a national version of a local "bond issue," but there seems to be an avoidable problem which always "crops up" as such programs unfold.  The problem arises from the fact that borrowing money is much more politically popular in most countries than raising taxes -- much more popular -- regardless of the story that goes with the explanation of why the money must be borrowed.

Naturally, the organic surplus can be overwhelmed by sudden expenses such as tsunamis, wars and other catastrophes.  In such cases, borrowing often determines whether a state will survive what confronts it.  In such cases economies cannot otherwise meet the cash requirements necessary.  Also, in such cases, the population whose name is "placed on the note" is usually quite aware of why the borrowing took place and in strong agreement with it.

When Debt Becomes Goliath

Such practices, in more stable economic times, disappear below the radar with the folks whose names are on the note.  The visible reality of social improvements -- again, schools, bridges, sewer plants and the like -- are normally enough to placate even the stodgiest conservatives among such voters.  In many cases, good arguments had been made that the new bridge to Shelbyville would benefit the local economy -- and it turns out that it did.

However, absent the war and tsunami case and floating far above the local "bridge bond" sale, we find borrowing practices which are best left far from the light of day.  Throughout all of this misery, the excuses for the terrifying, accumulated debt remain the same:  slow growth and too much spending.

The facts, however, cast a condemning shadow of these reasons.  It is usually the case that no reasonably possible rate of growth would have met the expectations accompanying the decision to borrow.  Further, the spending cuts seem to be targeting areas quite disassociated with the debt they supposedly address.  And, finally, there are no new bridges, water plants or school repairs -- just debt.

The "Meth Addict" Economy

When a nation desires to "consume the future" at a rate which is "faster than the actual passage of time," all sorts of undesirable consequences are "just around the corner."

Not only is there a sudden flow of money which is not yet produced, the spending of that "future money" grows sloppy.  Tax payers are, generally, quite interested in the spending of their tax money, but they may be somewhat less interested in the spending of money borrowed on their signature but based on future prosperity rather than current resources -- resources which would have, otherwise, appeared in their grocery carts or on their kitchen tables.

The infatuation with "growth" introduces an unusual irony.  From the mouths of these tax paying voters we hear a constant reluctance to "bathe their children in debt," but from the spending policies of the officials they continually to elect, the message is a polar opposite.

Theoretically, all this "extra meth" would work out just fine, but that theory is one fundamentally based on the prospect of a faster and faster monetary velocity through an ever growing economic pie.  Economists forgive the world's population for its incessant expansion, but they apparently do not consider the possibility of a limit to the size of the world's economy.

We're leaving out the forthright looting which usually accompanies the application of borrowed money to "specially designed projects" and other expenditures which seem to perpetually line the pockets of the policy makers who propose them.  The fleeting euphoria of our new bridge blinds us from any moment of clarity with respect to limits which should have been imposed on our borrowing rate.

Further, our creditors, like meth dealers, are gleefully uninterested in any discussion of rational limits.  They live in a world where the single question is "Can they pay?"

The unhappy, end result is that every dollar spent on such "special projects" is devalued by its interest because it is a borrowed dollar.  The price of every program is automatically increased by the interest rate of the money borrowed to create it.

We quit "getting our money's worth" long ago in favor of "getting our money's worth. less interest and looting."

"Good" Versus "Growing"

Through the years of manipulating our economy toward an unceasing state of growth, we have neglected what is, perhaps, an even more important question.  Even our language betrays our thoughts.

I'M DANCING AS FAST AS I CAN! (Image Source)

 Of course we can keep it up!  

We just have to keep GROWING!

An exaggeration?

How often we have heard ourselves speak of "better times" for our children, and how infrequently we have heard ourselves speak of "good times" for our children?  Do we really think that there is no limit on how much "better" things will get?  Especially with thoughts mature enough to understand that the economic "system" within which we live has, wait for it, limits?

Even though we have essentially ceased spending money on infrastructure in favor of financial gizmos, we have also quit worrying about any possible, upper limit on our planet's economy no matter how many hydroelectric dams, hospitals and highways we might ultimately build across the planet in hopes of reaching the "Star Trek" dream world.

The lament of the environmentalists  has been focused on the physical capacity of the planet to support our habits, but those well reasoned cautions have largely omitted the raw economic correlate.  Inebriated with the myth of perpetual growth, we have never subjected our synthetic optimism to such a test.

The herald of our future calls us to reconsider our incomplete fantasy of possible, ultimate future states.  We will need to have more thoughts about a "good" economy to replace our now unstoppable visits to the "dealer" for a "growing" economy.

Researchers on the topic of meth addiction have adopted a chilling terminology: "anhedonistic."  In their definition the state presents when all the pleasure hormone, dopamine, has been consumed, leaving the addict without any prospect of his normal, hormonal sponsorship of pleasure of any sort.  From such a low point, his future ambition becomes limited to pain reduction, not the blissful euphoria which had been possible earlier.

We can increase our "borrowing load" to a similar place as we frightfully pursue our insatiable appetite for growth without limit.  As we "consume our future" at an ever increasing rate, the actual, material productivity of the money we borrow dwindles precipitously until the advancements we dreamed of making are finally converted entirely to interest payments with a "little bit" left aside for the looters.

GOP- Keep Unemployment High to Un-Elect Obama

Not even CNN "Death to America" News was able to avoid reporting the latest ADP numbers for US employment growth.  On CNN's "top of the hour" quip, the editors bit their little neo-con tongues and let slip that the economy had increased employment with 212,000 new private sector jobs.

This number caught the doom boys by surprise.  The House Republican "budget slashers" were comfortably assuming that new jobs numbers would remain at the carefully crafted lethargic pace established by their neo-con political strategists.  

Of course, CNN also felt duty bound to broadcast the best product they could dream up as a "counter report."  After the announcement, the story was followed by no fewer than three "expert reports" suggesting that 

1.) the number was wrong, 

2.) the number didn't actually mean anything, or 

3.) the job situation under the brutal, megalomaniacal rule of the liberals remained utterly and absolutely hopeless until there was a change at the top.

After MeanMesa had a few minutes to think about all of this, the impulse arose to just casually dive into Google images to see what interesting things might be retrieved about the subject.  Here's what showed up, right away, during the search.

Chart One 

Private Sector Job Growth to Dec 2010

Given the grave state of the accumulated job losses during the autocracy coupled with the huge void of capital remaining in the US economy after the looting, we can see that the present administration's efforts have rekindled a slow, but fairly, steady reversal of the disaster of the Bush years.  From the bars on this chart, it is also clear that job numbers began to improve with the beginning effects of the stimulus.

Of course, the paid voices of the oligarchs are prepared to spin quite a different tale.  Their favorite "talking point" is that the stimulus did absolutely nothing beyond increasing the national debt.  Every time one of these wing nuts faces a microphone, this idea is trotted out like the First Station of the Cross.  No number of credible economists stating otherwise can so much as dent a fender on this right wing Juggernaut.

However, when we look at a few charts about the effect of the stimulus, the GOP lie starts collecting a serious case of "road rash" almost immediately.

Chart Two

Job Growth Resulting From Recovery Act - to April 2010

Chart Three

What the GDP Would Have Looked Like With the Stimulus

Chart Four

Simply assuming that the Republican strategy centers entirely on the goal of keeping the economy in turmoil until the 2012 elections may be over generous.  Of course, we have seen Republicans, especially in the Senate, obstruct every bill which might have assisted the nation in economic recovery.  We have, in fact, watched in disbelief, as the entire GOP bloc voted in a zombie like, unanimous lockstep as they gleefully extended our misery for an electoral advantage in 2012.

Does any one out there possibly believe that Republicans are of such a pure and homogeneous mind set that not a single one would support a single bill out of the approximately 280 designed to help our economy?

However, as mentioned before, there were other "low hanging fruit" to be plucked from this scheme.  The details are just as numerous as the states with new Republican looters sitting behind the wheel after the November election.  Thanks to national socialist reactionaries such as the ones millions of Americans hear on Fox "News," these main economic problems blanket a sinister horde of lesser indignities these folks have in mind for us.

For example, although the Wisconsin tea bag Governor may "shake all the feathers and fury" about his state budget in his inflammatory ranting, his actual goal is the destruction of union campaigners in the next election, the bargain basement sale of his state's power plants to Koch Energy and his scheme to gain an unstoppable access to the teachers' pension trust of $78 Bn.  If he succeeds in breaking union strength, no one can stop him from looting the 96% fully funded pension.

The shady Republican characters in the Wisconsin Assembly can certainly not be counted on to do any more than lick their Republican chops at the prospect.

A similar, "red meat bait and switch" is duplicated all across the country, now.

So, although we may have wandered just a bit, this is a very good time to keep track of all the threads.  Our country is under perhaps the gravest threat it has faced in this century -- counting the World Wars, the Depression, the military adventures and the autocracy's penchant for "dividing and conquering" us.

The Republic will survive only if we are both vigilant and active.  The country is depending on us.

MeanMesa's compliments to the President.

Speeches We'd Like to Hear - Obama on the Recovery

Can the Obama Administration allow the nay-sayers, truth benders and Congressional bigots sabotage the economic recovery for political advantages?

After all, enough "bad press" can throw us all back into the second dip of this economic morass.

MeanMesa has already taken the bold step of "putting words into the mouth" of President Obama.  (See "Speeches We'd Like to Hear - Obama on the Deficit," a recent posting on this blog go to the posting here  )  Now, we'd like to return to that theme with another "speech" concerning the recovery.

This posting finds the neo-con "sludge factory" running at full steam -- as usual.  All sorts of folks with Congressional seats or cheap, corporate microphones are spouting daily invectives, lies, of course, but still quite palatable to the hill billies and bigots who don't care enough about our country to even find out what's happening.  They form a chorus of extremely questionable voices which say things such as "Not a single job was created."  "We would have been better off if Obama had done nothing!"

The voices of scholarly economists -- with personal positions on both sides of the issue -- mean nothing.  Neither do facts.  Whenever something emerges from the routine sources of the government, public opinion or think tanks, the verdict is simply to "shoot the messenger" for these knuckle dragging troglodytes.  Philosophically, it is an existential impossibility (if there is such a thing...) for any credible information to contradict the pablum these losers swallow daily from the "fact benders" whether the voices belong to the Hannity Limbaugh ilk or the only slightly less soiled Republicans "talkers" in the House and Senate.

Ooops.  Did MeanMesa tip our hand, perhaps staining our nationally respected equanimity?   If anyone is wondering, we're so over these losers and crooks, we're ready to turn off the lights!

One last note before we begin the "speech:"  MeanMesa's brilliant (and, BTW, available) IT Guy, Dave, has educated us on the correct procedure for posting graphics!  No more scrawny little, half legible visual wreckage on this blog site!  For those wishing to view the original source of the graphics used here 

Milken Forecast / Huffington Post

Thanks Dave!

Once again, it is time for Barack Obama to become the teacher.  The topic of class for this speech is the United States economy in the process of recovery.

Good evening, my fellow Americans.

Although my recent talk about the country's deficit has drawn a significant amount of fire from our political opponents, a good number of Americans have told us that it helped explain things.  Remarkably, most of the folks talking to us via email and letters were not upset by the idea that I wanted to include a couple of graphs to explain my point.

Based on that reception, I've decided to talk in the same way -- that is, with more graphs -- about how our economy is performing as we take steps to get things going again.  Although the media presents economic information in rather small packages when there is a new development, I wanted to discuss a block of economic news which needs to be considered as a whole.  I especially want to address the economy's performance in areas which concern the majority of Americans the most.

Tonight, we'll take a look at five major areas of the economy.

1. Jobs - the employment outlook
2. Deficits - my plans to greatly lower the national debt
3. Our GDP - what the future of the whole economy might look like
4. Services - the future course of state and local government spending, and
5. House Values - the future housing starts as the economy recovers

As I said before, I want to talk about a chart for each of these five areas.  In each case, I want to discuss what the numbers on those charts can mean to our recovery.  Because our unacceptably high unemployment is the most pressing and immediate problem for both myself and for many Americans, let's begin with what jobs situation is predicted to do as we move ahead in the recovery.

Jobs and Unemployment

We are all painfully familiar with the "dip" in employment this graph shows.  It began around the start of 2008, got worse, then finally began to climb around the middle of 2009.  This "pocket" of job losses was immense, growing by around 3/4 of a million jobs a month at its very worst.  However, right here we have to remember that this graph shows job losses not the total number of people who are out of work.

To get to that number, we have to add all the bad news in my chart together.  Those are the stories of workers and families that make up the unacceptably high unemployment figures we face today.

Right at the 2010 line -- where the grey starts -- we see a jump that tells us that we finally began adding jobs.  Some of these were census workers, but a lot of them were Americans starting to go to work on projects funded by the Recovery Act.  Of course, those increases are now tapering off a little even though job growth remains on the positive side of the chart.  My administration decided that it was important to "break the cycle" which had begun in 2008.

As of right now, the country has had job growth for the last year.  This hasn't been as much as I would liked, but compared to what we have just put behind us, it's very promising.

The graph shows slower-- but still positive job growth -- coming up for the next year or so.  If you're unemployed, don't lose hope.  I know times are rough, and I am thinking about the problem everyday, trying to find even more that the Federal government and my administration can do to get us out of this as soon as possible.

The Deficit

Next, even though my last talk was about the national debt, we want to spend just a moment on the deficit.  First, regardless of what my Republican colleagues are saying about the deficit, it is more than politics -- it is a national security matter.  Again, since they -- like me -- are trying to win elections this November, they have been voting against policies such as the extension of unemployment benefits and justifying their opposition by complaining about how they raise the deficit.

As I mentioned in our last talk, they should know quite a lot about deficits.  The problem is that they don't seem to know much about what it's like to not have a job and to be relying on unemployment benefits to make ends meet.

I won't try to confuse anyone.  My administration has been pumping money into the economy big time, starting just as soon as I took office.  We had to do this because the economy had lost so much value that it was in danger of simply stopping.  My deficit this year is almost a $1 trillion dollars.  The government's tax revenues are way down because business is so bad, and that means that we have been borrowing money and printing money to put into the economy to get it going again.

We cannot keep pumping deficit money into our economy forever.  The deficit chart shows that this practice will be winding down to roughly the level before the crash by around 2012.  After that, my administration's austerity policies will continue to gradually control the deficit.  We don't want to choke the recovery now that we have actually got it started, but we know in no uncertain terms that our government spending must come back into line with our resources.

Jobs and Unemployment

The GDP

Now, a quick comment on our national GDP and the forecast for the American economy's growth in the next few years.  However, here again the numbers need a little explanation.  

The GDP before the crash was almost 40% financial products.  We now know where that kind of an economy will lead us.  As a result, we will work toward a GDP which is much more based on real growth -- manufactured things such as auto mobiles, energy saving solar panels and infrastructure improvements.  Unlike the financial products which have caused so much trouble, "cars, planes and trains" actually continue to hold value and improve the economy.

We need to go to this approach to get out of the financial collapse and to insure future growth for the nation -- real growth -- a GDP based on real products.

This chart shows that we have set a target of around 3.5% growth as our economy goes ahead to 2015.  That may sound modest, but we have to remember that the GDP growth we were experiencing before the collapse was based far too heavily on financial products -- not real ones.  When everyone saw what was fueling those GDP growth numbers, the "growth" collapsed right along with the rest of the economy.  We want real growth, not more high priced, risky financial  gizmos.

For those of you who don't usually think in terms of GDP, I'm not going to launch into a long explanation of it right here.  Just understand that a good healthy GDP, based on strong healthy products, means that everything else  in the economy will start working better, too.  That's what we're after.

State and Local Government Spending

A lot of the services of your government are the result of taxes collected and money spent by your local and state governments.  Paying for schools, fire departments, road maintenance and your local police and state troopers all depends of whether or not your city or your state has enough revenue money.  Right now, the economic downturn has not only reduced the amount that the Federal government take in, it has done the same thing to your local governments, too.

As we estimate the amounts of revenues which will become available to state and local governments in the next few years, we can see the trend to restore  necessary government services as the financial situation improves.  State and local governments usually can't go into the red -- even for a single yearly budget.  As a result of this, when the state and local money dies up, the services have to be cut to balance the books.

Now, we might think that this is a great chance to lower government spending.  To a certain extent, this may be the case.  However, as more and more of the government programs which support our economy get cut, too many other things go down as well.  A manufacturing plant struggling to stay in business simply doesn't need the road out in front to get so bad that its delivery trucks get ruined.

House Prices

The last of the five topics is one area which is causing Americans serious problems.  People have wisely used their homes as a bank account, a safe place to put all their savings over a lifetime.  We all know about  sub-prime mortgages and the other financial instruments which have caused so much trouble, but tonight, we need to look at the on-going effects of those problems.

Many Americans have had their houses foreclosed.  Many more are in danger of the same thing.  We have tried a number of programs to decrease these foreclosures, but we have not had the success I wanted.  We will work even harder on this as the recovery continues.

However, many Americans who are not in danger of foreclosure have seen the value of their houses drop sharply.  One reason for this is that so many homes have been foreclosed that there is a surplus of houses for sale -- many of them for sale at low prices as banks and mortgage holders try to sell foreclosures.  Making matters worse, many Americans who would -- in better economic times -- be in the market for a house are either not in a position to afford one or are waiting for housing prices to begin to rise again before they buy.

Because of this, not many new homes have been started even after the low point in 2009.  However, when housing starts -- the topic of my last chart -- begin to pick up, it means that the market has sold many of the surplus homes on the market right now.  More housing starts means higher prices on houses for sale, and higher values on homes currently owned.

Of course, the industry which builds homes in America will also start growing healthier when this happens.  My housing experts see this kind of progress gradually picking up steam toward the end of 2010.  If you presently own a home, hang on to it if you possibly can.  Things will get better.

I hope that the information on these charts has painted a picture of an economy in recovery.  The arguments which have been relentlessly presented to suggest otherwise are not based on the facts of the matter.  My administration has been working every day -- including quite a few long nights -- on our country's economic problem.  The facts show that our efforts are succeeding.  We all wish that things were moving faster, but let there be no question:  our economy is in recovery.

During the time I've been President, the economic emergency has consumed time when, if things were better, we could have done many other, important things for the country.  Every American is paying an immense price for this recovery.   This is a time when all of us must do whatever we can to move our recovery forward.  Each one of us  must participate in this effort.

However, politics is always politics.  Different ideas about the future course of the country make us the vibrant democracy that we are.  However, when a large part of what should be a healthy political discussion has no basis in fact, good decisions about our future suffer.  When the political discussion at election time centers on massive misrepresentations of the facts about the challenges we face, our real challenges go untended.

I encourage all Americans -- including those voting for either party -- to make their ballot decisions on the best information available.  The recovery depends on it, and our country's future depends on it.

Thank you, and God Bless the United States of America.