The Audacity Of Dopes: Tax Deal Edition

Caption: This is an old chart, but a good one. It represents the real change in income in America by economic bracket from 1979 through 2006. Note that only the upper five percent or so had been seeing improvement, while the rest of us are doing well to break even. Nothing about this has changed for the better since then. See the image credit link for a fuller explanation. Click on the image to enlarge.

Image credit: Afferent Input.

I hadn't gotten around to discussing the November job numbers last week, which went back to being the dismal numbers we're used to. Thankfully, with their announcement of the tax deal yesterday, the Obama Administration gave me some extra motivation. Robert Reich sums that up in his opening paragraph:

This is not a recovery. It’s a continuing jobs emergency and it demands action.

We learned this morning that unemployment rose to 9.8 percent in November and employers added only 39,000 jobs. Private employers added 50,000 — the smallest gain since January. Government employment continued to shrink.

The American Jobs Emergency Requires Action

As Keith Olbermann (of all people) noted yesterday, this is a depression that's being caused by lack of demand for the things our businesses make. That is caused by the increasing unemployment and underemployment we Americans face, as well as by the steady erosion of our earnings over the last generation. In contrast to the congenital idiot who covers economics for the Washington Post and many of her colleagues, Reich understands this:

Let’s be clear about this. The problem is lack of sufficient demand for workers.

There are only four sources of demand. The biggest source is American consumers, who comprise about 70 percent of economic activity.

But the vast American middle and working class can’t and won’t buy enough to get people back to work. They’re still under a huge debt load.

The American Jobs Emergency Requires Action

That's the problem, and it's not going to be cured by giving tax cuts to the rich. Hell, it's not even going to be cured by extending unemployment benefits, but at least that was a step in the right direction. Unfortunately, the Obama Administration seems to be determined to take at least two steps backwards for every one it takes forward, as Jon Walker noted this morning:

This tax deal is the public option fight all over again, but not the way Obama falsely tries to spin it. Both times, Obama had no intention of fighting for his promise. Both times, he argued that in order to obtain some help for regular people, he was “forced” into endorsing a huge transfer of wealth to the ultra rich and big corporations.

Tax Cut Deal is Public Option Debate All Over Again: All Lies, No Fight

That's the problem with this tax cut deal - it bribes us to give more money to the rich by giving us a little something, too.

You have to think that it would take a con artist like Obama to come up with a deal like that.

Afterword: Speaking of congenital idiots who cover economics for the Washington Post, another one got his ass handed to him by Dean Baker yesterday:

Actually [the problems of Ireland, Greece, Spain, Italy, and Portugal] is not a story that the United States should ever face -- contrary to the Post's sanctimonious lesson for its readers. Unlike all the countries on its list, the United States has its own currency. This means that, in a worse case scenario, Congress could have the Fed buy government debt. This could create a problem of inflation, but it would not lead to a crisis of type that the article is describing.

The Washington Post Gives Its Readers a False Lesson to Push Its Deficit Agenda

Which is macroeconomics 101, near as I can tell. The author of that article, Neil Irwin, even mentions that those countries are, indeed, part of the Eurozone, but doesn't connect the dots.

Interestingly, Iceland, the only European country so far to have actually defaulted on its massive debt, is, as Paul Krugman noted yesterday doing somewhat better than the other small European countries that got themselves in serious debt trouble. If a country hasn't chained itself to another currency, defaulting on a truly ruinous debt may be a better option than going even further underwater in an attempt to pay it off.

With this kind of economics reporting at one of our nation's leading newspapers, it's no wonder that most of us can't make heads or tails of what's going on.

UPDATE: Added the afterword, and corrected the caption for the income chart. It shows income changes from 1979 through 2006, not 2008, and it was the top five percent who were shown to be doing better, not the top two.