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PAUL CRAIG ROBERTS: Obama’s FY 2012 Budget Is A Tool Of Class War

February 18, 2011 Comments off

The following column is reprinted with permission from Paul Craig Roberts.
 

Obama’s FY 2012 Budget Is A Tool Of Class War
©  Paul Craig Roberts
February 17, 2011

Obama’s new budget is a continuation of Wall Street’s class war against the poor and middle class. Wall Street wasn’t through with us when the banksters sold their fraudulent derivatives into our pension funds, wrecked Americans’ job prospects and retirement plans, secured a $700 billion bailout at taxpayers’ expense while foreclosing on the homes of millions of Americans, and loaded up the Federal Reserve’s balance sheet with several trillion dollars of junk financial paper in exchange for newly created money to shore up the banks’ balance sheets. The effect of the Federal Reserve’s “quantitative easing” on inflation, interest rates, and the dollar’s foreign exchange value are yet to hit. When they do, Americans will get a lesson in poverty.

Now the ruling oligarchies have struck again, this time through the federal budget. The U.S. government has a huge military/security budget. It is as large as the budgets of the rest of the world combined. The Pentagon, CIA, and Homeland Security budgets account for the $1.1 trillion federal deficit that the Obama administration forecasts for fiscal year 2012. This massive deficit spending serves only one purpose – the enrichment of the private companies that serve the military/security complex. These companies, along with those on Wall Street, are who elect the U.S. government.

The U.S. has no enemies except those that the U.S. creates by bombing and invading other countries and by overthrowing foreign leaders and installing American puppets in their place.

China does not conduct naval exercises off the California coast, but the U.S. conducts war games in the China Sea off China’s coast. Russia does not mass troops on Europe’s borders, but the U.S. places missiles on Russia’s borders. The U.S. is determined to create as many enemies as possible in order to continue its bleeding of the American population to feed the ravenous military/security complex.

The U.S. government actually spends $56 billion a year, that is, $56,000 million, in order that American air travelers can be porno-scanned and sexually groped so that firms represented by former Homeland Security Secretary Michael Chertoff can make large profits selling the scanning equipment.

With a perpetual budget deficit driven by the military/security complex’s desire for profits, the real cause of America’s enormous budget deficit is off-limits for discussion.

The U.S. Secretary of War-Mongering, Robert Gates, declared: “We shrink from our global security responsibilities at our peril.” The military brass warns of cutting any of the billions of aid to Israel and Egypt, two functionaries for its Middle East “policy.”

But what are “our” global security responsibilities? Where did they come from? Why would America be at peril if America stopped bombing and invading other countries and interfering in their internal affairs? The perils America faces are all self-created.

The answer to this question used to be that otherwise we would be murdered in our beds by “the worldwide communist conspiracy.” Today the answer is that we will be murdered in our airplanes, train stations, and shopping centers by “Muslim terrorists” and by a newly created imaginary threat – “domestic extremists,” that is, war protesters and environmentalists.

The U.S. military/security complex is capable of creating any number of false flag events in order to make these threats seem real to a public whose intelligence is limited to TV, shopping mall experiences, and football games.

So Americans are stuck with enormous budget deficits that the Federal Reserve must finance by printing new money, money that sooner or later will destroy the purchasing power of the dollar and its role as world reserve currency. When the dollar goes, American power goes.

For the ruling oligarchies, the question is: how to save their power.

Their answer is:  make the people pay.

And that is what their latest puppet, President Obama, is doing.

With the U.S. in the worst recession since the Great Depression, a great recession that John Williams and Gerald Celente, along with myself, have said is deepening, the “Obama budget” takes aim at support programs for the poor and out-of-work. The American elites are transforming themselves into idiots as they seek to replicate in America the conditions that have led to the overthrows of similarly corrupt elites in Tunisia and Egypt and mounting challenges to U.S. puppet governments elsewhere.

All we need is a few million more Americans with nothing to lose in order to bring the disturbances in the Middle East home to America.

With the U.S. military bogged down in wars abroad, an American revolution would have the best chance of success.

American politicians have to fund Israel as the money returns in campaign contributions.

The U.S. government must fund the Egyptian military if there is to be any hope of turning the next Egyptian government into another American puppet that will serve Israel by continuing the blockade of the Palestinians herded into the Gaza ghetto.

These goals are far more important to the American elite than Pell Grants that enable poor Americans to obtain an education, or clean water, or community block grants, or the low income energy assistance program (cut by the amount that U.S. taxpayers are forced to give to Israel).

There are also $7.7 billion of cuts in Medicaid and other health programs over the next five years.

Given the magnitude of the U.S. budget deficit, these sums are a pittance. The cuts will have no effect on U.S. Treasury financing needs. They will put no breaks on the Federal Reserve’s need to print money in order to keep the U.S. government in operation.

These cuts serve one purpose: to further the Republican Party’s myth that America is in economic trouble because of the poor: The poor are shiftless. They won’t work. The only reason unemployment is high is that the poor had rather be on welfare.

A new addition to the welfare myth is that recent middle class college graduates won’t take the jobs offered them, because their parents have too much money, and the kids like living at home without having to do anything. A spoiled generation, they come out of university refusing any job that doesn’t start out as CEO of a Fortune 500 company. The reason that engineering graduates do not get job interviews is that they do not want them.

What all this leads to is an assault on “entitlements”, which means Social Security and Medicare. The elites have programmed, through their control of the media, a large part of the population, especially those who think of themselves as conservatives, to conflate “entitlements” with welfare. America is going to hell not because of foreign wars that serve no American purpose, but because people, who have paid 15% of their payroll all their lives for old age pensions and medical care, want “handouts” in their retirement years. Why do these selfish people think that working Americans should be forced through payroll taxes to pay for the pensions and medical care of the retirees? Why didn’t the retirees consume less and prepare for their own retirement?

The elite’s line, and that of their hired spokespersons in “think tanks” and universities, is that America is in trouble because of its retirees.

Too many Americans have been brainwashed to believe that America is in trouble because of its poor and its retirees. America is not in trouble because it coerces a dwindling number of taxpayers to support the military/security complex’s enormous profits, American puppet governments abroad, and Israel.

The American elite’s solution for America’s problems is not merely to foreclose on the homes of Americans whose jobs were sent offshore, but to add to the numbers of distressed Americans with nothing to lose the sick and the dispossessed retirees, and the university graduates who cannot find jobs that have been sent to China and India.

Of all the countries in the world, none need a revolution as bad as the United States, a country ruled by a handful of selfish oligarchs who have more income and wealth than can be spent in a lifetime.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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Categories: ISR, PAL, Paul Craig Roberts, USA, WORLD

PAUL CRAIG ROBERTS: Kleptocrats at Work

February 7, 2011 Comments off

The following column is reprinted with permission from Paul Craig Roberts.
 

Kleptocrats at Work
©  Paul Craig Roberts
February 7, 2011

Kleptocracy is as old as government. Exotic car broker Michael Sheehan discovered an amazing case nine years ago when he was invited to purchase rare Ferraris and McLaren F1s from a Brunei collection. He writes about it in the current issue of Sports Car Market.

Brunei is a family-owned oil Sultanate of 400,000 people located on the island of Borneo in southeast Asia. A brother of the sultan was finance minister until 1997, when the Asian financial crisis hit Brunei. The Arthur Anderson accounting firm was called in to audit the books. The accountants found that between 1983 and 1998 $40 billion had disappeared and that the finance minister himself had personally spent $14.8 billion.

The finance minister had a collection of 2,500 exotic cars, 500 properties, five yachts, and nine world-class aircraft. He had managed to spend $900,000,000 in the London jeweler Asprey, apparently guaranteeing the old age retirements of a number of attractive women who consort with kleptocrats.

The finance minister was allowed to keep 500 of the cars, but he had to turn in the rest of his loot – to no avail as we shall see.

Sheehan went to Brunei to view the cars. From his general description of the collection, I estimate that the finance minister had paid six figures for the least expensive car in the collection. Many cost much more. McLaren F1s cost $1,000,000 new. They are more valuable now. In October 2008 one sold at a London auction for $4,100,000. Many of the cars were custom built. Some of the high speed Ferraris “were coated in radar-absorbent matt-black coatings and fitted with infrared cameras for night driving.” Easily more than one billion dollars of Brunei’s oil revenues had found their way into the finance minister’s car collection.

Sheehan reports that the cars were stored in about 12 buildings “surrounded by a high wall topped with razor wire and with a bomb-proof front gate” and patrolled by “armed Gurkhas with very serious German shepherds.” The security was for naught, because “the air conditioning was off, but the tropical sun was not.” Years of heat and humidity had destroyed the cars. The storage facilities had become a car tomb.

Sheehan concluded that most of the cars were in such a state of ruin that only a few of the cars had sufficiently high inherent values to support commercially viable restorations. The best use of the rest, Sheehan decided, would be to turn them into an artificial ocean reef.

The careless waste is shocking and even more so to car buffs who consider many of the ruined cars to be artistic masterpieces. This is the kind of opulent waste that we associate with family-owned countries. But before we Americans start feeling superior, consider that the U.S. government puts the Brunei finance minister to shame.

On January 29, 2002, CBS Evening News reported that the Pentagon had lost track of $2.3 trillion, yes, $2,300 billion. Defense Secretary Rumsfeld admitted, “According to some estimates we cannot track $2.3 trillion in transactions.” “We know it is gone,” said Jim Minnery of the Defense Finance and Accounting Service, “but we don’t know what they spent it on.”

Reported thefts from Iraq and Afghanistan reconstruction aid rival Brunei’s missing billions. Pallets of cash stacked high have been flown out of Afghanistan in plain view. The stories of corruption and missing funds are so numerous that they are no longer reported.

The U.S. Congress, at President Obama’s request, recently passed the largest military spending bill of all time in behalf of the share prices of the military/security complex, while many of the 50 states teeter on bankruptcy and default on pensions and municipal bonds and slash education, medical, and other services. For “our” government in Washington, it is a no-brainer that the profits of the military-security complex take every precedence over every need of the American people.

If the Brunei finance minister’s billion dollar car collection becomes an artificial reef, it will foster marine life. In contrast, Dick Cheney seriously damaged, perhaps for many years to come, the Gulf of Mexico, because Cheney believed a few extra bucks for the oil companies were more important than safety standards. The missing safety standards have cost British Petroleum $20 billion in clean up and restitution costs.

U.S. taxpayers are paying the Department of Homeland Security
$56,336,000,000 this year to porno-scan and grope them and otherwise invade their privacy, while millions of Americans are foreclosed out of their homes.

How are the priorities of the U.S. government superior to those of the Brunei finance minister? When it comes to waste and corruption, lies and deception, the U.S. government has no equal.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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PAUL CRAIG ROBERTS: The Dissolving Constitution

January 28, 2011 Comments off

The following column is reprinted with permission from Paul Craig Roberts.
 

The Dissolving Constitution
©  Paul Craig Roberts
January 28, 2011

While people in Tunisia and Egypt have taken to the streets in attempts to gain their liberty, Americans are losing their liberty with minimal protest. Even the American Civil Liberties Union seems unfocused. At a time when we are being surrounded by a police state and the federal judiciary is being taken over by the Federalist Society and unitary executive theory that places the president above the law, we need a heightened appreciation of civil liberty and the Constitution on the part of the American people. The American people need to come together and to take a united stand against the police state and unaccountable executive branch power.

During my many years of writing in defense of law as a shield of the people instead of a weapon in the hands of the state, I have identified two important reasons that Americans are losing the protection of the legal principles that made them free. One reason is that among a significant portion of the population, especially those who think of themselves as conservative, there is indifference and even hostility to civil liberties. The other reason is that Benthamite thinking has made inroads into the Blackstonian conception of law that is the basis of the Constitution. Jeremy Bentham argued for pre-emptive arrest before a crime is committed, for torture in order to obtain confession, and for subverting the attorney-client privilege. Bentham’s views, fiercely hostile to those of our Founding Fathers, are now represented on the federal bench (federal appeals court judge Jay S. Bybee, for example) and in prestigious law schools (John Yoo, UC Berkeley, for example).

In chapter 3 of The Tyranny of Good Intentions, Larry Stratton and I contrast Bentham’s views with those of William Blackstone and our Founding Fathers. This article is about the division of the American public on the matter of civil liberty.

Court decisions by “activist judges” in behalf of criminals, abortion, homosexual rights, and against school prayer, all in the name of constitutional rights and civil liberty, have resulted in many Americans identifying civil liberty with procedures that provide protections and immunities for criminals and with judicially created rights that are destroying morality. All the fights over Supreme Court appointments have to do with “social issues” such as abortion. The enumerated rights in the Constitution, such as habeas corpus, due process, free speech and association, long ago receded into the background and play scant role in Senate confirmations of Supreme Court appointees.

As a member of the ACLU, I look to that organization for the legal defense of our enumerated rights. The ACLU does stand up for the enumerated civil liberties spelled out in the Constitution. However, reading the current issue of the ACLU newsletter, I found myself wondering if the ACLU is unconsciously contributing to the public’s indifference and hostility to civil liberty. The newsletter’s list of legal highlights for 2010 presents the ACLU’s activities as being concentrated in efforts to legalize homosexual marriage, to protect abortion from curbs, and to end the promotion of religious beliefs in public schools.

These are all issues that infuriate conservatives, and these are the issues that conservatives identify with civil liberties. Therefore, much of the public is not the least bit perturbed to hear that civil liberties are under attack when many understand civil liberties to consist of criminal rights, prayer bans, abortion, and homosexual marriage. This is dangerous, because in the public’s mind, civil liberty can easily morph from procedures that coddle criminals into procedures that coddle terrorists. Should this occur, all would be lost. Defense of the enumerated rights would become “giving aid and comfort to terrorists.”

It is not my purpose to argue the validity of the ACLU’s position on abortion and homosexual marriage. I am sure that the ACLU is convinced that homosexual and abortion rights are somewhere in the Constitution, but they are not enumerated rights, and the conservatives know it. When the Constitution and Bill of Rights were written, I don’t know if abortion and homosexual acts were the statutory offenses that they were during much of my lifetime, but they were not socially approved behavior that the Founding Fathers thought worthy of constitutional protection. The separation of church and state means no state church or taxpayer support. It does not mean no prayer in public schools. Ironic, isn’t it, that today with faith-based initiatives we have taxpayers’ money going to religious institutions, but no prayer in school.

When the issue is raised that perhaps the Constitution like common law can change as people’s mores change, conservatives reply that if the Constitution can change, anything can be put into it or be taken out, such as the civil liberties that I am complaining about Bush taking out. As for abortion and gay marriage, these are things that conservatives think activist judges and the ACLU put into the Constitution. Strictures against abortion and homosexuals should have been overturned legislatively, not by inventive interpretations of the Constitution.

The unintended consequence of the judicial branch exercising the legislative function in the name of constitutional rights has been the alienation of a large percentage of the population from civil liberty concerns. Today much of the population views the ACLU as a threat to society comparable to terrorism.

With the police state destroying protections against searches, the First Amendment, habeas corpus, due process, and the right to an attorney, with grand jury subpoenas issued to war protesters, with lists of American citizens to be assassinated, with ongoing war crimes committed in wars based in lies and deceptions, with the executive branch’s seizure of the power to violate statutory laws against torture and spying without warrants, should the ACLU refocus, stop alienating conservatives, and bring the people together against the police state?

Should the ACLU be devoting its scarce resources to convincing courts to legalize homosexual marriage when the executive branch can declare people to be suspects and throw them into a dungeon? Reproductive rights and homosexual marriage will not stop people from being thrown into dungeons. If the enumerated rights are lost, no other rights are meaningful.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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PAUL CRAIG ROBERTS: Spinning Unemployment in a Collapsing Empire

January 10, 2011 Comments off

The following column is reprinted with permission from Paul Craig Roberts.

Spinning Unemployment in a Collapsing Empire
©  Paul Craig Roberts
Source:  VDARE
January 9, 2011

The Bureau of Labor Statistics (BLS) reported Friday that the economy gained only 103,000 new jobs in December – not enough to keep up with population growth – but the rate of unemployment (U.3) fell from 9.8% to 9.4%. If you are confused by the report, you are among the many.

In truth, what fell was not the number of unemployed people but the number of unemployed people who are actively looking for work. Those who have become discouraged and have ceased looking for work are not considered to be in the work force and are not counted as unemployed in the U.3 measure. The unemployment rate fell because discouraged workers increased, not because employment rose.

The BLS counts short-term discouraged workers (less than one year) in its U.6 measure of unemployment. That unemployment rate is 16.7%. When statistician John Williams (shadowstats.com) adds the long-term discouraged, the U.S. unemployment rate as of December 2010 was 22.4%.

The question to ask yourself is: why does the media focus on the unemployment measure that does not count any discouraged workers? The answer is that the U.3 measurement only counts 42% of the unemployed and makes the situation appear to be a lot better than it is.

Where are the 103,000 new jobs? As I have reported for years, the jobs are in non-tradable domestic services: waitresses and bar tenders, health care and social assistance (primarily ambulatory health care services), and retail and wholesale trade.

Today the United States has only 11,670,000 manufacturing jobs, less than 9% of total jobs. Yet, despite America’s heavy dependence on foreign manufactures and foreign creditors, the idiots in Washington think that they are a superpower standing astride the world like a colossus.

John Williams reports that “the level of payroll employment still stands below where it was a decade ago, despite the U.S. population growing by more than 10% in the same period. The structural impairments to U.S. economic activity continue to constrain normal commercial activity, preventing any meaningful recovery in business activity.”

Another way of saying this is that American corporations have taken American jobs offshore and given them to the Chinese. So much for big business patriotism.

Williams also reports that, unless it is finagled, next month’s BLS benchmark revision of payroll employment data will lower the level of previously reported employment by more than 500,000.

Federal Reserve chairman Ben Bernanke used his testimony before the Senate Budget Committee last Friday to warn that the U.S. government must get its budget deficit under control or “the economic and financial effects would be severe.” Here Bernanke is acknowledging that the Federal Reserve cannot indefinitely print money in order to finance wars and bailouts of the mega-rich.

But how is the government to get its budget under control? The U.S. government, regardless of political party or president, is committed to American hegemony over the world. The Congress has just passed the largest military budget in history, and there is no indication that any of America’s wars and military occupations are near an end.

The financial crisis is not over, with more foreclosures and more losses for the financial sector that will result in more taxpayer bailouts for those “too big to fail.” John Williams says that the double-dip is already happening, just disguised by faulty statistics, and that the deficit implications are horrendous and are likely to result in hyperinflation as the Federal Reserve will have to monetize the otherwise un-financeable deficits.

The dollar is also in danger, its role as reserve currency undermined by the Federal Reserve’s creation of more and more dollars. Temporarily, the dollar is buttressed by the grief that Wall Street’s sale of fraudulent derivative financial instruments to Europe has caused the euro.

The Republicans will try to destroy Social Security and Medicare in order to pay for wars and bailouts. If Americans are capable of realizing that they are threatened on a much greater level by the Republicans’ evisceration of the social safety net than they are by terrorists, the Republican assault on what they call “the welfare state” will fail.

The fallback target will be private pensions, assuming any survive plunder by the Wall Street investment banks. Pension funds could be required to invest in Treasury debt or they could face a levy. In the Clinton administration, Assistant Secretary of the Treasury Alicia Munnell proposed confiscating 15% of all pension assets on the grounds that they had accumulated tax free. Certainly Washington will steal Americans’ pensions, just as Washington has stolen Americans’ civil liberties, in order to continue the empire’s wars of hegemony.

Increasingly, the rest of the world views America as the single source of its financial and political woes. While the superpower massacres Muslims in the Middle East and Central Asia, people in the rest of the world have learned from WikiLeaks that the U.S. government manipulates, bribes, threatens, and deceives other governments in order to have those governments serve the U.S. government’s interest at the expense of the interests of their own peoples.

The American Imperial Empire rests on puppet governments that are increasingly distrusted and hated by the peoples under their rule. Like the Soviet Union’s Eastern European empire, the American Empire is ruled not directly but through puppet states.

Puppet governments are caught between the empire’s power and the power of the local population. To the extent that Europeans have a moral conscience, they will find America’s foreign policy increasingly repugnant. To the extent that Muslim solidarity grows, the Muslim puppet governments that support America’s and Israel’s massacres of Muslims will find themselves threatened from within.

The American Empire is on the rocks, despite its vast arsenal of nuclear weapons and its control over the foreign and domestic policies of its subservient puppet states in Western and Eastern Europe, the United Kingdom, Canada, Australia, parts of Africa, the Middle East, Japan, Thailand, Indonesia, the Baltic states, Georgia, Kosovo, Mexico, Central America, Columbia, and, no doubt, others.

A country that is the font of war and oppression, whose dominance rests on the weak reed of puppet states, and whose economy is collapsing will not long remain dominant.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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PAUL CRAIG ROBERTS: Reaganomics

December 20, 2010 Comments off

The following column is reprinted with permission from Paul Craig Roberts.

Reaganomics
©  Paul Craig Roberts
December 19, 2010

I admire Robert Reich, because he has a social conscience. However, if I were writing about the current Republican/Obama tax cut, I would not help the Republicans put Ronald Reagan’s name on it. Outside of progressive circles, which reflexively blame Reagan, the 40th president is still popular, because the 1980s were the last of the good times. Who prefers 21st century America to the Reagan 1980s?

In his recent article “Reaganomics Redux” in Reader Supported News (17 December), Reich writes that “Ronald Reagan came to Washington intent on reducing taxes on the wealthy and shrinking every aspect of government except defense.” As Reagan’s first Assistant Secretary of the Treasury for Economic Policy, often labeled both in praise and derision “the father of Reaganomics,” I would like to offer a different perspective.

Reagan came to Washington to put an end to stagflation and the Cold War. Keynesian demand management had the wrong policy mix. Easy money pumped up aggregate demand, but high tax rates reduced the response of supply to demand. Consequently, prices rose. The problem was reflected in worsening “Phillips curve” tradeoffs between inflation and employment. As time passed, higher rates of unemployment were required to bring down inflation, and higher rates of inflation were required to boost employment.

Washington was concerned, including Democrats in Congress, because stagflation threatened every category in the budget.

The supply-side policy, which some label Reaganomics, reversed the policy mix. Monetary policy was tightened to lower aggregate demand, and marginal tax rates were reduced in order to boost the response of supply.

The policy worked. The economy ceased to experience worsening tradeoffs between inflation and unemployment. I described the policy change in my book, The Supply-Side Revolution, published after exacting peer review by Harvard University Press in 1984.

The Reagan tax rate reduction was modeled on the John F. Kennedy tax rate reduction, which was strongly supported by Reich’s Keynesian colleagues in Kennedy’s time. Both the Kennedy and Reagan tax rate reductions cut marginal tax rates (the rate of tax on additional income) proportionally across the board. Everyone got roughly the same percentage cut in tax rates.

Both the Kennedy and Reagan tax rate reductions raised distributional issues. As the higher incomes are taxed at higher rates, those with higher incomes pay far larger dollar amounts. Thus, when rates are reduced, those with higher incomes get more dollars back. But proportionally both tax rate reductions were equal for everyone. Progressives have focused on who got the most dollars back without acknowledging that lower income people were suffering the most from stagflation.

The Reagan tax rate reductions on earned income were proposed as 30% across the board phased in over three years. If memory serves, when enacted, they were a bit less. Using the 30% figure, the top tax rate on wages and salaries was reduced from 50% – the tax rate on a 19th century American slave – to 35% – a higher tax rate than that imposed on medieval serfs.

In 1980 the top tax rate on investment income (“unearned income”) was 70%. It was not Reagan, but the Michigan Democrat William M. Brodhead who put the amendment on the Reagan tax rate reduction bill to reduce immediately the top tax rate on investment income from 70% to 50%.

Reagan had rejected the Treasury’s proposal to reduce the tax rate on investment income. At 4:27 p.m.on February 13, 1981, the Dow Jones wire service reported: “The White House said President Reagan had rejected the Treasury proposal to reduce the maximum tax on unearned income.”

Supply-side economics did not originate with Reagan. Supply-side economics grew out of the policy process in the U.S. Congress. During the 1970s, I was a member of the congressional staff, both House and Senate and personal staffs and committee staffs. My best Republican allies were Jack Kemp and Marjorie Holt in the House and Orrin Hatch in the Senate. My Democratic allies were far more powerful – Russell Long, chairman of the Senate Finance Committee, Lloyd Bentsen, chairman of the Joint Economic Committee, and Sam Nunn on the Senate Armed Services Committee.

Everyone forgets, but House Speaker Tip O’Neill, a Democrat, had an alternative tax cut bill to Reagan’s. O’Neill’s bill cut personal income tax rates by 15%, but had expensing – one year write-offs for business investments – in contrast to Reagan’s accelerated depreciation for business investment. My effort to have the Reagan administration compromise with Tip O’Neill in order to gain expensing was blocked by White House chief of staff Jim Baker.

There were more supporters among Democrats in Congress for the supply-side solution to stagflation than there were on Wall Street. Indeed, Wall Street was the greatest problem that the Treasury team faced. Wall Street believed that the Reagan tax rate reductions would cause the double-digit inflation from stagflation to go even higher and destroy the values of their stock and bond portfolios. Wall Street’s two prestige economists, known as Dr. Gloom and Dr. Doom, along with Dow Jones’ Barrons, regularly beat me up in print as a “Keynesian inflationist.”

The reason for Reagan’s military buildup was to bring the Soviets, with their broken economy, to the negotiating table to end the cold war. That was Reagan’s second great achievement. The military/security complex was opposed to ending the cold war because of the implied cut in the vast military budget. It was Reagan’s chief-of-staff Don Regan who got the deal done during Reagan’s second term.

It was later administrations that reneged on the deal Reagan struck with Gorbachev and created a new war against “Muslim terrorists” and courted former Soviet republics as members of NATO.

I did not support the Bush tax cuts, because they have nothing to do with the economy’s problems since the collapse of the Soviet empire two decades ago. Reich does not acknowledge the devastating impact on American incomes and employment of the offshoring of middle class jobs in manufacturing and professional services. The Soviet collapse caused socialist India and communist China to decide to get on the winning side of “the end of history.” Consequently, for the first time U.S. corporations had access to the massive supplies of Indian and Chinese labor. The large excess supplies of labor in those countries meant that U.S. corporations could hire workers at wages far below their productivity. Thus the savings from replacing American workers with Chinese and Indians translated into higher stock prices, higher shareholder earnings, and large bonuses for managements, thus worsening the income distribution.

It is the before-tax incomes of corporate CEOs that have exploded from 30 times the average wage to 300 times. Annual Wall Street bonuses from extreme debt leverage now exceed the lifetime earnings of workers. To blame the worsening income distribution on tax rate reductions is to ignore the facts.

Jobs offshoring has resulted in both manufacturing jobs and professional service jobs, such as software engineering and IT, being sent to India and China with a corresponding decline in US employment, income and consumer demand.

Reagan’s supply-side economic policy has nothing whatsoever to do with the post-1991 offshoring of American manufacturing jobs and tradable professional services.

None of us in the Reagan administration had any inkling that the Bill Clinton and George W. Bush regimes would deregulate the financial sector and unleash greed and debt leverage to levels that the world has never before experienced.

No one in the Reagan administration realized that the demise of the Soviet Empire would result in an American Empire whose annual trillion dollar military budgets would be financed by cutting Social Security, Medicare, and income support programs for the poor.

None of us in the Reagan administration, with the exception of the neoconservatives whom Reagan fired, would have supported the policies of the George W. Bush administration or the Clinton administration, which launched a war against Serbia on false premises just as Bush did against Afghanistan and Iraq.

Reagan was not perfect – especially Ed Meese’s war on drugs and the neocon’s plots – but the Reagan administration had no intention of establishing American hegemony over the world. Empire is a neoconservative goal, not a conservative one.

Supply-side economics is a necessary modification to Keynesian demand management, not a conspiracy to enrich the rich.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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PAUL CRAIG ROBERTS: Fabricating Terror

November 30, 2010 Comments off

The following column is reprinted with permission from Paul Craig Roberts.

Fabricating Terror
©  Paul Craig Roberts
November 29, 2010

Why does the FBI orchestrate fake terror plots?

The latest one snared Osman Mohamud, a Somali-American teenager in Portland, Oregon. The Associated Press report by William Mall and Nedra Pickler (11-27-10) is headlined in Yahoo News: “Somali-born teen plotted car-bombing in Oregon.”

This is a misleading headline as the report makes it clear that it was a plot orchestrated by federal agents. Two sentences into the news report we have this: “The bomb was an elaborate fake supplied by the [FBI] agents and the public was never in danger, authorities said.”

The teenager was supplied with a fake bomb and a fake detonator.

Three sentences later the reporters contradict the quoted authorities with a quote from Arthur Balizan, special agent in charge of the FBI in Oregon: “The threat was very real.”

The reporters then contradict Balizan: “White House spokesman Nick Shapiro said Saturday that president Barack Obama was aware of the FBI operation before Friday’s arrest. Shapiro said Obama was assured that the FBI was in full control of the operation and that the public was not in danger.”

Then Shapiro contradicts himself by declaring: “The events of the past 24 hours underscore the necessity of remaining vigilant against terrorism here and abroad.”

The story arrives at its Kafka highpoint when President Obama thanks the FBI for its diligence in saving us from the fake plot the FBI had fabricated.

After vacillating between whether they are reporting a real plot or an orchestrated one, the reporters finally come down on the side of orchestration. Documents released by U.S. Attorney Dwight Holton “show the sting operation began in June.” Obviously, the targeted Portland teenager was not hot to trot. The FBI had to work on him for six months. The reporters compare “the Portland sting” to the recent arrest in Virginia of Faroque Ahmed who was ensnared in a “bombing plot that was a ruse conducted over the past six months by federal officials.”

Think about this. The FBI did a year’s work in order to convince two people to participate in fake plots.

If you are not too bright and some tough looking guys accost you and tell you that they are Al Qaeda and expect your help in a terrorist operation, you might be afraid to say no, or you might be thrilled to be part of a blowback against an American population that is indifferent to their government’s slaughter of people of your ethnicity in your country of origin. Whichever way it falls, it is unlikely the ensnared person would ever have done anything beyond talk had the FBI not organized them into action. In other cases the FBI entices people with money to participate in its fake plots.

Since 9/11, the only domestic “terrorist plot” that I recall that was not obviously organized by the FBI is the “Times Square plot” to which Faisal Shahzad pleaded guilty to trying to set off a car bomb in Manhattan. This plot, too, is suspicious. One would think that a real terrorist would have a real bomb, not a smoke bomb.

In the May 19, 2009, online site, sott.net (reprinted Nov. 27, 2010), Joe Quinn collects some of the fake plots, some of which were validated by torture confessions and others by ignorant and fearful juries. The-Tortured-and-Manipulated-Terrorist-Threat-Evidence. The U.S. government comes up with a plot, an accused, and tortures him until he confesses, or the government fabricates a case and takes it to jurors who know that they cannot face their neighbors if they let off a media-declared “terrorist.”

Perhaps the most obvious of these cases is “the Miami seven,” a hapless group of Christian-Zionist-Muslims that called themselves the “Sea of David” and were quietly living in a Florida warehouse awaiting biblical end times. Along came the FBI posing as Al Qaeda and offered them $50,000 and an Al Qaeda swearing in ceremony.

The FBI told them that they needed to blow up the Sears Tower in Chicago and various government buildings. An honest reporter at Knight Ridder revealed: “The Justice (sic) Department unveiled the arrests with an orchestrated series of news conferences in two cities, but the severity of the charges compared with the seemingly amateurish nature of the group raised concerns among civil libertarians,” who noted that the group had “no weapons, no explosives.”

The Justice (sic) Department and tamed media made a big show out of the “militaristic boots” worn by the hapless “plotters,” but the FBI had bought the boots for them.

The biggest piece of evidence against the hapless group was that they had taken photos of “targets” in Florida, but the U.S. government had equipped them with cameras.

The U.S. government even rented cars for its dupes to drive to take the pictures.

It turns out that the group only wanted the $50,000, but an American jury convicted them anyhow.

When the U.S. government has to go to such lengths to create “terrorists” out of hapless people, an undeclared agenda is being served. What could this agenda be?

The answer is many agendas. One agenda is to justify wars of aggression that are war crimes under the Nuremberg standard created by the U.S. government itself. One way to avoid war crimes charges is to create acts of terrorism that justify the naked aggressions against “terrorist countries.”

Another agenda is to create a police state. A police state can control people who object to their impoverishment for the benefit of the super-rich much more easily than can a democracy endowed with constitutional civil liberties.

Another agenda is to get rich. Terror plots, whether real or orchestrated, have created a market for security. Dual Israeli citizen Michael Chertoff, former head of U.S. Homeland Security, is the lobbyist who represents Rapiscan, the company that manufactures the full body porno-scanners that, following the “underwear bomber” event, are now filling up U.S. airports. Homeland Security has announced that they are going to purchase the porno-scanners for trains, buses, subways, court houses, and sports events. How can shopping malls and roads escape? Recently on Interstate 20 west of Atlanta, trucks had to drive through a similar device. Everyone has forgotten that the underwear bomber lacked required documents and was escorted aboard the airliner by an official.

The “war on terror” provides an opportunity for a few well-connected people to become very rich. If they leave Americans with a third world police state, they will be living it up in Gstaad.

This despite the fact that everyone on the planet knows that it is not lactating mothers, children, elderly people in walkers and wheelchairs, members of Congress, members of the military, nuns, and so on, who are members of Al Qaeda plotting to bring aboard a bomb in their underwear, their shoes, their shampoo and face creams.

Indeed, bombs aboard air liners are a rare event.

What is it really all about? Could it be that the U.S. government needs terrorist events in order to completely destroy the U.S. Constitution? On November 24, National Public Radio broadcast a report by Dina Temple-Raston: “Administration officials are looking at the possibility of codifying detention without trial and are awaiting legislation that is supposed to come out of Congress early next year.” Of course, the legislation will not come out of Congress. It will be written by Homeland Security and the Justice (sic) Department. The impotent Congress will merely rubber-stamp it.

The obliteration of habeas corpus, the most necessary and important protection of liberty ever institutionalized in law and governing constitution, has become necessary for the U.S. government, because a jury might acquit an alleged or mock “terrorist” or framed person whom the U.S. government has declared prior to the trial will be held forever in indefinite detention even if acquitted in a U.S. court of law. The attorney general of the United States has declared that any “terrorist” that he puts on trial who is acquitted by a jury will remain in detention regardless of the verdict. Such an event would reveal the total lawlessness of American “justice.”

The United States of America, “the city upon the hill,” “the light unto the world,” has become Nazi Germany. It was the practice of the Gestapo to ignore court verdicts and to execute or hold indefinitely the cleared defendant in the camps. The Obama regime is in the process of completing Dick Cheney’s dream by legislating the legality of indefinite detention. American law has collapsed to the dungeons of the Dark Ages.

This Nazi Gestapo policy is now the declared policy of the U.S. Department of Justice (sic).

Anyone who thinks the United States is a free society where people have liberty, “freedom and democracy” is uninformed.

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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PAUL CRAIG ROBERTS: TSA Gestapo Empire

November 23, 2010 Comments off

The following column is reprinted with permission from Paul Craig Roberts.

TSA Gestapo Empire
©  Paul Craig Roberts
November 22, 2010

It doesn’t take a bureaucrat long to create an empire. John Pistole, the FBI agent who took over the Transportation Security Administration on July 1 told USA Today 16 days later that protecting trains and subways from terrorist attacks will be as high a priority for him as air travel.

It is difficult to imagine New Yorkers being porno-screened and sexually groped on crowded subway platforms or showing up an hour or two in advance for clearance for a 15 minute subway ride, but once bureaucrats get the bit in their teeth they take absurdity to its logical conclusion. Buses will be next, although it is even more difficult to imagine open air bus stops turned into security zones with screeners and gropers inspecting passengers before they board.

Will taxi passengers be next? In those Muslim lands whose citizens the U.S. government has been slaughtering for years, favorite weapons for retaliating against the Americans are car and truck bombs. How long before Pistole announces that the TSA Gestapo is setting up roadblocks on city streets, highways and interstates to check cars for bombs?

That 15 minute trip to the grocery store then becomes an all day affair.

Indeed, it has already begun. Last September agents from Homeland Security, TSA, and the U.S. Department of Transportation, assisted by the Douglas County Sheriff’s Office, conducted a counter-terrorism operation on busy Interstate 20 just west of Atlanta, Georgia. Designated VIPER (Visible Inter-mobile Prevention and Response), the operation required all trucks to stop to be screened for bombs. Federal agents used dogs, screening devices, and a large drive-through bomb detection machine. Imagine what the delays did to delivery schedules and truckers’ bottom lines.

There are also news reports of federal trucks equipped with backscatter X-ray devices that secretly scan cars and pedestrians.

With such expensive counter-terrorism activities, both in terms of the hard-pressed taxpayers’ money and civil liberties, one would think that bombs were going off all over America. But, of course, they aren’t. There has not been a successful terrorist act since 9/11, and thousands of independent experts doubt the government’s explanation of that event.

Subsequent domestic terrorist events have turned out to be FBI sting operations in which FBI agents organize not-so-bright disaffected members of society and lead them into displaying interest in participating in a terrorist act. Once the FBI agent, pretending to be a terrorist, succeeds in prompting all the right words to be said and captured on his hidden recorder, the “terrorists” are arrested and the “plot” exposed.

The very fact that the FBI has to orchestrate fake terrorism proves the absence of real terrorists.

If Americans were more thoughtful and less gullible, they might wonder why all the emphasis on transportation when there are so many soft targets. Shopping centers, for example. If there were enough terrorists in America to justify the existence of Homeland Security, bombs would be going off round the clock in shopping malls in every state. The effect would be far more terrifying than blowing up an airliner.

Indeed, if terrorists want to attack air travelers, they never need to board an airplane.

All they need to do is to join the throngs of passengers waiting to go through the TSA scanners and set off their bombs. The TSA has conveniently assembled the targets.

The final proof that there are no terrorists is that not a single neoconservative or government official responsible for the Bush regime’s invasions of Iraq and Afghanistan and the Obama regime’s slaughters of Pakistanis, Yemenis, and Somalians has been assassinated. None of these Americans who are responsible for lies, deceptions, and invasions that have destroyed the lives of countless numbers of Muslims have any security protection. If Muslims were capable of pulling off 9/11, they are certainly capable of assassinating Rumsfeld, Wolfowitz, Perle, Feith, Libby, Condi Rice, Kristol, Bolton, Goldberg, and scores of others during the same hour of the same day.

I am not advocating that terrorists assassinate anyone. I am just making the point that if the U.S. was as overrun with terrorists as empire-building bureaucrats pretend, we would definitely be experiencing dramatic terrorist acts. The argument is not believable that a government that was incapable of preventing 9/11 is so all-knowing that it can prevent assassination of unprotected neocons and shopping malls from being bombed.

If Al Qaeda was anything like the organization that the U.S. government claims, it would not be focused on trivial targets such as passenger airliners. The organization, if it exists, would be focused on its real enemies. Try to imagine the propaganda value of terrorists wiping out the neoconservatives in one fell swoop, followed by an announcement that every member of the federal government down to the lowest GS, every member of the House and Senate, and every governor was next in line to be bumped off.

This would be real terrorism instead of the make-believe stuff associated with shoe bombs that don’t work, underwear bombs that independent experts say could not work, and bottled water and shampoo bombs that experts say cannot possibly be put together in airliner lavatories.

Think about it. Would a terror organization capable of outwitting all 16 U.S. intelligence agencies, all intelligence agencies of U.S. allies including Israel’s Mossad, the National Security Council, NORAD, air traffic control, the Pentagon, and airport security four times in one hour put its unrivaled prestige at risk with improbable shoe bombs, shampoo bombs, and underwear bombs?

After success in destroying the World Trade Center and blowing up part of the Pentagon, it is an extraordinary comedown to go after a mere airliner. Would a person who gains fame by knocking out the world heavyweight boxing champion make himself a laughing stock by taking lunch money from school boys?

TSA is a far greater threat to Americans than are terrorists. Pistole has given the finger to U.S. senators and representatives, state legislators, and the traveling public who have expressed their views that virtual strip searches and sexual molestation are too high a price to pay for “security.” Indeed, the TSA with its Gestapo attitude and methods, is succeeding in making Americans more terrified of the TSA than they are of terrorists.

Make up your own mind. What terrifies you the most. Terrorists, who in all likelihood you will never encounter in your lifetime, or the TSA that you will encounter every time you fly and soon, according to Pistole, every time you take a train, a subway, or drive in a car or truck?

Before making up your mind, consider this report from antiwar.com on November 19: “TSA officials say that anyone refusing both the full body scanners and the enhanced pat down procedures will be taken into custody. Once there the detainees will not only be barred from flying, but will be held indefinitely as suspected terrorists … One sheriff’s office said they were already preparing to handle a large number of detainees and plan to treat them as terror suspects.”

Who is cowing Americans into submission, terrorists or the TSA Gestapo

[End.]
__________

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term.

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