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Commentary Last Updated: Jan 31st, 2008 - 01:14:56

Laughing a gift horse in the mouth
By Jerry Mazza
Online Journal Associate Editor

Jan 31, 2008, 01:12

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The so-called, recent bipartisan effort, which will yield $150 billion in �tax breaks� for consumers and business, is something I find chillingly funny, believe it or not. Bush is praising Congress for it, and Pelosi is using the b-word at least 10 times per appearance. Yuck, yuck.

The �tax-break� money is to be borrowed from China, which is where most of it will probably be re-spent on cheap Chinese imports. Perhaps this is why I�m laughing the gift horse in the mouth. This comes on top of a $439 billion defense budget for 2007, plus a $100 billion supplementary request to Congress for the Afghanistan/Iraq wars. The budget deficit, which peaked at an all-time high of $521 billion in 2004, is supposed to decline to only $219 billion in 2008, if you can believe the yearly government accounting.

The balance of trade is imbalanced by about $805 billion. The National Debt weighs in at over $9 trillion. In fact, it cost us $406 billion in 2006 just to pay the interest on that debt. That�s more than a billion a day, actually $41 billion more. Ain�t that a scream?

The �tax breaks� are also supposed to cover the president�s trillions in tax cuts to the wealthiest among us, the same that helped build that national debt. The only positive numbers I see are $2.2 plus trillion saved in the Social Security Trust, plus $3.6 trillion in Medicare. But Bush and friends would love to find a way to get their hands into the Trust Box and leave us some more US Treasuries, what they call worthless pieces of paper. Ha ha, ha ha!

In fact, they would love the �tax breaks� to help us to forget they wanted to privatize Social Security and give humongous fees to Wall Street to administer this bad idea. And they�d love to lay some more deductibles on Medicare, whether for drugs, doctor or hospital coverage, so the HMOs and the insurance companies and Big Pharma make more money. Yup, those �tax breaks� make me laugh my head off, in fact, bring tears to my eyes thinking how Bill Clinton left Bush a $265 billion budget surplus.

On the other hand, Clinton also opened the door to disaster with NAFTA, the North America Free Traitor (excuse me, Trade) agreement, which screwed workers north and south of the borders into competing for the lowest bid wages, least amount of healthcare, and zilch retirement plans. Ha ha, �tax breaks,� some break.

So these �tax breaks� should what, make a big dent into the net public held debt that weighs in at about $5.5 trillion. Oh ho, ho. You can run on down to the mall and stimulate the dying economy with your �tax breaks.� Cheer yourself up you�re not one of the 2 million who lost their jobs since Bush rode in with his posse. Tee hee! So go on, max that card out some more. Maybe we�ll have a porridge festival for July 4 instead of a barbecue.

What�s interesting is that Eisenhower, Truman, Kennedy, and even Johnson had just about cleared up the WW II debt. But by 1969, due to Viet Nam, Tricky Dick, and the nascent neocons, the budget started turning into Debt Vortex. I guess this is the price of being an Empire, a New World Disorder, a Hegemonic hysteria, even what the free traders call �sustainable development,� which is totally unsustainable.

The abdication of financial responsibility is no joke

That�s what financier George Soros calls our condition, a result of the abdication of financial regulators over the past few years, which has a very funny outcome, a global realignment of wealth toward the large emerging markets, away from the United States, toward China and other developing countries, leaving us the number two or worse currency. And that says sayonara to our credit expansion based on the US dollar as the world�s major reserve currency.

Thus speaks Soros, �The current crisis is the culmination of a super-boom that has lasted for more than 60 years.� But, as he points out, �every time the credit expansion ran into trouble, the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy.� Witness the fourth rate cut within a year, 75 basis points or three-quarters of a percent, doled out by the Fed last week.. No pain, no gain.

Soros lays the blame at the feet of the �Gipper,� former US President Ronald Reagan and his brand of �market fundamentalism,� which asserted that �magic� marketplaces just know how to assign risk correctly. This market �fundamentalism� rejects regulation, since markets, the marketers believe, tend toward �equilibrium� and �self regulation.� Not so, Soros asserts. �It is an obvious misconception. It was the intervention of the authorities that prevented financial markets from break-down, not the markets themselves.�

Soros also can understand or tolerate the US housing bubble, though I�m still troubled by all the people that got rich on it, as told by Robert Borosage in Keep Dancing, Chuck. The title comes from a bon mot of former Citibank President Charles �Chuck Prince, which was �As long as the music is playing, you�ve got to get up and dance. We�re still dancing.�

"These now-immortal words . . . of �Chuck� Prince were uttered in July, as Citibank was about to lose billions in everything from mortgages to credit cards. Prince departed with a reported $68 million good-bye package. Stanley O�Neal, who led Merrill Lynch to write off a record $9.9 billion in last quarter, departed with a $161 million severance package.

�Now the top five Wall Street banks -- three of whom racked up record losses -- have announced that they are paying their employees a record $39 billion in year-end bonuses. Hemorrhaging losses, Morgan Stanley, Merrill Lynch and Bear Sterns had to increase the percentage of revenue they devote to pay to ladle out these bonuses. So much for pay for performance.

�Bank spokesman were not exactly lining up to justify this, but Jeanne Branthover, managing director of a global search firm, helpfully explained: �It�s essential that pay is still there or you�re going to lose really good people.�� Unbelievable.

Borosage asks, �Well. Is she talking about the really good people whose feckless speculation is now pushing the global economy into recession and will cost hundreds of thousands of Americans their homes? The really good people whose 'dancing' got so risqu� that the somnambulant Federal Reserve just issued new regulations requiring bankers to assess whether the borrowers they are lending money to actually have a blue moon chance at repaying the loan?�

Nicely put, Bob. I guess he�s not laughing. Nor is Soros.

In his opinion, we�re living that 1980s ideology of �market fundamentalism� which gave us, in pursuit of globalization, a huge current account deficit, the void between what we produce and what we consume.

So were do we go from here?

I guess the joke�s on us, the everyday people, who fell for this song and dance, from 9/11 and the War on Terror to today, spending a fortune more than you�re taking in every day. In the process a few people got rich as Croesus and most people are getting, or will get as poor as church mice if we stay on this treadmill.

That�s why I find the �tax breaks� no break but bribes to forget about the financial disaster that�s been made. And now with Bush�s CAFTA added, his North American Union looming, and the prospect of the masses of Americans loosing their standard of living, jobs, retirement, health care, and independence, this is serious stuff, laughing a gift horse in the mouth.

The question is, do you see a serious candidate to remedy this? Mrs. Clinton, Mr. NAFTA�s spouse? Or some even darker horse from the right? I don�t. Maybe it�s suffering time, the time to wake up, to time put limits on crooks, the time to say no to Afghanistan and Iraq wars, to the war on our productivity and our genius as a people. And, after all is said and done, I will, in the light of no else, go for Obama if he makes it as the Democratic fcandidate, not perfect, but the best I see. And electable only with hand-counted paper ballots, the only really reliable voting system we have.

Jerry Mazza is a freelance writer. Reach him at

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