President Obama, for all of his flaws, has consistently been a supporter of alternative energy. He has pushed for significant commercial and residential tax credits and has made use of government funds to make low-interest loans and grants to producers and researchers of green technology and power generation. However, may of the tax credits and investment programs aimed at bolstering the infant green energy sector are set to expire at the end of 2012. It is increasingly unlikely that the programs will be renewed by a Republican controlled House of Representatives. The recent up-tick in more cheaply–and dangerously–extracted natural gas has also forced serious debate of the need for renewable and alternative energy sources onto the back burner. So, while little doubt exists as to Obama’s cozy relationship with Wall Street and the financial sector, he fearlessly remains at odds with many in his own party, as well as Republicans, who are loathed to support green technology under threats of reprisal from the immensely powerful oil and natural gas lobbies.

Goldman Sachs can quite obviously be an imminently evil company. However, it does one thing well: make money. It is this understanding that must lead to the conclusion that alternative energy is on the cusp of not only competitiveness, but profitability. Contrary to widespread propaganda concerning “peak oil,” the world has more than enough oil in reserve to fuel industrialized society into the distant future, and coal a-plenty. Goldman is most assuredly not making significant investment in green energy because it fears depletion of oil, gas, and coal reserves. It is investing in alternative energy to make a profit. Perhaps it is also making a political calculation. As attitudes change and the destructive consequences of hydrofracking, coal mining, and oil drilling become less palatable to the public, political sentiment is sure to follow and shift to cleaner sources of energy. Goldman wants to be right there at the front of the line when it does, with a giant vacuum cleaner to suck up all the revenue it can get its tentacles into.

A recent study by Bloomberg Energy Finance found that solar electricity generation costs no more than traditional energy generation in terms of daytime power rates in several of the world’s major economies. It also found that given the environmental and health costs of traditional energy, it is actually less expensive than oil and gas. A host of other studies have found that wind power can and is being produced at a rate that rivals coal and natural gas, and will be fully competitive by 2016. Geothermal power–power generated from the earth’s natural heat sources–has been found to be not simply competitive with, but cheaper than, producing electricity through coal.

While the $40 billion investment is relatively modest when spread over the entire ten-year time frame, many analysts expect it to grow as opportunities for investment and profit expand. Still other analysts accuse Goldman of undertaking a “charm offensive” in an effort to mitigate some of the recent damage done to its reputation. Honestly, it would be a strange about-face for Goldman, as it has rarely provided the public with any evidence that it is concerned with its reputation. It has unabashedly gone about making profits for as long as it has been in operation, and little evidence exists that a critical New York Times op-ed is worth $40 billion to the investment bank. It is more likely a savvy investment with an unintended side order of good public relations.

With new emissions standards in emerging economies like Brazil, and less reluctance across Europe and in developing nations to explore alternative means through which to deliver electricity to its people, Goldman is shrewdly positioning itself to profit in foreign markets even as the United States stumbles and bumbles its way toward less reliance on oil, coal and natural gas. Just recently, the U.S. Senate rejected a proposal to allow the military to explore alternative sources of energy if the short term costs exceeded traditional fuels, further placing the country behind the energy curve. Goldman is almost certainly prepared to invest in areas with the most upside profit potential, rather than depend upon the United States to follow the lead of the rest of the world. Many nations already have energy feed-in tariffs in place that require utilities to purchase excess power produced by households and businesses at the prevailing rate, and in some cases pay a rate for each unit of energy produced even if consumed, thereby encouraging investment in alternative energy at the micro and macro level. Emerging and developing economies that do not have entrenched fossil fuel industries supplying electricity are looking to alternative sources of energy as a real alternative as they prepare to build significant energy infrastructure. This trend is almost certain to grow as evidence of the devastation caused by oil, coal, and gas increases, and the economic and environmental costs of extracting the fuels expands.

In the United States, the fossil fuel industry is extraordinarily large and politically  influential. Even as alternative energy tax credits and incentives are set to expire, no serious debate is taking place in government to do away with subsidies and tax incentives provided an otherwise healthy fossil fuel industry. The industry also employs millions of people across nearly every state and every congressional district. Goldman is well aware of this conundrum, yet it is investing in alternative energy nonetheless. Goldman understands that although significant numbers of people will be required to build out alternative energy infrastructures across the globe, that once constructed and operational, alternative energy will require far fewer employees per kilowatt hour produced. The number of employees and the cost of heavy equipment required to extract oil, coal, and natural gas is staggering. A solar or wind farm requires little attention other than routine maintenance, as does a geothermal power generating plant or a solar farm. Technical expertise will replace brute strength and employment costs will come down. Both Goldman and the government of the United States understand this fact, yet the government and its elected incumbents, not Goldman, will suffer the consequences of lost jobs as employees of the oil, coal, and gas industries retool and move into alternative energy generation. With alternative energy predicted to account for nearly 1/3 of all energy production in the world by 2035, political influence and political fear continue to encumber the United States while much of the globe speeds past it.

Goldman is not pursuing increased investment in order to buttress its philanthropic image. It is investing in alternative energy because it makes economic sense, and because it looks outside the borders of the United States’ Tea Party saturated ass backward energy policies for profit. Goldman is looking ten, twenty, thirty years ahead with this and subsequent alternative energy investments. If the United States government and its people would see fit to make these investments, the people could benefit from new technology and a potential partnership with commercial enterprises might flourish. Instead it has left development and research to private industry almost entirely while at the same time stacking the odds against it by subsidizing its traditional fossil fuels competition. It has hardly been the recipe for entrepreneurship, creativity, and inventiveness that can be seen in China, Germany, and other forward-thinking countries.

Goldman is doing nothing more than following an industry to its logical end, and seeking to profit at a later date by investing early and placing itself among the pioneers of alternative energy. If Goldman knows anything, it is that those who innovate, profit. It should speak volumes to those in power in the United States that Goldman is willing to move forward with its green energy investments, and now, and in this limited instance, it should follow Goldman Sach’s lead.

But there are a few brave souls who are speaking truth, and the information about who Obama is and what he has done is slowly coming out. Charles Ferguson’s excellent new book, Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America, is the first post-mortem of the financial crisis in which the lens is political corruption in both parties and in economics. Ferguson, who made the Academy Award documentary Inside Job, sees the financial crisis first and foremost as a political problem, of oligarchy and a captured political system. The technical details – Volcker Rule, Dodd-Frank, etc – are just that. Ferguson isn’t dancing around the problem, either. He puts the blame on, among other people, Bill Clinton and Barack Obama. I’ll have more on this book.

The Bush tax cuts enacted in 2001 and 2003, and extended through 2012 by President Obama in a December 2010 agreement, are set to expire. The expiration would adjust marginal tax rates upward across all income brackets and modestly raise the tax on capital gains–income earned from investments–from 15% to 20%. The expiration will also remove qualified dividends from special tax treatment, and undo a temporary patch to the Alternative Minimum Tax, among other smaller changes. Additionally, as part of the deal to raise the debt ceiling in 2011, Democrats and Republicans agreed to automatic across the board spending cuts of $1.2 trillion over the next ten years. The cuts are part of a sequester agreed to by both parties which will go into effect because the two sides could not agree on an alternative as required by the original pact. While certain mandatory outlays are exempted from the spending reductions, the total amount will be split roughly 50/50 between discretionary and defense spending unless consensus is reached before or sometime shortly after January 1, 2013. The federal unemployment extension and temporary 2% payroll tax reduction would also expire at years end. If Republicans are not willing to move into a position of rationality and responsibility, my position is that we should all buckle up and see where the ride takes us, rather than concede to incoherent demands in order to to avert a greater short term disaster.

Economists and the Congressional Budget Office have been busily crunching the numbers in an attempt to estimate the so-called fiscal cliff’s impact on GDP, employment, and government services. The CBO estimates that the economy will contract in the first half of 2013 and grow modestly in the second half, for an overall growth rate of only 0.5%. Other estimates vary widely from an economic impact equal to 2% of GDP to 7.5% of GDP over the first year after the spending cuts and tax adjustments take effect. The $1.2 trillion in cuts will be reduced to roughly 18% due to reductions in interest payments and smaller interest payments on the national debt as a result of borrowing caps and borrowing reductions as a result of the sequester accord. Estimates of the potential impact on jobs are gloomy as well, with unemployment predicted to top 9% in 2012 and 2013.

While Social Security, Medicaid, food stamps, the CHIP children’s’ health program, child nutrition, Supplemental Security Income, the Earned Income Tax Credit, veterans’ benefits and federal retirement are exempt from the sequester spending cuts, all other federal programs, including Medicare, will face smaller outlays. Defense spending will be cut by roughly $484 billion over nine years, or $50 billion each year. By way of example, the yearly cuts equal the cost of only seven months fighting in Afghanistan. Defense Secretary Leon Panetta has nonetheless walked the party line, referring to the cuts as “devastating.” He was out in full damage control mode as early as November, 2011.

The CBS Evening News reported, “A lot of folks in the defense industry could lose their jobs. The failure of the budget negotiation means that in a little over a year, across-the-board cuts in federal spending will be automatic and half of them will come from the Defense Department. … To hear Defense Secretary Panetta tell it, automatic spending cuts would be devastating to national defense.” Panetta: “It’s a ship without sailors. It’s a brigade without bullets. It’s an air wing without enough trained pilots. It’s a paper tiger.” CBS added, “Across-the-board cuts would, according to the Pentagon, mean the loss of a million or more jobs in the defense industry, increasing unemployment by 1%.”

Panetta is obviously attempting to frighten the public as well as lawmakers into pushing for an agreement that will avoid the scheduled Pentagon cuts from taking effect in 2013. In his defense, the military budget was already slotted to absorb $500 billion in cuts over the next decade prior to the sequester as a result of past budget negotiations. However, the United States still spends as much money annually on its defense budget as does nearly the remainder of the world. It is inconceivable that an American soldier will find himself or herself on the battlefield short of ammunition due to $50 billion in yearly cuts, or that reducing the largest military the globe has ever seen by 10% will render it impotent. If the only means through which the people can force the Pentagon into spending its allocated funding responsibly and making determinations as to where to deploy its resources carefully is to allow the sequester to take effect, it may be the best course of action. For decades neither Democrats or Republicans have been willing to seriously study and critique military programs and overall spending. As a consequence, I am left will little faith that Panetta’s words are sincere, or that the military in unable to defend the United States provided a small 10% cut in overall funding. If the military is unable to fund its operations, it can easily pull its equipment, troops, and contractors from Afghanistan and Iraq to make up the difference. The fact of the matter is that the military and its contractors have operated in a horribly inefficient manner for decades without oversight. The Pentagon is not above constructive analysis of its spending effectiveness simply because it is charged with the duty defense rather than education.

We already have evidence that the Republicans will continue to negotiate in bad faith. John Boehner, Paul Ryan, and fellow Republicans just recently passed a measure aimed at avoiding the defense cuts mandated by the sequester. Their solution: to slash federal workers’ retirement plans and cut even more from social programs such as food stamps and Medicaid. All Democrats and 16 Republicans voted no. This isn’t a serious attempt at governing or legislating, and it sure as hell isn’t a responsible attempt to spread cuts fairly across government. It is more of the same slash and burn non-conciliatory garbage that has become the trademark of the modern Republican Party. As the onset of the cuts draws nearer, what evidence do we have that a more scrupulous proposal will emerge from the GOP? Rather than prepare for the inevitable one-sided compromise, the Democrats should be readying a public relations campaign to explain to the American people why it is that a deal could not be reached. Let us not forget that the reason we sit on the edge of the ominous fiscal cliff to begin with is the Republicans’ refusal to authorize an increase in the debt ceiling, a routine order of business that has in the past normally been completed with legislation one page in length.

To be sure, the economic effect of the domestic spending cuts and tax adjustments will be dramatic. The combined effect will likely increase unemployment and prune the meager recovery already underway. However, the alternative is less appealing. Republicans have not and likely will not negotiate in good faith. If Obama is able to win reelection in November, Republicans will again make a calculated strategic decision as to whether to embark upon genuine negotiations for fear of shouldering blame in 2014 for a renewed recession, or to proceed full speed ahead on their course of economic lunacy, refusing to increase tax rates on the wealthy, dividends, and capital gains. I suspect the GOP will proceed due north toward the latter. In an effort to solidify its majority in the House of Representatives, state legislatures and governors mansions, it has pigeon holed itself into a position of intransigence by making unrealistic promises to the likes of Grover Norquist, corporate PAC contributors, and Tea Party lunatics. It has left itself with little choice but to abrogate its promises in order to return some civility to government and economic policy or to travel further down the path of destruction.

With little hope that Republicans will agree to offset decades of stagnant middle-class wage growth and tepid domestic investment by adjusting tax rates upward for the wealthy, responsible Democrats will be left with no alternative but to allow the totality of the Bush tax cuts to expire and to refuse to curtail the automatic spending cuts. With Obama in the White House for four more years, Democrats would be wise to bank on a recovery following the initial shock of the fiscal cliff. Tax revenues will almost certainly initially decrease significantly as the CBO has predicted. However, the CBO also predicted that if Democrats and Republicans were to agree to extend the Bush tax cuts and curtail the automatic spending cuts for the long term, the economy would ultimately be worse off. The CBO actually recommends increasing the deficit now through tax reductions and spending increases in order to spur economic growth while at the same time putting in place a solid scheme for deficit reduction and tax increases in the future, a plan that has absolutely no chance of passing through a Republican controlled House.

So, given the political posture of the Republicans at this time, the only conscionable position for the Democrats to take is one of absolute steadfast refusal to continue down the road of capitulation and compromise. It simply must not agree to further cuts in government spending, most notably cuts to the inherently stimulative social programs of unemployment insurance and food stamps, to offset defense cuts. It must uphold its promise to seniors to provide effective affordable medical care through the Medicare program. It must hold firm to a position of economic efficacy in refusing to allow the false propaganda of cutting taxes on the wealthy to create jobs to become entrenched in its platform. It must not be cornered into extending reduced high income marginal tax rate cuts in exchange for extending middle-class tax cuts.

It will be a formidable task given the Democrats’ inherent bent toward compromise, and almost certain political consequences for proceeding down this righteous path. It is however the only reasonable course on which to proceed given its opposition. It is unfortunate that the Republican Party has married itself to so many sociopaths hell bent on destroying the lives of millions of Americans in order to serve their own myopic and utterly unsound religious and economic positions. However, if the ship is doomed to taking on water, it is no longer acceptable for the wealthy to sit on deck while the rest of us man the pumps. Jump!

Occupy Wall Street protestors march down Fifth Avenue towards Union Square during a May Day rally in New York City. Photograph: Monika Graff/Getty Images

In an interview with The Real News Network, Jeff Cohen, the director of the Park Center for Independent Media at Ithaca College, the founder of the media watchdog FAIR, and the co-founder of RootsAction.org, argued that the Occupy movement–as well as the rest of us–must dismiss third parties and its contempt for the political process outright, and instead focus on fielding and supporting Democratic challengers in primary races across the country. Writer for the Washington Post, Jonathan Capehart penned a blog post for the paper in which he essentially mirrored Cohen’s position. Both men held out conservative movements, most recently the so-called Tea Party, as examples of right-wing groups who have succeeded where Occupy falls short.

There is certainly no arguing with the recent Tea Party-Republican-Koch Brothers, et al.’s achievements, as Cohen properly points out.

But the next question—and you raised it—is, if you’re going to also—instead of—you know, you can’t forever be a protest movement. At a certain point, the whole idea is to take some power, to not just protest power, but take power. And when we look at the recent history of our country, like the last 35 years, we see that right-wing social movements, sometimes with corporate money behind them and sometimes not, have seized one of the major parties, the Republican Party. And when we look around us and we see that the military budget is through the roof, wealth disparities are through the roof, battles we thought we’d won years ago, like reproductive rights, separation of church and state, we’re having to refight all that. The reason that the progressives are on the defensive, whether they’re out in the streets protesting or they’re trying to figure out an electoral strategy, we’re on the defensive because right-wing social movements have seized one of the two major political parties and used that power, by controlling the Republican Party, to continually dominate the American debate and move the debate rightward. So while I agree the most important thing is to build independent social movements, I also believe one needs an electoral strategy, and in that electoral strategy I think the right wing has basically shown the way.

Cohen does lay out nicely the right wing’s past ability to homogenize the Republican Party. However, it is extraordinarily disingenuous to paint the Tea Party and the Occupy Movement with the same brush. The two movements are wholly dissimilar. Nor should the Occupy movement be forgiven its failures to engage in the electoral process. As I have opined before, I do not write today to defend the movement’s silence in this arena or argue that I have the perfect solution. That being said, no serious person should have the impression that somewhere in America tonight an independent Tea Party event will be taking place wherein the group will debate its place within the larger conservative movement and how the influence of money spent by very few individuals, corporations, and conservative PACs has derailed its greater message. The Tea Party may have sprouted from the soil as an organic movement, but it has since been fertilized with harsh chemicals and weeded and debugged by deadly insecticides produced by the likes of Monsanto. One need look no further than perhaps the catalyst of the entire Tea Party machine, Samuel “Joe the Plumber” Wurzelbacher. Who could forget this caricature of a man and potential member of Congress? During the 2008 campaign, he was held out as the overtaxed everyman–a victim of government overreach and out of control spending. If only the government would cut taxes and social programs, he and men and women like him would each be driving two cars and living in a Toll Brothers catalog house.

Wurzelbacher was then grabbed up quickly by the campaign of John McCain and blatantly used in an attempt to rally the millions of men and women who mistakenly believed the falsities espoused by Samuel and the then growing Tea Party.  It was later discovered that much of what the balding blow-hard had claimed about his own personal life was lie. Sarah Palin was then brought in to further buttress support from the Tea Party masses. This is essentially where we stand today. The Tea Party was at no point an independent organic movement. It has been and continues to be nothing more than a group of manipulated “leaders” and misguided masses, controlled at every turn by conservative donors and power brokers, albeit significantly electorally successful. The Tea Party offered nothing new to the right wing. The right wing has been chipping away at domestic social spending for as long as I can remember. Conservative hard-liners have made no secret of their want to destroy social programs and so-called entitlements while bolstering defense spending and cutting taxes. The Tea Party is nothing more than a gift to the extreme of the right wing–a group that it can easily manipulate to do its bidding. While it is properly pointed out by both Capehart and Cohen that the Tea Party and its financial backers may have in fact ousted traditional Republicans, it is not as if traditional Republicans have historically been accepted by those who pulled the strings prior to Citizens United.  The party at its core has always been radical. The Tea Party simply allowed it the wiggle room to oust the compromising traitors from its ranks. The Tea Party is not challenging the Republican establishment, it is providing a wider voice to those with money and power who have desired to steer the ship rightward for decades. It is not akin to the progressive movements of the 1930′s or the 1960′s.

Occupy meetings have absolutely nothing in common with Tea Party leadership “summits” wherein religious leaders, Republican Party surrogates, and wealthy donors are often in attendance. Any outsider who has attended or listened in during an occupy general assembly or strategy session could testify to the intelligence and thoroughness of the process. It is a serious undertaking where ideas are debated and consensus reached. One can make the case, as do Capehart and Cohen, that this exclusion of those who could assist in the fielding of candidates and inclusion in the electoral process is a fatal error. However, I believe those in “leadership” positions with the Occupy movement have not reached a consensus on how precisely to maintain the movement’s independence while working within the political process and its players. I do not believe that there is widespread harmony that a zero-sum approach is best to achieve Occupy’s ultimate goals. This discussion never took place within the Tea Party, it was simply swallowed whole and alive by the corporate and religious establishment. While Caprehart concedes that the so-called “movement” was co-opted by the likes of Dick Armey and the Koch Brothers, he mistakenly allocates far too much credit to individual candidates for rising up and seeking election. Tea Party candidates are opportunists generally. There are few true believers in the bunch.

Capehart sets forth his argument for the need of Occupy to jump into the political process as the Tea Party has.

Think about it. When the tea party got real angry, folks who adhered to its overarching concerns about federal spending and overreach made their voices heard in protests in Washington. But they weren’t content to simply protest. Whether out of conviction or co-opting by Dick Armey or the Koch brothers, those protesters became office seekers. They upended the Republican establishment by running primary challenges to the right of sitting members of Congress — and winning. Sen. Richard Lugar (R-Ind.) is the most recent example. They provided the GOP the majority it needed to take back the House in 2010. And their resistance to raising the debt ceiling last summer put the full faith and credit of the United States at risk, called into question House Speaker John Boehner’s ability to control his caucus and forced President Obama to make a debt-ceiling deal that was less than ideal.

Capehart cites the recent defeat of Dick Lugar of Indiana. A Republican Senator who has been in Washington my entire life. His opponent, Richard Earl Mourdock, the Indiana Treasurer, is no rising star of the Tea Party. He is a two-term office-holder who has run for office several times. He did not find his call to action at a Tea Party rally. He is a hard line conservative who despises negotiation or compromise. In other words, he fits in well with the the current political climate surrounding the Republican base.  He did not return from a Tea Party rally with an acute commitment to become a conduit for change. Many of the so-called Tea Party candidates are more or less cut from the same cloth–political opportunists who are now striking while the iron is hot.  For example, Scott Walker, prior to his now infamous call with a Koch impostor, had entirely sold his soul, not to the Tea Party, but to the powerful interests that manipulate it. Ron Johnson, a businessman who defeated three-term Senator Russ Feingold in Wisconsin, was also touted as a Tea Party candidate in 2010, yet his campaign was nearly entirely funded by himself and several special interest groups and corporate interests, not small contributions from rank and file Tea Partiers. Much has been made of the Tea Party’s success in 2010, yet the fact of the matter is that over 60% of Tea Party candidates lost.

The media is also in part responsible for the overstatement of and widespread misconception of Tea Party successes. The use of terms such as “Tea Party candidates” and “Tea Party backed candidates” in the media lead to improper reporting of fact. Many of the candidates are either self-financed wealthy individuals or individuals financed by those who pull the Tea Party strings. The notion that the Tea Party has swept in grass-roots candidates em masse is simply false. Media reports of Grover Norquist-like threats of primary challenges attributed to the Tea Party also fan the flames of misunderstanding. However, the threats are not dissimilar to those of Mr. Norquist–funded entirely by special interests and corporate donors, not by small donations of those seriously concerned with taxation and government spending. The primary challenges will not be manned by grass-roots Tea Party candidates, but rather by hand-picked folks financed by those who actually pay for the gasoline that powers the Tea Party engines. This is precisely the type of co-opting that the Occupy movement struggles to fend off.

Cohen also argues against third parties as a vehicle for change.

I am a graduate of that. I’m a recovering that. You know, I worked in Barry Commoner’s third-party campaign in 1980, the best presidential candidate no one ever heard of. You know, you can decide that your progressive electoral activity is going to be getting protest candidates 1 or 2 or 3 percent of the votes. I prefer trying to work in primaries where we have a chance of actually winning, where you can bring that same full Green Party or independent progressive agenda into a much vaster audience and you can actually win a primary.

…

I just—we have a system that’s rigged against third parties. We have a winner-take-all system. We don’t have a German Parliament or a Swedish Parliament where if the green parties get a few percent of the vote, they get into parliament. That’s not what we have, and to pretend that we do, I think, is faulty electoral strategy.

It is difficult to mount a cogent argument for the use of third parties to affect real change within our system. However, the idea should not be written off in its entirety. A serious nationwide all-ballot-level third party bid for has yet to be seriously attempted. If the Occupy movement were to do so it would have to develop a platform and a vision consistent at all levels, and avoid the disjointed efforts of other third party attempts at inclusion in the process. It must build from the floor to the ceiling, not from the roof to the basement as did Ross Perot. The Green Party, for all of its virtues, is extraordinarily disorganized and myopic, and suffers from many of the same shortcomings of the Occupy movement itself. Americans Elect failed because it attempted to cut to the front of the line, as well as its financial secrecy and dubious management. The Justice Party and candidate Rocky Anderson have had little success in essentially taking the Occupy message to a third stage. The party has run up against a brick wall of red tape and ridiculous state requirements in obtaining ballot access. The system was constructed by Democrats and Republicans to blockade third parties, but changing that should also be on the to-do-list of the Occupy movement. I do however take Cohen’s words to heart. If the Tea Party–or its backers–can elect candidates that challenge the status-quo of the Republican Party, why can’t the Occupy movement do the same within the Democratic Party? Moreover, why can’t it do the same without selling its soul to the party machine and its own list of benefactors?

It is a complicated question for those most closely involved with determining Occupy’s strategy going forward. It must not disenfranchise much of its anarchist and activist base by appearing to sell out to the Democratic Party machine. However, Capehart and Cohen are correct in that it can’t simply stand pat–it will atrophy and dissipate over time. Further, as a scorched earth approach to organizing is not in line with Occupy and its supporters, it will be difficult to strike fear into candidates who do not walk the Occupy line if elected. The Occupy movement, unlike the Tea Party, as a truly organic and grass-roots movement, does not have a cavalry of wealthy donors aloft white horse to ride in at a moment’s notice to untie the fair maiden from the tracks. These are yet several other strategic quandaries those trusted to make decisions for Occupy must overcome.

Cohen and Capehart are correct in that it is time for the Occupy movement to chose a course of action and set its troops in motion toward that end. It does have an overarching message, one of economic justice, much like the Tea Party and its concocted anger toward spending on anything that doesn’t kill people in foreign lands. Occupy’s message resonates at a time when issues of economic justice are hot topics of debate in the Congress and across the several state legislatures. Yet, even as Occupy–to its credit–was able to move the debate in its direction in 2011, it has not forced any significant policy changes at the federal or state level as the Tea Party has. We have seen little change surrounding the treatment of large financial institutions. Talk of a return to Glass Steagall is treated as if it is an idea cooked up by some “socialist” dictator. No progress has been made toward stemming the increases in income inequality. I believe it is possible for the Occupy movement to involve itself in electoral politics without allowing itself to be swallowed whole by the Democratic Party. It must find, finance, and field candidates in state legislatures, Congress, and myriad other statewide and local offices. Each candidate must believe in the core principles of economic justice, while Occupy avoids a zero-sum approach on other issues. Candidates must openly state that they are running on behalf of the Occupy movement or the 99%. It must not be ambiguous.

As Cohen rightly points out, there are already many within the Democratic Party who long for a return to the principles of economic fairness and financial regulation once championed by the party of FDR. It should not however rule out a third party bid. It should formulate working groups to design a plan for ballot access. Cohen also makes clear that our governmental structure is not similar to that of many Parliamentary systems, but that in and of itself has not prohibited independent candidates from winning elections and wielding power in the Congress. If the Occupy movement was able to elect twenty or thirty candidates to the Congress on a third party ticket, it could dramatically effect policy. Each side would be vying for its support, and each side would compromise to win it. While a third party might be shut out of leadership positions in the Congress, it could caucus with the Democrats and push the party to the left on economic issues. The bottom line is that the movement must do something. It must act. It must not allow its fear of co-option to paralyze it into impotence.

The Occupy movement and its supporters must also avoid blindly following a party that ultimately acts against its own interests, as the Tea Party has. In races where no Democratic candidate is supportive of economic justice, Occupy members must not vote for that candidate and actively recruit and field challengers. In order for Mr. Cohen and Mr. Capehart’s Democratic Party approach to work, there must be consequences for those who fail to work toward economic fairness and equality. Otherwise, it is doomed to failure.

It should come as no surprise that the talk spawned a vitriolic response from many TED attendees, who blasted an initial decision to post the talk publicly, and from TED itself, which now treats the six minutes of truth telling as if it never happened, citing the “political” nature of the disputation. It is unclear to me when exactly basic economics became political. I would hazard a guess that it occurred somewhere between 1979 and the Republican Party’s complete assimilation by sociopathic billionaires and tax-cut hawks in 2008. What is so striking about the reaction to Hanauer’s words is that he did nothing more than lay out basic truths about supply, demand, production and employment.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me.

So when businesspeople take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around.

Anyone who’s ever run a business knows that hiring more people is a capitalists course of last resort, something we do only when increasing customer demand requires it.  In this sense, calling ourselves job creators isn’t just inaccurate, it’s disingenuous.

He also lampooned another widely accepted theory, that tax cuts for the wealthy create jobs.

If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs.  And yet unemployment and under-employment is at record highs.

Hanauer’s ideas were delivered in such a matter-of-fact and simple manner that it left little room for ambiguity or misunderstanding. The economy is much like any ecosystem, or as he refers to it, a “feedback-loop.” Without consumers, entrepreneurs and businesses do not exist, and once a business does exist, it will not create new jobs until consumer demand not only dictates it, but when the capitalist is left with no other alternative. Hiring an employee is a last resort, rather than a noble calling.  He cleverly points out that the most fundamental reason that the middle class and poor consumers drive job creation is the difference in consumption levels. For example, he and his family own three cars, not three-thousand cars. But if three thousand consumers were given jobs capable of purchasing a car, then orders to manufacture cars would increase, and car manufactures would be forced by necessity to hire more employees. No matter how wealthy Hanauer becomes, he will never need more than three cars. He can never eat out at a capitalist’s restaurant more than seven times per week. It is an empirical impossibility. However, millions of new employees will eat millions of meals at restaurants, and therefore create a far greater number of jobs. Hanauer understands that forming a business does not occur in a vacuum. Without customers, there is no capitalist, and there are no employees.

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

Here’s an incredible fact.  If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?

Hanauer also points out that the wealthy have come to expect certain tax and other benefits in our capitalist system as a direct result of being deified as “job creators,” if even subconsciously. In other words, many rich Americans, even business owners, venture capitalists, and executives, may not be aware of how flawed the notion is that the wealth creates employment. The expectation of uncommon treatment under the law may be the by-product of an extraordinary campaign by a few motivated folks and wide acceptance of the scheme by a fawning electorate. Many wealthy individuals may actually believe that their wealth alone creates jobs, and left to their own devices, they could produce equal wealth absent consumers at all, notwithstanding the utter absurdity of the hypothesis. So-called “job creators” have been elevated to superhuman or even prophetical status, not simply by themselves, but by those of us who mistakenly believe it. The story is as old as capitalism itself. The poor father who must beg Ebenezer Scrooge for each and every penny he earns–no Scrooge, no job. When the fact of the matter is that if each of us were paid as little as the wealthy would prefer, the wealthy would lose their fortunes overnight. Without enough disposable income to purchase their products, employment would shrink, factories would close, and yachts would sit idle.

Significant privileges have come to capitalists like me for being perceived as “job creators” at the center of the economic universe, and the language and metaphors we use to defend the fairness of the current social and economic arrangements is telling. For instance, it is a small step from “job creator” to “The Creator”. We did not accidentally choose this language. It is only honest to admit that calling oneself a “job creator” is both an assertion about how economics works and the a claim on status and privileges.

The extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists, and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification.

Much like a small farm pond, the economy relies upon the smallest among us to maintain the health of the whole. The water must be kept oxygenated by just the right number of plants and exposure to the air. Insects and other small animals must come to the pond in order to feed and to be fed upon by the more developed fish. The less developed fish and other animals must feed upon the waste of the plants and more developed fish in order to prevent the pond from becoming unable to sustain life. If any of the elements is removed, the pond and all within it will die. So too will the economy. Without those willing to risk capital in order to fund business ventures, consumers can not purchase goods to increase employment, but without employment and the subsequent income, those risking the capital lose everything. Because there are so far fewer capitalists required in relation to consumers in order to sustain a market economy, the consumers role is incontestably more important. As Hanauer correctly argued, try as they might, the wealthy simply can not purchase enough goods and services to drive job creation, while large numbers of consumers with disposable income can buoy an economy to unprecedented growth, and create countless jobs in the process.

The modern boycott is a striking example of Hanauer’s thesis. During an effective boycott, consumers refuse to purchase the goods and services of a particular capitalist. If a large enough number of consumers participate, the capitalist is forced to terminate employees due to decreased demand–remember, hiring employees is an absolute last resort, and also the first line of defense against falling sales–as well as to scale back payments to executives, owners, and shareholders. If the boycott continues for a long enough period of time, the resources of the capitalist no longer are able to fund the remaining liabilities, and the capitalist fails. By contrast, in a functioning market system, if a capitalist closes his or her doors, consumers are free to begin spending disposable income with a competing capitalist, who is then forced to increase employment in order to meet demand. In other words, in an efficient capitalist marketplace, the consumer is more important than that wealthy business owner.

The most striking, and in my view, the most telling passage in Hanauer’s soliloquy is also the most elemental.

It is astounding how significantly one idea can shape a society and its policies.  Consider this one.

If taxes on the rich go up, job creation will go down.

This idea is an article of faith for republicans and seldom challenged by democrats and has shaped much of today’s economic landscape

Why is it that Democrats seldom challenge this idea? Cynically, one could easily draw the conclusion that the festering tumor of our campaign financing structure render Democrats and Republicans alike unable to challenge a notion as ridiculous as this, for fear of political reprisal. An idea that has long since been debunked by economists left, right, and center. Right wing groups have made it no secret that they will actively fund primary challengers to Republican incumbents who do not walk the line of tax cuts. Could Democrats have a more surreptitious agreement with their wealthy benefactors? I prefer to think it is a combination of a sincere misunderstanding of economics, a real fear that the public has so come to believe the notion of the rich as “job creators” that to say otherwise would be politically damaging, and an outright and not so subtle relationship with wealthy donors who expect tax cuts in return for now unlimited amounts of cash.

What I will never understand is how it is that those who would most benefit from reversing the current tax policies so ardently campaign against it. Perhaps they have been deified to the degree that they are incapable of understanding the disastrous consequences of their actions. Whatever the case, it is we the consumers and the middle class who hold the key to reversing this trend, and returning Hanauer and those who agree with his understanding of sound economics to their proper place in the halls of government, and to cast out those who wish to do harm to not only us, but themselves.

It is time for the consumer to rise up against those businesses that champion the misguided notion of wealth as job creation. It is as easy as getting to know your local business owners and spending your money accordingly. The sheer thought of this frightens the wealthy so that they spend billions each year blistering the airwaves with propaganda in an effort to prevent us from learning Hanauer’s elemental truth. It is as simple as avoiding the large corporations whose money is spent reinforcing these false, hateful and misguided ideas. Hanauer is right, the economy will ultimately shift so long as consumer spending remains constant or grows. Once the tax code is altered, there will be no shortage of opportunities for the “job creators” to get back to work. In fact, times will never be better for them.

The Democratic Party diverges from the Republican Party in many respects. It is a diverse party with many distinct points of view on issues across the political, environmental, economic, and social spectrum. The Republican Party–since the mid-1980′s at least–walks in lockstep. As it’s positions on issues change, its elected officials and its base follow blindly and obediently. Obviously, if given a choice between only the two governing ideologies, no sane human being would support the Republican Party. Yet, rather than take a stand on any of the core principles to which the Democratic Party is moored, it either overtly acts in direct conflict with those principles, or it capitulates and “compromises” in the name of political expediency. Governing and legislating is a messy process. I do not harbor any illusions about that. I understand that Barack Obama and the Democrats can not wave a magic wand and implement a progressive agenda and rest on the seventh day. I also do not ignore many of the positive regulatory and legislative changes that have taken place on Obama’s watch.

It is a common and by now expected line of attack. Nothing that the Republicans do makes any sense, so all of our problems and each of the failed efforts to enact reasonable legislation or regulation  is not the Democrat’s fault. The media plays along by fashioning a narrative of “gridlock,” blaming each party equally. While there is no shortage of evidence to support the Democratic minions’ position that nothing is their fault, it isn’t an appropriate response to hold your nose and take whatever is offered by the crazies in the GOP. It also is not genuine or helpful to romanticize the bygone days of compromise and moderation.

Since the 1980′s, the Republican Party has employed a strategy of extreme ideology and intransigence in an effort to solidify its power. Newt Gingrich hatched a plan early on in his congressional career to berate and intimidate Democrats in Congress in order to force them into poor decisions. He also corralled his caucus into uniformity with never before seen effectiveness. He exploited every Democratic scandal far out of proportion to the actual dalliance. He drafted trite yet impossible to argue against lists of items he promised to accomplish. He then took his case to the public, promising to restore efficacy and responsibility to the legislative body if only the voters would send Democratic incumbents packing. It worked. It worked not because Newt Gingrich is brilliant, but because the American voter is not. Advertising wouldn’t be nearly a trillion dollar industry if people didn’t fall for preposterous claims.

Enter the marriage of the Republican Party to the likes of Grover Norquist and various other right wing and evangelical groups. The groups promised financial support and an unprecedented get-out-the-vote effort on behalf of Republicans. In return, the Republicans were only asked to champion, and more importantly, to never deviate from the political policy positions held by the groups. In Norquist’s case, he cleverly cajoled Republicans into signing a contract–called a pledge–memorializing their allegiance. Americans for Tax Reform, Norquist’s front group, has been able to recruit nearly every Republican member of Congress. If a Republican failed or fails to hold up his or her end of the bargain, all support disappears. In more drastic cases, a Republican challenger is knighted to take over the seat, no matter the tenure or leadership positions held by the traitor. It is a terribly irresponsible way to manage a major political party. Moreover, it lends itself to ultimate marginalization as greater society moves further and further from its political posture. However, at the end of the day it is the Republicans who have made a conscious decision to carry on down this path. It is really of no consequence to the Democrats.

Rather than use this radicalization to its benefit, the Democratic Party has instead chosen to capitulate to the very same individuals and groups to to which the Republicans are beholden. Democrats falsely believe all sorts of things these days. Democrats are so fearful of attracting an even harsher attack from Republicans, that they have bended to Republican will on several important issues. It is why the party will not support the legalization of medical marijuana notwithstanding the fact that nearly 74% of Americans support it. It is why the President did not close down the prison at Guantanamo Bay. It is the reason that the President has chosen to renew the Patriot Act. It is the reason that Democrats supported the JOBS Act. It is why the the United States military still holds sham trials of suspected terrorists and hands down unequal justice in secret proceedings. It is why the President condones domestic wiretapping and the mining of Americans’ private electronic communications. Democrats will tell you that they did not want to be cast as weak on terrorism or the economy, but the fact of the matter is that they fear attacks more than they relish defending such attacks with common sense and principled policy positions. They have in effect adopted for themselves a pledge of sorts, a pledge to move further enough right so as not to attract too much attention. They have done this notwithstanding the fact that history and common sense are on their side on each and every issue.

Let’s look at an example. At the end of 2010 the Bush tax cuts were set to expire. The President and the Democrats in Congress initially refused to allow the tax cuts for the wealthy to continue. It was shouted far and wide that no one making more than $250,000 would be receiving a tax beak on their watch. Republicans shot back with claims that the Democrats were hell bent on killing jobs, that they were beholden to unions and the labor movement, and that they hated small businesspeople. Republicans refused to negotiate on the Bush tax cuts if the tax rates on the wealthy would be raised, and further they demanded an end to the Making Work Pay tax credit, a tax credit that assisted poor families. The Republicans accused the Democrats of stifling the economy and worsening the deficit. While Obama did propose an alternative which held many of the middle income tax rates at the lower levels and marginally raised taxes on higher earners, bipartisan investigation revealed that Republican claims concerning the effect on small businesses were false. Democrats also proposed a dangerous 2% reduction in the Social Security withholding. While a laudable attempt to secure some relief for the middle class, a Democratic administration should at no point tinker with the funding mechanisms of Social Security. Quite frankly, I abandoned the President at least temporarily over this issue. More importantly however, the Republicans also demanded capitulation from Democrats if unemployment insurance was to be extended. This strategy was reprehensible at best, and downright hateful at worst.

What the Democrats could not do however, was to call the Republicans’ bluff. The Democrats agreed to maintain the Bush income and capital gains tax rates as is in exchange for a one year extension of unemployment benefits and a horribly irresponsible payroll tax cut for the middle class. If the Republicans wished to be responsible for a failure to extend unemployment benefits and an across the board increase on the middle class, the Democrats should have allowed them to have their way. You simply can not allow yourself to be bullied and not design a plan to wrangle the bully. Throughout the tax cut debate the Republicans were loudly echoing the Tea Party concerns over the deficit and the national debt. In refusing to allow the Bush tax cuts to expire in the face of Republican intransigence, the Democrats all but guaranteed that the national debt would grow as government revenues failed to keep up with expenditures. It was a horribly naive political calculation. The fruits of the miscalculation are before us this very instant, as renewed debate is unfolding surrounding the tax and spending adjustments that the nation faces at the end of 2012.

The Democrats solved nothing in 2010. The Party accomplished nothing of note for its constituency, and it guaranteed that it would become fully embroiled in the identical debate two years later, during a hotly contested election. If the Bush tax cuts had expired, the arguments and name-calling would be a distant memory by now. Instead, the Democrats will be forced into a position of renewing the cuts yet again at the end of 2012 in the face of threats of economic catastrophe. In fact, in 2011 when the one year extension of unemployment benefits negotiated in 2010 was set to expire, the President and Democrats did in fact call the Republicans bluff. And you know what, it worked. The Republicans did not want to be accused of allowing millions to be removed from the unemployment rolls and cast out into the street, so they negotiated another extension. They would have extended unemployment benefits alone in 2010 had the Democrats stood firm on taxes and allowed the Bush cuts to expire. The result would have been a reversion to Clinton era tax rates, hardly the worst possible outcome, rather, at the end of the day the most responsible outcome.

Yet here we stand again, having the same debate. During the debt ceiling fight in 2012, Republicans threatened to play chicken with the full faith and credit of the entire government if the Democrats didn’t agree to hatchet Medicare, Medicaid, and social spending. Democrats failed again to stand firm against ridiculous and outlandish requests. Instead, the two parties agreed to form a bipartisan Superfriends Supercommittee in order to draw up a plan for cutting an arbitrary amount of money from federal spending. No one in Washington held out any hope that the committee would actually reach an agreement, so as an incentive, the parties agreed to automatic idiotic and random cuts from defense and domestic spending if the committee failed in its efforts. This is the world famous “sequester” that House Republicans now illegally refuse to honor. The combination of the Democratic failures to stand firm in 2010 and 2012 have been referred to as 2013′s “fiscal cliff,” when the Bush tax cuts expire and the automatic spending cuts go into effect. Already Republicans are threatening Democrats that if they do not agree to cuts to offset the increase in the debt ceiling next year when an increase will again be required, that no deal will be reached. Obama and the Democrats, should they win re-election, must allow the Republicans to make good on their promise or force a compromise. Threats of a United States credit downgrade should not deter Democrats from preventing a dismantling of Medicare, Medicaid, and other programs. Bring the fight to them and let the American people decide.

It is without doubt a lugubrious fact that the Republican Party is no longer capable of taking part in a functioning democracy. There is no question that a greater degree of dysfunction exists in Washington D.C. and in state legislatures than at any period in the recent past. It is also unquestionable that the Republicans bear a greater degree of the blame for the current state of affairs than the Democrats. However, the Democratic response can not be to throw up its hands and accept the status quo. The party can not allow itself to be bullied time and time again into short term fixes that are not only poorly constructed, but also assure a similar battle into the indefinite future. It is not responsible for the party that holds itself out as the embodiment of the hopes and dreams of the middle class, the poor, the disabled, the oppressed, and the disenfranchised to allow those interests to be trampled upon over the long term in exchange for short term trinkets. It is not admirable to allow widely accepted economic realties to be cast aside and replaced by platitudes and failed policies.

It is always best to be on the right side of the historical record. If Obama is able to win re-election this November, the political calculations must give way to ideological concerns. As a self described non-ideologue, he must set aside his inherent belief in compromise and focus instead on right versus wrong. Compromise is not a victory in and of itself. It must include a degree of sound economics, and a heavy dose of morality. This is after all what the Democrats stand for, or stood for. The Republicans must not be permitted to drive policy decisions based on nothing more than the lunacy of a few insane and sociopathic contributors. If the full faith and credit of the United States is compromised for some short period as a result, so be it. If taxes must be raised across the board in order to force the wealthy to pay a larger share in order to stabilize the treasury, so be it. To accept pebbles in exchange for gold under threat of murder is no way to to negotiate.

It is time to set aside the op-eds and the punditry pushing the theme of Republican consternation as the foundation of all that ails our government and its ability to function. It is time to stand in front of the tank as it rolls down Pennsylvania Avenue and say no, we won’t take it anymore.

Barack Obama’s largest asset is a diversified group of long term and short term treasury obligations. The bonds and notes are generally regarded as risk-free investments delivering modest returns, even more modest in the current low interest rate environment. Mr. Obama’s personal stock holdings are limited to three retirement accounts, all invested in the Vanguard 500 Index Fund. The fund is not actively managed nor speculative. It simply tracks the performance of the S&P 500 Index, nothing tricky or fancy, or creative. Mitt Romney on the other hand holds pages and pages of individual equities, individual corporate bonds, foreign securities and actively managed mutual funds, many of which are managed in so-called blind trusts. Romney does have significant assets in market tracking index funds as well, but he also has upwards of $500,000 in gold, perhaps the most speculative of all possible investments. While the two men offer very similar policies for Wall Street, the two banal baby-kissers could not be more contrasting in their handling of their own personal fortunes.

So, what does this say about the two men? It has been widely reported that President Obama harbors no adulation for Wall Street, but rather coddles and serves it out of a fear of the political consequences of not doing so. Whether Obama has made a poor political calculation in this regard is a subject for another day. However, Obama apparently views the endeavor of those who have chosen “finance” as their career as facile and uncreative, adding little of real value to society. In fact, during a meeting between Obama’s campaign director and Wall Street heavies, the executives pulled no punches, even demanding that the President apologize to Wall Street publicly.

One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief.

“Most people in the financial world,” a top Obama donor later told me, “do not understand how most of America feels about them.” But they think they understand how the president’s inner circle feels about them. “This administration has a more contemptuous view of big money and of Wall Street than any administration in 40 years,” the donor said. “And it shows.”

Mitt Romney on the other hand embraces the myth of creative finance and wealth creation wholeheartedly. Even given his advanced age of sixty-five–by age-based investment strategies at least–he is far too heavily invested in individual equities, individual corporate bonds, and active managed mutual funds. Most responsible fee only investment advisers would counsel the GOP candidate to sell off much of his equity stake in lieu of safer fixed income investments. Mitt Romney however will apparently hear none of that. His investments evidence a heartfelt belief  in the soundness of the American financial system directly in line with his political rhetoric and hyperbole.

Most of us spend decades believing the hype surrounding individual stocks and pimply-faced mutual fund managers fresh from Harvard Business School notwithstanding the mountain of empirical data to the contrary. We call our brokers and financial advisers seeking the next hot tip. After all, they know what they’re doing, right? Study after study reports the ineffectiveness of actively managed mutual funds and investing upon the advice of brokers and commissioned advisers. It is not until we actually sit down and research the subject, or remove our head from Wall Street’s all-encompassing allegory surrounding its brilliance for long enough to pay close attention to someone who actually knows what he or she is talking about, that we adjust our strategy. President Obama, a self described pragmatist, must have undertaken this analysis years ago. He understands that no matter how rosy the claims or how flashy the public relations campaign, that those peddling financial stock-picking advice have a downright pitiful track record. He also understands that to truly reap extraordinary gains from the stock market over time, you must either risk losing your entire fortune on risky bets, or you must be privy to inside and often illegal information. Neither of the preceding two courses of action is particularly appealing to an individual aspiring to the highest office in the land, so hum drum practicality it has been for the Commander in Chief.

President Obama’s changeable challenger is the consummate opportunist. He believes that actively managed funds offer superior returns to stock index funds and bond index funds. He believes that those Wall Street boys clad in $5,000 suits while extracting 2% or more of the wealth of their clients in return for poor advice actually enjoy some level of expertise. It is not all that surprising in that Romney himself spent much of his career surrounded by folks who made their livings bilking people of onerous fees by touting “exclusive” yet utterly perfunctory “proprietary analysis” while poorly managing their investments. The crowd in which Romney moves honestly believes its own claims of brilliance. In contrast to the con-man who knows precisely how valueless his products are, the Romney’s of the world believe their advice and knowledge has some real value. They are, in a essence, delusional borderline sociopaths. Some have opined that Romney’s portfolio is overly conservative and carefully crafted to avoid any political pitfalls. This analysis only makes sense if the author continues to himself or herself subscribe to the long-since-discredited strategy of actively managing investments. Even in 2012, those who advocate for a strategy based upon empirical data and sound experiential reports continue to swim upstream. A testament to the depth and reach of the myth of the stock-picker.

I believe that the duo’s investments speak volumes concerning each man’s approach to governance. Obama almost certainly charges his staff and advisers with the responsibility of researching each and every social issue or economic policy question inside, up, out, and down, leaving no stone unturned. It is in his nature to do so. He is then presented with each and every data set and potential effect prior to his coming to a practical and pragmatic conclusion. That very conclusion is then simmered on low heat through a Bearnaise sauce of political consequences and an ultimate decision is reached. This is precisely how Obama handled the gay marriage debate. He understands that practically speaking gay marriage is of no consequence to him, his marriage, or the orderly functioning of society or government. He has no moral objections to the idea. He has said as much in the past. However, once placed upon the hot stove of electoral politics, he made a poor decision, and his statements on the issue during the 2008 campaign were overly-complicated, forced, and disingenuous. This is almost certainly how he has approached the closing of Guantanamo Bay Prison since being elected, among a whole host of other issues and questions that have but one clear and obvious practical solution.

Mr. Romney in part still believes in  making “gut” decisions. It would be unfair to cast him among the same ilk as George W. Bush and his nearly unexpurgated lack of reliance on data and practical effect, as Romney can indeed be a thoughtful and realistic man. However, having no occasion in his life to doubt the efficacy of efficient markets, Mr. Romney is almost certain to believe much of what he spews on the campaign trail. I am unquestionably confident that he believes that tax cuts spur economic growth and lead to job creation in the face of reams of data to the contrary. He almost assuredly believes that  military power can be used to solve centuries old civil and religious conflicts and restore peace. He without question holds the position that income inequality will not eventually erode society as a whole. If he is elected it is likely that Mr. Romney will make many poor decisions based upon an honest belief that he is correct notwithstanding opposing information. However, he will also make his share of practical decisions. The question is which of the two categories will be out of balance.

In 2012 we do not have to chose between an ideologue and a pragmatist, or a true believer and a statistician–assuming a vote for either of the two mega-parties. Neither of the major candidates ultimately believes in anything strongly enough to be swayed by ideology or morality alone. Each man can be swayed from a practical common sense solution by politics, so both men are inherently dangerous. One need only look to Obama’s treatment of Wall Street and Romney’s continual conversion on policy for evidence. It is ultimately irrelevant how thoughtful and pragmatic a leader may be at his or her core if practical considerations have no place at the policy table. In analyzing the two men’s investments, it is clear that one man is a practical sound decision-maker at his essence, and one man is practical yet inclined to surrender to his belief in the advantage of risk and reward. Whether it is more desirable for a leader to make poor decisions based upon an honest yet misguided belief in the anticipated results, or to make poor decisions based upon a political calculation in the face of a deep understanding of information to the contrary is a choice that each of you will have to make on your own. I however would like a third choice.

Barack Obama is fond of referring to Dimon as one of Wall Street’s best and brightest.

JP Morgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting,” the president said. “We don’t know all the details. It’s going to be investigated, but this is why we passed Wall Street reform.

I don’t know which claim in this sentence is the most absurd. First, if Jamie Dimon is one of the smartest bankers we’ve got, who is the worst? Good grief. If you have a potential loss looming into the many billions of dollars on a unnecessary and risky bet that was permitted to spiral out of control on your watch, you’re not a genius. If you beg Congress to limit the rules that could potentially prevent the loss from taking place in the first place, you’re an idiot whose hubris has digested whatever tiny amount of good sense you had remaining. You are by no stretch of the imagination to be held out as some captain of finance worthy of the respect of the common man and bankers alike. If you insult those who are attempting to promulgate rules to prevent you–yes you–from destroying the economy and sending millions back to the unemployment lines and soup kitchens, you are a sociopath incapable of understanding the profound effect your actions have on other human beings. You’re just another banker Mr. Dimon, and there are hundreds of thousands of people within fifty miles of Wall Street capable of stepping into your shoes and replicating your results in an instant. I only wish Barack Obama understood that simple fact. Let me backpedal a bit. In fairness, I am sure that he does understand, he just isn’t willing to act upon this knowledge.

Second, there isn’t going to be any investigation. More than four years following the onset of the recent recession-depression, not a single executive–let alone an expendable fall guy–of any of the large Wall Street investment banks has seen the inside of a jail cell. While the Department of Justice has admonished the American public to “just wait” for the hammer do be dropped upon the heads of those who cost millions their jobs, retirements, and pensions, we are told that Wall Street South will be undertaking yet another “investigation.” I won’t hold my breath.

Essentially, the brilliant Mr. Dimon placed the very same family of bets that led to financial collapse. Perhaps he felt that JP Morgan’s relative solvency throughout the crisis granted him the free reign to act similarly without consequences.

For one thing, JPMorgan was known as the best manager of risk on Wall Street. That’s largely because the company made it through the financial crisis mostly unscathed. But it turns out that even the best manager of risk can slip. This trade, in fact, echoes the financial crisis: They bet on something unlikely as if it were impossible. That’s what all those banks did when they bet almost everything on the belief that the housing market never goes down everywhere all at once. It’s a reminder that even “good” banks make this kind of mistake. And remember, JPMorgan made this mistake less than four years after the fall of Lehman Brothers, so this came at a time when the lessons of the crisis were still fresh, and when regulators were watching closely.

The only guarantee that taxpayer money will not be put at risk again due to similar and much larger miscalculations in the future is to again separate the deposit institutions from the investment and speculative institutions. Dodd-Frank is famous for being over eight-hundred pages long with several thousands of additional pages to be produced by the various regulators charged with promulgating additional rules at its direction. No number of pages of byzantine regulation will prevent the unscrupulous likes of Jamie Dimon and others whose egos have been hyper-inflated by ridiculous compensation and consistent government bending to their will from carving out a path through the best intentions of regulators en route to over-leveraged gambling and placing at risk the financial system and the savings of taxpayers. This rather intuitive fact is ultimately what led legislators in the 1930′s to pass the Glass-Steagall Act, a Depression era law which strictly separated investment banking from depositor banking. While there was consternation during the debate surrounding the act and the act was not perfect–in fact the sponsor, Senator Carter Glass, even moved to repeal the act shortly after passage–its framework averted a widespread banking sector collapse for more than seventy years.

Ironically enough, as the banking sector chipped away at the regulations included in Glass-Steagall over the years from 1933 through 1999, when it was repealed in its entirety, it was JP Morgan that pushed for one of the largest non-traditional banking expansions of the act.

In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole to include dealing in debt and equity securities in addition to municipal securities and commercial paper. This marks a large expansion of the activities considered permissible under Section 20, because the revenue limit for underwriting business is still at 5 percent. Later in 1989, the Board issues an order raising the limit to 10 percent of revenues, referring to the April 1987 order for its rationale.

In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities, so long as its underwriting business does not exceed the 10 percent limit.

JP Morgan and other large banks spent the better part of a century unraveling Glass-Steagall. Since its complete destruction in 1999, we have seen the steep deterioration of ending standards as well as the greatest expansion of leveraged investing and derivatives trading in the modern world. The result was the 2008 collapse of the world economy. Many, including Massachusetts Senate candidate and economics professor Elizabeth Warren, have called for the reinstatement of Glass Steagall in its entirety, believing that minor fixes such as the Volcker Rule are inadequate.

Well, I’m going to put it this way. The Volcker Rule would help. We don’t know exactly the nature of these trades. But if the question is is the Volcker rule enough, or do we need more, look, I’m somebody who believes we really should have boring banking. That banking should be — the part that’s about savings accounts and checking accounts and our money system — should be separated from the kind of risk-taking that Wall Street traders want to take. That was originally what the Glass-Steagall Act was about, it was repealed in 1999. There was an effort to get it into Dodd-Frank in the 2010 bill. That effort failed. I think we really do need that kind of separation. We need to go back to boring banking. The people who want to take risks need to take risks with their own money and do it somewhere else.

The banking sector spent nearly $500 million on efforts to repeal the Glass-Steagall Act. Initially the banks lobbied to be permitted to enter the bond and securities markets, followed by a loosening of the standards prohibiting banks from underwriting commercial paper and mortgage-backed-securities. Many of the regulatory changes occurred over the objection of Paul Volcker, the then Federal Reserve Chairman and continued nemesis of the reckless investment banking sector.

In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities. Thomas Theobald, then vice chairman of Citicorp, argues that three “outside checks” on corporate misbehavior had emerged since 1933: “a very effective” SEC; knowledgeable investors, and “very sophisticated” rating agencies. Volcker is unconvinced, and expresses his fear that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public. For many critics, it boiled down to the issue of two different cultures – a culture of risk which was the securities business, and a culture of protection of deposits which was the culture of banking.

The banking sector also objected to efforts to reinstate Glass-Steagall during the debate over the 2010 Dodd-Frank bill. It had after all spent millions of dollars and several decades dismantling the legislation and gaining access to your savings deposits and loans, and the deposits and loans of businesses and groups as a source for leveraged gambling and “creative” debt offerings and derivatives. It wasn’t about to allow the clock to be turned back to a time when banks did well and the financial sector was a rather hum-drum yet effective and profitable industry. Let me be clear, there is no need for creativity in finance. There is no need for the best and brightest mathematicians and physicists to waste their significant true brilliance concocting new means through which to extract exponential wealth from wealth. Banking is not inherently complicated, as the century following Glass-Steagall illustrated. Efforts to reinstate Glass-Steagall do in fact have significant support, but not enough support to overcome the most powerful lobby in Washington D.C.

Without a return to a full separation of commercial banks from investment banks, we are doomed to repeat the events of 2008, no matter now well intentioned and even how well written the thousands of pages of regulations drafted in an effort to avoid this basic truth. If brokerage houses wish to cook up a witches brew of financial instruments, leveraged bets, derivative trades, mutual funds, credit default swaps, and hedges, they should be free to do so. They should not however be permitted to do so using the deposits and ordinary loans of individuals and small businesses. The recent debacle at JP Morgan illustrates the inherent inability of the investment and finance sector to refrain from engaging in extraordinarily dangerous activities. Obama himself admitted that had a smaller less solvent institution engaged in similar behavior, the government may have had to step in–”You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in. That’s exactly why Wall Street reform’s so important.”

Unfortunately the reform he backed did nothing–and will do nothing–to prevent the government from having to step in when, not if, his scenario plays out. However, if the brokerage or investment house is completely separate from the bank–not a subsidiary or affiliated entity–it can be allowed to rise and fall without intervention. After all, as Obama points out but does not for one second believe, these titans of finance are brilliant minds who are certainly capable of generating trillions of dollars employing their creativity exclusive of making use of our savings and mortgage notes as collateral. Certainly a failure of a large investment house would cause a minor crash in the economy, but the government would not be forced to step in because depositors’ funds would not be placed in harms way. The government would not be held hostage by the financial sector under threat that it will refuse to make loans to individuals and small businesses, because it will no longer be in the business of doing so.

Just one week ago Jamie Dimon called the concerns of those like Paul Volcker who believe that too-big-to-fail banks continue to present a threat to the economy and to the proper functioning of basic financial transactions “infantile and nonfactual.” When I was a child I would often attempt to push my mother over the edge by callously and purposefully engaging in the very behavior she had just admonished me against. I would then be subjected to a lengthy lecture on the childishness of my actions, followed by severe punishment. It was not until several years later that I realized how utterly pubescent my behavior had been. The banking sector and its stockpile of Harvard and Wharton graduates on the other hand, not four years removed from the worst financial collapse since the Great Depression, could not help itself but to sneak into the backyard and play with matches after it had just burned down the family home. In their case a timeout will not do, they need to be completely separated from the rest of us, for everyones’ safety. No separation – no peace.

Unlike the New Deal programs that followed the Great Depression, during this period of extreme economic trauma, both the federal government and the states have instead reacted to shrinking tax revenues and mass unemployment by shrinking government programs and firing workers. At the federal level, the appetite for renewed borrowing to fund programs, assist states, and help the middle class and the poor is minuscule. At the state level, due to requirements of budgetary balance, massive layoffs have accompanied drastic cuts in public services. Parks have closed. Hospitals have closed. Transportation, improvement, and infrastructure projects have been canceled altogether or have been substituted with patchwork fixes and band-aid repairs. Public sentiment is perceived by Washington to favor deep cuts and curtailments in borrowing and spending. Not only is Washington wrong on the policy, it is wrong on its taking of the pulse of Americans.

It was recently revealed that another 15,000 public sector jobs were lost in April 2012. Since the depression began in 2008, the public sector has lost–conservatively–more than 600,000 jobs. 600,000 folks who once provided you with the services that you took for granted as a birthright. People who educated your children, removed your trash, maintained your public spaces, filed your deed transfers, inspected your homes, monitored clean air and clean water standards, and on and on. Democrats and Republicans each favor varying degrees of continued austerity, with Democrats favoring small tax increases on the wealthy and corporations, and fewer cuts to government programs, and Republicans favoring huge tax cuts for the wealthy and corporations, with massive cuts to spending, defense outlays left untouched.

To listen to stump speeches and congressional soliloquies, one might come away with the impression that the public favors some mixture of the two approaches, with wide agreement that taxes should be kept in check and government spending cuts imperative. The data suggests that neither side is properly reflecting the position of the vast majority of Americans. For example, 56% of Americans believe that higher taxes and increased spending is needed to remedy our faltering economy. 68% of Americans believe that the current tax system benefits the wealthy at the expense of the rest of us, and a majority of Americans would be willing to pay more taxes to maintain Social Security and Medicare, as well as government programs that assist the poor.

As stimulus monies run dry, it is nearly impossible to open a local paper anywhere in the nation and not find a story or two concerning budget shortfalls and potential layoffs. School Board meetings far and wide have become contentious events. Property owners have been asked to pay more to support local schools, yet staff reductions and benefit give-backs remain unavoidable. Teachers are slated to be laid off, municipal services are being scaled back, and programs that offer help to young children and the poor are being eliminated altogether. State programs to offer incentives to people to install energy reducing technologies are being dispensed with, and along with the incentives, the jobs of those who install solar panels, geothermal systems, and energy efficient building materials and upgrades are lost. With each unnecessary cut, the ripple effects are felt beyond the public sector.

With budget cuts to education, we are destroying our own future. Enrollment is down at some of our most prestigious public university systems in response to higher out-of-pocket costs and staffing restrictions. At a time when technical education is becoming the very key to obtaining a good paying job, we are making it increasingly difficult to obtain, even for those who have excelled academically. This is a recipe for disaster. Last year alone, the federal government cut more than $5 billion in funding from education programs, the bulk of which was slated to pay for state programs and direct state grants. As the states struggle to balance budgets, education becomes a large juicy target. New York State alone will be eliminating more than 5,000 teaching positions, even after increasing tax levies.

As federal money fails to reach states, so too does state money fail to reach localities. These localities are forced to cut back on services such as fire and rescue, as well as police. Local government offices cut back on building inspections, shrink hours of operation, close public libraries, and even darken street lights. The Federal Reserve Bank of San Francisco, hardly an arm of the socialist movement, has predicted lasting consequences should the economy remain stagnant and federal aid to states remain damned. Because state governments are constrained by a requirement to balance their budgets, revenue shortfalls require offsetting cuts and debt offerings. Many states are already burdened by high debt loads and are loathed to increase bond offerings for fears of credit downgrades that increase borrowing costs. The states are left with the option of cutting spending and increasing taxes. Increasing taxes–while necessary–is politically unappealing during an economic recession, therefore most states opt for spending and services cuts.

The only entity available to step in and curtail the bloodletting of state and municipal jobs and cuts to public services is the federal government. Unfortunately, President Obama has not been willing to expend any political capital on efforts to assist the states, and Republicans are hell bent on ensuring that the economic emergency continue through election day. This situation creates immeasurable suffering in local communities. Taxpayers are asked to bear the burden of funding depleted schools and local services at increasingly unsustainable levels. Many people have lost their homes over an inability to meet property tax and other municipal burdens. Allowing this to continue during a period of high unemployment is particularly devastating, and sets in motion a cavalcade of events that only drags the local economy down further.

It is time for the federal government to step up and offer assistance to states and localities in order to maintain a basic level of public services and avert further layoffs of public employees. While the private sector continues to report modest job creation in 2012, the public sector continues to lose jobs. Lost in the debate over funding of government and government services is the fact that it is the public sector that allows the private sector to flourish, and it has done so since WWII. The public sector helps educate its employees, it maintains the bridges and roads on which the private sector transports its goods and personnel, it maintains the safety of air travel so that the private sector may travel to meetings and business events, it oversees the ports through which the private sector exports its goods and imports its supplies, it manages the tax boards and the IRS, it provides fire, police, and ambulance services to private sector business and its employees, it pumps clean water in and carries sewage and waste water out of private sector facilities, it has ensured efficient markets and regulation that has allowed private sector American business to attract capital from around the globe and enjoy some of the largest stock trading premiums in the modern world, it administers the courts through which the private sector settles its disputes, it handles patents, copyrights, and trademarks in order to allow private business to profit from its own creative product free of exploitation and theft. Essentially, without a robust and functional public sector, the United States of America and its business and financial dominance would not exist.

It is time to provide the public sector with the short term assistance it needs in order to ensure our collective long term survival. Teachers and public employees are not the reason that the government is broke–wage inequality, poor and dis-courageous governance, and corporate greed is. Please join us in focusing the anger, vitriol, and more importantly the constructive solutions, on those actually to blame for the current circumstances of state and municipal budgets. Those who provide us with the invaluable services that distinguish a modern functional society from one of chaos and dysfunction in return for substandard wages and a secure retirement are not the enemy. Don’t allow yourself to be convinced otherwise.

Harkinson takes some umbrage with the Occupy movement and its posture toward an electoral-centric approach.

Occupy activists, many of whom don’t have a lot of experience with politics, seem to think that MoveOn is taking its orders from the White House. In reality, MoveOn polls its 7 million members on which candidates to support, and it often runs campaigns to unseat Blue Dog Democrats when it thinks a more progressive candidate has a shot at winning. But whatever. What Occupy really ought to do if it intends to live on is plunge directly into electoral politics on the local, state, and congressional level. It ought to co-opt the Democratic Party.

Though Occupy could support many sympathetic candidates in Democratic primaries, some pundits haven’t pushed the idea because they worry about a tea party effect on the left, with liberal Democrats losing to Republicans in the general election. Yet other than a third-party bid, with its potential for another Nader debacle, this may be the only way to command Washington’s attention. Many occupiers believe it’s futile, however, because they’d never win against an avalanche of unregulated corporate political spending.

Berger articulates Occupy’s reticence to simply sign on as another left-leaning non-profit.

If Occupy tried to start a left Tea Party, we would be following in the footsteps of several progressive movement efforts that came up short. Howard Dean’s presidential campaign turned into Democracy for America to reclaim the “Democratic wing of the Democratic Party,” the Progressive Change Campaign Committee explicitly references the DCCC, and Rebuild the Dream originally billed itself as the progressive Tea Party. I have worked for each of these organizations and have lots of respect for their work. But unfortunately, none of these projects, despite their many successes, have managed to mount a serious national effort to take out bad Democrats and replace them with good ones. They are constrained by the lack of a grassroots base in many congressional districts and big donors reluctance to fund challenges to Democrats. Even big, collaborative efforts to take out bad Democrats have a relatively poor record (See Sheyman, Ilya; Halter, Bill; or Lamont, Ned).

While I am sympathetic to both positions, and I do believe both men share the same ultimate goal, I believe the answer lies somewhere in between. Harkinson, who too his credit has been one of the few reporters covering the Occupy movement in-depth, misses the ultimate binding strength of the Occupy movement: its members don’t desire to be part of the establishment as is, and fail to see a means of change from within. Rather they view extraordinary pressure from without as a more formidable force for change. Even as he cites Lyndon Johnson as an electoral success, he must also admit that outside pressures exerted upon the Congress and the presidency moved civil rights legislation forward. Johnson himself had made no grand promises as vice president or as a candidate for president in 1964. Much like Franklin Roosevelt so famously called upon those in the progressive movement to take to the streets and rally the masses if the movement sought to see its agenda signed into law. While many of the immediate economic and relief measures passed during the first tranche of the New Deal passed easily, none of the second tranche of New Deal programs–many of which faced opposition from the business community and conservative Democrats–would have been possible without the robust pressure thrust upon Congress by the public. Much of which was drummed up through grass-roots organizing rather than organized efforts to elect individual candidates.

It isn’t simply enough to send a handful of progressive Democrats to Congress in order to “unrig” the system. The system itself will co-opt even the most true-believing of candidates in short order. The vast majority of congressional districts around the country do not lend themselves to radical candidates. However, that is no excuse not to try. Harkinson is correct in that the Occupy movement can not exist as an island unto itself. When opportunities are presented to elect progressive candidates–be they third-party or Democratic–the Occupy movement is foolish not to lend its support. However, I believe the Occupy movement is cognizant of the danger of  what becoming a lefty Tea Party would mean. It would necessarily involve similar a scorched earth approach to policy once its candidates are elected. The Occupy movement would have to design a progressive pledge–formal or informal–much like Grover Norquist and his tax pledge. How then would the Occupy movement handle candidates that once elected do not follow through on their promises? Would it be tricked into running down the rabbit hole of funding candidates to unseat its first-loved candidate indefinitely and in every state?

Insofar as Occupy’s fears of being co-opted by the likes of MoveOn.org and Rebuild the Dream are concerned, it is naive and irresponsible to take a zero-sum approach to cooperative efforts. It is not inconsistent with Occupy’s approach to changing the political system to throw its considerable weight behind campaigns for legislation, repeal of legislation, regulatory reforms and enforcement, and the election of specific candidates. It is obviously true that many in the Occupy movement would become disenfranchised and disheartened by following Harkinson’s advice. Many in the movement might defect outright. However, it has also been my experience that the movement also includes incredibly bright and reasonable people who would not toss out a more measured course of action out of hand. The movement itself has authored several policy and legislative working papers and submitted them to the proper regulatory agencies and congressional representatives. It understands economics and social policy particulars as well as any progressive movement out there. Much of the policy positions of the progressive movements that the Occupy movement shuns are directly in line with its own, and to advocate wholesale abandonment of cooperation–to throw the baby out with the bath water–is quite frankly childish.

Harkinson also argues that rather than to stump for Obama, Occupy should openly support progressive movements and PACs that are campaigning against Romney. The idea is utterly anathema to the Occupy movements methodology, and rightfully so. First, it’s disingenuous. Campaigning against Romney is not significantly any different than openly campaigning for Obama. The two are not mutually exclusive. The goal is not to elect Obama, but rather to force those in power to break down the structures of government that operate in conflict with the masses. To accomplish this goal, it matters not what the party affiliation of the president may be. The Democratic Party has been operating in direct conflict with its stated platform for decades, and electing another Democrat by bludgeoning Mitt Romney isn’t going to change that. The Occupy movement is no more likely to “co-opt” the Democratic Party than it is the Republican Party. That being said, Harkinson is correct in that the Occupy movement must broaden its tactics and embrace a multitude of strategies in order to move its policy and structural agenda forward, and viewing those that it is direct agreement with with disdain is counterproductive.

For his part, Berger’s approach is far too radical, but he sells me on some points as well. I agree with Berger that simply electing more Democrats won’t create the change the country needs. However, it will certainly add oil to the gears. I have steadfastly held to my belief that either a third-party movement or a massive uprising of tens of millions of people is needed to force the political elites to change course, but in the meantime, we must also work toward change that affects the most abused in our society to live better lives. Berger also unfairly attacks many of the progressive movements as failing to elect good Democrats and replace bad Democrats. Here, he misses an obvious reality: it is precisely through movements like Occupy Wall Street that change like that takes place. In order to accomplish the goal of moving the policy agenda to the left, we must have millions of people organized toward that end. Casting aside these movements to go about their adorable little work while the Occupy movement focuses on the real problems society faces is condescending at best. It smacks of Americans Elect, an online presidential nominating method that would prefer not to bother with all the work of building a party and quickly head to the front of the line. The Occupy movement can not have its identity stolen from it unless it allows it to be. Coordinating with other groups is not as dangerous as Berger believes.

Berger also takes a far too extreme tact toward the political structures in the United States itself. He claims of the election of Barack Obama, “the most progressive Democratic nominee of the past 30 years and a Democratic super majority in Congress resulted in relatively little change in American political economy, even during a time of massive economic crisis.” Barack Obama was not by any stretch a progressive candidate, nor did he campaign as one. In fact, he and Hillary Clinton campaigned as moderates, and disgustingly overtly to boot. Berger argues that the political system is designed to respond only to the market. It isn’t the system that responds to the market necessarily, but the failure of the public to create an environment wherein massive hand-outs to moneyed interests would not be tolerated. As such, I agree with Berger in that campaigning for Obama or against Romney does not serve the interests of the public or the Occupy movement. Obama had his shot to react differently to the crisis, yet he did not avail himself of the opportunity. I can not sit here are demand that Berger and Occupy support him because Romney may or may not be worse.

Berger goes off the rails slightly by attacking the presidential and congressional system in the United States as byzantine and outdated. He is rightfully angry that the system failed to respond to the crisis in a way that served the greater good, but it is unclear what is is that he views as the alternative. The system is certainly “prone to gridlock,” but I for one would not advocate for a system wherein the majority is able to rule over the minority carte blanche, with no check on the power of the majority, no matter how disastrous the policies. It is not the sixty vote cloture requirement that creates gridlock in Washington, but rather the public’s failure to create an environment wherein consequences flow from continued inaction and obfuscation. It is entirely likely that both the House and Senate will be majority Republican in 2013. The political structures–short of gerrymandering–have nothing to do with it. It is the voters inability to inform themselves and organize effectively. Berger is also rather lofty in his description of Occupy. Occupy does not dwell in the rarefied air of being the only movement or group speaking about structural change. Many of the organizations he lauds yet shuns do precisely that.

Berger is correct that Occupy must keep up its efforts to exert pressure on the system as a whole. Harkinson is correct in that in doing so, it is not indispensable to operate alone. Berger is correct that bogging down in electoral politics will lead to Occupy losing sight of its greater goal. Harkinson is correct in that involvement in electoral politics is part and parcel of the change that the Occupy movement seeks. Berger is off base in his belief that the very structures of democratic and parliamentary government must be shaken to their core.  Harkinson is minimally too optimistic in his view of the current electoral environment and the Democratic Party. Berger–much like myself as a younger man–wishes to break up the system and cause chaos which will reverberate across Wall Street and the powerful everywhere. I will not begrudge him this, nor would I ever seek to quell the enthusiasm of the young. It has been at the forefront of every important political battle the world has ever known. Harkinson however, is far too practical in his approach, evidencing his age–likely much closer to mine–but yet the nuts and bolts of change must be assembled, and level heads are required in order to do so.

Berger cites womens’ rights, civil rights, and environmental movements as electoral victories, and concedes that the electoral arena must not be ignored. Each victory in the battles for equality he cites ultimately culminated with a legislative victory, and each victory involved concurrent massive public effort and massive legislative and electoral pressure. In other words, precisely in the middle ground between the two men.

“For the first time in 75 years, we are experiencing a protracted recession due to a lack of demand,” Summers said during a speech to the Center for Global Development in Washington. “It’s now been about five years since the recession began and it appears the stagnation will be with us for another long interval.”

“There is not enough demand,” Krugman said during an appearance at the Economic Policy Institute, where he gave a talk to promote his new book, End This Depression Now. “We focused a lot – too much – on the financial sector’s problems. Yet that is long since gone and we still don’t have a steady recovery. That tells us the crisis was far more about household debt.”

Summers chose to focus on fixes to income inequality through progressive taxation as medicine for the demand problems in the United States, while Krugman focused on retracing the cuts in government spending at the federal and state level in order to increase expendable income, employment, and certainty. Both men are correct. Summers is correct in that if the United States is to allow the tax system to remedy income inequality rather than to implement tight regulation and limits on executive pay and compensation, then individual–namely wealthy individuals–and corporate tax revenues must necessarily increase. He also points out, falsely I believe, that much of the job losses caused by technological innovation in the manufacturing sector are to blame for much of the income inequality, and that nothing can be done to reverse that trend. Krugman is correct in that it was wholly irresponsible to react to a short term protraction in government revenues by slashing millions of public sector jobs. By failing to recapitalize state and municipal coffers, the federal government has exacerbated the huge demand problem and contracted government tax revenues. Krugman also points out that the long slog of short term fixes to the tax code and stop-gap measures on infrastructure funding have created an uncertain contracting environment for federal and state agencies, leading to the cancellation and procrastination of major improvement and repair projects. In doing so, the government has further dragged down consumer spending, employment, and government revenues.

The two had also squared off last November in a debate sponsored by the Munk Debates, sponsored by the Canadian Aurea Foundation. In this prior exchange, it appears that Krugman got the best of Summers.

Economically speaking, the Nobel laureate largely had the better of the technocrat. We’re already four years from the beginning of the U.S. recession, and we’ve certainly been going nowhere over that time — the question isn’t whether the economy is lost, so much as whether there’s something which can help it back onto its feet in the next few years. As Rosenberg said, if you look at employment, or the stock market, or median income, or house prices, all of them are back to where they were years ago. Things might improve in the future, but they sure aren’t healthy right now. And Japan is proof that economies can stagnate more or less indefinitely — it’s now, as Krugman pointed out, 19 years into its “lost decade”.

Summers on the other hand not surprisingly offered boasting support for the economic achievements of his former boss Barak Obama. He also went as far as to voice some support for the idea of income inequality.

But here’s the thing: Summers really is a formidable debater. He met Krugman’s gridlock argument head-on, saying that Barack Obama’s legislative achievements in 2009-10 were greater than those in any two year period since 1965-66, or possibly even 1933-34. And in his concluding remarks, he declared that “things are never as bad as you think they are when things are bad”, adding optimistically — and accurately — that in politics, “the transition from inconceivable to inevitable can be very rapid”. Summers’s optimistic sentiment went down well with the well-heeled Toronto crowd: people who are wealthy and healthy and happy, like the Munk Debate audience, tend to be attracted to arguments saying that there’s no need to feel guilty or fearful.

Summers also tried to defend inequality, at least in part, by saying that “suppose the United States had 30 more people like Steve Jobs” — that, he said, would be a good thing even as it increased inequality. “So we do need to recognize that a component of this inequality is the other side of successful entrepreneurship; that is surely something we want to encourage.” This might have been received better had Summers not earlier praised America, while pointing to Bremmer, as “the only country in the world where you can raise your first $100 million before you buy your first suit and tie”.

A  healthy mix of both men’s proposals is required to lift the United States economy from a potential ten or more years of stagnant growth and high unemployment. Marginal tax rates must be increased across the board with a heavier weighting toward the top earners in order to grow government revenues and allow it to send stimulus into the economy. The government must also borrow while interest rates are at historic lows in order to prop up state and local governments to constrict the public sector job bloodletting. The Federal Reserve must abandon attempts to prop-up the banking sector and force equity to flow through the large financial institutions and into the hands of the public. The Federal Reserve must also set aside fears of higher interest rates and inflation as cause for inaction and focus on increasing employment, as no evidence exists to support the fears. The government, in conjunction with the business community, must implement job training  and education programs in order to fill needs that currently and will exist, and prevent the millions of long-term unemployed from creating a drag on the economy for decades. Germany for example, has a wonderful dual education-job training system that through agreements with for-profit business has been able to maintain extraordinarily low unemployment throughout the recession.

Consumer spending accounts for 70% of the United States economy. It doesn’t take a Harvard business degree to conclude that if real wages continue to drop and income inequality continues to increase, that the economy will be unable to sustain growth going forward. Without disposable income, there is no money to spend on the goods and services that are so vital to maintaining the growth that has been enjoyed in the United States for generations. The United States has a lower debt to GDP ratio that the United Kingdom, France or Japan, and just marginally higher than that of Germany. Contrary to public consciousness, the United States is not on the eve of some public debt crisis. However, it certainly will be if it continues to reduce government revenues by embarking upon policies that guarantee high unemployment and lower tax rates.

Until recently, consumers had been deleveraging responsibly since the outset of the financial crisis. Fears of economic and employment uncertainty have encouraged the people to pay off debt and attempt to save more than they had in the recent past. Lax lending standards and easy credit tightened considerably following 2008, and it is only now beginning to loosen for the average citizen. It is downright fantastic that Americans have seen fit to pay down high interest rate credit cards, auto loans, and refinance their mortagges when able. However, every dollar now spent to pay down debt is not being spent in the larger economy. It isn’t responsible policy to continue to expect the middle class and the poor to live life on the economic edge in order to provide the consumption necessary for growth. Without government stimulus and spending to make up the difference, while the government also fails to offer a counterweight to reductions in spending due to unemployment, the economy flounders, and will continue to do so until structural changes are made.

Neither Democrats or Republicans are promising any large scale recapitalization of state and municipal budgets, or increased spending on infrastructure. The Democrats fear being labeled as irresponsible spenders in the current political atmosphere of cut-now-ask-questions-later, and the Republicans are hell bent on destroying the economy while President Obama is in charge.  Certainly if Mitt Romney is able to capture the presidency this November, he will be left with no choice but to allow the economy to crumble further into dust under the policies proposed by Paul Ryan and his fellow economic Darwinists in the Congress, or save his own hide by corralling his party and releasing cash into the economy. If President Obama is reelected, he will face much the same obstructionism he currently faces, with little chance of convincing Republicans in the Congress to offer him a lifeline unless public sentiment is such that the conservatives  have no electoral choice.

It is a recipe for decades of stagnant growth and continued reductions in government programs, infrastructure spending, school funding, park and wildlife preservation, government efforts to maintain clean water and a safe food supply, higher education funding, and funding for advanced projects such as high speed rail, solar, wind, and geothermal power. It will also exacerbate crime and overload the prison system. Medicare, Medicaid, and Social Security will have to be cut. The only means through which this situation can be avoided is by following the advice–gulp–of both Mr. Summers and Mr. Krugman. Taxes must be made more progressive and the government must borrow and spend to provide the economy with life support until it can breathe on its own. Structural changes must be made to the means through which we train and educate future workers. Income inequality must be addressed through the tax code, or alternatively, strict regulations must be put in place to limit worker-to-executive pay ratios.

To do otherwise practically guarantees that future Professors Krugman and Summers will be holding graduate seminars in exclusively private universities in order to study the United States and its lost century.

For the next hour, the donors relayed to Messina what their friends had been saying. They felt unfairly demonized for being wealthy. They felt scapegoated for the recession…

One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief….

“This administration has a more contemptuous view of big money and of Wall Street than any administration in 40 years,” [one] donor said. “And it shows.”

Much has been written about the vitriol felt by the wealthy and Wall Street toward Obama. It has been opined that the explanation for the hatred is rooted in his rhetoric concerning the wealthy and their need to pay their fair share of taxes. Obama has indeed been fond of touting the virtues of bottom-up economic growth rather than trickle-down. Another theory is that Wall Street is incensed by Obama’s attempts to promulgate new regulation following the financial collapse brought about by the very same folks now demanding an apology. The most simple explanation recently offered for the consternation of Obama claims simply that Wall Street insiders are nothing more than spoiled brats who whine when any barrier is placed between them and stealing the hard-earned money of every day Americans.

This episode if particularly sad because the current administration has done nothing but accommodate Wall Street at every turn. It refused to break up any of the large banks once it became clear that many in the group were no longer financially solvent. It refused to offer homeowners any real relief if any share of that relief would come from the hide of Wall Street. It capitulated to Wall Street in maintaining extraordinary capital inflows of taxpayer funds into the large banks for what has now been nearly four years. It has negotiated widespread immunity from civil action on behalf of Wall Street with all but one of the states’ Attorneys General in exchange for chump change. It has paid only lip service to any real attempt to reduce the principal owed on tens of millions of underwater homes. The list of charity provided to Wall Street is indeed lengthy and diffuse.

Back in April of 2009, Obama famously said that “My administration is the only thing between you and the pitchforks.”  He could not have been more accurate in his description. Yet, at this watershed moment, when it should have been abundantly clear to Obama that no amount of largess would satisfy them, he chose to play the role of referee rather than to pick up the ball and dunk it on behalf of the American people. The period since has been littered with obfuscation and outright malice toward Obama from Wall Street. Once it became obvious to Wall Street that Obama was going to pursue a course of mild regulation, wealthy power brokers all but cast aside any plans they had to support the President’s reelection efforts. This has borne itself out, as Wall Street has donated exponentially more money to Romney than to Obama. Wall Street hasn’t maintained its status-quo methodology of hedging its bets, rather it has gone all-in on the Republican candidate. As recently as 2008, Wall Street was goo goo for Obama, donating nearly 50% more to him than rival John McCain. This time around anger has translated to a windfall for Romney.

And in this election cycle, Wall Streeters didn’t have to look far for a more natural fit. Mitt Romney founded a leading private-equity firm, Bain Capital, and he promised to repeal Dodd-Frank altogether. By late fall, invitations to some of Romney’s New York fund-raisers were carrying the names of dozens of financial executives, many of whom knew Romney personally or had closed deals with him during his years at Bain. Some Romney donors started asking their Obama-supporting colleagues to Romney events just to tweak them.

Wall Street donors were also emerging as the financial engine behind Restore Our Future, a super PAC founded by former Romney aides. Even as Obama outpaced Romney in traditional fund-raising, Restore Our Future, exploiting the Supreme Court’s Citizens United decision and subsequent rulings and regulations, was bringing in millions of dollars in unlimited checks from hedge-fund and private-equity magnates.

By the end of February, the group had raised more than $43 million, almost half of it from Wall Street — more money than Obama raised from the industry during the entire 2008 campaign. Paul Tudor Jones was among the group’s donors, cutting Restore Our Future a $200,000 check in December. At the same time, a super PAC founded by former Obama aides, Priorities USA Action, was struggling, raising less than $5 million, much of it from Hollywood and unions. The Democratic group faced a particularly cold reception among Wall Street Democrats, some of whom feared any money they gave would be used to finance attacks on their own industry.

With the passage of the 850 page Dodd-Frank Act and the thousands of pages of analysis required by the act, Wall Street abandoned Obama entirely.

“I think it’s an unfixable relationship,” one Democrat involved in planning the March 1 fund-raisers told me this spring. “They hate him. They really, really do. They hate all the Democrats.”

Notwithstanding the meager reforms included in the legislation, Wall Street viewed it as a direct assault to their bow, and has fought back by bankrolling conservative candidates. Ultimately, the reform serves in some measure to prevent Wall Street from imploding itself or the larger economy. However, when a sector of the economy has an overt guarantee from the government to be rescued should it become unstable, no regulation is seen as responsible or necessary.

Obama does have the right instincts. It has been widely reported that he and his inner circle have not been willing to coddle and cavort with business power brokers as the Clinton’s had. He apparently is uncomfortable in small fundraising groups of Wall Street executives. He’s right to feel as he does. Wall Street and business executives don’t need his help. They don’t need him at all, they want nothing more than guarantees that he won’t overly restrict their efforts to continue to extract wealth from the economy for themselves. However, beginning in 2009 and continuing to this day, he has made poor decisions regarding which side to support in the war between banks and Wall Street and the American people. His rhetoric falls flat on many as it has become obvious that it will not be backed-up by policy initiatives. The administration has continued to funnel trillions of dollars though Wall Street in hopes that some measure of the riches would find its way to Main Street. It hasn’t happened.

Yet Wall Street despises him nonetheless. Had the President made the decision to allow several of the large banks to be broken apart, forced lenders to cram-down mortgage debt, and prosecuted those responsible for much of the fraud that caused the collapse, Wall Street would rightfully abhor him, but he would have the support of the people. In choosing  to capitulate to Wall Street from the very beginning, he has the excited support of neither.While it is unlikely that Obama will deliver a national save-the-rich speech anytime soon, he is almost certain to strike some deal with Wall Street that calls off the dogs.

Looking at some examples from Obama’s first term we can see the limits of political pragmatism and general rigidity. The most glaring example is his reaction to the financial crisis. His policy decisions following inauguration through today are generally accepted by his progressive base, as well as most rank and file Democrats, as being far too friendly to Wall Street and the financial sector generally. Much time and effort has been spent ensuring the solvency of the banking sector, while little or no help has been offered to those most affected by the crisis. Experts have opined that it is precisely the President’s pragmatic rigidity that has contributed to his failure to move toward a more progressive fair approach in addressing the depression. Interestingly, while disappointed, neither the Democratic base or independents have been willing to take Obama to task over his  continued willingness to assist Wall Street. Even while Obama has been reported to have a great degree of contempt for Wall Street and apparently views the fruits of its labor generally valueless, he has bent over backwards to help it. Even when pushed by the public and Congress to pass some sort of financial reform package, the result was an impotent regulatory regime in the name of Dodd-Frank, and facially attractive but only marginally  protective credit card and other consumer protection reforms. Yet Wall Street still views him with extreme and venomous derision.

Mitt Romney however will not be offered the kind acquiescence of progressives, rank and file Democrats, and independents, if he is to pursue similar policies of Wall Street philanthropy. He will be challenged continually by the Occupy movement as well as left-leaners on the ground. He may even face some push-back from the generally Wall Street friendly Democratic caucus in both houses of Congress. If Mitt Romney is to attempt to hand over trillions of dollars to Wall Street and the financial sector should the economy sink back into deep recession, he will be met with much greater protest and defiance from all political spheres, most notably because his own party seems weary of defying its Tea Party base in shoveling more cash into the hands of the bankers. With Mitt Romney we could actually find ourselves with more thoughtful policies toward the financial sector and more accommodative policies toward those suffering from its recklessness, as policy proposals that do not jive economically will be hard to sell. Given Mitt Romney’s movement on issues like health care, women’s rights, immigration, gun laws, the Bush tax cuts, climate change, LGBT rights, and stem cell research, it isn’t all that difficult to envision a Romney Presidency that if pushed by the public, would be far more flexible on policy. As Governor of Massachusetts, Romney refused to sign Grover Norquist’s ridiculous tax pledge, raised fees across the board in order to balance the budget, signed a permanent assault weapons ban, and he passed near universal health care. He also fought same sex marriage, pushed for a death penalty bill, opposed prevailing wage and local labor contract provisions for government projects, proposed indexing the minimum wage to inflation, fought providing in-state tuition to undocumented persons, and refused to take part in real programs to regulate greenhouse gases.

His opponent, President Obama has accomplished some significant change since 2009. For example, he was able to pass a relatively small stimulus package–the American Recovery and Reinvestment Act, he signed the CARD Act, he advanced womens’ equality in pay in the workplace, he established the Consumer Protection Financial Bureau, he saved General Motors and Chrysler from bankruptcy, he advanced LGBT rights, and he increased funding for alternative energy technology. He also signed or ordered several other smaller policy changes that will have a lasting effect on the environment, government, and the lives of individuals and families for decades to come. However, he has not removed the armed forces from the Middle East and Asia, he has not ended many of the unlawful practices at the CIA, he has not ended–rather he expanded–the wiretapping and surveillance of American citizens, he has not closed Guantanamo Bay Prison, he has not prosecuted a single executive of any of the corporations responsible for the financial collapse, he did not break up a single large bank, he has not pushed for meaningful loan modifications for the tens of millions of homes that are underwater, he worked with the states to limit the liability of the banks stemming from foreclosure fraud, he has not pushed to legalize medical marijuana, he tinkered with the funding of Social Security, he refused to allow the Bush tax cuts to expire, he has not pushed for significant student loan reform, he has not prosecuted any of the executives responsible for the BP oil spill, and he has not attempted to reign in offshore oil drilling. Essentially he has maintained the status quo, with a tweak here and there to throw red meat to his base. Yet rather than extend his hand in solidarity with the majority of Americans, he has instead chosen to allow himself to be cast as a socialist, while championing policies that  are nothing of the sort.

As the election draws near, the media narrative will certainly evolve into a disingenuous discussion of the perceived cavernous differences between the two candidates. The two candidates certainly have profound policy disagreements at the present time, but Romney just completed a grueling primary race in which he was forced to appeal to the far reaches of his party. In November, Romney will be competing with Barack Obama for the vote of each and every American, be they left, right, or center. Once elected, if elected, Romney will immediately form a team to begin planning his run for reelection in 2016. In 2016 he will again be competing for the majority of votes in each of the states, and not simply from the fringe of his party. The Grover Norquists and David Kochs will not suddenly pull back monetary and public support from Mitt Romney if he doesn’t campaign in lockstep with their stated principles. The alternative is to provide buoyancy to Barack Obama, and that is not an option. Ultimately, the two candidates are not terribly different on policy. Both candidates support Wall Street and recapitalization. Both candidates support rigid immigration policies. Both candidates support continuing the war on drugs to varying degrees. Obama has shown a willingness to support environmental research, while Romney’s penchant for practicality and opportunism may push him into taking on the highly unpopular oil companies. Neither candidate has proposed seriously reforming the corporate tax code. Neither candidate will risk embroiling America in a protracted and bloody conflict unless absolutely necessary. Neither candidate is willing to roll back the authority of private and public entities to spy on American citizens. Neither candidate is proposing to seriously regulate the cost of health care.

Barack Obama has been President for nearly four years and we’ve been able to develop a fairly exhaustive understanding of where he will position himself on nearly every issue. He will approach questions that he has little experience with unbreakable pragmatism. He will listen to his advisers and not back off his position once he has made his decision, rightly or wrongly. We can’t say the same for Mr. Romney. What we do know however is that Mitt Romney will say anything to get elected, and once elected, will do just about anything to get reelected. In doing so, the policy framework growing from a Romney Presidency could as much resemble that of Barack Obama as of George W. Bush. The unanswered question is whether the public can exert significant enough pressure upon him to sway his opinion and convince him of the political portentousness of defying them. If Mitt Romney believes that plastering 1,000,000 acres with solar panels, farming algae as fuel, raising the minimum wage, breaking up failing banks, drastically writing down mortgage debt, and pulling out of Afghanistan will win him another term and strengthen the economy, I’d be willing to bet he’d be on board in a hot second. He won’t be running against Rick Santorum anymore.

It wouldn’t be the first time that a Republican President, when pushed, signed or supported progressive legislation. President Nixon supported the ERA, implemented the first federal affirmative action program, over Republican dissent, as a convert to the environmental movement he established the Environmental Protection Agency (EPA) and signed the Clean Air Act of 1970, he created the Occupational Health and Safety Administration (OSHA), and proposed a requirement that all emploees be covered with health care plans by their empoyers. President Reagan worked with Democrats to thoughtfully reform Social Security. President George H.W. Bush worked with Democrats to raise taxes, he reauthorized the Clean Air Act, and he signed and supported the Americans with Disabilities Act (ADA), the most pro-civil rights legislation passed in many years. President Eisenhower built the interstate highway system and warned against the unbridled and unchecked growth of the military industrial complex.

The political environment is certainly more toxic than in recent memory, but the current toxicity is not certain to continue. Political fight or flight is an overwhelming motivator. We will have a choice between two practical political animals this fall. Both men are intelligent. Both men lack idealism or ideology. One man is a known quantity and one man is a wild card. So, who will it be?

While the banks have moved significantly from tightening lending standards across the board in 2008, to a toes-in-the-water approach to easing lending standards following the crisis, it is only a matter of time before banks begin to ease standards considerably in an effort to boost profits. American households did a great job of paying down debt during the early part of the financial collapse, reducing household liabilities to $865 billion from $958 billion between 2008 and 2009, according to the most recent Federal Reserve G.19 report.

It will certainly be difficult for consumers, whose spending accounts for 70% of the American economy to resist the urge to return to the spending frenzy of the mid 2000′s, but resist it we must. First, it isn’t sustainable. A modern economy can not survive if the vast majority of its economic activity surrounds purchasing goods and services from foreign companies and eating fast food at the local hot shop. Second, it isn’t responsible. With fewer and fewer employer sponsored options available for funding retirement, and health care cost increases, over-leveraging household debt is a recipe for disaster in old age. Moreover, it isn’t fair to your fellow citizen, who will ultimately have to pick up the tab for your health care costs and basic needs.

According to the Federal Reserve G.19 report, consumer debt has risen from the low of $793 billion during the crisis to nearly $800 billion today. With banks and credit union lending standards loosening, that number is certain to rise quickly. We must not forget what it was that fueled the mess that we’re currently in and accept our measure of accountability for it. A return to credit card debt and rampant consumer spending is not the answer. Ignore the news reports you hear begging you to spend your hard earned money to support the greater economy. The American economy requires a structural change from the floor to the ceiling, and much like the fast food that the television demands that you eat, increased consumer spending will fill a short term craving but leave you hungry and sick down the road.

She called upon Fannie Mae and Freddie Mac, both of which are overseen by the Federal Housing Finance Agency, to reduce the principal owed on homes, whether the homeowner is in arrears on payments or simply underwater and current in their obligations. Unfortunately, FHFA boss Edward DeMarco has steadfastly maintained that he will not support policies that allow for widespread mortgage write-downs. Mr. DeMarco was to make a decision by April 30, 2012 whether or not he would move forward on a plan under Obama’s HAMP program to allow principal reductions on properties backed by Fannie Mae and Freddie Mac where the mortgage holder is seriously delinquent. Unfortunately Mr. DeMarco recently announced that he would ignore the deadline, imposed by Congress, and continue to study the problem.

The HAMP program reductions that are under consideration by Mr. DeMarco would only affect about 10% of all underwater mortgages backed by Fannie Mae and Freddie Mac because homeowners who are underwater but continuing to make timely payments are not eligible for reductions. Mr. DeMarco has said in the past that he fears mass purposeful mortgage delinquencies if the program is permitted to move forward, a prospect that has not been supported by evidence. The likelihood of damaging ones credit rating and potentially losing a home in exchange for a principal reduction that may or may not come at all has not convinced any significant number of borrowers to stop making their mortgage payments.

The Obama administration has been reported as putting pressure on Mr. DeMarco to make a decision allowing the contemplated principal reductions to move forward, but I am dubious as to how extraordinary the insistence has truly been from the White House. The administration has offered a deluge of failed and ill-conceived fixes to the mortgage mess since 2008, none of which truly aimed at forcing the banks and Fannie Mae and Freddie Mac to allow principal write-downs of underwater properties. A wisely constructed plan by the FHFA and the administration could easily limit any reductions to those homes actually purchased during the fraudulent run-up in home prices, and those homes who value exceeds that of the original mortgage, excluding refinancing undertaken to make additional unnecessary purchases. Configuring a program to address this problem and stimulate the economy would not be a herculean task.

It is wholly objectionable that the already incommensurate principal reductions proposed by Congress and the President are being insubordinately rejected. However, it should come as no surprise to anyone given the administration’s posture concerning this problem from the very beginning. Setting aside the earlier mentioned waterfall of half-assed programs previously concocted, the furthest the President has been willing to travel down the write-down road has been to propose federally assisted and voluntary refinancing of a small number of homes under lower interest rates. Not a single legitimate attempt has been made to reduce the principal of homes currently in repayment and dramatically underwater. Offering a homeowner the ability to pay twice the value of a home under a lower interest rate is no program at all. It is an insult to each American who had their tax dollars spent drowning large banks and mortgage institutions in liquidity in order to ensure their solvency.

So, Mr. DeMarco, no one is surprised by your decision. Further, only a fool should be surprised by the administration’s lack of movement on this issue. You’re a homeowner, not a bank, and as such, you don’t matter. The most logical course of action is to walk away from any home that is seriously underwater, because help is not coming.

Christine Legarde was right to call upon the American government to offer significant principal reductions to underwater homeowners. She is right because it will boost the American economy, setting free cash to be spent consuming goods and services and alleviating business and personal uncertainty. She is right because it will boost the world economy. She is right because it represents remuneration for the fraud perpetrated upon the people. She is right, quite simply, because it is the moral thing to do.

This is nothing short of a sea change. As University of California-Berkeley economist Brad DeLong notes, until not long ago, “businesses would hold on to workers in downturns even when there wasn’t enough for them to do—would put them to work painting the factory—because businesses did not want to see their skilled, experienced workers drift away and then have to go through the expense and loss of training new ones. That era is over. These days firms take advantage of downturns in demand to rationalize operations and increase labor productivity, pleading business necessity to their workers.”

Real wages and total compensation have also eked along just barely keeping pace with inflation recently, continuing a long term trend that has continued since the 1970′s. While it is true that when total compensation–wages plus benefits–is measured and adjusted for inflation, workers compensation has indeed grown more quickly than inflation, the ultimate effect is less money in the pockets of workers, fewer retirement options, greater debt, increasing number of multi-generational households, and a lower standard of living generally. It is also true that the employer foots the bill for much of the benefit cost, but the added investment ultimately benefits neither the employee or the employer.

Productivity has vastly outpaced real wage growth over the past two decades and the prediction going forward is that the downward pressure on wages will continue.

The income story in America is deeply troubling. Inflation-adjusted average hourly earnings for production and nonsupervisory workers (a category that encompasses 80% of the workforce and leaves out higher-paid managers and supervisors) rose by an anemic 0.1% a year from 1979 to 2007, according to the EPI. A potent combination of economic and social forces has conspired to keep wages down for most workers with the exception of a brief period of white-hot economic growth in 1995-2000. Private-sector unions have largely disappeared. Companies have outsourced all kinds of tasks to cheaper places overseas and low-cost contractors at home. The upward spiral in health-care costs has eroded wages.

What the downward spiral of real wage growth means for the economy is simple–stagnant growth. With less real buying power remaining after fixed costs, retirement savings, and debt service have been factored in, workers will not be able to purchase the necessary goods and services in order to sustain growth in the larger economy. The economy has shown evidence of this recently, with orders for durable goods down and recent manufacturing spurred by a short term need to increase inventories also now trending downward.

I do maintain a certain level of sympathy for employers however, as costs to provide medical insurance continue to outpace inflation by nearly 7% on average. Each dollar spent on inefficient and expensive health care plans is a dollar necessarily unable to be spent on wages employer sponsored retirement plans. While there is no guarantee that employers would pass along any health care savings to the employees should costs somehow be reined in, under the current system employers have not been provided with that option. Obviously, as labor supply outstrips labor demand, employers lack any real incentive to do so even if given the choice, but at some point the labor supply will more evenly mirror demand, yet it is unlikely that reductions in health care costs will have come to pass in the interim.

If you are like me you have a twitter account. If you are are interested in finance you probably also follow several respected economists using that very same twitter account. If you take the time to track back and read the vast majority of posts and links to all of the mind-numbingly dense economic data–charts, charts of charts, charts within charts clarifying other charts, bar charts, line graph charts, area charts, government labor data, Federal Reserve data, Census data, articles, studies, blogs, scholarly publications, and on and on–you will find a dearth of discussion concering real wage growth and inflation. You will be peppered with astonishing amounts of information concerning inflation, unemployment, productivity, compensation costs, among other data sets, but you will not find a bona fide widespread discussion among mainstream economists surrounding real wages and productivity.

Unfortunately the trend should surprise no one. It is a consequence of decades of deregulation, attacks on public sector workers, attacks on labor unions,  and above all an intense campaign by corporate American to manitain the myth of Horatio Alger and the American Dream. Look, I even capitalized it, “American Dream.” I am not certain that it is required, but my very first instinct was to make sure that everyone is able to distinguish the idea from each of the other meaningless words surrounding it. The fact of the matter is that as worker productivity has increases and wages have stagnated, the profits of the employers have not showed a correlative decrease. In fact, profits have increased, as has executive pay and compensation. In other words, corporate America has used your otherwise laudable American work ethic to pound you into dust.

You know the feeling–guilt for not completing a task or set of tasks, no matter how unreasonable. The feeling of anguish at the thought of calling in sick. The overwhelming barrage of conflicting information you are faced with when you dare demand to have a modicum of work-life balance. The idea that working two, three, or four jobs is admirable and worthy of respect and recognition. You’re a hero, because that is what Americans do–we get up every day to make someone else filthy rich and we’re damn proud of it. It has all been orchestrated to brainwash you into believing that you are a failure if you do not do whatever is required of you by your employer. Astonishingly, corporate America has been able to maintain this myth even as it demanded more and more from you for less and less in return. It’s wrong and it has to stop.

The Republican position is uniquely barbaric. Assuming no legislative change from status-quo, the top wage earners in the United States in 2012 will pay a top rate of 35% on incomes over $388,350 and 33% on incomes roughly over $218,000. Comparatively, most European nations carry a top tax rate of over 40%, and significant sales taxes and luxury taxes. Germany has a top income tax rate of 42%, and is currently the only thing standing between Europe and total economic destruction, rightly or wrongly. The Republicans are demanding not only that the top tax rate not be raised, but rather that it and other taxes affecting top earners be lowered dramatically, to 25%. Each of the lower marginal tax brackets would be lowered to 10%. They offer no compromise on this position.

Democrats on the other hand are standing pat on the position that taxes should be raised to pre-Bush levels for top earners of as high as 39.6%, and proposing that marginal tax rates for lower income earners not be changed from current levels for families earning less than $250,000 and individuals earning less that $200,000. There is also a surtax on unearned income at the higher income levels of 3.8%. Further, any individual earning more than $1 million would pay a minimum income tax rate of 30%.

Setting aside any debate concerning the United States’ arcane corporate tax code, neither party is being reasonable. First, the Republican plan leaves the government $6.2 trillion short on revenues and would necessarily lead to drastic cuts in discretionary spending, be it from programs boosted by Democrats, or from Defense. Second, the Democratic proposal, although much more equitable, also leaves in place the irresponsible Bush tax cuts for lower wage earners. It isn’t smart economics or smart politics to propose tax changes that affect only a small group of taxpayers. Moreover, Obama and the Democrats had their chance to avoid this fight altogether in late 2010. With the Bush tax cuts set to expire, they instead chose to negotiate with the Congress for a two-year extension. That decision was neither politically smart or economically responsible. With deficts almost certainly to be a more resounding issue during the 2012 campaign than tax rates, the Democrats, primarily out of fear, intentionally exacerbated the deficit by signing the 2010 agreement, playing directly into the Republicans’ wheelhouse. Allowing the Bush tax cuts to expire for everyone would have been a much easier political sell for the President and Democrats if they had painted the Republicans as unreasonable and focused on the shared sacrifice inherent in allowing a return to Clinton era rates. Instead, Democrats must fight the battle battle again during an election year.

Income and other taxes are the mechanism through which we fund the necessary spending of the federal government. The tax code is not the proper conduit through which to remedy wage disparities, working conditions, and income inequality. The proper method for addressing those problems in through the enactment of statutory regulation and enforcement of current law. Whether or not what we receive in return for our tax revenues is also not properly addressed by the tax code. The tax code should simply represent a fair allocation of the public burden upon those subject to its various assessments. In cases where it becomes necessary to raise revenues to meet the payments due on programs and expenses legally required by passage of laws, increases in tolls should be allocated in an equally equitable fashion.

Ultimately that is what the current tax debate is all about–different perceptions of fairness. The Republicans assert, falsely, that cuts to high income tax brackets will create jobs and that placing too high a burden on high income earners is inherently biased because it is precisely these high earners that allow the rest of us to exist at all. The reality is that the cuts will not create jobs. The more logical explanation for their position is a desire to reenumerate those who fund their campaigns. They serve one master. The Democrats on the other hand serve two masters–their progressive base and those who fund their campaigns. Arguably a more precarious tightrope to walk. As a consequence, the Democrats must please their base by proposing tax policy that places a heavy burden on those who own the vast majority of the wealth. On the other hand, the Democrats must not place too high a burden on those earners, lest the dogs of war be unleashed upon them by the wealthy.

The Republican tax plan also has as part and parcel of its structure an extraordinary reduction in revenues that must be offset by spending cuts. The spending cuts will undoubtedly come from the hides of those on government programs such as Medicaid and Medicare. As such, the tax plan lacks credibility. As I opined earlier, the tax code is not to be used as a back-door technique to accomplish policy goals. The prior commitments made under government programs are in effect a bill that government must pay because it has promised to do so, and any tax plan that can not fairly be estimated to meet that burden should not be taken seriously. It is also disingenuous to continue to treat capital gains as some special carve-out in the tax code. Capital gains represents real money and real income, and should be taxed as such. It is not a genuine offering.

The Democratic tax plan is also irresponsible. It is not an efficacious position to take that high income earners should have their taxes raised while middle and lower income individuals and families should not. It isn’t responsible to those it claims to represent to propose that capital gains rates be raised only marginally. The Democratic plan also proposes to remove subsidies from industries it views as unfriendly and retain subsidies for those industries that it supports. The tax code is no place to subsidize any industry without an open and honest discussion of the supposed benefits of doing so. The Democratic plan will also offer some extension of the Social Security payroll tax holiday.  The Democratic Party should never have toyed with the program to begin with, and in doing so it chose politics over policy. However, obviously, with fairness as your guide, the Democratic tax plan represents a more scrupulous and benevolent offering than the Republican farce.

The reality is that the best possible scenario for the American people–given the current reactionary posture of the Republican Party–is for neither party to get its way. Marginal tax rates would revert back to Clinton era levels and drastic funding cuts to government programs would be avoided. The more likely outcome is some mix of Democratic and Republican proposals, that continues to leave the government underfunded. Again, playing directly into the hands of the Republicans. Neither party is being honest with the American people concerning the tax debate. While the Democrats have the high road on fairness, the Republicans have the high road on transparency.

But we who believe with Uygur (who believes that campaign finance reform is the largest issue facing American politics) must recognize that waiting is not costless either. The nature of campaign spending in the two elections since Citizens United has changed American politics fundamentally. After this election, that change will seem normal. The outrage that now courses through this Republic — on the left and at least the silenced right (squashed by four to one spending) — will fade. The idea that 196 Americans — the .0000063 percent — can contribute close to 80 percent of super PAC expenditures will seem ordinary. The tiniest slice of the 1 percent will then gladly accept the role of funding America’s elections, in exchange for the continued acquiescence by the rest of us — acquiescence in its dominant role in American politics, and because that role has been privately, not publicly focused, the continued plundering of our children’s futures.

If we let this issue go unremarked now, we could well pass a point of no return. The new normal is too profitable for those who control our government. Lobbyists can now promise clients triple digit returns on lobbying investments — what rational CEO would invest in a better mousetrap when more lobbyists on Capitol Hill promise more profit? And when the average salary increase for moving from the Hill to K St. is 1,452 percent, what rational congressperson is going to make it her cause to end the corruption that is this system?

We cannot afford this silence now. We can’t afford to wait. We must find a way to put this issue into the center of this presidential campaign. And the only way to do that just now is the most misunderstood movement in this election cycle so far — Americans Elect. (emphasis added, content not in original)

…

But the right answer here is not easy. And it begins with a recognition that we all must accept: America has lost the capacity to govern. By handing over the funding of elections to the tiniest slice of the 1 percent, we have guaranteed that any important policy choice can be blocked by a fraction of that tiny slice of the 1 percent. There will be no climate change legislation. There will be no simplification of the tax code. Health-care costs will not go down. Wall Street will be bailed out again. You pick your issue. Here is the fact: Our government hasn’t the ability to decide any important question of governance sensibly. And it will remain that way until we find the will to end this pervasive system of corruption.

Americans Elect claims:

Americans Elect is a “2nd way” to nominate a President, not a traditional 3rd party. Our process is open to any qualified candidate and any registered voter—no matter their party. We have no ties to any political group—left, right, or center. We don’t promote any issues, ideology or candidates. None of our funding comes from special interests or lobbyists. Our only goal is to put a directly-nominated ticket on the ballot in 2012.

I am certainly tempted to entertain the notion that because no other third party or so-called “alternative” movement has been able challenge the status-quo in the United States and our two-party system, that I should support Americans Elect on grounds of principle alone. I have in fact registered on the site, completed the questionnaire, and made my opinion clear. I have done the same with the Justice Party. I have not shied away from the possibility that Americans Elect could somehow grow into a serious challenge to the Democratic and Republican machines. However, I share many of the concerns highlighted by the Lessig piece. I also have independent concerns of my own. But all things considered, I support Americans Elect and its efforts to at the very least scare the pants off of the two major parties.

My first major concern is the requirement that the Americans Elect nominee nominate a candidate for Vice President from a party not affiliated with the Presidential candidate. Americans Elect is fond of its claims that its process will produce a “nonpartisan” ticket. The requirement that a candidate choose a running mate from another party is not in any fashion nonpartisan, but rather bipartisan. The idea that Americans Elect has removed itself from partisan politics is simply not believable. It makes very clear that it is not a third party, but rather an alternative nominating method within our current system. Moreover, The strongest candidates currently declared and willing to accept the nomination of Americans Elect, with the exception of Rocky Anderson, are quite obviously members of the two major political parties. For example, The Americans Elect front-runner Buddy Roemer served in the House of Representatives and the Louisiana Governors mansion as a Democrat. Only Rocky Anderson has declared himself not to be a member of either of the two major parties. On the draft side of Americans Elect, Ron Paul, who has long since abandoned any desire to break from the Republican Party, leads the way. He is followed by Jon Huntsman and Bernie Sanders. Huntsman has no intentions of leaving the Republican Party. Bernie Sanders has to his credit been elected more than once to the United States Senate as a Independent.

So, what we have at Americans Elect is essentially a cast of characters who, if ultimately elected, would have close ties to one party or the other. This does absolutely nothing to reform the corrupting influence of money on our system, rather it places an individual who did not receive a major party’s nomination in the position to be corrupted once elected. Furthermore, the ridiculous requirement that the nominee of Americans Elect hand-pick a Vice Presidential candidate from a competing “party” is inherently anathema to its purpose. If a majority of caucus members vote to have a progressive or conservative candidate as the Presidential nominee, why would those same caucus members be forced to accept an individual who does not represent the views of the majority? I defy any Americans Elect proponent to explain the efficaciousness of this to me.

Americans Elect also lacks the functionality of a political party. It has no local committees, or state boards. It functions completely in cyberspace, shutting out millions of Americans from the process. It has no platform, meaning the nominee for President in 2012 could advocate expanding Social Security while the nominee in 2016 could advocate destroying the program. The entire movement lends itself to the political winds, and that is indeed dangerous. A conventional political party functions efficiently for the same reason here in the United States as it does around the world–It offeres a consistent belief system and set of ideals for like-minded people to rally around. It is relatively static over time, and it works well that way. It greatly reduces the likelihood that short term events will blow politics and policy completely off course.

Much of the criticisms of third parties, and short term Ross-Perot-Ralph-Nader patterned candidacies, from the journalistic elites are similar to mine. The arguments generally flow from an idea that any problem conceivably addressed through a third party could and should be properly addressed through one of the two competing parties through direct involvement of its members. There are no magic bullets or panaceas. This argument certainly has some merit. However, when, as is true now, we find ourselves with two parties that nearly mirror each other on important issues, notwithstanding millions of members standing in disagreement, the system is broken. I agree with Americans Elect and Lessig that the reason the system is broken is money and influence. Money contributed to elections, and powerful moneyed interests threatening to wreak havoc upon the economy if they don’t get what they want. Also, I agree with Lessig that any concerns of stealing votes from a Presidential nominee of a major party and handing the candidate of the other party the win is a not a concern worth entertaining if doing so means continuing the status-quo. Further, any misgivings regarding any potential damage inflicted upon the two major parties as a result of this or other alternative efforts should not force folks back into the loving arms of the major parties. The lesser of two evils remains evil.

I do applaud the efforts of the Americans Elect founders and board for carving out a new and admittedly exciting element in the American Presidential election process. It stirs the pot and I like that. However, Americans Elect is a half-hearted solution to a larger problem. The predicament of the corrupting influence of money is pervasive in American politics. It is not difficult to understand, nor is the methodology needed to dismantle it difficult to grasp. The American people must demand that remedial legislation be passed by the Untied States Congress and sent on to the President, be he or she Democrat, Republican, or other. If Buddy Roemer or Jon Huntsman were somehow elected President on the Americans Elect ticket, without support of the people, Congress will continue to click click along as it always has. The President has nearly nil ability to influence the legislative process.

However, if a true third party or grass roots movement worked to elect alternative and independent candidates in Congress and in state houses across the land, real change could take place. The timing could not be more ripe for this type of change. In recent polling, nearly 80% of Americans were willing to entertain the idea of casting their ballot for a third party. Americans Elect is not a third party, and it lacks any mechanism to organize and communicate with the 80% of Americans that could potentially support its efforts. Americans Elect seeks only to drive a different car to the same location. Sending a Republican or Democrat to the White House via the sponsorship of a movement not willing to clearly define its mission is a fools errand and will ultimately change nothing. I wish them luck, but Americans Elect certainly smacks more of a clever idea hatched by a few wealthy individuals frustrated with the current system than a carefully researched and planned political movement. I share their frustration, but without organization and messaging, it’s nothing more than money influencing the system under a contradistinct justification.