OWS Changes the Conversation

The payroll tax cut used to be a Republican idea, but now that President Obama is for it, they're against extending it. That is, until Occupy Wall Street made clear the division between the 1% and the 99%:

If Republicans block the measure, as expected, Democrats would paint them as the party of the rich.

Trying to get ahead of the game, McConnell proclaimed Republican support for the payroll tax cut extension and told reporters his party would soon propose its own ideas for covering the cost of the tax cut.

"The Democrats put them in a box," said Andrew Taylor, a North Carolina State University political science professor. "I think many Republicans realized this is a bad side of the argument to be on."

Thanks to the protesters, there's media buzz highlighting the GOP's behavior and allegiances. It's common knowledge now, nothing anyone can obfuscate with rhetoric. And you know #OWS matters when the new GOP frontrunner, Newt Gingrich, calls on President Obama to repudiate the movement and its message of wealth inequality.

As Robert Reich tells us, the Basic Bargain holding our society together and creating growth in the 20th Century has been torn apart by greed and must be restored:

For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling.

That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages.

...

The latest data on corporate profits and wages show we haven't learned the essential lesson of the two big economic crashes of the last 75 years: When the economy becomes too lopsided -- disproportionately benefiting corporate owners and top executives rather than average workers -- it tips over.

In other words, we're in trouble because the basic bargain has been broken.

...

Corporations don't need more money. They have so much money right now they don't even know what to do with all of it. They're even buying back their own shares of stock. This is a bonanza for CEOs whose pay is tied to stock prices and it increases the wealth of other shareholders. But it doesn't create a single new job and it doesn't raise the wages of a single employee.

Nor do the wealthiest Americans need more money. The top 1 percent is already taking in more than 20 percent of total income -- the highest since the 1920s.

American businesses, including small-business owners, have no incentive to create new jobs because consumers (whose spending accounts for about 70 percent of the American economy) aren't spending enough. Consumers' after-tax incomes dropped in the second and third quarters of the year, the first back-to-back drops since 2009.

The Dems are proposing to pay for the payroll tax cut with a surtax on millionaires -- affecting 0.2% of the U.S. population.

I hesitate to ask what 1%-favoring counterproposal GOP will come up with themselves.

Financial Matters

It didn't start under Obama, but according to two economists, one of whom worked with McCain:

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.

The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years.

As for the Obama stimulus, it's not all public sector:

States are putting hundreds of thousands of people directly into jobs through programs reminiscent of the more ambitious work projects of the Great Depression

But the new efforts have a twist: While the wages are being paid by the government, most of the participants are working for private companies

The opportunity to simultaneously benefit struggling workers and small businesses has helped these job subsidies gain support from liberals and conservatives. Congress is now considering whether to extend the subsidy, which would expire in September, for an additional year. A House vote is expected on Thursday or Friday.

Despite questions about whether the programs displace existing workers, many economists have argued that direct job creation programs are a more cost-effective way to put some of the nation’s 14.6 million unemployed back to work than indirect alternatives like tax credits and construction projects.

So which is it? In any case, Obama is trying to help small businesses as well:

The battle was on full display on Wednesday as Senate Democrats pushed ahead with efforts to pass a bill that would increase lending to small businesses and provide tax breaks, and President Obama visited the Tastee Sub Shop in Edison, N.J., where he ordered a “super sub with everything,” to highlight his party’s small-business agenda.

The two sides agree that the nation’s 27 million small businesses will be a big factor in the economic recovery. Beyond that, however, the gloves come off, as Democrats say Republicans are stalling the small-business bill and Republicans say that Democrats will strangle small businesses with higher taxes and heavy-handed regulation — though Mr. Obama, in New Jersey, emphasized that he had cut taxes for small businesses eight times.

At the sandwich shop, Mr. Obama said there should be no argument. “Surely, Democrats and Republicans ought to be able to agree on this bill,” he said. “Helping small businesses, cutting taxes, making credit available. This is as American as apple pie. Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery.”

One last question. We know that George Bush Jr. used "fuzzy math." But is it systematic that Republicans have trouble with numbers?

Start Buying Stock

Apple poised to win all the marbles with their upcoming iPad/iTablet? As in, the future of print and therefore business market share?

Drive

It looks like Obama has a plan for GM and it's shifting into gear:

The chairman and chief executive of General Motors, Rick Wagoner, resigned Sunday as part of a broad agreement with the Obama administration to funnel more government aid to the ailing auto giant, according to people close to the decision.Mr. Wagoner, who has served as G.M.’s top executive since 2000, agreed to step down after it was requested by the president’s auto task force, these people said.

I'll be interested to see how the President's plan unfolds, expecting the same level of strategic intelligence that has been his trademark since the campaign.

And how about how he treated the CEOs he summoned to the White House last week?

Will the ever learn, maybe with a generational turnover?

Buy, Baby, Buy

There will be much more said about this in the future, but thanks to Microsoft there's a whole lotta valuation goin' on:

The two companies said on Wednesday that Microsoft would pay $240 million for a 1.6 percent stake in Facebook. The investment values Facebook, which is three and a half years old and will bring in about $150 million in revenue this year, at $15 billion.

Aside from the fact that it makes the company I work for, Zannel, ostensibly more valuable, this makes me wonder why any one would go to work for Facebook from hereon out, since it is now a pre-IPO start-up where the company is priced so high that any options they get would be unlikely to ever increase in value enough to make it worth your while.