More on that Austin plane crash

[unixronin]

This is apparently the message left behind by the pilot.  It's now very clear that yes, he was 100% intentionally targeting the Austin IRS office.

(Gee, that was fast ... the FBI has requested it be taken down.  The Smoking Gun has a copy here.  It's also been posted by statesman.com here.  This genie is out of the bottle already.)

If you’re reading this, you’re no doubt asking yourself, “Why did this have to happen?”  The simple truth is that it is complicated and has been coming for a long time.  The writing process, started many months ago, was intended to be therapy in the face of the looming realization that there isn’t enough therapy in the world that can fix what is really broken.  Needless to say, this rant could fill volumes with example after example if I would let it.  I find the process of writing it frustrating, tedious, and probably pointless… especially given my gross inability to gracefully articulate my thoughts in light of the storm raging in my head.  Exactly what is therapeutic about that I’m not sure, but desperate times call for desperate measures.

We are all taught as children that without laws there would be no society, only anarchy.  Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all.  We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals [sic] represented by its founding fathers.  Remember?  One of these was “no taxation without representation”.  I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood.  These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.

While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind.  Nor, for that matter, are they the least bit interested in me or anything I have to say.

Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours?  Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies.  Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”.  It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.

And justice?  You’ve got to be kidding!

How can any rational individual explain that white elephant conundrum in the middle of our tax system and, indeed, our entire legal system?  Here we have a system that is, by far, too complicated for the brightest of the master scholars to understand.  Yet, it mercilessly “holds accountable” its victims, claiming that they’re responsible for fully complying with laws not even the experts understand.  The law “requires” a signature on the bottom of a tax filing; yet no one can say truthfully that they understand what they are signing; if that’s not “duress” than what is.  If this is not the measure of a totalitarian regime, nothing is.

How did I get here?

My introduction to the real American nightmare starts back in the early ‘80s.  Unfortunately after more than 16 years of school, somewhere along the line I picked up the absurd, pompous notion that I could read and understand plain English.  Some friends introduced me to a group of people who were having ‘tax code’ readings and discussions.  In particular, zeroed in on a section relating to the wonderful “exemptions” that make institutions like the vulgar, corrupt Catholic Church so incredibly wealthy.  We carefully studied the law (with the help of some of the “best”, high-paid, experienced tax lawyers in the business), and then began to do exactly what the “big boys” were doing (except that we weren’t steeling from our congregation or lying to the government about our massive profits in the name of God).  We took a great deal of care to make it all visible, following all of the rules, exactly the way the law said it was to be done.

The intent of this exercise and our efforts was to bring about a much-needed re-evaluation of the laws that allow the monsters of organized religion to make such a mockery of people who earn an honest living.  However, this is where I learned that there are two “interpretations” for every law; one for the very rich, and one for the rest of us…  Oh, and the monsters are the very ones making and enforcing the laws; the inquisition is still alive and well today in this country.

That little lesson in patriotism cost me $40,000+, 10 years of my life, and set my retirement plans back to 0.  It made me realize for the first time that I live in a country with an ideology that is based on a total and complete lie.  It also made me realize, not only how naive I had been, but also the incredible stupidity of the American public; that they buy, hook, line, and sinker, the crap about their “freedom”… and that they continue to do so with eyes closed in the face of overwhelming evidence and all that keeps happening in front of them.

Before even having to make a shaky recovery from the sting of the first lesson on what justice really means in this country (around 1984 after making my way through engineering school and still another five years of “paying my dues”), I felt I finally had to take a chance of launching my dream of becoming an independent engineer.

On the subjects of engineers and dreams of independence, I should digress somewhat to say that I’m sure that I inherited the fascination for creative problem solving from my father.  I realized this at a very young age.

The significance of independence, however, came much later during my early years of college; at the age of 18 or 19 when I was living on my own as student in an apartment in Harrisburg, Pennsylvania.  My neighbor was an elderly retired woman (80+ seemed ancient to me at that age) who was the widowed wife of a retired steel worker.  Her husband had worked all his life in the steel mills of central Pennsylvania with promises from big business and the union that, for his 30 years of service, he would have a pension and medical care to look forward to in his retirement.  Instead he was one of the thousands who got nothing because the incompetent mill management and corrupt union (not to mention the government) raided their pension funds and stole their retirement.  All she had was social security to live on.

In retrospect, the situation was laughable because here I was living on peanut butter and bread (or Ritz crackers when I could afford to splurge) for months at a time.  When I got to know this poor figure and heard her story I felt worse for her plight than for my own (I, after all, I thought I had everything to in front of me).  I was genuinely appalled at one point, as we exchanged stories and commiserated with each other over our situations, when she in her grandmotherly fashion tried to convince me that I would be “healthier” eating cat food (like her) rather than trying to get all my substance from peanut butter and bread.  I couldn’t quite go there, but the impression was made.  I decided that I didn’t trust big business to take care of me, and that I would take responsibility for my own future and myself.

Return to the early ‘80s, and here I was off to a terrifying start as a ‘wet-behind-the-ears’ contract software engineer... and two years later, thanks to the fine backroom, midnight effort by the sleazy executives of Arthur Andersen (the very same folks who later brought us Enron and other such calamities) and an equally sleazy New York Senator (Patrick Moynihan), we saw the passage of 1986 tax reform act with its section 1706.

For you who are unfamiliar, here is the core text of the IRS Section 1706, defining the treatment of workers (such as contract engineers) for tax purposes.  Visit this link for a conference committee report (http://www.synergistech.com/1706.shtml#ConferenceCommitteeReport) regarding the intended interpretation of Section 1706 and the relevant parts of Section 530, as amended.  For information on how these laws affect technical services workers and their clients, read our discussion here (http://www.synergistech.com/ic-taxlaw.shtml).

SEC. 1706. TREATMENT OF CERTAIN TECHNICAL PERSONNEL.

(a) IN GENERAL - Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:

(d) EXCEPTION. - This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.

(b) EFFECTIVE DATE. - The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986.

Note:

"another person" is the client in the traditional job-shop relationship.

"taxpayer" is the recruiter, broker, agency, or job shop.

"individual", "employee", or "worker" is you.

Admittedly, you need to read the treatment to understand what it is saying but it’s not very complicated.  The bottom line is that they may as well have put my name right in the text of section (d).  Moreover, they could only have been more blunt if they would have came out and directly declared me a criminal and non-citizen slave.  Twenty years later, I still can’t believe my eyes.

During 1987, I spent close to $5000 of my ‘pocket change’, and at least 1000 hours of my time writing, printing, and mailing to any senator, congressman, governor, or slug that might listen; none did, and they universally treated me as if I was wasting their time.  I spent countless hours on the L.A. freeways driving to meetings and any and all of the disorganized professional groups who were attempting to mount a campaign against this atrocity.  This, only to discover that our efforts were being easily derailed by a few moles from the brokers who were just beginning to enjoy the windfall from the new declaration of their “freedom”.  Oh, and don’t forget, for all of the time I was spending on this, I was loosing income that I couldn’t bill clients.

After months of struggling it had clearly gotten to be a futile exercise.  The best we could get for all of our trouble is a pronouncement from an IRS mouthpiece that they weren’t going to enforce that provision (read harass engineers and scientists).  This immediately proved to be a lie, and the mere existence of the regulation began to have its impact on my bottom line; this, of course, was the intended effect.

Again, rewind my retirement plans back to 0 and shift them into idle.  If I had any sense, I clearly should have left abandoned engineering and never looked back.

Instead I got busy working 100-hour workweeks.  Then came the L.A. depression of the early 1990s.  Our leaders decided that they didn’t need the all of those extra Air Force bases they had in Southern California, so they were closed; just like that.  The result was economic devastation in the region that rivaled the widely publicized Texas S&L fiasco.  However, because the government caused it, no one gave a shit about all of the young families who lost their homes or street after street of boarded up houses abandoned to the wealthy loan companies who received government funds to “shore up” their windfall.  Again, I lost my retirement.

Years later, after weathering a divorce and the constant struggle trying to build some momentum with my business, I find myself once again beginning to finally pick up some speed.  Then came the .COM bust and the 911 nightmare.  Our leaders decided that all aircraft were grounded for what seemed like an eternity; and long after that, ‘special’ facilities like San Francisco were on security alert for months.  This made access to my customers prohibitively expensive.  Ironically, after what they had done the Government came to the aid of the airlines with billions of our tax dollars … as usual they left me to rot and die while they bailed out their rich, incompetent cronies WITH MY MONEY!  After these events, there went my business but not quite yet all of my retirement and savings.

By this time, I’m thinking that it might be good for a change.  Bye to California, I’ll try Austin for a while.  So I moved, only to find out that this is a place with a highly inflated sense of self-importance and where damn little real engineering work is done.  I’ve never experienced such a hard time finding work.  The rates are 1/3 of what I was earning before the crash, because pay rates here are fixed by the three or four large companies in the area who are in collusion to drive down prices and wages… and this happens because the justice department is all on the take and doesn’t give a fuck about serving anyone or anything but themselves and their rich buddies.

To survive, I was forced to cannibalize my savings and retirement, the last of which was a small IRA.  This came in a year with mammoth expenses and not a single dollar of income.  I filed no return that year thinking that because I didn’t have any income there was no need.  The sleazy government decided that they disagreed.  But they didn’t notify me in time for me to launch a legal objection so when I attempted to get a protest filed with the court I was told I was no longer entitled to due process because the time to file ran out.  Bend over for another $10,000 helping of justice.

So now we come to the present.  After my experience with the CPA world, following the business crash I swore that I’d never enter another accountant’s office again.  But here I am with a new marriage and a boatload of undocumented income, not to mention an expensive new business asset, a piano, which I had no idea how to handle.  After considerable thought I decided that it would be irresponsible NOT to get professional help; a very big mistake.

When we received the forms back I was very optimistic that they were in order. I had taken all of the years information to Bill Ross, and he came back with results very similar to what I was expecting.  Except that he had neglected to include the contents of Sheryl’s unreported income; $12,700 worth of it.  To make matters worse, Ross knew all along this was missing and I didn’t have a clue until he pointed it out in the middle of the audit.  By that time it had become brutally evident that he was representing himself and not me.

This left me stuck in the middle of this disaster trying to defend transactions that have no relationship to anything tax-related (at least the tax-related transactions were poorly documented).  Things I never knew anything about and things my wife had no clue would ever matter to anyone.  The end result is… well, just look around.

I remember reading about the stock market crash before the “great” depression and how there were wealthy bankers and businessmen jumping out of windows when they realized they screwed up and lost everything.  Isn’t it ironic how far we’ve come in 60 years in this country that they now know how to fix that little economic problem; they just steal from the middle class (who doesn’t have any say in it, elections are a joke) to cover their asses and it’s “business-as-usual”.  Now when the wealthy fuck up, the poor get to die for the mistakes… isn’t that a clever, tidy solution.

As government agencies go, the FAA is often justifiably referred to as a tombstone agency, though they are hardly alone.  The recent presidential puppet GW Bush and his cronies in their eight years certainly reinforced for all of us that this criticism rings equally true for all of the government.  Nothing changes unless there is a body count (unless it is in the interest of the wealthy sows at the government trough).  In a government full of hypocrites from top to bottom, life is as cheap as their lies and their self-serving laws.

I know I’m hardly the first one to decide I have had all I can stand.  It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants.  I know there have been countless before me and there are sure to be as many after.  But I also know that by not adding my body to the count, I insure nothing will change.  I choose to not keep looking over my shoulder at “big brother” while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won’t continue; I have just had enough.

I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less.  I would only hope that by striking a nerve that stimulates the inevitable double standard, knee-jerk government reaction that results in more stupid draconian restrictions people wake up and begin to see the pompous political thugs and their mindless minions for what they are.  Sadly, though I spent my entire life trying to believe it wasn’t so, but violence not only is the answer, it is the only answer.  The cruel joke is that the really big chunks of shit at the top have known this all along and have been laughing, at and using this awareness against, fools like me all along.

I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different.  I am finally ready to stop this insanity.  Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well.

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Joe Stack (1956-2010)

02/18/2010

Comments

[ithildae]

Made the front page of the WSJ. Very little chance of it being an accident. Two things are certain in life, he hit both at once.

[montieth.livejournal.com]

Looks like stack is a '3%'er.

[unixronin.livejournal.com]

I'm not familiar with the term.

[jmkelly.livejournal.com]

http://www.threepercenter.org/forums.php?topic=737.0

[unixronin.livejournal.com]

Thanks for the pointer.

One thing that does seem clear is he was (a) really seriously furious at the IRS, and (b) at the end of his rope.

[glitch25.livejournal.com]

Damn...

[fruitylips.livejournal.com]

The more I read about this guy the less the immediate and constant assertions that 'this was not terrorism. It was suicide' make any sense. How the heck wasn't this terrorism? I'm pretty sure the military would happily point you at a gazillion terrorists that managed to kill themselves in the act...

[luxobscura.livejournal.com]

CNN has it in a nice pdf wrapper as well

http://i2.cdn.turner.com/cnn/2010/images/02/18/stack.letter.pdf?hpt=T1

[wyrdling.livejournal.com]

homegrown terrorists seem more likely to actually finish what they start.

and, uhm, why they heck did the IRS put that law into place in the first place?

[unixronin.livejournal.com]

Damned if I know. I don't even really follow what the provision does. The tax code has gotten so bloated that even the IRS themselves have candidly admitted that they don't understand the entirety of the tax code any more. They certainly appear to follow the parts of tax law that suit them. We like you? Eh, we'll give you a pass on this clear evasion. We don't like you? Gee, look, here's this obscure, cryptic technicality that we can construe in such a way as to apply to you. Open your wallet and repeat after us, "Help yourself."

[randwolf.livejournal.com]

I think it's the law that says you're an employee if you act like one. If it is, it was intended to keep employers from evading the tax codes by declaring employees "consultants."

[randwolf.livejournal.com]

Links, on Stack and taxes:
1. History of tax evasion:
http://tpmmuckraker.talkingpointsmemo.com/2010/02/report_suspected_austin_pilots_past_racked_by_tax.php
2. On the specifics of the tax Stack mentioned:
http://salon.com/technology/how_the_world_works/2010/02/18/joe_stack_s_tax_problem
http://taxfoundation.org/blog/show/25870.html

(It was the one I suspected.)

[unixronin.livejournal.com]

The hard question becomes where do you draw the dividing line between failing to grasp and follow the intricacies of the tax code, and deliberate tax evasion? My father, who is NOT by any means an uneducated or naive individual — he's a chartered engineer who spent almost 20 years working for HP Labs, and actually became the de-facto Spokane division of HP Labs because HP Labs wanted him that badly but he didn't want to relocate to California — had a scare late last year when he realized that he had been misunderstanding a particular provision of investment taxes for almost ten years. An entirely innocent mistake, for which he could have ended up with a huge fine or even been jailed.


That said, this much is pretty much inarguable: if he set his own house on fire with his wife and daughter inside, then flew his plane into a government office building, and he thought either of those things would HELP anything ... 'his little red engine done broke down.'

[randwolf.livejournal.com]

Innocent mistakes honestly admitted (a tax lawyer is a good idea, however!) don't usually lead to jail or huge fines from the IRS, though you do have to pay your back taxes. The provision that angered Stack is not a complex one--he just didn't like it, that's all--and nothing subtle about Stack's tax problems: he just didn't pay.

Washington has a very simple state tax structure, and one that is deeply unfair: the poor pay a hugely larger percentage of their income than the rich, and businesses have to pay a percentage of their revenues, even in bad years. Personally, I'll take complexity.

[cipherpunk.livejournal.com]

I'm sorry, I don't understand. (This is my general response to any claims of fairness or unfairness in the tax code.)

Let's take a ridiculously simple example. Alice and Bob each draw from a well, from which they each receive an equal benefit. The well has to have upkeep, so Alice and Bob pay to maintain it. Alice pays $10,000 per year to maintain it on her income of $100,000. Bob pays $3300 per year to maintain it on his income of $30,000.

Alice pays three times what Bob does, while not receiving any additional benefit over what Bob does. Is that unfair?

Bob pays more as a fraction of his income than Alice does, while not receiving any additional benefit over what Alice does. Is that unfair?

If we can't talk intelligently about the fairness or unfairness of taxes even for such a simple case, then how can we talk intelligently about the fairness or unfairness of taxes in a system which is so hypercomplex that many times professional tax preparers can't agree on which rules apply in which situations?

We can talk about the direct fiscal effects of taxation, sure: but fairness and unfairness seems to be beyond the realm of mortal intelligences to reason about. They are emotional responses, not thoughtful inquiries.

[randwolf.livejournal.com]

In Washington, the lowest quintile pays around 17%; the highest about 6%. The disparity is considerably larger than your example, and gets even larger the richer the taxpayer. The 17% counts against necessities, whereas the 6% usually does not. I've met people who argue that that is fair, but I don't think they've ever wondered whether to pay for rent or health care. Such policy is cruel. While it is an emotional, or at least ethical, decision to reject cruelty in public policy, I don't think you'll find it has many defenders among advocates of democracy: more usually the argument is that it's not really cruel. Less obviously regressive taxes are bad for business. If a rich woman gets a tax cut, maybe she pays down debt, maybe she buys a yacht, maybe she buys some securities. If a poor man gets a tax cut, he spends it, because he needs to. Regressive taxes are a drag on consumption. (This same argument applies to the distribution of stimulus funds.) Finally, there are all the practical arguments against class systems: in reality, rather than fantasy, they are stressful for all concerned.

So, you see, this is in the range of thoughtful inquiry. Furthermore extensive inquiries have been made. The ethics of wealth and poverty are not exactly a new topic in philosophy.

Ref: http://www.itepnet.org/wp2009/wa_whopays_factsheet.pdf

[cipherpunk.livejournal.com]

"Cruel" is an emotional response, not a factual response. There are just as many arguments about morality which condemn everything except pure per capita taxation: after all, the idea that I should pay more just because I'm more successful and others should pay less because they have more needs comes awful close to "from each according to his ability, to each according to his need."

Saying, "well, these services have to be paid for somehow, and the rich are better able to pay for them than the poor" is a nonstarter. Raise the taxes enough and the rich will flee to other, friendlier, tax environments -- meaning this tax policy which is based on the illusion of fairness and non-cruelty has the net effect of spending more and driving away those who can pay for it, leaving large bills to fall on the shoulders of those who can't pay for it.

At the federal level, something on the order of half of all citizens pay no income tax at all. This means that half the country gets their services for free and the other half gets socked with the bill. This produces incentives to use more of the services and to push for the introduction of more services, which contributes to our spiraling debt burden. And so on, and so on, and so on.

By comparison, privatization of government services pushes expenses back on the people who make direct use of them. If you want to go into massive debt in order to pay for Bob's Defense Industries, Inc., you can (assuming your banker agrees); but you can't force your neighbor into debt in order to pay for Bob's Defense Industries, Inc. This strikes some people as having an immensely ethical character; and it strikes other people as denying the benefit of national defense to the people least able to pay for it.

In the last microeconomics class I took, we spent a good bit of class time looking at taxation, morality and ethics. The lesson I took away from it is that anyone who thinks there are clear answers in the realm of taxation and morality is fooling themselves and using numbers to justify their prejudices. Morality is orthogonal to taxation. It is neither moral nor immoral, it simply is.

[randwolf.livejournal.com]

You've slipped past a main point: I am not making the argument on emotion, though I find that important, but on practicality: regressive taxes are economically destructive and lead to political instability. A minor point: while pain is a subjective experience, it is not very hard to agree on its reality, unless we are determinedly dishonest.

I do not know of very many rich Americans who moving to China to save on taxes: the people who might do so are the ones wanting to become rich, not the ones who are already rich.

The argument that privatization leads to greater efficiencies appears to be valid mostly in very corrupt places. Privatization has harmed economies as a whole, people both rich and poor. Often governments pay more for privatized services--Eric's Private Army is hired by George's Defense Department--so that citizens get the worst of both worlds: overpriced, brutal, and tax-payer funded.

Modern macroeconomics as a discipline failed so dramatically that I'd have to ask for your sources before granting their authority. The Chicago libertarian school has no credibility left: not only did their models fail, but they are still defending them, even after they failed. The rationalizations are gorgeous, but they are now visible as rationalizations.

Anyhow, I doubt this little note will persuade. But perhaps it will lead you to dig a bit deeper.

Ref: Zombie Economics preprint (http://zombiecon.wikidot.com/).

[cipherpunk.livejournal.com]

If the argument is that "regressive taxes are economically destructive and lead to political instability," then does that mean progressive taxes are somehow not? Tax Bill Gates at 100% of his income, and Bill Gates will simply decide to not work at all. It's the most progressive tax imaginable, and is unspeakably destructive. The obvious rejoinder is, "well, okay, yes, there is a tipping point." But where is that tipping point, and how do we know which side of it we are on?

I have yet to find any reputable economist who is willing to say, "I have answers." The reputable ones I've read have all implored the necessity of humility in the face of our staggering ignorance.

"Privatization has harmed economies as a whole" is true only if you believe command economies are more productive than private-sector economies. During Gorbachev's perestroika, farmers' collectives were allowed to set aside five percent of their plots for private agricultural endeavors. That five percent often outperformed the ninety-five percent grown under collectivist schemes.

"Often governments pay more for privatized services" -- this is why the argument is that these government services should not even exist, and instead those taxes be returned to individual citizens so that citizens can themselves choose the service providers that are most in their interests. As I said earlier, this has a major downside of the poor, who under our current system pay little tax but get full government services, suddenly being out in the cold. However, to dismiss the entire idea casually as "well, it doesn't work that way" ignores the entire argument and replaces it with a straw man.

"Modern macroeconomics..." Fortunate, then, that I was discussing my microeconomics course.

"The Chicago libertarian school has no credibility left...". No: it has no credibility left with you, and with others who believe as you do. But then again, your political stripe never thought it had much credibility in the first place. The Chicago and Austrian Schools are alive and well, and many of their predictions of Keynesian dystopia are coming true. The Keynesian intervention the President pushed through in the economy, in order to limit unemployment? Unemployment is now much, much higher than it was in the President's predictions. "If we don't intervene unemployment might reach nine percent" has been replaced, now that unemployment is ten percent or higher, with "imagine how much worse it would've been if we hadn't intervened."

[cipherpunk.livejournal.com]

Also:

"I do not know of very many rich Americans who are moving to China to save on taxes."

The point isn't about the people moving to other places to save on taxes. The point is about the money moving to other places to save on taxes. Corporations are relatively mobile: they will go where makes the most economic sense for them. Tax rates inform that economic calculus in a very big way.

[unixronin.livejournal.com]

That. Corporate America has been offshoring as many jobs as it can, as fast as it can, since mid-2000. Often, the quality of the work is far below what they could get domestically, but in their calculus, 50% of the quality of work for 10%-20% of the cost is still a bargain. At a five or ten to one reduction in costs, they can afford to have things done twice or three times to get them done right.

[randwolf.livejournal.com]

Me, last summer:

I think I know the bottom line: someone is going to die. Too much crazy has been unleashed, too much negativity. Mobs at town halls. Death threats. And they're going to keep stirring the pot, until some dramatic act of violence happens, until the House caves, or until the House is back in session. [I thought the death was going to be sooner. At the time, the House was in recess and the House health care bill had yet to be passed.]

"For, without a cement of blood (it must be human, it must be innocent) no secular wall will safely stand."--WH Auden, Horae Canonicae, "Vespers."

I don't know about anyone else here, but I'm scared.

[unixronin.livejournal.com]

Things are indeed getting very tense. I note that one state after another is telling the Federal Government, and in quite a few cases the BATF in particular, to go piss up a rope, which I think may act as a defusing influence; and I also note that the BATF in particular is responding "Fuck you, we'll continue to do whatever the hell we feel like", which is not about to defuse anything.

[randwolf.livejournal.com]

Also, I think, the failure of Federal government to support the states is leading to very great stresses at the state and local level. California is being hit especially hard, of course, but all states are suffering.

[unixronin.livejournal.com]

California has its own problems exacerbating the situation, of course.

[ithildae.livejournal.com]

The situation is tense. Some people are cracking. Part of the problem is that everyone in America knows what the country's problem is. You see it in the savings rate going from -9% to 6% in the last 18 months. Every government in the nation has gone the opposite direction. The people are in the bottom of a hole, and have stopped digging, but their governments have called in the heavy equipment to cover for their lost efforts. That has very many people on edge right now.

The argument can be made that governments need to step up services and spending to cover the people in need from a downsliding economy. I can clearly see that point. At the same time, there are fewer people to pay for those services because of the downsliding economy, and the government checkbook is overdrawn. When the government attempts to cover their collective indebtedness through persecution of individuals, everyone needs to be very afraid indeed. Especially because the "rich" do not have enough money to cover the expenses incurred. (Unless we count ourselves as rich.)

[randwolf.livejournal.com]

The problem is that "everybody" disagrees on what the problem is, and the prescription varies, depending on what people think the problem is. My take on this, drawn from the few economists who called it, and who seem to know what is going on is that: (1) we had a gradual shut-down of the regulatory system starting around 1980, which led to a vast explosion of fraud in the system, (2) the Federal Reserve fed, rather than limited, bubbles, and (3) the major banks like Goldman-Sachs, Citi, and Chase committed (and are apparently still committing) large-scale financial fraud. The opportunity to tighten regulation and shut down the corrupt institutions when the financial system came unglued was not taken.

I generally agree with this group that government deficit is not the problem: jobs are the problem. Strikingly, the big investors seem to agree, too: if they felt government deficits were the problem, we would see it in long-term bond rates, and we don't.

What you are describing in terms of government services is what economists call the "cyclical deficit." It means that tax revenues fall during recessions and that fallback services like unemployment insurance are used more heavily during recessions. We still have the resources to take care of ourselves: we are nowhere near our limit of production. We still have farms and factories, but they are not operating, and this is partly the work of the banks, which still have not cleaned up their act. What we do have is a series of systemic failures.

Since conservatives seem to like family-budget analogies, I will offer one. Imagine, if you will, an extended family that has come on hard times because some of the wealthier members who were relied on to manage the family's money have accumulated gambling debts. Is the family to respond by telling its poorer members to tighten their belts while the wealthier members continue to gamble? Or will the poorer members prevail on the wealthier to share and stop gambling?

Refs:
The Baseline Scenario (http://baselinescenario.com/2010/02/09/revised-baseline-scenario-february-9-2010/). Former IMF chief economist Simon Johnson and entrepreneur James Kwak.
Naked Capitalism (http://www.nakedcapitalism.com/). Yves Smith, corporate banker, and collaborators.
Bonddad (http://bonddad.blogspot.com/). Hale Stewart, tax lawyer.
Calculated Risk (http://www.calculatedriskblog.com/). Bill McBride, retired small-business executive.

In deference to the conservatism of most commentators here, I have not cited liberal sources--these are the moderates. This, unfortunately, means that broader critiques of economic theory and policy also are not cited. It is startling to me how quickly the once-marginalized group of economic liberals has been swept back into the mainstream of the profession, but it will be decades before discipline has taken out its trash. Scientists, as some wit once said, are persuaded one tombstone at a time.