Saturday, Nov 13, 2010 06:14 ET

Eric Cantor’s Pledge of Allegiance

by Randy Shannon

Jeremy Grantham manages one of the largest asset funds in the world. He has been a consistent critic of the bubble economics of the Federal Reserve and the big banks. In a recent interview on MSNBC he called for direct government hiring of the unemployed. Below are some key excerpts from his interview.

What I worry about most is the Fed’s activity and — QE2 is just the latest demonstration of this. The Fed has spent most of the last 15, 20 years— manipulating the stock market whenever they feel the economy needs a bit of a kick. I think they know very well that what they do has no direct effect on the economy.

So, what are they going to use as ammunition if they cause another bubble and it breaks, let’s say, in a couple of years? Then we might have some real Japanese-type experiences.

The way you address a weak economy, particularly very substantial excess unemployment is through fiscal policy. You must either bribe corporations to hire people who have been unemployed, which they did in Germany. A lot of economists think that’s perfectly effective.

Or you must go in there and hire people yourself as a government. I would never do it unless there was clearly quite a few million extra unemployed. I wouldn’t go after too many skilled labor because there’s never— enough of them to go around. And that does cause crowding out. I would go after the— what I called lightly-skilled workers.

The kind of people who were building the extra million houses in— in ’05, ’06 and ’07. And find— and find jobs for them. We have an infrastructure that is decades behind schedule.

We could insulate every house in the Northeast. These are high-return projects, great— for society in general. And to— to allow people to sit there unemployed. Their skills are deteriorating. Their family morale goes to hell. And— it’s a deadweight on society. And you have to remember when— when the government hires someone, it doesn’t pay the full price like a corporation does.

The government, pays a lot for someone sitting down unemployed. All the many ways that unemployed get helped plus— the government carries the atrophying of the skills. Society loses that, the longer they’re unemployed.

Continue reading Top Asset Fund Manager Calls for Direct Government Hiring of Unemployed →

by Randy Shannon

November 12, 2010

Congressman Jason Altmire addressed a meeting organized by the Pennsylvania Alliance of Retired Americans to celebrate the birthday of Social Security on September 1, 2010 at the Community College of Beaver County. The purpose of the meeting was to ask Altmire to pledge to defend social security against any proposed cuts from the Deficit Commission. Altmire refused to make such a pledge.

The corporate Democrats, including Blue Dog Altmire, are trying to conflate the issue of the deficit with social security. They are blowing up a small problem with social security into a paper tiger to cover their plan to steal the Social Security Trust funds to finance the deficit caused by the tax cuts for the wealthy, the wars, and the bank bailout.

The Social Security Trust Fund has a $2 trillion surplus that will grow over the next few years due to interest payments even though the recession has caused a drop in tax revenues. The surplus is designed to cover the retiring baby boomer generation. The little problem is that in 35 years this surplus will be all paid out and the fund will only be able to pay 80% of the planned distributions. The solution to this problem is simple. Raise the cap on income subject to the social security tax. Of course the financial elite oppose paying their fair share of taxes.

In any case this Social Security future shortfall is not a problem that needs to be solved right now. And it is not a problem that has any relationship whatsoever with the deficit. Social security is funded by a direct tax. The money in the trust fund is lent to the government by buying special social security bonds. The US government must pay these bonds just like all the other bonds that it has sold around the world.

In this video ( that unfortunately has poor sound quality) I queried Congressman Altmire on this point. My question, which is cut off at the beginning, was: “Regardless of the deficit, do you have any concern and do you have any plans to address the expected shortfall in social security payments 35 years from now.” The purpose of this question is to show that Altmire’s plan to, as he says “consider the whole recommendation of the deficit commission” is part of the corporate elite’s agenda to confuse social security with the deficit.

In his answers Altmire conflates the issue of social security with the issue of the deficit. By default he admits that he has no actual concern about social security and no plans to address any future problems of social security. His concern and his plan is how to safely steal our money to pay for the deficit created by the bankers. This depends on confusing the public and twisting the arms of all the politicians to sign on to the scam.

A big thank you to PDA Vice President, retired IBEW member, and South Heights Councilman Robert Schmetzer for recording and publishing this video document.