A Critical Year End

The interval between Christmas and the New Year is a time to sum up. You can bet that every mainstream publication will be cranking out summaries of the year just passed and predictions for the one to come. You can also bet that most will compete vigorously in superficiality, focusing on celebrities and events whose significance is already vanishing. Conventional wisdom, repeated endlessly, will reach the point of nausea.

My own perspective differs wildly from that of the mainstream media I read (I hardly watch TV any more; its mindlessness is far too depressing.) I believe the year now passing was one of the most critical in our national history, and the year to come will be even more so. My reasons are simple but unusual.

First, after forty years of farting around, we have exhausted our lead time for intelligent response to our energy “crisis.” The future we feared is here now, and the time for an effective response is rapidly vanishing. In the next year or two we will be tossed about by economic and perhaps political forces like a ship without a rudder—all on depleting seas of oil, on which we are utterly dependent, and all without regard to the equally serious (but longer-term) problem of global warming.

Second, I believe we are entering a critical phase in our “ideological disease,” analogous to what the Russians went through in their anti-Gorbachev putsch of 1991. The analogy is far from perfect. But just imagine the pathetic economic state of Russia (or the Soviet Union) today if the putsch had succeeded and the same tired policies that had bankrupted the Soviets and destroyed their industrial infrastructure had continued to the present day.

If we don’t change course dramatically and soon, something similar will happen to us. That’s why the next year and the 2012 presidential election will mark a crisis in our ideological disease. We will either throw off the virus or likely succumb to it.

Unlike the unsuccessful Communist putsch in Russia in 1991, our own putsch was peaceful and successful. November’s midterm elections brought to power the same people, with the very same tired ideas, that caused our near economic collapse in 2008 and that have weakened us to the point of collapse over the last thirty years.

As I’ve argued in a recent post, which (due to its importance) I repeat below, we have an ideological disease just as serious as the Soviets’ and just as likely to bring us down if not cured soon. The only person qualified and positioned to effect a cure is our President—analogous to Russia’s Yeltsin on the tank, facing down the 1991 putsch.

Our own chief putscher, John Boehner, is third in line for the presidency. As the Apostle of No and perhaps the national political figure most fundamentally ignorant of economics (although he has many close competitors), he will be bad enough as Majority Leader. His tenure as president would be unthinkable.

As Yogi Berra once sagely remarked, the future is one thing that is hard to predict. But one thing is not hard to see. The health of our nation now depends on the health of two individuals: the President and Vice President. Outside of our War of Independence, the Civil War, and World War II, our dependence on individual leaders has never been so acute.

So when the New Year arrives, I will quietly toast the President’s and Vice President’s health and the Secret Service’s vigilance. Although not a religious man, I will also offer a corresponding (if secular) fervent prayer.

Here is a reprint of my post summarizing the analogy between our own ideological disease and the Soviets’:

Reds on the Right

A recurrent theme on this blog is the resemblance between the mindless ideology that the GOP has pushed for thirty years and the one that destroyed the Soviet Union. [See 1, 2, 3 and 4.] They differ in economic substance of course, but in methods they are surprisingly similar. The only major difference is that our system emphasizes propaganda more than terror, at least up to now.

I have argued that no one “won” the Cold War. Both sides lost. The War’s mutual paranoia caused each side to dig itself deep into an ideological hole—and away from reality—with ultimately catastrophic consequences.

Of course the ideologies differed in substance. Communism is not the same as fundamentalist, over-the-top capitalism. But both ideologies shared essential methods and means that made them dangerous to national health. Both were “totalitarian” in the sense that they ignored reality, brooked no dissent, and involved “creative” (some would say “fantastic”) rewriting of facts and history.

While the substance of GOP ideology differs from the Soviets’, the methods of enforcing the different lies are chillingly similar. Our propaganda organs, such as Fox, are privately funded, but they could have taught the Soviets a thing or three.

The Reds had their commissars in every department of government to enforce the party line on ideology, history and “truth.” Commissars even ruled the factory where the great aircraft designer Tupolev and his team of engineers designed warplanes at the height of World War II. Under Karl Rove, Dubya’s administration had the same thing: he just called them “political operatives” instead of “commissars.” But they did precisely the same job: (1) spying on their departments and reporting ideological transgressions to political controllers, (2) exercising direct authority outside the chain of command, and (3) owing absolute political loyalty to their ideological masters because of their youth, inexperience and ideological zeal. Our commissars even had their own universities where they received political indoctrination, places like the Orwellian-named “Liberty” University and Oral Roberts’ college of religious indoctrination.

A second characteristic of ideological totalitarianism is the cult of personality. During the Cold War, American scientists used to laugh at how Soviet commissars forced their scientists to begin papers on abstruse fields with several paragraphs of praise for Marxism-Leninism, the Soviet Communist Party, and whoever was then its general secretary. Under Duyba, the surgeon general of the United States was ordered [search for “three times”] to mention Dubya, by name, at least three times on every page of his public speeches.

But word play is the worst and most Orwellian of the mutually observed totalitarian tactics. Just as the Soviets rewrote history and redefined words, so does our GOP and its talented PR operatives. I’ve already written extensively [see 1 and 2] on the redefinition of words, and I won’t repeat that analysis here. But Paul Krugman of the New York Times has just brilliantly summarized how the GOP has rewritten recent history and intends to continue to do so.

In order to blame the Great Economic Collapse of 2008 on government, rather than the unrestrained private banks that actually caused it, GOP dissenters on the Financial Crisis Inquiry Commission have blacklisted words like “deregulation,” “shadow banking,” “interconnection,” and even “Wall Street.” Having disposed of these inconvenient words and the underlying concepts, they concluded that government alone had caused the catastrophe.

Failing to face reality always has consequences. The Soviet Union is no more. Most of its subject (non-Russian) peoples are no longer part of it. They are not even satellites. Instead, they are citizens of separate nations with varying degrees of economic dependence on Russia.

Russia itself has only a fraction of the old Soviet Union’s GDP. It is now engaged in a long and painful struggle to rebuild its industrial base and create a modern industrial infrastructure, including roads throughout its vast territory. The only thing truly modern about it today are its armament and space industries. Even its oil industry, despite large reserves, is technologically backward and dilapidated.

A similar fate awaits us if we continue on our present course. It won’t be the arms race that bankrupts us, although our endless wars, financed by borrowing, surely will help. It will be our profligate use of fossil fuels and our utter dependence on them for our entire transportation infrastructure. You have only to look at this graph to see why. Together with Canada, we use eleven times as much oil per capita as the developing world, including the BRIC countries.

Unless we bind up this Achilles heel soon, it will be the cause of our economic collapse, just as an unwinnable arms race was for the Soviets. The precise trigger of our collapse will be a second banking crisis like that of 2008, brought on by failure to face honestly the causes of the first.

Some time ago, I pooh-poohed a theory of an old Russian KGB man turned professor. He had predicted a breakup of these United States much like the Soviet Union’s.

Now I’m not so sure I was right. Our Constitution is just a piece of paper. When economic powerhouses like California, Illinois, New York and Washington State begin to understand how the so-called “red” states are dragging them down, they may decide to head for the exits and make their own, better economic policy. Our nuclear weapons, evenly distributed around the nation, would avoid another civil war because, as I’ve argued, nuclear weapons keep the peace. So a Soviet-style breakup here, while still unlikely, is far from impossible.

How ironic is the resemblance! Even the nicknames are the same. In the old Cold-War days, we used to call the Communists “Reds” because their banners were red. Now we call the GOP states “red” states.

Whoever thought up that color scheme must have been clairvoyant. We Democrats are “blue” because we continue to lose despite having far better contact with reality. The “reds,” with a propaganda machine unmatched in human history, are winning. They’re not the old Russian or Soviet Reds, but our own reds on the right. Yet their “victory” will be a pyrrhic one, just as was the Soviets’, even if it takes another seventy years for the tragedy to play itself out. No person or political party, however powerful, can make his or its own reality for long.

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Four Dollars a Gallon by Next Summer

[For an update on this post as of 1/6/11, click here. For comment on John Boehner’s crocodile tears, click here. For comment on our own “reds” and their future, click here.]

How quickly they forget. In June and July of 2008, when we all knew home prices would go up forever, the price of gasoline rose above $4 per gallon [Footnote 1] for the first time ever. Diesel fuel nearly hit $5. Suburbanites were hurting, and truckers blocked streets in D.C. in protest.

Just six months later, regular gas had dropped from its peak of $4.05 to a low of $1.59, which it reached on December 29, 2008. That’s a plunge of over sixty percent—almost two thirds.

What caused the drop? Did some massive new supply of oil miraculously appear? Did the brilliant economic policies of Dubya’s administration, which presided over the second-greatest global economic collapse in human history, suddenly solve our four-decade-old energy “crisis”? Had nefarious speculators caused the high prices, as demagogues on both sides railed?

No, no, and no. The answer, dear reader, was none of these. It was Economics 1A: the law of supply and demand.

So many people who really should have known better failed this test of cause and effect. As I’ve argued before (in one of my best posts), we Americans are innumerate. Culturally speaking, algebra and calculus are utterly beyond our ken, because most of our leaders are lawyers. They went to law school because they hate math.

As a culture, we can’t even do arithmetic very well. But we can learn. So let’s run some simple numbers.

But first, let’s review some key facts about economics and gasoline. There’s a key economic variable called “inelasticity.” A commodity is said to be “inelastic” when its price varies widely (and wildly) with changes in demand. This is what happens when people can’t do without it, and there are no good substitutes to which they can switch. As demand goes up, people can’t stop using the commodity or switch to cheaper substitutes, so its price skyrockets. The price jumps push poorer people out of the market entirely; they do without. If demand falls, the price plummets, unless supply contracts too.

Gasoline and the oil it comes from are two of the most inelastic commodities known to economics. Outside of a few dense cities like Chicago, New York, or San Francisco, just try getting to work or the supermarket without your car. And what about substitutes? Can you put cooking oil or fat drippings from your stove in your gas tank? Try that, and you’ll ruin your engine. You can’t even run ordinary engines on natural gas or a blend containing more than about 25% ethanol. You need engine modifications even for such close substitutes.

These facts are not as true everywhere in the world. A few foreign countries have decent, high-speed rail systems and good public transit. France has cheap and pollution-free electricity, 77% of which comes from the atom, which it can use for electric cars. Brazil has flex-fuel vehicles. But the rest of the world, including the worst offender (us), relies on gasoline alone to transport goods and people, even where they call it “petrol.” Most places have no substitutes.

Worse yet, the entire world is now investing massively in a race to make oil and gasoline even more inelastic. Every increase in car production and sales, every new plant for manufacturing internal combustion engines, every new freeway designed for oil-fired cars—all these things increase the inelasticity of oil as a commodity. Only the electric car, flex-fuel vehicles, and electrified railroads provide any hope for relief. Electric and flex-fuel cars can use some of the same manufacturing plants and the same roads as gasoline-fueled cars.

Unfortunately, we Americans are the most vulnerable to the price shocks produced by inelasticity and increases in demand. As our own Department of Energy summarizes, “Canada and the United States stand almost alone in their consumption of oil per capita[,]" as shown in a helpful graph. Our per-capita consumption of oil is over eleven times that of non-industrialized countries, including China.

Now we have the basic facts: a global economy in which gasoline may be the most inelastic commodity in common use (and is getting more inelastic every day), and in which we are most vulnerable to resulting price shocks.

So what caused the merciful drop in gasoline prices at about the same time as the global economy collapsed? Was it coincidence? Did the oil god take pity on us poor mortals suffering from a bursting real-estate bubble? Did speculators relent?

Not hardly. The two phenomena were cause and effect. The global economic collapse reduced demand for oil [Footnote 2] by about 2%, and the price of gasoline fell by 60%, with oil prices falling accordingly. That’s inelasticity.

Now the global economy is recovering, even here at home. So what does that mean? Well, let’s do some simple arithmetic. For the entire OECD, which includes us, the projected GDP growth rate for next year is 2.7%. [Open “Economic Projections” and drill down to “Economic Outlook No 88 - Dec. 2010”] This figure is probably low, since it projects our own rate at 2.2%, while our more recent projections are for 2.6%. But let’s be conservative and say just 2.7% for the whole OECD, including us.

The rest of the world isn’t growing so slowly. Projected growth rates for China and India are 8%. And China’s rate accounts for what China’s leaders expect to be a “slowdown” to avoid a real-property bubble there.

Now the OECD countries account for about two-thirds of global oil consumption. Together, China and India account for a little less than 40% of global population. So they probably account for about the same share of the rest of global oil demand, i.e., 40% of one-third, or about 13%.

Let’s make the reasonable assumption that growth in oil consumption is proportional to growth in GDP. Let’s also assume that the rest of the world, which accounts for the remaining 20% of global oil consumption, is growing, as global economic recovery continues, at a rate midway between the OECD’s and China-India’s rates, that is (2.7 + 8)/2 or 5.3% (rounded down). Then consumption-weighted global growth in oil demand will be (2.7*.67 + 8*.13 + 5.3*.20) = 3.9%.

Now let’s look at the supply side. Our own Energy Department projects non-OPEC supply as decreasing by 0.28 mbb/d (million barrels per day) in 2011. OPEC supply is supposed to increase by a maximum of 0.4 mbb/d. That’s a maximum net increase of 0.12 mbb/d. As compared to 2010 average global demand of 87.3 mbb/d, that’s less than a 0.14% increase. So the projected increase in demand, less the projected increase in supply, is 3.9% - 0.14%, or 3.76%.

So in less than seven months (2/3.76 x 12 = 6.4 months), the global economy should have made up the shortfall in demand that appears to have dropped gas prices from $4.05 to $1.59. In theory, getting back to $4 a gallon should take even less time than this, as the price is already just two cents shy of $3 per gallon.

Our Energy Department’s projections provide a more optimistic estimate. The DOE projects (by other means not stated) global demand growth for oil in 2011 at 1.4 mbb/d, or about 1.6% of 2010 average daily demand (87.3 mmb/d), for a deficit in supply of only 1.46%. At that rate it would take (2/1.46 x 12) or about 16.4 months to get back to $4 per gallon.

But what if the DOE’s estimates of net global demand growth are low? OPEC’s surplus capacity is supposed to be 5 mbb/d. Even at the DOE’s lower rate of demand growth, that’s 5/1.4 or only about 3.6 years of slack at 2011 growth rates. Now recall that the DOE projects non-OPEC supply to fall in 2011.

And please don’t wave your hands and mumble “new oil.” There isn’t a single major new oil discovery anywhere in the world that can produce significant gasoline at the pump in 3.6 years, let alone seven months. Most of the new oil is in deep water. If nothing else, the Great BP Oil Spill proved that thinking of it as gas at the pump exaggerates our human capabilities and underestimates risk and cost.

As for other explanations for the recent price rise, alleged refining bottlenecks are not the answer. Refining bottlenecks don’t explain recent price increases. As oil has risen from $70 per barrel to over $90 now—a rise of more than 28%—gas has gone from around $2.70 to just over $3.00—a rise of about 11%. If refining bottlenecks were the problem, gas prices would go up faster than oil prices, not vice versa. And anyway most of the recent rise in gas prices occurred as winter approaches—hardly a time of maximum driving. That fact, too, suggests that oil price rises are the underlying cause.

Maybe my less-than-seven-month projection is wrong, and the over-sixteen-month projection based on the DOE’s numbers is right. Let’s hope so. In the best of all possible worlds, with OPEC cooperating fully and not overestimating its reserve capacity, with no unexpected spikes in demand, and with no unexpected shortfalls in supply (for example, due to war in the Middle East), it might take as many as three or four years to get back to $4 a gallon for gas.

But what if global economic growth accelerates, OPEC refuses to cooperate, and/or something bad and unexpected happens, like a boycott or war in the Middle East? Only we and Europe are still hobbled by the aftermath of the 2008 derivatives debacle. For the rest of the world, the sky may be the limit on growth.

What if, as my calculations suggest, $4 gas takes far less than two years to return? Gas is already back to nearly $3 per gallon, and it’s easy to see it moving up another 33% to $4, especially when a 2% drop in demand apparently caused the price to drop over 60% in late 2008.

If my assumptions and arithmetic are right, and if OPEC can’t or won’t prevent, we will have $4 a gallon gas again by next summer. If that happens, and if gas stays over $4 during the 2012 election campaign, the President will be a one-termer.

Far more than any campaign contributor—let alone ordinary voters—OPEC can retain or dismiss the President in 2012 simply by turning the oil tap on or off. And if my less optimistic (than the DOE’s) 3.9% estimate of global oil demand growth is accurate, the world will outrun OPEC’s estimated 5 mbb/d reserve capacity in 5/(87.3*.039) = 1.47 years, with 2010 demand of 87.3 mbb/d as a baseline. Once that happens, gas will exceed $4 a gallon in another seven months—for a total of 25 months—no matter what OPEC does.

No one—not even the most optimistic economists—expects employment to have recovered by then. If truckers blocked traffic during the still-booming summer of 2008, think what mood they and the public will be in when diesel is over $5 again, over fifteen million people are still unemployed, and millions have lost their homes to foreclosure. Then think what will happen to our economy.

If members of Congress consider this year’s Tea Mob Revolt rough, maybe they ain’t seen nothin’ yet.

So my conclusion is simple. Being a Socratic sort, I’ll express it as a question: isn’t it time to get serious about energy? The long term is no longer long; it’s here now.

Footnote 1: All gasoline prices in this post are for regular gas and come from the Department of Energy’s official website. You can access current prices through this page and historical prices through this link. Just click on “Regular” under “Grade,” download the spreadsheet, and open it in Excel or OpenOffice (which I use). My figures are from the left-hand column, labeled “Weekly U.S. Regular Conventional Gasoline Retail Prices.” Other figures are regional averages. (I assume “conventional” excludes ethanol blends.)

Footnote 2: It’s hard for an outsider like me to get a precise estimate of the drop in global demand for oil that caused the price drop during the Crash of 2008. I could find no weekly figures corresponding to those for gas prices in Footnote 1. In any event, responses in the price of gasoline to demand for oil are probably not immediate. They probably take a month or more, assuming no intervening change in supply by OPEC.

But we can estimate the general level of demand drop from this graph. The average 2008 demand was 86.1 million barrels per day, and it dropped to 84.4 in the first quarter of 2009. That’s a drop of 1.7/86.1, or just under two percent.

Update to Main Post (1/6/11)

Today the New York Times posted a story about our car industry’s partial success in increasing the gas mileage of its collective fleet while still making a profit, largely by reducing the size and weight of its vehicles. The headline, “The Downsizing in Detroit,” wasn’t much news to anyone who’s followed our industry’s struggle to survive over the last several years.

But the story contained two pieces of important news. First, GM CEO Dan Akerson reportedly told his car-design managers to “to plan for oil at $120 a barrel and gasoline at more than $4 a gallon[.]” Since the auto industry typically takes two years from design to production—three if you include time from concept to design—it appears that Akerson’s own time frame is consistent with the more optimistic conclusions from my arithmetic above. That is, it appears to assume that OPEC will use all of its spare capacity to keep oil prices low as long as it can.

Having my calculations confirmed in part by the executive responsible for the auto-industry icon most recently returned from the dead gave me more confidence in them. I trust that the confirmation was independent, through I did notice recent (and unusual) hits on this blog from GM.

The second bit of news was just as important and perhaps reflected the first. Ford is scheduled to announce an all-electric version of its leading Focus compact tomorrow. This announcement will further complicate my personal buying decision, perhaps adding a third choice to the Volt and the Leaf. But that’s a complication that I, our nation and our species can only applaud.

If the announcement of the all-electric Focus is at all credible, I probably won’t make a final buying decision until late spring or early summer. Needless to say, I’ll post my decision and my reasons on this blog.

Stalin in America?

Josef Stalin was a sentimental man. Often he would cry, in private, after “purging” a friend and comrade who, for reasons real or imagined, had become an enemy of Stalin, and therefore of the State.

It’s hard for ordinary mortals to know what really motivated those tears. People like Stalin are so different from the rest of us as to claim the mantle of another species. He is famous for having said that the greatest human feeling is not love, but revenge. He lived that ethos, decimating his colleagues and causing his people immense pain and suffering. Precisely why he cried after sending long-time comrades to the firing squad or the gulag will forever remain a mystery.

Lenin built the Communist state, with all its internal contradictions. But it took Stalin to institute the Terror and deprive the Soviet Union of any chance of beating fascism easily. The only tyrant who ever rivaled Stalin in magnitude and scale of evil and incompetence was Hitler. Genghis Khan, whose regime was enlightened for its time, didn’t even come close.

Now we have the same specter of crocodile tears from John Boehner, our new Speaker of the House. Not once, but several times. He says he can’t even visit kids—so many of whose lives he has hardened or destroyed—without tearing up. Much of his tears appear to come from self-pity, as his age exaggerates the remembered pain of doing manual labor at odd jobs to get to the point where he could hand out tobacco lobbyists’ checks on the floor of the House. [Set video time to 1:16.]

To say that Boehner is now the most dangerous man in America would be an understatement of Obamanian proportions. As Speaker, he will be third in line for the presidency.

Like Stalin, Boehner enforces party discipline. Like Stalin, he has become quite good at it. He hasn’t yet resorted to physical purges, but he’s used every lever of economic, political and social pressure. Under his leadership, moderate Republicans have nearly become extinct.

Boehner’s ignorance and stupidity in matters economic could rival Stalin’s. Like Stalin, he is a man whose record consistently ignores and steps on common people. God knows what the people of his district, who had a much better alternative, were thinking.

Even our centrist president retains Guantánamo (in part because Boehner exaggerates the dangerousness of prisoners there), continues domestic spying, argues in court for over-the-top secrecy, and won’t investigate the war crimes of his predecessors. So saying “it can’t happen here” is whistling by the graveyard.

There is one clear lesson to be drawn from Boehner’s imminent accession to real national power. The President and Vice President should never travel together. They should never even be in the same city at the same time.

Reds on the Right

A recurrent theme on this blog is the resemblance between the mindless ideology that the GOP has pushed for thirty years and the one that destroyed the Soviet Union. [See 1, 2, 3 and 4.] They differ in economic substance of course, but in methods they are surprisingly similar. The only major difference is that our system emphasizes propaganda more than terror, at least up to now.

I have argued that no one “won” the Cold War. Both sides lost. The War’s mutual paranoia caused each side to dig itself deep into an ideological hole—and away from reality—with ultimately catastrophic consequences.

Of course the ideologies differed in substance. Communism is not the same as fundamentalist, over-the-top capitalism. But both ideologies shared essential methods and means that made them dangerous to national health. Both were “totalitarian” in the sense that they ignored reality, brooked no dissent, and involved “creative” (some would say “fantastic”) rewriting of facts and history.

While the substance of GOP ideology differs from the Soviets’, the methods of enforcing the different lies are chillingly similar. Our propaganda organs, such as Fox, are privately funded, but they could have taught the Soviets a thing or three. The Reds had their commissars in every department of government to enforce the party line on ideology, history and “truth.” Commissars even ruled the factory where the great aircraft designer Tupolev and his team of engineers designed warplanes at the height of World War II.

Under Karl Rove, Dubya’s administration had the same thing: he just called them “political operatives” instead of “commissars.” But they did precisely the same job: (1) spying on their departments and reporting ideological transgressions to political controllers, (2) exercising direct authority outside the chain of command, and (3) owing absolute political loyalty to their ideological masters because of their youth, inexperience and ideological zeal. Our commissars even had their own universities where they received political indoctrination, places like the Orwellian-named “Liberty” University and Oral Roberts’ college of religious indoctrination.

A second characteristic of ideological totalitarianism is the cult of personality. During the Cold War, American scientists used to laugh at how Soviet commissars forced their scientists to begin papers on abstruse fields with several paragraphs of praise for Marxism-Leninism, the Soviet Communist Party, and whoever was then its general secretary. Under Duyba, the surgeon general of the United States was ordered [search for “three times”] to mention Dubya, by name, at least three times on every page of his public speeches.

But word play is the worst and most Orwellian of the mutually observed totalitarian tactics. Just as the Soviets rewrote history and redefined words, so does our GOP and its talented PR operatives. I’ve already written extensively [see 1 and 2] on the redefinition of words, and I won’t repeat that analysis here. But Paul Krugman of the New York Times has just brilliantly summarized how the GOP has rewritten recent history and intends to continue to do so.

In order to blame the Great Economic Collapse of 2008 on government, rather than the unrestrained private banks that actually caused it, GOP dissenters on the Financial Crisis Inquiry Commission have blacklisted words like “deregulation,” “shadow banking,” “interconnection,” and even “Wall Street.” Having disposed of these inconvenient words and the underlying concepts, they concluded that government alone had caused the catastrophe.

Failing to face reality always has consequences. The Soviet Union is no more. Most of its subject (non-Russian) peoples are no longer part of it. They are not even satellites. Instead, they are citizens of separate nations with varying degrees of economic dependence on Russia.

Russia itself has only a fraction of the old Soviet Union’s GDP. It is now engaged in a long and painful struggle to rebuild its industrial base and create a modern industrial infrastructure, including roads throughout its vast territory. The only thing truly modern about it today are its armament and space industries. Even its oil industry, despite large reserves, is technologically backward and dilapidated.

A similar fate awaits us if we continue on our present course. It won’t be the arms race that bankrupts us, although our endless wars, financed by borrowing, surely will help. It will be our profligate use of fossil fuels and our utter dependence on them for our entire transportation infrastructure. You have only to look at this graph to see why. Together with Canada, we use eleven times as much oil per capita as the developing world, including the BRIC countries.

Unless we bind up this Achilles heel soon, it will be the cause of our economic collapse, just as an unwinnable arms race was for the Soviets. The precise trigger of our collapse will be a second banking crisis like that of 2008, brought on by failure to face honestly the causes of the first.

Some time ago, I pooh-poohed a theory of an old Russian KGB man turned professor. He had predicted a breakup of these United States much like the Soviet Union’s.

Now I’m not so sure I was right. Our Constitution is just a piece of paper. When economic powerhouses like California, Illinois, New York and Washington State begin to understand how the so-called “red” states are dragging them down, they may decide to head for the exits and make their own, better economic policy. Our nuclear weapons, evenly distributed around the nation, would avoid another civil war because, as I’ve argued, nuclear weapons keep the peace. So a Soviet-style breakup here, while still unlikely, is far from impossible.

How ironic is the resemblance! Even the nicknames are the same. In the old Cold-War days, we used to call the Communists “Reds” because their banners were red. Now we call the GOP states “red” states.

Whoever thought up that color scheme must have been clairvoyant. We Democrats are “blue” because we continue to lose despite having far better contact with reality. The “reds,” with a propaganda machine unmatched in human history, are winning. They’re not the old Russian or Soviet Reds, but our own reds on the right. Yet their “victory” will be a pyrrhic one, just as was the Soviets’, even if it takes another seventy years for the tragedy to play itself out.


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Tax Cuts for the Rich: A Disastrous Blunder

Coda: Is the President a Bleeding Heart?

It’s been nearly a week since “The Deal” now. There will be some low-level haggling. But tax cuts for the rich appear on their way to extension and probable permanence, especially if the President loses in two years.

What’s left of the progressive side of the Democratic party is recovering from shock. But it’s not just the left wingers. People like me had no illusions about the President: we recognized his centrist and domestic “peacemaker” credentials from the start. Compromise and “getting along” here at home were central themes of his 2004 keynote speech that put him on the road to the White House,

People who expected the President to act like the left-wing caricature that Boehner and McConnell painted of him, with the help of Fox Propaganda, just weren’t thinking clearly.

But big things have changed since 2004. In 2004 it was still possible to think of our nation as “Number One” without seeming delusional. The 9/11 attacks had knocked us back on our heels, but we had responded forcefully. We hadn’t captured bin Laden or Zawahiri, but we had routed the Taliban in Afghanistan and seemed to have things under control there. Even in Iraq, where our forces were still searching for WMD, the civil war hadn’t erupted yet. Moammar Kadafi in Libya, having seen what we had done to a similar erratic dictator in Iraq, had voluntarily given up his nuclear weapons program.

At that time, we seemed to bestride the world like a colossus. The division at home remaining from the 2000 election—and just about everything else—didn’t seem to matter much. The nation had no idea of how bad things were just under the surface.

Economics told the same story. The dot-com bubble had been a little one, a minor outburst of irrational exuberance. It had few repercussions outside the stock market and Silicon Valley. By 2004 it was almost forgotten. It seemed like a speed bump on the road to even greater prosperity for a people who proudly proclaimed themselves teachers and leaders of the human race.

But there was rot under the surface. After 2004, it began to emerge like antibiotic-resistant bacteria, eating away at our muscles and skin.

The rot affected our military and financial strength, which of course are interlinked. Our misconceptions of Iraq bogged down our forces. The civil war of 2006-2007 infected our self-confidence. So did our neglect of Afghanistan. What had seemed like a masterstroke of military strategy and clever subversion there turned out to be just one battle in a long civil war, in which we may have taken the losing side.

Economically, the rot was much, much worse. For thirty years we had neglected the critical problem of dependence on foreign oil and the universally predicted advent of “peak oil.” For a shorter time, but at least since Bill Clinton’s tenure, we had gone on a wild bender of deregulation. We had allowed not just ideologues, but the stupidest, most short-sighted, greediest of them, to take over our entire financial system and turn it upside down.

Both of these problems erupted like skin lesions during Dubya’s last term. Gasoline shot to over $4 per gallon and diesel fuel to nearly $5. The Great Economic Collapse of 2008 followed in quick succession.

Ironically, the second disaster mitigated the first. The global economic collapse killed demand for oil and gas, so the price of gasoline dropped to a livable range. But with global economic recovery, it’s already $3 a gallon ($90 a barrel) and headed north. OPEC has just announced that $100 a barrel would be fine, and there is no evidence that even OPEC has the spare capacity to keep it from going beyond that.

China is already the world’s largest car market, and India is not far behind. If they both keep building gas-driven cars, the sky’s literally the limit for the price of oil and gas. Whatever you may think about peak oil, no one can doubt that oil is getting harder and more expensive to find and extract, even discounting disasters like the Great BP Oil Spill.

So despite decades of awareness, we have still have three monumental problems that are causing our national decline. We have to wean ourselves from the foreign oil tit. We have to wrest our financial system back from the gamblers and swindlers and return to making and building things. And we have to come up with the money to create an alternative energy infrastructure, repair the badly dilapidated infrastructure we already have, and (at the same time) mitigate the hardy consequences of the biggest economic collapse since 1929. We can’t do any of that without money, and we are broke.

That’s why the President’s “base” has gone ballistic over The Deal. It’s not just that tax cuts for the rich are an unwarranted concession to the worst scorched-earth, nation-be-damned politics since our Civil War—although they are. It’s not just that the President promised to end them—although he did. It’s not just that the President could avoid them with a stroke of the pen—which he can. It’s not just that the tax cuts are spectacularly unfair and counterproductive—which they are. It’s that we can’t solve our national problems without money, and we can’t get the money we need without raising taxes. It's that simple.

Unfair and unwise taxation creates a negative feedback loop that hastens our national decline. When I was born in 1945, our top tax rate was 94%, on all incomes over $200,000. (No, that’s not a typo; look it up.) Capital gains were taxed less severely. The clear message to plutocrats was: put your money where your mouth is. You claim to be clever and productive. If so, great. If you invest in private business or infrastructure, we’ll tax you lightly.

But if you want to keep your money for multiple homes, yachts, excessive consumption, the kind of jewelry that royalty wears, supporting idle children, or subverting our political system with corruption and propaganda, no deal. You can put your money back to work, or you can give it to your government, which will put it to work for you. Take your pick. But one way or another, your excess wealth is going to go to work for the common good.

Today, the top tax rate is 35%, where it has been since 2003. The capital gains rate is down to 15%, but it doesn’t seem to matter much. Excessive consumption among the rich is rampant. The nonfinancial corporate world has $1.93 trillion in cash but isn’t investing in industry or employment. Donald Trump is a hero, or at least a celebrity.

The sixteen plutocrats—every one of them outside the fossil-fuels industries—who just agreed to give away billions from their personal fortunes (not coincidentally while The Deal was being negotiated) are only the tip of the iceberg. The Koch brothers and Rupert Murdoch aren’t giving away any of their idle wealth. They’re using it to subvert our democracy further and to enrich themselves while we as a nation decline.

Although seldom articulated, this is the reason why Democrats, including relative centrists like me, are going ballistic. The President is a good and smart man. During his campaign, he saw many ordinary people suffering for lack of health care. So he made fixing our abysmal health-insurance system his first priority after economic stimulus.

He did a reasonable job, against enormous, entrenched opposition. But it’s becoming increasingly apparent that spending so much political capital on health-insurance reform was a mistake. The reform requires lots of money up front, to the incidental benefit of insurance and drug companies, with only a CBO promise of eventual deficit reduction. The fix was far, far more complicated than it need have been. But most of all, it took our eye off the ball.

Besides education and our straitjacket Constitution, we have three major, intractable problems that appear increasingly likely to bring us down: energy dependence, financialization and loss of manufacturing, and the unwillingness to any spend money collectively, as a society, to improve our condition.

The President made a good down payment on solving the second problem with his financial reform bill. But it remains to be seen whether even it is tough enough. Just today, the New York Times reported that derivatives are still largely (and secretly!) in the hands of the same people who caused the Collapse of 2008.

As for the other two problems, there is not even a down payment yet. The so-called stimulus money for energy—even for something as mainstream as nuclear power—is minuscule. There is little federal leadership and guidance of the private sector. And The Deal walks us backwards toward greater insolvency, less fiscal flexibility and responsibility, and more room for Republicans to demagogue debt, “starve the beast,” and continue building excess wealth not just in the private sector, but also in the bank accounts of the individuals who run it.

So what’s going on is far from a temper tantrum among the President’s liberal base. The media ought to be ashamed for portraying it as such. It’s a realistic and sober conclusion that the very President whose wisdom, intelligence and sense of perspective we counted on to right our foundering ship of state has failed us badly this time.

The President’s support in 2008 went far beyond self-identified liberals, who now represent less than one-third of our voters. His education, mind and character won him wide support across the board.

Why? Because we all thought he had the ability to see through churning chaff to grab the wheat. We thought he understands what really matters and what we need to get back on our feet. Now we are beginning to wonder.

We can’t get back on our feet if we’re wasting nearly a billion dollars a day on foreign oil. We can’t get back on our feet unless we transform our entire energy infrastructure, in less than two decades, to something more sustainable. We can’t get back on our feet unless we begin to make things again, instead of shuffling paper.

And we can’t make real progress on any of these things unless we all start paying more taxes and building our government back into a partner with industry, not an emaciated serf capable of being drowned in a bathtub.

To be sure, there’s symbolism in tax cuts for the rich. They stand for our multi-decade deviation from the sound economic policy of the postwar period, which once gave us the brightest future in human history. There is also simplicity: the wrongness (in every sense) of continuing tax cuts for the rich at a time of accelerating national decline is not hard to understand. But most of all, there is substance.

Tax cuts for the rich are bad morally. They are dispiriting and destroy social cohesion. They waste national resources at a time when we have too few of them. And they encourage people who think they are smart because they have money to ignore the common good and use their wealth to throw us further off the path of national salvation.

The President saw clearly the folly of invading Iraq at a time when everyone else was beating the drums for war. Besides the 2008 economic collapse, whose extent was not entirely clear on election day, that single act of wisdom and perspective was probably most responsible for his election. But now, when we need his wisdom and perspective most, he seems to have lost them, in favor of feckless compromise with declared enemies who have made their sole goal his personal defeat.

The disappointment we feel is far, far more than an ideological tantrum. It is a sense that we all—including the President—are playing out a vast tragedy of Shakespearean proportions.

Coda: Is the President a Bleeding Heart?

One of the worst lies about the President is that he doesn’t care about ordinary people. Of course he does. If you couldn’t get that fact from his career as a community organizer in one of the most blighted areas of Chicago, you can just look at his most difficult and controversial decisions as President.

Why did he spend so much political capital on such complex half measures for health-insurance reform, when we had and have so many other serious problems? Because on every stop of his year-long campaign, he heard real stories of unnecessary suffering, pain and death from people with no or bad health insurance. I have rarely seen real passion in the President (except on occasion when his judgment is challenged), but he told those stories with real passion. No one could doubt that his primary goal in health-insurance reform was to alleviate real suffering that has no place in a first-world country.

That same point, I think, is what motivated The Deal. The President just couldn’t stomach the thought of millions of honest Americans, willing to work but without jobs, ending up on the streets, in the middle of winter, when their unemployment insurance expires. And he knew from experience that the soulless GOP would hold them hostage without mercy.

He just couldn’t do that to the “little” people who look to him alone for relief from suffering. So he made The Deal, breaking his promise not to extend tax cuts for the rich and maybe ruining his chances for winning in 2012. It was a noble self-sacrifice for ordinary people at the bottom of the heap.

I have no quarrel whatsoever with that motivation. It is a good one.

But there’s a difference between being an effective champion and a bleeding heart. There’s also a difference between short-term relief and relief that lasts for the medium and long term.

We still don’t know whether the GOP was bluffing because no one called its bluff. The President didn’t bargain hard; he didn’t even threaten a veto. By wearing his heart so conspicuously on his sleeve, he let his vicious enemies run over him and back him into a corner, where he had to agree to counterproductive policies.

More important, problems for the people at the bottom whom he cares about are likely to come thick and fast. Gas prices are already rising. I wouldn’t be surprised if they get back to $4 per gallon within two years. If that happens by 2012, with all the general economic stagnation it implies, the President will almost certainly be a one-term president. Who will protect the weak and helpless then?

We have been facing financialization of our economy for about thirty years, and economic devastation from oil dependence for nearly forty. These always seemed like long-term problems. But the long term doesn’t stay long forever.

If we don’t soon get about the serious business of converting our transportation infrastructure away from oil, the resulting economic devastation will be far more severe, far more widespread, and far longer lived than any temporary hardship to people denied unemployment insurance while the GOP slowly decides not to commit political suicide. Imagine how life will be for those same people, many of whom live far from any available jobs, when gas hits $8 or $10 a gallon?

We have, at most, twenty years to get energy right. We may have less than ten. (And these numbers are completely independent of any concern about global warming. They’re just a matter of supply and demand.)

We just can’t wait two more years for private industry to decide to act. We have to push it, and that’s better done with subsidies than a gas tax or cap and trade, which seem politically impossible. You can’t subsidize or build without money, which requires raising taxes.

The same is true for manufacturing. Converting our energy infrastructure will produce many domestic jobs that can’t be outsourced. Even if we get the electric cars and solar panels from abroad, someone will have to service the cars and install their charging infrastructure and the solar panels. Infrastructure conversion is the only new industry that promises anywhere near the number of jobs needed to keep us from falling into a depression or (worse yet) protectionism that leads to a global depression and maybe war, just as in the last century.

So when I say my opposition to The Deal is cold and sober, I mean that literally. Like the President, I’m not indifferent to the people who would suffer in the short term from Republican hostage-taking. It’s just that I think they will suffer a lot more—and probably a lot sooner than anyone thinks—if we don’t raise taxes, restore our government to health and effectiveness, and start working soon on the things that are even now reducing us to third-world status. Chief among them is spending a billion dollars a day on a non-renewable resource which the whole globe uses, demand for which could spike, or supply for which could drop, at any time.

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An Open Letter to the President

Dear Mr. President,

Since 2007, I have been among your strongest and most loyal supporters.

Believing (as I still do) that Hillary Clinton is unprepared and unqualified for the presidency, I began looking for better candidates early. I had heard and reread your rousing 2004 keynote speech. I read both of your books. And I became your avid supporter early in that year.

Except for some last-minute work in 2004, in desperate support of John Kerry, I had never personally gotten involved in politics. Our nation’s critical need—and my admiration of your record and promise—transformed me. I turned this blog to your support, publishing dozens of posts praising your personal qualities: your intelligence, your character, your sense of perspective, your judgment, and your potential for leadership.

I maxed out my personal contributions to your campaign and convinced my wife to so do, too. I canvassed for you and volunteered for your campaign. My wife and I housed another campaign worker for the last three weeks. When you won the presidency on November 2, 2008, I cried like a baby with relief, triumph and joy. My wife and I traveled to your Inauguration and watched you sworn in on a frigid day, although we both hate cold and crowds. We wanted to feel the power of national renewal—your renewal—in the flesh.

As my blog posts attest, I have never been a lukewarm or fair-weather supporter. I understand the forces of history and the forces of evil arrayed against you. I knew change would not come quickly or easily, the more so when your opponents declared as their chief desire that you fail, but days after your inauguration. I think I have the imagination to sense how wearing must be the constant abuse that you and our First Lady take from political opponents, let alone racists, extremists and their TV and radio enablers.

I’m an academic as you once were, and I understand your preference for cool reason, expertise and compromise. They’re part of why I so enthusiastically endorsed your candidacy. I am not one of those many pundits and supporters who insist that you fight for the sake of fighting or that you bang on the table.

More important, I’m acutely aware of all the good things that you have done in office. I appreciate the big things like health-insurance reform, financial reform, the initial stimulus, your saving General Motors and maybe Chrysler, your recouping most of the TARP money, your efforts to advance nuclear power, your superb “race to the top” in school reform, the restoration of some funding for stem-cell research, and your keeping the pressure on climate change, despite an utterly recalcitrant Congress, through every possible measure that the Executive Branch can take alone. I also appreciate the little things, like the agreement with auto makers to improve efficiency, the money for energy conservation, the small subsidies for electric cars, windmills and solar power, your attempt to draw a deadline in Afghanistan, and your efforts to preserve NASA for the future despite a long-neglected budget crisis.

But I must confess I am beginning to lose faith. I once thought that your compromising and conciliation, in the face of the meanest possible intransigence and obstruction, would attract voters. I was wrong. Supporters deserted you. Many doubted your sincerity and commitment. Some doubted your courage. A few even doubted your intelligence. The result was what you yourself described as a “shellacking” of your party at the polls.

As I thought about that shellacking, I recalled a few things that had troubled me before. I thought about the ease with which you surrendered the “public option” for health insurance, although polls said 60% to 70% of Americans supported it. I thought about your approving a minor “surge” in Afghanistan, in support of a self-evidently corrupt and weak government. And recently I thought about the cap-and-trade bill and your giving away (no doubt on poor advice) the chief bargaining points prematurely, causing a delicate bipartisan effort to collapse. (I would have much preferred a gas tax to cap and trade, but cap and trade would be better than nothing.)

So I began to wonder whether you could be a fighter and a hard bargainer. Now I read that you already have signaled a willingness to extend all the Bush tax cuts, including those for the rich, before any real bargaining even begins. Worse yet, you have sent Tim Geithner, Wall Street’s eager errand boy, to “negotiate” future tax rates.

I cannot tell you how much that news has led me to despair. Like many Americans, I don’t trust Geithner’s understanding of the big picture (or of economic cause and effect), his commitment to transparency or accountability, his knowledge of America’s current historic crisis, or his basic sense of right and wrong. I regard him as the fox sent to guard the hens, and one much too young, selfsure and inexperienced even to know their worth.

Far more than most voters, I understand how the numbers work. Allowing even the middle-class tax cuts to expire will not ruin a single middle-class person who has a job. And their extension will save no one who does not. The “stimulus” from continuing them would be far too small, and far too much “discounted” in current business planning, to have any measurable effect in a $14 trillion economy, at least for several years. I think your advisors know this but fear demagoguery from the right.

As for the tax cuts for the rich, we need to let them expire not just to cut the deficit in some way, but to make a point. We must show our trading partners, rivals and enemies—as well as ourselves—that we, the people, are in control of our financial destiny.

That principle is vitally important. Since Ronald Reagan cut the top tax rates nearly in half, the share of income of our top 1% of earners has risen from 9% to nearly 25% of all income. The top marginal rate has fallen from 94% when I was born in 1945 to 35% from 2003 to today.

In my view, that boring accounting “detail” is the root of all our national evils. Far from promoting sound investment as the GOP claims, it has produced idle and surplus wealth that has inflated several bubbles, encouraged gambling and financial excess (which led to the collapse of our economy in 2008), and fostered an epidemic of greed and self-righteous entitlement among the privileged. It has also pumped billions into political campaigns and propaganda, turning our policy-making and electoral processes into a perverted form of entertainment and threatening democracy itself.

Worse yet is the effect this inequality has had on public morale. You have only to read the hundreds of cynical and despairing comments in national on-line media, including both the New York Times and the Wall Street Journal, to feel the palpable distrust and despair of both government and corporations that now grip the nation. With zero confidence in church, state and their places of work, Americans no longer have any institutions they feel they can trust.

I have seen nothing like this in my 65 years of life. The civil rights movement and Vietnam-war protests, which I lived through and which you so eloquently portrayed in your second book, pale in comparison. They had lots of anger, but they also had lots of hope.

No one begrudges rewards to rich people who produce. But when incompetent and self-seeking rich and powerful people cause debacle after debacle, catastrophe after catastrophe, and yet continue to receive outsized and undeserved rewards while ordinary people suffer, the only rational response is despair or rebellion.

Right now, we are in the despair phase. Even from reading, the only comparable eras I know are the Great Depression here and the Weimar Republic in Germany, just before the Nazi putsch began. We find ourselves on a precipice of doubt in ourselves and our system of government.

Our Republic can’t take much more of this. No enemy or economic rival can defeat us—not China, not Russia, not Al Qaeda, and certainly not the Taliban. But our own internal decay can, and it is well under way.

For me and many Americans, the drastic changes in tax burdens wrought by Reagan, and continued by his successors to the present day, are the single most important determinants of our decline. They have spawned such inequality of income and opportunity, not to mention waste, excess and unfairness, as to undermine our collective confidence in our own future.

Someone has to call a halt. Someone has to reverse a trend that is rending our social fabric and tearing the guts out of the most successful and brilliantly cohesive society ever. History seems to have appointed you.

Having read your autobiographical book carefully, I may be one of the few voters who knows that you got good genes from both sides of your family. I recall the stories of your paternal grandfather, a strict leader who held an entire village in respect approaching awe, if not fear. I recall the story of your father, who stood up to a racist in a bar in Hawaii so forcefully and cleverly that the racist eventually bought drinks for your father and everyone else in the bar.

Those stories were among the many reasons I worked so hard for you. I believed (and I continue to believe) that, despite all her self promotion, your rival Hillary Clinton has nothing like such steel. I was appalled at her repeated triangulation and pandering to obvious demagoguery, beginning with her voting to go to war in Iraq without even reading the National Intelligence Estimate. I thought you were made of sterner stuff.

I’m still waiting for you to channel your strong African ancestors. You have the unquestioned power. You have the veto pen. I and millions of Americans are waiting for you to say simply and clearly, “No extension of tax cuts for the rich. If that means no extension for anyone, so be it. We’ll work on the deficit.” Of course, if that happens, you can ask your Democratic colleagues in Congress to re-introduce the middle-class tax cuts as a separate bill and dare the Republicans to vote against it.

I know you have a good political “ear” and are a superb political strategist. Please don’t say that the propagandists and apologists for the plutocracy already have won, that if you don’t extend the tax cuts for the rich, they will shut government down, and their demagoguery will cost you the White House in 2012.

If that’s true, then we have already lost our Republic. But no such result is foreordained. Leadership means taking appropriate risks, and refusing to extend tax cuts for the rich is a risk well worth taking. There are always options.

You have accomplished many good things in less than two years in office. But some of them, such as health-insurance reform, are exceedingly complex. Their benefits will take years to become evident to ordinary people.

Ending tax cuts for the rich is not like that. It is the rare issue in which simplicity, symbolism and substance combine. For three decades the rich have increasingly shirked paying their fair share of the cost of maintaining the society that has given them so much. The result has been to make them not more, but far less, responsible as a class. Our shining city on a hill is morphing into a corrupt, rotten plutocracy far faster than anyone could have believed, faster even than ancient Rome did.

The American people want to believe that you have the skill and moxie to arrest that decline. Many are beginning to doubt, and sadly I am one.

Please don’t disappoint us on this crucial issue. Please begin the process of restoring the system of progressive taxation that once made our nation the most prosperous and cohesive society in human history. You can do that, simply and surely, by exercising your veto power. Even a credible threat of a veto might do.

With best regards and continuing support,

Jay


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Tax Cuts for the Rich and DADT: Two Litmus Tests

Normally, I hate litmus tests. Life is complex, and litmus tests are simple. They remind me of people who put plastic yellow ribbons on their refrigerators and cars and then insist on tax cuts that deprive our troops of proper medical care when they come home.

But these are not normal times. Our political dialogue has so far departed from common sense—let alone intelligent debate—that bold lies pass for conventional wisdom and obvious necessities for heresy.

To restore our faith in ourselves and our sanity, our nation desperately needs two things in particular. One is substantive and economic, the other is more symbolic.

The substantive issue is ending tax cuts for the rich. When I was born in 1945, the top marginal tax rate was 94%, on all income over $200,000. At that time, the President of the United States made $100,000 per year. I guess the thinking was that, if you made twice or more what the president did, most of the excess should go to the common good.

Not coincidentally, then and now were the only times in our history when federal debt had risen within striking distance of 100% of GDP. The causes of the huge debt were different then and now. Then we had fought history’s greatest war and helped defeat the two most powerful and barbaric totalitarian states ever. Now we just spent a pile to avoid a second Great Depression.

But both debts were necessary and for the common good. Paying them off was and is also. And who should pay most, now as then, but those who stood the most to gain? The postwar logic still holds true.

There is no excuse whatsoever for continuing Dubya’s improvident and inequitable tax cuts for the rich. None.

“Job creation” is a bald lie. Thirty years of Reaganomics have proved beyond doubt that “trickle down” is a fantasy. And even if it still held some bare hypoethetical, theoretical plausibility, today’s facts refute it soundly.

Our business corporations are sitting on a collective cash hoard of $1.84 trillion. They aren’t spending it on anything, let alone creating new jobs. The notion that we can create jobs by giving the individuals who run them (not even the corporations themselves) more money through tax cuts is nonsense. And the rich are not about to spend their tax windfall to stimulate the economy; they can’t even spend what they have now. The only dependable result of continuing tax cuts for the rich will be to make them richer.

And so I come reluctantly to my litmus test. I urge and expect the President to pull out all the stops to keep the tax cuts from continuing. If he can’t influence the legislative process, I expect him to use his veto.

I don’t much care whether the middle-class tax cuts expire, too. They don’t amount to a hill of beans for each individual taxpayer. And collectively they represent far less “stimulus” than the tax cuts for the rich, which themselves were less than the 2009 stimulus that was too small.

Anyhow, now is a good time to remind us that we’re all in this together. I’m happy to let go my tax windfall as long as the rich do theirs. Like Warren Buffet, who’s much, much richer, I’m willing to pay my fair share.

I won’t make idle threats. I know in both my heart and head that the President is the best of all realistic alternatives for national leadership, now or on the horizon. That includes 2012. It also includes Hillary Clinton. In my view she’s done nothing to distinguish herself as Secretary of State and absolutely nothing to change my longstanding and firm conviction that she is unqualified for higher office. (See, e.g., 1, 2, 3, and 4).

But if the President doesn’t do all he can to end tax cuts for the rich, my enthusiasm for his leadership will take a big hit. The GOP’s multigenerational assault on progressive taxation is, in my view, the single most egregious economic mistake of the last century. Its consequences are key factors in most of the other mistakes. For example, if the rich had to pay heavily (and currently!) for foreign wars, they would be less likely to support them or begin them, even if our “voluntary” services now make their families immune.

So if the President does not use all his power to end the tax cuts for the rich, with or without those for the middle class, I will lose faith. I will come to see him not as a transformational figure, but as just another bought politician, albeit smarter and better than most.

My second litmus test is more symbolic. Unlike the steady drop of our max tax rate from 94% to 35%, where it’s been from 2003 on, “don’t ask, don’t tell” is not a significant factor in our national decline.

But it’s important for two reasons. First, equality for homosexuals is just the last in a long series of painful but necessary tests of Thomas Jefferson’s credo: “all men are created equal.”

How can our President not see that point with clarity and passion? He sits in the White House because, two generations ago, Dr. King died, and Lyndon Johnson put everything on the line, for long-overdue equal treatment of African-Americans. What about the next victims of discrimination and scapegoating?

Where is the man who, in the midst of one of the longest, bitterest presidential campaigns in our history, spoke to us like adults in Philadelphia, on the subject of race? Can that same man not speak up forcefully, and act forcefully, for the principle that made him president and defines us as a nation? The President should be leading the charge on this issue, not hiding in the trenches hoping it will go away.

I get the respect for due process, for the military as an institution, and for the brass. Above all, I get the deference and loyalty due Bob Gates, who by all accounts has been a superb Secretary of Defense, adding immeasurably to the President’s administration. But Gates has delivered the “cover memo” and lined up all the military ducks.

It’s time now to move and to lead, with the passion required for an issue of equality. There’s still at least one more group waiting in the wings for relief: America’s scapegoated Muslims. They may be the toughest nut to crack because of the fear mongering and the vile lie—winked at by Boehner, McConnell et al.—that the President himself is one of them.

Even cynical politics suggests the President should move now. The many people who hate him just for who he is are not suddenly going to fall in love with him for keeping DADT. He has everything to gain, and little to lose, by leading on this issue, as on fair taxation.

I know, I know. Dubya’s father, the effete George Herbert Walker Bush, said “Read my lips: no new taxes.” Circumstances changed, he raised taxes, and he ended up a one-term president. Since then, every politician has made risk aversion an understatement. Maybe that’s why Hillary became such a feckless triangulator, and why every politician since has had a rubber spine.

I didn’t vote for the elder Bush, and I didn’t much like him as president. But he grows on you. He did he right thing in raising taxes, despite his earlier campaign promise, and he paid the price. On Colin Powell’s advice, he also held back the dogs of war. After an overwhelming military victory in Gulf I, he stayed out of Baghdad and avoided the quagmire that his son jumped into so eagerly on false information. The elder Bush is looking better and better as time goes on, and it’s only been 18 years since his term ended.

Barack Obama once said he would also settle for a one-term presidency if that’s what it took to do the right thing. He now can do two right things, all by himself. He can stop the tax cuts from enduring with his veto. He can wipe out counterproductive discrimination in our military—which soils Jefferson’s and Dr. King’s very memories—with a stroke of his pen. Or he can simply withdraw the government’s appeal of the district court’s order and let the judiciary do its job.

If he does both right things, he can be sure of one thing in a very uncertain world. He will stand at least as high in his country’s and history’s esteem as his predecessor’s father, who these days doesn’t look too bad.

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