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By Age 40, Your Income Is Probably as Good as It’s Going to Get

Mother Jones

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By age 40 you’re done. That’s the conclusion of a report from the New York Fed that looks at lifetime earnings from age 25 through retirement. The charts on the right tell the story.

The top chart shows average earnings by age. It’s a little hard to immediately see how dramatic the income peak is since the y-axis shows the log of earnings, but if you do the arithmetic it demonstrates that, on average, by age 40 you’re within about $1,000 of your peak earnings. You’ll get inflation adjustments after that, but for the bulk of us, that’s it. Real earnings pretty much plateau after age 40.

The bottom chart illustrates this in a different way. The yellow rectangle shows earnings growth for the bottom 80 percent. The blue line is for ages 25-35, and there’s a fair amount of earnings growth except at the very bottom. The red line is for ages 35-45, and it’s pretty close to zero. There’s virtually no earnings growth for anyone. And the green line is for ages 45-55. It’s actually negative. If you put the latter two age groups together, the report concludes that “average earnings growth from ages 35 to 55 is zero.”

Now, outside the yellow box we have the top 20 percent: the well off and the rich. Those folks show a lot of earnings growth when they’re young, but they also show fairly healthy growth between ages 35-45.

And the top 1 percent? That’s on the very far right, and as you can see, they show earnings growth at every age level.

None of this will come as much of a surprise to anyone, but I thought it was interesting to see it in black and white, so to speak. If you’re planning to make your fortune, you’d better do it by age 40. With only a few exceptions—and those exceptions are mostly for people already making a lot of money—you’re done by then. Your income just isn’t likely to ever go up much after that.

(Via Wonkblog’s Danielle Paquette.)

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By Age 40, Your Income Is Probably as Good as It’s Going to Get

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Is Republican Concern About Middle-Class Wage Stagnation Just a Big Con?

Mother Jones

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Over the past few weeks, Republicans have become oddly troubled about the state of the American economy. It’s not just that recovery from the Great Recession has been slow. Their big concern is that income inequality is growing. Middle-class wages are stagnating. GDP growth is benefiting corporations and the rich, but no one else. The economy is becoming fundamentally unfair for the average joe.

This is certainly a sharp U-turn for a party that’s traditionally been more concerned with cutting regulations on businesses and lowering taxes on the rich. Why the sudden unease with the fact that the rich are doing so well?

The cynical side of me says the answer is simple: Republicans don’t really care about the growing unfairness of the economy any more than they ever have. They’ve just decided to attack Democrats on their strongest point, not their weakest. This was a favorite tactic of Karl Rove’s, and over the past decade or two it’s become a fairly conventional strategy. If Hillary Clinton thinks she can make hay by pointing out how the well the rich are doing at the expense of everyone else—well, let’s just defuse that right from the start by agreeing with her. Thomas Edsall puts it like this:

The danger for Democrats is that they will lose ownership of the issues of stagnation, opportunity and fairness. But they also face what may be a deeper problem: What happens when their candidates are not the only ones who can harness the emotional power that stems from the anger many Americans feel as they helplessly watch the geyser of wealth shooting to the top?

The less cynical view is that the Republican Party is finally responding to the views of the “reformicons,” a loose group of youngish thinkers who have urged the GOP to adopt a more populist, family-friendly economic agenda. This, goes the story, is pushing Republicans in a more centrist direction, and is responsible for their increasing attention to issues of economic fairness. As Edsall says, they have to move to the center if they want to win in 2016. However, Yuval Levin, one of the most prominent of the reformicons, says this is just flatly wrong:

A lot of Edsall’s confusion would be resolved if he considered the possibility that we are actually trying to drag the party to the right, not the center—on the tax question that is his focus, and on the other issues we have taken up.

….Edsall’s treatment of the tax question as the one on which the reformers have stepped furthest from traditional conservative arguments is a good illustration of his failure to see this dynamic….The kind of proposals that “reform conservatives” tend to call for, and the sort that Lee and Marco Rubio have advanced in Congress, consist of the same basic components as most of the successful conservative tax reforms of the last three decades….It does emphasize the business tax code in pursuit of growth more….It does emphasize marginal rate reductions less….It does deliver more of its tax relief through payroll-tax cuts….It does prominently feature the over-taxation of parents among the distortions it seeks to correct.

….This approach to tax reform is precisely an application of longstanding conservative principles and goals to contemporary circumstances….So on taxes, the question between some reform conservatives and some other conservatives is how best to move Republicans to the right….At its core, at least as I see it, “reform conservatism” is just applied conservatism. In many areas of policy, we’re trying to move Republicans from merely saying no to the left, or worse yet saying “yes, but a little less,” to showing what the right would do instead.

I remain unsure what to think of this argument. In one sense, it just seems opportunistic. Reformicons have so far made little headway with a Republican Party that’s been relentlessly moving to the right, so now they’re trying to insist that their agenda is more conservative than even the tea party agenda. Honest. You just have to squint at it in the right way.

But in another sense, I buy Levin’s pitch. Most of the reformicons really are trying to shrink the size of government and lower the overall tax take. The fact that their proposals are perhaps more likely to get adopted in the real world makes them, in a practical sense, more conservative than a firebrand who just wants to scream about taxes with no real chance of ever getting a conservative tax plan passed.

That said, I still think Levin underestimates some of the differences here. The reformicons, he admits, do emphasize marginal rate reductions less than traditional conservatives. But this is not just some minor point of tactics. Ever since Reagan, lowering marginal rates on the rich has been one of the two or three unshakeable Holy Grails of the conservative movement. You see this over and over again when Republicans actively oppose tax cuts if they don’t include a rate cut at the top. They don’t want to reduce payroll taxes. They don’t want to increase child tax credits. What they want is to cut tax rates on the rich. The evidence on this point could hardly be more crystal clear.

Overall, then, I’d say Edsall has the better of this argument, and he’s right to be a bit befuddled. The reformicons may say that their agenda is both more populist and more conservative than traditional Republicanism, but that’s a hard argument to swallow. And when it comes to issues other than taxes, the problems get even worse. Reformicons mostly want to accept the welfare state but transform it into something more efficient. That’s not a message that the modern Republican Party is open to. Ditto on social issues, where reformicons tend to simply stay quiet. But in real life, politicians don’t get to stay quiet. They either toe the line on social issues or else they’re drummed out of the movement.

The bottom line remains the same as it’s always been. To the extent that reformicons are successful, it’s because they aren’t really reformers. To the extent that they’re true reformers, they aren’t successful. Maybe that will change in the future. But not yet.

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Is Republican Concern About Middle-Class Wage Stagnation Just a Big Con?

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Scott Walker Would Be the Most Conservative GOP Candidate Since Goldwater

Mother Jones

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For those of us who are sort of fascinated by the rise of Scott Walker as a Republican presidential contender, here’s an interesting chart from Jason McDaniel, a political science professor at San Francisco State University. It shows the relative conservative-ness of GOP presidential nominees in the past six contested elections, and it demonstrates what an outlier Walker would be if he won next year’s primary: he’d be the first candidate since Ronald Reagan who’s more conservative than the average of the Republican field. And by McDaniel’s measure,1 he’d actually be the most conservative recent nominee, period—even more right-wing than Reagan:

Walker is well to the right end of the conservative spectrum, residing in the ideological neighborhood of Ted Cruz and Rand Paul….It is not a stretch to argue that if nominated, Walker would be the most conservative Republican nominee since Barry Goldwater in 1964.

….In contrast, Jeb Bush’s ideological position closely resembles previous Republican nominees. Bush most closely resembles John McCain in 2008….In Scott Walker versus Jeb Bush, party elites and primary voters are presented with clearly contrasting visions of the future direction of the Republican party….If the recent history of Republican nomination contests is any guide, the party is likely to decide that Scott Walker is too ideologically extreme to be the Republican nominee in 2016.

Of course, the fact that this chart seems surprising is one of Walker’s big strengths. He may be as conservative as, say, Ted Cruz or Rand Paul, but he doesn’t seem as conservative. He doesn’t have Cruz’s bombast and he doesn’t go around hinting that we should go back to the gold standard, like Rand Paul. In practice, that may put him closer to the center of the field than his actual positions warrant.

Still, McDaniel’s data is worth taking note of. If Walker remains hardnosed in his views, it may be hard to hide this from the voters. Eventually he’s going to say something that will cause the Jeb Bushes and Chris Christies to pounce, and that might expose him as too much of an ideologue to win the mainstream Republican vote. It all depends on how well he learns to dog whistle and tap dance at the same time. But then, that’s true of everyone running for president, isn’t it?

1Using data from Adam Bonica, as McDaniel points out via Twitter.

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Scott Walker Would Be the Most Conservative GOP Candidate Since Goldwater

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Republicans Need to Speak Up About Alabama Gay Marriage Ruling

Mother Jones

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Steve Benen has a question for Republican presidential candidates:

Last week, after Gov. Chris Christie (R-N.J.) and Sen. Rand Paul (R-Ky.) made controversial comments about vaccines, almost immediately political leaders in both parties were asked to explain their own position on vaccinations. Within a day or two, every likely presidential candidate was on record, endorsing an anti-disease position.

It’d be nice if we saw similar scrutiny today about developments in Alabama. There are all kinds of political figures poised to launch presidential campaigns, and last week they told us what they think about vaccines. Maybe this week they can tell us whether they’re comfortable with Alabama counties ignoring the federal courts?

In case you missed it—not likely, but I guess you never know—earlier this week a federal judge struck down Alabama’s law banning same-sex marriage. Alabama’s chief justice then ordered local judges to ignore the federal ruling and refuse to issue marriage licenses to same-sex couples. A hearing to resolve the issue in federal court is scheduled for Thursday.

But tomorrow’s hearing isn’t really at issue. A federal court has made a ruling, and the Supreme Court has already declined to issue a stay. The court’s decision is now good law. So the question is: should local judges follow the law, or should they continue to oppose same-sex marriage and refuse to issue licenses?

Like Benen, I’d sure like to hear what everyone has to say about this. The tap dancing would be entertaining. Chris Christie would probably pull his usual cowardly schtick and simply refuse to take a position. Jeb Bush might insist that it’s strictly a matter for Alabama and it would be improper for him to take a position. Mike Huckabee would probably counsel civil disobedience. And Scott Walker? Good question. I don’t know what he’d say. But I’d like to find out.

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Republicans Need to Speak Up About Alabama Gay Marriage Ruling

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Growing Income Inequality Was What Made the Great Recession so Great

Mother Jones

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A couple of years ago a new narrative emerged about the role that income inequality may have played in the boom/bust cycle that ended in the Great Recession. In a nutshell, it goes like this:

Middle class incomes stagnated during the aughts.
Income gains went mostly to the rich, who got ever richer.
To sustain its accustomed lifestyle, the middle class began borrowing more. The rich eagerly provided them with loans, since there were limited opportunities to invest the huge pool of money flowing their way.
This worked fine, until it didn’t. Eventually the middle class couldn’t borrow any more, and the music stopped. The result was an epic crash driven by high household debt levels.

This view is strongly associated with Raghuram Rajan (in his book Fault Lines) and others. But a few days ago Bas Bakker and Joshua Felman wrote a piece suggesting that there’s more to the story. The rich, they say, did more than just provide money that fueled a middle-class consumption boom and bust. The rich participated actively themselves. That is, the rise and fall of the consumption of the rich had as big an effect as that of the middle class—maybe even bigger.

The chart on the right shows the authors’ estimate of consumption patterns by income class. As you can see, from around 2003 to the present, it was fairly flat for the bottom 90 percent. But for the well off, consumption rose substantially from 2003-06, dropped conspicuously between 2006-09 and then began increasing again at a quick pace:

The model suggests something truly striking. The top decile explains the bulk of overall consumption growth. Between 2003 and 2013, about 71% of the increase in consumption came from the rich. Much of the slowdown in consumption between 2006 and 2009 was the result of a drop in consumption of the rich. The rich also played a key role in the subsequent recovery.

Their conclusion:

Our results suggest that the standard narrative of the Great Recession may need to be adjusted. Housing played a role, but so did financial assets, which actually accounted for the bulk of the loss in wealth. The middle class played a role, but so did the rich. In fact, the rich now account for such a large share of the economy, and their wealth has become so large and volatile, that wealth effects on their consumption have started to have a significant impact on the macroeconomy. Indeed, the rich may have accounted for the bulk of the swings in aggregate consumption during the boom-bust.

In some ways, this shouldn’t come as a surprise. If the bulk of income gains are going to the rich, it stands to reason that their consumption will vary substantially as those incomes go up and down. Middle-class consumption still plays a big role here, and the loss of housing wealth after 2006 still explains a great deal of why the Great Recession was so deep and so long.

But if Bakker and Felman are right, it’s far from the whole story. Consumption patterns of the rich are even more volatile than those of the middle class, and when they’re getting most of the income gains, then overall consumption patterns become more volatile too. If more income had been flowing to the middle class during the aughts, there would have been less borrowing and a more even pattern of consumption. The boom would have been more moderate and the bust would have been less catastrophic. Growing income inequality made the economy ever more fragile and ever more unstable, and we all suffered as a result.

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Growing Income Inequality Was What Made the Great Recession so Great

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Arming Ukraine? Sorry, but Europe Simply Isn’t On Board

Mother Jones

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Republican hawks have insisted from the start that President Obama isn’t being tough enough in his approach to the Ukraine crisis. And perhaps he isn’t. It’s a point that’s arguable by reasonable people.

But what’s not arguable is that regardless of what Obama would do if he had a truly free hand, he pretty clearly doesn’t have a free hand. Ukraine is, first and foremost, a European problem, and the leadership of Europe just isn’t on board with a more aggressive strategy against Russia:

Through nine months of struggle to halt Russia’s military thrust into Ukraine, Western unity has been a foremost priority for American and European leaders. Now, with the crisis entering a dangerous new phase, that solid front is in danger of collapsing.

….A growing number of U.S. officials, and some in Europe, particularly in countries bordering Russia, believe that the only way to dissuade Russian President Vladimir Putin from continuing what they see as an invasion of Ukraine is to raise the military cost to Moscow. That means giving the Ukrainians better weapons, they say.

….But the Germans, French and many other European leaders are equally convinced that arming the Kiev government will not halt Putin, but will increase carnage in a war that already has killed about 5,300 people and risk an all-out East-West confrontation.

German Chancellor Angela Merkel, speaking at a security conference in Munich, Germany, made clear that not only would Germany not contribute arms, but it also opposed allies doing so. “Military means will lead to more victims,” she said, arguing that the West should apply a patient containment approach toward Russia.

I’m skeptical about providing arms to the Ukrainians, but I remain open to arguments that it’s the only way to stop Vladimir Putin’s aggression. However, there’s just no way that this will work without European cooperation. End of story. The US can’t pretend that acting on its own has even the slightest chance of success.

So the hawks need to stop obsessing over Obama’s alleged weakness, and instead look overseas. The truth is that Obama has been one of the most aggressive of the Western leaders in the fight against Putin, while it’s Merkel and her colleagues who have insisted on a less confrontational approach. If John McCain and his buddies want to arm the Ukrainians, they need to figure out a way to persuade Merkel that it’s the right thing to do. That might be less congenial for their tea party buddies, whose interest in Ukraine is pretty much zero aside from its role as a way of painting Obama as a weak-kneed appeaser, but it’s the only way they might get what they say they want.

So that’s their choice. Continue bashing Obama, which feels good but will get them nowhere. Or start pressing our European allies, which is boring and difficult and pays no political dividends—but which might actually get them closer to what they claim is their goal. Which is it going to be, boys?

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Arming Ukraine? Sorry, but Europe Simply Isn’t On Board

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How Can The Atlantic Give Us 5,000 Words on Prison Life Without Interviewing Prisoners?

Mother Jones

As someone who writes about prisons, and who two spent years behind bars, I devour nearly everything written about it, especially the long-form stuff. So I was excited when I saw that The Atlantic’s latest issue had a major story called “How Gangs Took Over Prison.”

Then I read it. Anyone who has ever survived anything traumatic—domestic abuse, rape, torture, war—knows the particular jolt that happens in the body when someone makes light of that thing that you once thought could destroy you. I am a former prisoner—I was held captive in Iran from 2009-2011—and a survivor of solitary confinement. In my experience as a reporter who writes about prisons, it is surprisingly rare that I come across people outside of the prison system who justify long-term solitary confinement. Even within the world of prison administrators many are against it. The last two times I’ve attended the American Correctional Association conferences, there have been large, well attended symposiums on the need to curb the use of isolation.

Graeme Wood, the writer of the Atlantic story, gives a different impression of the practice. He visits Pelican Bay State prison, which probably has more people in solitary confinement for longer periods than any other prison in the world. He goes to the Security Housing Unit, or SHU, where people are kept in solitary confinement or, as he gently puts it, are “living without cellmates.” When he enters, he says it’s “like walking into a sacred space” where the silence is “sepulchral.” The hallways “radiate” and the prisoners are celled in the “branches of (a) snowflake.” Beautiful.

It’s difficult to understand why Wood does not find it worth mentioning that the cells in those snowflakes are each 7×11 feet and windowless. Men literally spend decades in those cells, alone. I’ve been to Pelican Bay, and wrote a story about it in 2012. I met a man there who hadn’t seen a tree in 12 years. Wood tells us categorically that everyone there is a hard-core gang member. This is what the California Department of Corrections consistently claims, but if Wood did a little digging, he would find that number of the prisoners locked away in the SHU are jailhouse lawyers. There are people like Dietrich Pennington who has been in the SHU for six years because, in his cell, he had a cup with a dragon on it, a newspaper article written by another prisoner, and a notebook filled with references to black history, which a gang investigator counted as evidence of gang ideology. People get locked away in the SHU based on all kinds of flimsy evidence that doesn’t involve violence. I won’t say it’s a breeze to get ahold of the documentation of this stuff, but it’s not anything a seasoned reporter like Wood couldn’t handle.

Keep in mind that the UN considers solitary confinement for anything more than 15 days to be torture or cruel and inhumane treatment. University of California-Santa Cruz psychology professor Craig Haney did a review of psychological literature and found that there hasn’t been a single study of involuntary solitary confinement that didn’t show negative psychiatric symptoms after 10 days. He found that a full 41 percent of SHU inmates reported hallucinations. The corrections department’s own data shows that, from 2007 to 2010, inmates in isolation killed themselves at eight times the rate of the general prison population.

Wood, on the other hand, makes the experience of living in one of those cells sound transcendental. It is as if everyone is “on one of those interstellar journeys that span multiple human lifetimes.”

It’s hard to know where that impression came from because, in his story on prison gangs, Wood doesn’t interview prisoners. Well, that’s not completely true. He does go to the doors of several inmates’ cells—with prison staff—to ask them about prison gangs, then tells us breathlessly that almost no one would talk to him. Wood travels to England to interview a scholar on prison gangs, but there is no indication that he attempted to conduct a single serious interview with a prisoner. Not that California makes this easy—since 1996, the state has given prison authorities full control over which inmates journalists can interview in person. But still, you can write to anyone. Nearly every one of the dozens of people I’ve written in the SHU have eagerly written back.

Wood tells us that no prisoner can talk about gangs because doing so would mean death. Yet there are plenty who do. I’ve had inmates break down gang culture to me in letters, and I didn’t even ask them to. There are whole wards in prisons for gang dropouts, many of which are eager to talk about the life they left behind. There are former prisoners like Andre Norman who used to be in gangs and now make their living by exposing gang culture. These people are primary sources that could have given Wood intimate details and a nuanced understanding. They’d also tell him about what it’s like to live in a place like Pelican Bay, though chances are he wouldn’t find anyone who would describe living in the SHU as “interstellar.”

It’s remarkable that a publication as reputable as The Atlantic would run such a thinly sourced story. Its 5,000 words are based almost entirely on four sources: an academic, the spokesperson of Pelican Bay, the warden, and the gang investigator. Wood prints their claims straight away. At the beginning of the story, for example, Wood is standing with the prison’s spokesperson, Lt. Chris Acosta, and together they are looking out onto the yard, observing prisoners and their behavior. Then he quotes Acosta saying, “There’s like 30 knives out there right now. Hidden up their rectums.”

Well hold on a second. How did Acosta know that? Did Wood verify this? How did his editor let that one slide?

Claims like this make what could be an interesting story hard to trust, and the piece is full of them—the size of the bar of soap on an inmate’s sink indicates what kind of phone he shoved up his ass; requests for halal food are a way to “create work for the staff” rather than a sign of religious conviction. Since when does this pass as acceptable journalism? Prison reporting is tricky, sure. When I reported on Pelican Bay, I had to take pains to verify every claim a prisoner made through extensive documentation or verification by prison officials. No good journalist would print a claim made by an inmate about a guard, for example, without carefully corroborating it. Many prisoners have an agenda. But so do guards and wardens. Prison officials have a long record of trying to stymy public inquiry. I was recently booted from a prison convention—for which I was registered—for my reporting. When you have two sets of people, like inmates and prison administrators, who each have interests in misrepresenting each other, you make every effort to verify their claims about each other. Those are the ground rules of journalism.

One last thing. Jokes about things in prisoners’ asses are not funny. In a presentation for Wood, a gang investigator likens gang leaders to 1980s Chrysler chairman Lee Iacocca. As an aside to us readers, Wood quips, “I have found it impossible to look at a picture of Iacocca without imagining him stuffing his cheeks and rectum with razor blades.” It sickens me that I am meant to laugh at this.

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How Can The Atlantic Give Us 5,000 Words on Prison Life Without Interviewing Prisoners?

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Iran’s Oil Exports Have Fallen By Half Since Sanctions Were Imposed

Mother Jones

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If you’re curious about the impact of economic sanctions on Iran, OPEC’s newly-released 2014 statistical bulletin provides a pretty concrete look. As the tables below show, in just the past two years Iran’s oil exports have fallen by nearly half and the rial has lost a third of its value. If you want to know why Iran is negotiating over its nuclear program, that’s the story in a nutshell.

The whole report is here. Plenty of interesting little tidbits there for inquiring minds.

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Iran’s Oil Exports Have Fallen By Half Since Sanctions Were Imposed

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Vladimir Putin’s Games Finally Blew Up In His Face Today

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Josh Marshall practically reads my mind with this post:

Were it not for the hundreds killed, it would also be comical the ridiculous series of events Vladimir Putin’s reckless behavior led up to this morning. For months Putin has been playing with fire, making trouble and having it work mainly to his advantage….But the whole thing blew up in his face today in a way, and with repercussions I don’t think — even with all wall to wall coverage — we can quite grasp.

Find extremists and hot-heads of the lowest common denominator variety, seed them with weaponry only a few militaries in the world possess — and, well, just see what happens. What could go wrong?

Read the whole thing. It’s almost precisely what I’ve been thinking all day long. I’d only add one thing: It was sickening listening to Putin’s bleating prevarications and denials after the plane was shot down. Really, truly revolting. If anything could expose him, once and for all, as the petty schoolyard bully that he is, this was it.

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Vladimir Putin’s Games Finally Blew Up In His Face Today

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Student Loan Relief in Sight, Maybe

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Hooray! A new bipartisan bill has been introduced in the Senate to address the student loan crisis. It wouldn’t actually reduce the amount that grads have to pay (you didn’t expect that, did you), but it does make repayment easier by taking a program that already exists as an option and making it the default repayment plan. Jordan Weissman reviews the details:

It looks pretty solid overall. All federal loan borrowers would be enrolled in an income-based program where they paid 10 percent of their earnings each month, with a $10,000 annual exemption. Meanwhile, the government would collect the money directly from workers’ paychecks, just like tax withholding. One potentially controversial part: It would forgive up to $57,500 worth of loans after 20 years, but anything above that amount wouldn’t be forgiven for 30 years. (The current Pay as You Earn repayment program forgives all debts after two decades.) But borrowers who don’t like the income-based option could opt out and set their own payment timetable.

And now for the bad news. The bill is sponsored by Democrat Mark Warner and Republican Marco Rubio. And as Weissman puts it a family-friendly rewrite of Jon Chait, “Rubio doesn’t have a sterling track record of selling his own party on bipartisan policy proposals.” No, he doesn’t, does he? But who knows. Maybe after ripping his political guts out over immigration reform, Republicans will throw him a bone by supporting this bill. It’s not like it really costs any money to speak of, after all.

Then again, passing the bill would represent getting something done, and Republicans these days seem to be convinced that getting anything done makes government look efficient and responsive and therefore redounds to the credit of Democrats. And we can’t have that, can we?

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Student Loan Relief in Sight, Maybe

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