(h/t ThinkTanked Blog)

Just in case you didn't see it coming, here's the opening salvo in the Great Bush Tax Hike Cut Battle, courtesy of the Heritage Foundation, that non-partisan think tank that just happens to wrap itself around every conservative value out there.

It's a fantasy, just like every other fiscal policy the Republicans think is gospel. They cue the tax cut fairies and ignore David Stockman, Alan Greenspan, Paul Krugman, and just about every economist on the planet while catering to the few and starving the many.

Reassure the children. The Tax Cut Monster is a big red greedy thing, but it's easy to kill. Do nothing, and the tax cuts vanish! Just like that. The tax cut fairies will cry and stomp, but it'll be all right. We'll all be better off for it, even if the richest 400 people in the country have to pay something more like their fair share.

It's a little (pardon the pun) depressing to read that our economic policy in the face of this "balance sheet recession" is exactly the wrong one. Japanese economist Richard Koo has been sounding the alarm for a while, citing Japan's economic collapse after following the International Monetary Fund's advice to cut their deficit:

Hearing comparisons between the US and Japan? Confused about deleveraging, private saving, and government spending? Look no further – Richard C. Koo explains it all in his testimony before the Committee on Financial Services U.S. House of Representatives.

The first point Koo makes is that ordinary recessions – which tend to come up every so often – and full-fledged depressions are “two different diseases requiring totally different treatments.”

What’s the difference? In a depression, the private sector is focused solely on getting rid of debt. Who cares? Just take an example: a family makes $1000 and saves $100. Normally that $100 is lent by the family’s bank to a borrower who can invest and use that money. But in today’s world, where everyone is trying to get rid of debt, no one wants to borrow that $100.

This is just what happened during the Great Depression, and also what happened to Japan in the 1990s. But Japan was smart: the government borrowed and spent $100 instead, keeping the money flowing. Even though it increased the government’s debt by 460 trillion yen, it sustained over 2,000 trillion yen – “making it a huge bargain,” the understated Koo points out. On the other hand, cutting spending and government deficits will have the opposite, devastating effect.

His testimony is here and it's the clearest argument yet for the administration to stop pushing this deficit nonsense.

Another dispatch from the front lines of the class war informs us that the rich are more ruthless than the rest of us. And in other news, dog bites man:

LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

The rich can also afford lawyers. In some states, despite your mortgage being a secured debt, the mortgage holder can still come after you. So if you're going to walk away, by all means, do so. But don't do it until you check your legal status.

Judging from the recent polls, if the Democrats don't figure out a way to either get people employed or at least extend unemployment benefits for the people who can't find jobs, this year's midterms will be a tsunami that washes the Democrats into the sea:

As the nation contends with a long and sustained labor market recession, a new study from the Center for Economic and Policy Research demonstrates that the current unemployment rate is higher than the conventional measure shows.

"An unemployment rate that has hovered above 9 percent for several months is striking, but the jobs picture is even worse than it looks," said report author and CEPR Economist David Rosnick.

The study, "The Adult Recession: Age-Adjusted Unemployment at Post-War Highs," adjusts the current unemployment rate to account for demographic differences and finds that the unemployment rate has not fallen below 10.8 percent in the last 12 months. During the worst episode of the recession of the 1980s -- the second half of 1982 and the first half of 1983 -- unemployment passed 10 percent for 7 months.

The analysis notes that the population is older today than it was in the 1980s, which has the effect of lowering today's unemployment rate relative to the past. Since they change jobs more frequently and are more likely to move in and out of the labor market, Young people have a higher unemployment rate than older workers. Adjusting for this older workforce shows that the United States is experiencing the weakest labor market since the Great Depression.

The severity of the current unemployment situation suggests that policy makers should consider measures that would slow or reverse this trend. Additional stimulus such as work sharing or the extension of unemployment benefits by Congress would go far in addressing the plight of the millions of unemployed Americans suffering as a result of this downturn.

The Reid Report: Rand Paul, the Joe the Plumber of eye doctors

Eunomia: U.S. hawks suddenly discover the futility of NATO

Ta-Nehisi Coates: Because there are no racists...

Check out the Stand-Up Economist (h/t Batocchio)

Manifesto Joe's Texas Blues: Colorado Springs is what happens when rich twits refuse to pay taxes

onegoodmove: Freedom vs. Suckas

Facing South: Another disaster waiting? Shell Oil running "sister rig" in Gulf nearly identical to ill-fated Deepwater Horizon

Sensen No Sen: IOKIYAR: A Case Study

Balkinization: Glenn Beck as civil libertarian, Joe Lieberman as authoritarian, John McCain and Peter King as terrorist sympathizers and authoritarians

The Agonist: Spill The Beans

The Washington Independent: J.P. Morgan economist calls Senators 'ignorant'

ANNALS OFJOURNALISM: NYTimes Fail...Papal pity-party...Jake Tapper Fail...Bias against bigots...The Blogging Journalist...Mediaite's Ann Coulter...Virtuous Kristof...Fox News' environmental catastrophe...100,000 Rally, media yawns...NPR Check...Paid links...Par-Tay...Facebook stirs up trouble...Fox News ratings dive...Watching America

Paul Ryan is trying to actually say he and the GOP have ideas. Soon, the media will pick up on this and also say that the GOP and Ryan have really cool ideas to take care of that nasty federal deficit and curb health care costs by 2080. Yes, I'm not kidding. 2080 I guess it is an idea even if it's batshit crazy.

The Economist lays it out for you.

Barack Obama's visit with the Republicans last week, some members of the opposition were deeply upset. They bristled at the idea that they have not proposed any serious ideas and are simply the "Party of No". In fact, the accusation is not true: Republicans have proposed some serious ideas recently. I'm going to post on two of them. The first, put forward by Paul Ryan, the ranking Republican member of the budget committee, is the "Roadmap for America's Future" budget proposal and it credibly claims to put America's federal budget in surplus by 2080. The CBO agrees. How does it do that?Simple, it slashes Medicare...top_paying_them">read on

He's shilling for Wall Street yet again as he usually does. He wants to privatize medicare and social security although he uses words like "vouchers" to mask what he's saying.

Crying John Boehner is running from it as fast as he can.

House Republicans are at pains to point out that a far-reaching budget roadmap unveiled by their top budget guy, Rep. Paul Ryan (R-WI), isn't their budget, but when asked today at a press conference what about Ryan's budget he disagreed with, Minority Leader John Boehner couldn't name anything.

"Off the top of my head, I couldn't tell you," Boehner said.

And as Howie Klein points out, he reminds teabaggers why they aren't going to like him.

And Paul Ryan's is one of Wall Street's most devoted partisans on Capitol Hill, a veritable lobbyist inside Congress for all of their interests. Teabaggers don't like politicians who voted for the irresponsible Bush bank bailouts? Ryan didn't only vote for it-- twice-- as a high ranking member of Ways and Means and Banking Committee, the he persuaded dozens of reluctant GOP colleagues to vote for it and after it failed the first time, is said to have been the key figure in passing it the second time a week later!

Blue America just set up a page called Stop Paul Ryan. While he's a spectacular conservative hack, he's still very dangerous. If you can throw a few bucks our way. We plan to target him. Remember, he is a conservative and Wall Street golden boy.

Awfully optimistic, aren't they? I hope they're right:

Dec. 31 (Bloomberg) -- Fewer Americans than anticipated filed claims for unemployment benefits last week, pointing to an improvement in the labor market that will help sustain economic growth next year.

Initial jobless claims fell by 22,000 to 432,000 in the week ended Dec. 26, the lowest level since July 2008, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance fell in the prior week to 4.98 million, and those receiving extended benefits jumped.

Companies are retaining staff as sales improve and production picks up. Gains in consumer spending, which accounts for 70 percent of the economy, may encourage more hiring in coming months, helping to bolster the rebound from the worst recession since the 1930s.

“It’s boding well for outright job growth,” said Stephen Gallagher, chief U.S. economist at Societe Generale in New York, who forecast claims would drop to 430,000. “It seems that some of the layoffs that took place in the early part of the year were excessive.”

John Amato asked me to do a Photoshop of Bernanke as a snake after reading this. There's a larger version and the early drafts of the photoshop, here.

Open Thread below...

Big Brass Blog: Rants...

Jack & Jill Politics: More people protesting outside Glenn Beck’s Christmas show than watching inside

FiveThirtyEight Improving unemployment numbers makes the political case for a Jobs Bill stronger, not weaker

The Pump Handle: Sign of bad things to come from Obama's OMB: Sunstein hires staunch anti-regulatory economist

Facing South: The privatized war in Afghanistan

Southern Beale: Still embarrassed by my fellow Tennesseans