Sunday Round-Up - November 17, 2013

This is the weekly selection of news and opinion from outside the US mainstream media.  Today we look at the Republican stranglehold on Congress, the Euro-recession, war spending and the deficit, The Guardian editor's upcoming appearance before Parliament, and bee colony collapse.

In an article posted on its website on November 11, Rolling Stone magazine takes up the lock on Congress that Republicans have in spite of the growing gap between their policies and the wishes of the majority of the electorate.  Tom Dickinson explains how national Republicans have rigged the game by "waging an unrelenting campaign to exploit every weakness and anachronism in our electoral system.  Through a combination of hyperpartisan redistricting of the House, unprecedented obstructionism in the Senate and racist voter suppression in the states, today's GOP has locked in political power that it could never have secured on a level playing field."  The redistricting of Pennsylvania, Ohio, and Michigan is described in some detail.  The vast sum of money spent by Republicans in North Carolina to take over the state legislature in 2010, voter suppression laws, activist judges and the unprecedented use of the filibuster in the Senate are exposed.  And, as Dickinson notes, the Republicans are not done yet.  "In a project with the explicit blessing of Republican National Committee Chairman..., a half-dozen Republican-dominated legislatures in states that swing blue in presidential elections have advanced proposals to abandon the winner-take-all standard in the Electoral College. These states would instead apportion electoral votes by the favored candidate of each congressional district – a method currently practiced by only two, small, homogenous states, Maine and Nebraska. Thanks to the GOP's gerrymandering, such a change would all but guarantee that a Democratic presidential candidate in a big, diverse state like Michigan would lose the split of electoral votes even if he or she won in a popular landslide."

"The EU economy will remain flat in 2013, EU economic affairs commissioner Olli Rehn said on Tuesday (5 November), as he downgraded the bloc's growth forecasts for 2014 and 2015...There was little to cheer for Europe's jobless. Unemployment levels are likely to remain virtually unchanged, although they are forecast to fall from 12.2 percent to 11.8 percent across the eurozone by 2015."   The November 13 EU Observer article should be a reminder to us of how austerity programs implemented to reduce deficits slow recovery from a recession.  The "sequestration" cuts, our own version of misguided austerity, will begin having a greater impact in 2014.  Combine this with the fiscal cliff negotiations and the possibility of another government shutdown and we may be in for an interesting ride leading to the 2014 mid-term elections.

Speaking of the US deficit, a Harvard report out earlier this year put the eventual total monetary cost of the Iraq and Afghan wars as high as 6 trillion dollars - or 35% of the 17 trillion dollars total national debt.  The DNA India website noted that this corresponds to $75,000 for every household in the country.  "There's a sense that we are turning the corner, but unfortunately, the legacy of these wars, because of decision about the way we fought and funded these wars, means we will be paying the costs for a long time to come," [Harvard Professor Linda] Bilmes said in an interview with The Daily Telegraph. "We may be mentally turning the page, but we are certainly not from a budgetary and financial perspective."   As the Congressional budget discussions proceed, it should be helpful to keep in mind this graphic from the National Priorities Project.



 

In the UK, Guardian editor Alan Rusbridger has been asked to appear before Parliament to give evidence regarding the intelligence files leaked by American whistleblower Edward Snowden.  Rusbridger will appear at a meeting of the home affairs select committee amidst rising criticism from British intelligence agencies and Tories.  "Alan has been invited to give evidence to the home affairs select committee and looks forward to appearing next month," a Guardian spokeswoman said.  A New York Times editorial  warns that the freedom of the press so essential to democratic accountability, is being challenged by the Conservative-Liberal Democrat coalition government of Prime Minister David Cameron.



Finally, here's an update on the bee colony collapse that's been occurring around the world and threatening to impact fruit and vegetable production.  Ars Technica reported on October 21 that Italian researchers had cut through the complexity of causes that had surrounded the bee colony collapse.  Infections, insecticides and agricultural practices were all thought to be involved.  "Previous toxicology work in mammals indicated that a specific class of insecticides, the neonicotinoids, could influence the activity of genes involved in the innate immune system."  The researchers started by showing that the same is true in insects. Initially, they worked with everyone's favorite fruit fly, Drosophila, showing that the equivalent genes responded in the same ways in the flies. They then showed that the innate immune response isn't activated when these same flies are exposed to an infection.... Various infections may still be doing the ultimate job of killing the bees, but their virulence could be explained by compromised immune function, caused by a combination of insecticide use and agricultural practices. The results will also provide further support for the European Union's attempt to ban the use of neonicotinoid pesticides."  The relationship between insecticides and colony collapse had been legally challenged by Bayer and Syngenta earlier this year.  

The image of the European honey bee is from Wikipedia.

A World Cup Update & Waiting for Default

As we wait for the United States to default on its debt for the first time in its history in an incredible display of arrogance, extremism, and dysfunction, here's an update on an area of international interest to keep our mind off the coming debacle.  I'm talking, of course, about the 2014 World Cup qualifiers.  The first rounds in all regions are now complete and twenty one sides have qualified.  The remaining eleven slots will be filled in a series of home-and-home playoffs. 

Here are the teams that have already qualified for the 2014 World Cup Tournament:

- Graphic is from FIFA website

The remaining tournament teams will be selected by November 19 after a series of home and home playoffs. This is what it looks like:

Intercontinental playoff (SA-Asia): Uruguay vs. Jordan

Intercontinental playoff (NA,CA, Caribbean - Oceania): Mexico vs. New Zealand

Africa has completed Round 1 of its qualifiers.  The following 10 African teams are vying for the 5 slots allotted to the continent: Ghana, Ivory Coast, Nigeria, Burkina Faso, Cameroon, Tunisia, Algeria, Ethiopia, Senegal and Egypt.

Europe has completed Round 1 of its qualifiers. Nine teams have qualified. The eight best second-place teams from Round 1 will compete for the remaining 4 tournament slots: Greece, Portugal, Ukraine, Sweden, Romania, Iceland, Croatia, and France.

Default

Hopefully, the USA will come off looking better in the tournament than we do in the coming default.  The Party of Tea is an embarrassment to this nation and the effects of their actions, should the default occur, will affect other countries as well as our own.  A New York Times article from today describes the consternation of the rest of the world well: A common question crossing continents remains quite simple: The Americans aren’t really that unreasonable and self-destructive, are they?   'It just goes to show that it’s not only Greece that has irresponsible and shortsighted politicians,” said Ioanna Kalavryti, 34, a teacher in Athens. 'We’ve been held hostage by our reckless politicians, and the interests they serve, for more than three years now. I guess our American friends are getting a taste of the same medicine.'

One Week to Default

As the government shutdown enters its 10th day, we are more than halfway to the US defaulting on its debt for the first time in history.  Default is expected to happen on October 17 unless Republicans reverse their intransigence on raising the debt ceiling.  "In 2011, the last time we were in a major debt ceiling standoff, the U.S. lost its top credit rating, business and consumer confidence plunged and the impasse shook the stock market. All this, even though lawmakers ultimately reached a deal." [Huffington Post, Oct. 8]

This is all happening because Republicans want to stop Affordable Care Act.  "Obamacare", as it was been named by its detractors, reforms health insurance and extends affordable health insurance to tens of millions of Americans.  This law has been passed by Congress, signed by the President, and upheld by the Supreme Court.  In 2012, it (along with taxes on the wealthy) was the distinguishing issue in the Presidential election.  Guess what?  Obama won - by 5 million votes and overwhelmingly in the electoral college (332-206).  The campaign of lies and distortions against the Affordable Care Act [See this piece in Media Matters about 15 Myths perpetrated by the right-wing media] have managed to shake its acceptance with the public and the start-up computer glitches have made it more difficult to sign up for insurance with the health care exchanges. 

With Republicans refusing to budge and with the government shut down for the first time in 17 years, 800,000 government workers have been furloughed and the economy is losing $160 million per day.  Bad as all this is, what could happen if the government actually defaults?  Today, the NBC News website had an article by Jeff Cox that points out some worst possible outcomes:

• "Depression and Unemployment" - "Financial shockwaves, beginning at the Treasury and Federal Reserve, would make their way through banks and eventually blow a hole through the Main Street economy. Just as in the 2008 financial crisis, businesses would quit hiring amid the uncertainty."  Unemployment rate went from 5 percent in 2005 to 10 percent in 2009 as a result of the Great Recession.  Unemployment is currently at 7.3 percent.  We could ill afford another 5 percent on top of this figure.
• "Dollar down, prices and [interest] rates up" - "Among the biggest impacts could be mass selling of the U.S. dollar, an event that would threaten the greenback's standing as the world's reserve currency. That would pound consumers' buying power by boosting prices for everything from groceries to clothing to the gas we pump into our cars...homeowners and prospective homeowners would have to say goodbye to the low mortgage rates "
• "Down go your investments" - "Estimates among Wall Street analysts are the market would drop between 10 percent and 20 percent — with the upper end at what Wall Street defines as a bear market."
• "Social Security payments halt" -starting with the November 1 payment for the duration of the default.
• "Banking operations freeze up" - "If the Treasury and related securities were in default, one does not know what they would be worth," [banking analyst] Bove said. "Assume a Latin American valuation of 10 to 20 cents on the dollar and an estimated $1.28 trillion in U.S. banking equity would be wiped out."
• "Money market funds break" - "The $2.7 trillion money market industry operates on a basic premise: Millions of American depositors won't lose money."  Bove notes : "A Treasury default would make this virtually impossible and millions of Americans would lose billions of dollars."
• "Global markets walloped" - "Some of our biggest trading partners are equally rattled by the prospect of the U.S. defaulting on its debt. The International Monetary Fund this week warned that a default would push the U.S. economy back into recession and cause 'major disruptions' for global markets."

These are worst case scenarios but, considering that the United States has never in its history defaulted on its debt, do we really want to take a chance that none of these will occur?  All this to stop an already passed law that makes health care affordable and accessible to tens of millions of Americans.  What are these people thinking? 

Tornadoes, Hunger, and Getting Angry

Be kind for everyone you meet is fighting a hard battle.

- Plato

The personal tragedies wrought by tornadoes over the past few weeks in Oklahoma are just the latest reminders of the difficulties faced by ordinary people in the course of everyday life in this country. Untimely deaths from disease and accidents, impoverished and malnourished children, homelessness, drug and alcohol addiction, urban violence, hate crimes, student massacres ... the list is seemingly endless. That is why I can't understand the positions taken by today's Republican Party. If you have the opportunity to do something to relieve or prevent the suffering of the vulnerable in our society, why on Earth would you choose not to?

Former Republican presidential candidate and former Senator Bob Dole, answering a question put to him by Fox News' Chris Wallace, said that neither he nor Ronald Reagan would feel comfortable with the GOP's present membership. Dole said that the party should hang a “closed for repairs” sign on its doors until it comes up with a few positive ideas.    A May 28 NYT editorial put it like this: "The difference between the current crop of Tea Party lawmakers and Mr. Dole’s generation is not simply one of ideology....Republicans used to set aside their grandstanding, recognize that a two-party system requires compromise and make deals to keep the government working on the people’s behalf. The current generation refuses to do that. Its members want to dismantle government, using whatever crowbar happens to be handy."

Dole is a staunch conservative and holds many of the same general policy positions as the Tea Party Republicans - although admittedly less extreme. There are few moderate Republicans around nowadays - at least in the Republican Party. The closest you have to moderate "Eisenhower Republicans" - people like former Senators Mark Hatfield of Oregon and Clifford Case of New Jersey - can now be found within the Democratic Party. Whether because of Republican obstructionism or because of his belief in his role as Compromiser-In-Chief, Obama has effectively become an Eisenhower Republican. This is not what we voted for in 2008 or 2012.   That said, his policy and budget positions are generally better than or, at least, no worse than, those of the Tea-Party-controlled GOP. (For a comparison of the various 2014 budget proposals, here's a link to a one-page summary from the National Priorities Project.)

There is so much to criticize in the proposed Republican budget that time and space do not permit even a partial listing. Their proposed cuts to social services can best be described as Draconian. And then there is the infamous sequester brought about by the Budget Control Act of 2011, which in turn was the compromise response to the phony debt-ceiling crisis initiated by Republicans. The Congressional Budget Office has estimated that 750,000 jobs will be lost or not created because of this austerity measure in this year alone.

"But", in the immortal words of Arlo Guthrie, "that's not what I come to talk about tonight." What I really want to talk about is hunger in America and the current and future proposed cuts to the food stamp program. The World Food Summit of 1996 defined food security as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”. Food insecurity then is the opposite: when you don't have enough food to maintain a healthy and active life.

Take a guess. How many Americans, citizens of the wealthiest country on Earth, live with "food insecurity"? Well, in 2011, 50.1 million Americans lived in food insecure households, 33.5 million adults and 16.7 million children. [Feeding America website] That corresponds to about 1 American out of every 6.

What was our elected representatives' response to hunger in America? The Republican-controlled House Agriculture Committee proposed cuts of $20.5 billion to the food stamp program over the next 10 years. The Senate Agriculture Committee proposed cuts of $4.1 billion. This is all part of the response to the phony deficit crisis - imposing austerity measures in the midst of a recession. On May 21, the U.S. Senate blocked an amendment to reinstate the $4.1 billion for food stamps. It was not just Republican obstructionism this time. For whatever reason, 28 Senate Democrats voted with all the Republicans for the 2013 Farm Bill which put corporate welfare ahead of  low-income families.

The differences in the farm bills will now be resolved in a joint House-Senate committee. As of December 2012, approximately 48 million people relied on food stamps. That's more than at any time in history and a direct result of the number of people thrown into poverty in the Great Recession. The House bill would drive 2 million low-income people off food stamps. Paul Krugman's excellent op-ed of May 30 analyzes these untimely and mean-spirited cuts to the Supplemental Nutrition Assistance Program and concludes:

"Look, I understand the supposed rationale: We’re becoming a nation of takers, and doing stuff like feeding poor children and giving them adequate health care are just creating a culture of dependency — and that culture of dependency, not runaway bankers, somehow caused our economic crisis.  But I wonder whether even Republicans really believe that story — or at least are confident enough in their diagnosis to justify policies that more or less literally take food from the mouths of hungry children. As I said, there are times when cynicism just doesn’t cut it; this is a time to get really, really angry."

Yup.

RIP Frank Lautenberg

New Jersey lost one of its finest Senators in history on Monday morning. Frank Lautenberg had a consistently liberal voting record and he will be missed by the Senate majority. He had been ill for a while. But so important was his vote and so total his dedication, he was brought to the floor for several important Senate votes during his illness - including gun control. Unfortunately, thanks to the Republican filibuster, these last public services from the ailing Senator Lautenberg generally went for naught. You can rest assured that Republican Governor Christie will appoint a Republican until the special election later this year. Times will be even tougher for the Senate majority. With the next chance of changing Senate filibuster rules in 2014 and with the unlikely return of the House with its gerrymandered Congressional seats to the Democrats until the next census (2020), it will be a hard time for progressives.

The Fiscal Cliff (and other) Follies

The markets reacted positively yesterday (Dow up 300 points) when the so-called fiscal cliff was finally averted. The dreaded fiscal cliff was and continues to be a self-imposed crisis. It's closely related to last year's Republican-manufactured “debt ceiling crisis” that briefly threw the markets into a downward spin. The centrists who control the Democratic Party today have apparently swallowed the Republican nonsense that the most important problem facing America is the national debt. It's not. The most important economic problem facing America today is the continuing high unemployment and underemployment.

The fiscal compromise was finally approved by the Republican-controlled House. The Senate shamed them into it by overwhelmingly approving it. The compromise raises revenues by discontinuing the income tax break for people earning more than $450k/yr (almost double Obama's going in position). It basically kicks the can down the road two months – when additional battles on the sequestering of funds will take place. If the Republican foot dragging on the compromise is any indication, you can bet the military-industrial-political complex will fight the defense cuts that are in play. And if the lack of cooperation in the fiscal cliff negotiations shown by Republicans is any indication, you can bet that the debt ceiling will again become another ridiculous fiasco at about the same time. Geithner's special steps on the debt run out about then. In any case, we'll get an early indication of how much the Republicans intend to obstruct progress on things beneficial to the average American when Biden's task force on gun violence presents its recommendations to Congress. It will be particularly interesting to see what they do on the reinstatement of the assault weapons ban. 

It took Republican Governor Christie of New Jersey to call out House Republicans, and in particular John Boehner for failing to call for a vote on the $60 billion relief bill for Sandy victims already approved by the Senate. As ABC reported, "Do your job and come through for the people of this country," Christie pointedly said about Boehner. The bill "could not overcome the toxic internal politics of the House majority," Christie said. It had the desired effect – Republicans scrambled to reassure voters that they would vote on $9 billion within days and consider the remaining $51 billion by mid January.

President Obama also has a lot to answer for. As reported in the Huffington Post: “President Barack Obama signed the [$633 billion] National Defense Authorization Act of 2013 on Wednesday, despite his own threat to veto it over prohibitions on closing the Guantanamo Bay prison camp....Civil liberties advocates had roundly criticized the bill over Guantanamo and a separate section that could allow the military to indefinitely detain American citizens on suspicions of supporting terrorism. “ There was no way Congress would have overridden his veto. They would have revoted on the ridiculously overbloated military budget without those provisions. Maybe Obama was just worn down by the fiscal cliff negotiations but this does not bode well for his second term.

Finally just a word about what may be one of the bigger threats to our democracy – gerrymandering (aka redistricting) of House Congressional districts. Talk about the will of the people. With a Congressional approval rating barely registering in double digits for much of 2012, 94% of House incumbents were reelected to office in the 2012 elections – and Republicans, because they are now better at gerrymandering  than Democrats, retained firm control of the House.  From  the Think Progress website: “Based on current tallies, Democrats now lead Republicans 59,343,447 to 58,178,393 in total votes cast for their House candidates — meaning that the American people preferred Democrats over Republicans by nearly a full percentage point of the total vote. Yet, despite clearly losing the popular vote, Republicans will control nearly 54 percent of the seats in the House in the 113th Congress.”  The scary thing is that there is no end in sight to Republican control of the House and their "safe" districts.  Unless the average Republican voter wakes up to what is happening (or more accurately not happening) because of this, we are in for more of the same until the next census in 2020.

Outrageous

With the Republicans threatening to induce a major global economic disaster by not raising the debt ceiling unless their extremist and unfair demands are met, Obama is showing signs of weakening in his defense of the social safety programs including Social Security, Medicare, and Medicaid.  Apparently, these programs are now "on the table" in the debt ceiling negotiations.  Also, apparently, the Bush tax cuts for the wealthy are still "off the table".  This is an outrageous affront to the middle class, the elderly and the poor. 

Instead of addressing the jobs issues that are at the heart of the ongoing economic crisis, the politicians are wrangling over a debt ceiling increase that was executed without controversy SEVEN TIMES during the Bush administration.  This is politics pure and simple.  If the President were a Republican, we would not be having this debate. 

Warren Buffett in a CNBC interview stated that the the Republican-controlled Congress is "trying to use the incentive now that we're going to blow your brains out, America, in terms of your debt worthiness over time."  In May, Buffett stated at a Berkshire Hathaway shareholder's meeting that if the Congress failed to raise the debt ceiling, it would constitute "the most asinine act" in the nation's history. 

Katrina vanden Heuvel offered a solution in a recent Nation column: "Invoke Section 4 of the Fourteenth Amendment, which says that 'the validity of the public debt of the United States … shall not be questioned.' This constitutional option is one that the president alone may exercise."

It will be interesting to see how this shakes out...in the meantime, the Republicans should be held accountable for the ensuing crisis if the US defaults on its debts.  And Obama should be held accountable if he caves in to the extremists of the right - especially if the Bush tax cuts for the wealthy are not also part of the solution. 

The Republican "Jobs" Plan

How stupid does the Republican leadership believe Americans are?   If their recently announced jobs plan is any indication, plenty stupid.  The plan is nothing more than a rehash of the supply-side economics theory that for the better part of 30 years has failed to provide jobs and wage growth for the average citizen.  Their outdated laissez-faire assault on business regulations led directly to the greatest economic crisis since the Great Depression.  Their lower taxes for the wealthy results in more difficult lives for the not-so-wealthy and job losses for public service employees.  Frankly, the only thing this so-called job creation plan will do is make the wealthy wealthier and corporations more powerful. 

The economy is not recovering  quickly - but it is not the fault of "burdensome" regulations or high taxes.  The problem is that there is not enough demand for goods and services.  Demand is low because workers do not have jobs.  And supply-side economics is a proven non-starter for jobs creation. 

The Center for American Progress and the Economic Policy Institute in a 2008 report compared the impact of the 1981 Reagan tax cuts and the 2001 Bush tax cuts against the 1993 tax increase in Clinton's first year.  From the summary of that report we learn the following :

• Real investment growth after the tax increases of 1993 was much higher than after the tax cuts of 1981 and 2001. The yearly growth rate after 1993 was 10.2 percent versus 2.8 percent for the first supply-side era beginning in 1981, and 2.7 percent in the period of the second supply-side era beginning in 2001.
• Over the seven-year periods after each legislative action, average annual real GDP growth was 3.9 percent following 1993, 3.5 percent following 1981, and 2.5 percent following 2001.
• Average annual real median household income growth was greatest after the 1993 tax increases, at 2.0 percent annually compared to 1.4 percent after 1981 and 0.3 percent after 2001.
• Wage levels also did better after 1993. Average real hourly earnings following 1981 fell at an annual rate of 0.1 percent and following 2001 rose at a rate of only 0.3 percent. Following the 1993 tax increases average hourly earnings grew by 0.9 percent per year.
• Employment growth was weaker during the supply-side eras than during the post-1993 era. Average annual employment growth was 2.1 percent after 1981, 2.5 percent after 1993, and 0.6 percent after 2001.

The Elephant in the Room

Democrat Kathy Hochul was victorious (47% to 43%) in a special election in NY-26, one of the most conservative and Republican districts in all of the state. Republicans spent more than $3M trying to hold the seat, which has been in Republican hands almost continuously since the Civil War.  The Republicans fate was sealed when their candidate Jane Corwin stated that she would have voted for the Ryan budget plan which would replace Medicare with a voucher program while retaining tax breaks for the wealthiest. 

The Ryan plan would destroy Medicare, add $6400/year to each senior's medical costs, not keep pace with medical inflation, and make it more difficult (or impossible) for some seniors to obtain any coverage at all.

Following the raucous town halls protesting the plan and the flap over Gingrich's statement (and later retraction) that Ryan's Medicare plan amounted to conservative "social engineering", it's clear that the Ryan plan is the elephant in the room for the 2012 elections.  Only a few Republicans have stepped out of line so far but unless the RNC is totally deluded, their new litmus test could turn out to be their downfall.  That is good news indeed.

Now is the time for Democrats to step up to the plate and start to hammer home how far from the average American's interest those of the GOP are.  From the GOP's extremist agenda to destroy the social safety net to their support of Wall St. interests (e.g., currently blocking the appointee to head the Consumer Financial Protection Bureau) to their refusal to reverse the Bush tax cuts for the wealthy to their blatant support for all things corporate to their attacks against consumer and environmental protections and against workers' rights, people need to begin to realize: the GOP is not on your side.

Protect the Rich, Screw the Unemployed

Republicans and a few Democrats have prevented passage of an extension of unemployment benefits. The bill did not come to the floor for a vote today and 2,000,000 will lose their benefits in December. Merry Christmas.

The opponents of the extension are generally the same clamoring for the continuation of the Bush tax cuts for the rich. So let’s get this straight - a one year extension of unemployment benefits would cost $60 billion dollars of short term deficit. The Bush high-end tax cuts will cause a structural deficit of $700 billion over the next 10 years. Hmm - this somehow makes sense to a deficit hawks.

For every dollar in unemployment benefits there are two dollars pumped into the economy - more economic activity means more jobs. The unemployed will spend the money, not hoard it. One thing appears quite clear - the Bush high end tax cuts suck at job creation.

Some Congressman oppose the benefits because they claim it keeps people from looking for a job. I guess living high on the hog is easy when you get $290/week.

We have never cut off benefits when the unemployment rate was this high. The jobless rate is 9.6% - if we factor in the underemployed, the figure is closer to 17%.

How these people can sleep at night is beyond me.

Obama met with the leaders of the Party of No today and they made some progress on, you guessed it, compromising on the tax break extensions for the rich. While the President doesn’t pass legislation, he can use his bully pulpit to get the public behind what makes sense and he can twist arms in the halls of Congress to get the Democrats on board. They still have a majority in both houses.

Anger and Lies in the Mid-terms

As expected, Republicans have taken over the House of Representatives and greatly reduced the Democratic majority in the Senate. It was a bloodbath.

By early Wednesday, Republicans had netted 60 formerly Democratic seats in the House and led in 4 more. Excluding Patty Murray’s (D-WA) seat, which is still too close to call, the Democrats lost a net of 6 Senate seats. So the total loss in Congress is about 70 seats. In the 2010 midterm, the Democrats have lost more than all the gains they made in the 2006 and 2008 elections (66 seats). 

For comparison, Democrats lost 62 seats in the 1994 "Contract for America" mid-terms.  You'd have to go back to 1938 for a mid-term loss larger than this one.  In that year, FDR's Democrats lost 79 Congressional seats. 

In two years’ time, Democrats have used up their political capital. They spent it on modest changes to health care (i.e., no single payer like most advanced democracies) and to the financial system and to saving the US auto industry. They enacted a stimulus package that was able to save 3 million jobs and helped keep the Great Recession of 2008 from turning into the Great Depression of 2009.

It was not enough and people were angry.

Democrats did not adequately respond to the misleading and downright false statements thrown out by Republicans and they paid for it.   The Big Lie (Harold Evans, The Daily Beast, Nov 1) is “that the aggressive fiscal and monetary measures by which Obama defended America in the Great Recession were a waste of money, a notorious example of the Democratic appetite for throwing money at any problem.” That is, “the stimulus didn’t work”. There were a lot of other lies and misrepresentation around health care and TARP and financial reform but this is the one that worked best for the Republicans in the mid-terms.

Should Obama have worked harder on jobs and less on health care in the first year? It would have made sense politically but let’s face it - extending health care to more than 30 million Americans is a major accomplishment.
Could he have pushed through a stronger stimulus? He might have if he seized the initiative and explained in simple terms why deficit spending is important in overcoming a recession.

The Democrats tried to do what was best for the country in the long run and ended up suffering for it politically.  Rachel Maddow had an excellent segment that summarizes the major accomplishments of the 111^th Congress with a Democratic President and Democratically-controlled House and Senate.

As a sidebar, the Blue Dogs who sometimes acted and voted like Republicans took it on the chin. They could have enacted the stronger measures that progressives were championing and lost anyway. According to an analysis by The Huffington Post, 22 of the 46 Blue Dogs up for re-election went down on Tuesday.
See also: http://en.wikipedia.org/wiki/United_States_midterm_election