Economic debates rarely end with a T.K.O. But the great policy debate of recent years between Keynesians, who advocate sustaining and, indeed, increasing government spending in a depression, and austerians, who demand immediate spending cuts, comes close — at least in the world of ideas. At this point, the austerian position has imploded; not only have its predictions about the real world failed completely, but the academic research invoked to support that position has turned out to be riddled with errors, omissions and dubious statistics.
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What, after all, do people want from economic policy? The answer, it turns out, is that it depends on which people you ask — a point documented in a recent research paper by the political scientists Benjamin Page, Larry Bartels and Jason Seawright. The paper compares the policy preferences of ordinary Americans with those of the very wealthy, and the results are eye-opening.
Thus, the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.
Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.
And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?
I hope not; I’d like to believe that ideas and evidence matter, at least a bit. Otherwise, what am I doing with my life? But I guess we’ll see just how much cynicism is justified.
What, after all, do people want from economic policy? The answer, it turns out, is that it depends on which people you ask — a point documented in a recent research paper by the political scientists Benjamin Page, Larry Bartels and Jason Seawright. The paper compares the policy preferences of ordinary Americans with those of the very wealthy, and the results are eye-opening.
Thus, the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.
Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.
And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?
I hope not; I’d like to believe that ideas and evidence matter, at least a bit. Otherwise, what am I doing with my life? But I guess we’ll see just how much cynicism is justified.
In other words, this is a fig leaf. Reinhart and Rogoff’s work is a cover for political actors who do not want to take steps to boost the economy and lower the unemployment rate and who want to cut programs like Social Security and Medicare. It is not part of a honest policy debate.
So now we all agree and we can all be friends. But the fact is that this isn’t just some sad case of conservative politicians running around mischaracterizing a sober-minded study and then liberals overreacting in response. Ken Rogoff was writing op-eds drawing strong policy conclusions from this paper. He was delivering congressional testimony drawing strong policy conclusions from this paper. And it’s not as if he’s some political naif who stumbled down from the ivory tower into a partisan controversy he could never have predicted. He was research director at the International Monetary Fund and he knows how the game is played. He’s signed up as a paid speaker for the Washington Speakers Bureau. His “fees vary based on event location” but they promise that in exchange for your money “Kenneth Rogoff reaches beyond the theoretical and delivers quantitative proof from his frequently cited research and best-selling book to explain why our financial history continues to repeat itself-and just where the US and global economies are heading.”
But of course their is no quantitative proof. In a sense there never was, but the University of Massachusetts counter-paper helped exposed how little quantitative proof was there. Now under attack Reinhart & Rogoff are retreating to much softer, much milder, much more defensible claims. And good for them. But that shows how much credit their critics deserve.
In a sane political world everyone would realize that austerity is keeping us in a depression and that we have much, much bigger economic problems.
We should do things that are smart policies that target the long-term unemployed. Amy Taub of Demos has done convincing work on why ending credit checks as part of the job interview process would be a good idea. Extending unemployment insurance is also important. But the idea that we should change course away from boosting the general economy strikes me as a bad idea. The long-term unemployed experience the worst impact of a generally weak economy. But its that weak economy that is doing the damage. If unemployment was actually brought down, which we could do with more expansonary policy, then employers couldn’t afford to be so choosy.
We can fix the unemployment crisis we’ve done it before. And the beauty is, if we put people back to work, that will fix the deficit and many of our other economic problems. And the chained CPI scheme for Social Security should be scrapped, Why Obama’s Stealth Social Security Cut Is Bigger Than It Seems. Keynes was right, it’s time to put people back to work.
The sequester is an idiotic idea that will make our economy worse. It was born because what needs to be done to fix our economy is largely left out of the discussion. In a nutshell President Obama deals from the center and the GOP is so far right, and there’s no left balance in any of our current negotiations. The reality is if our elected representatives would pass what the American people prefer, it looks nothing like the current discussion the villagers are having.
As Paul Krugman shows today there’s an insane parallel to those who were so wrong about the Iraq war and those who continue to be so wrong about what our economy needs now.
We’re just a few weeks away from a milestone I suspect most of Washington would like to forget: the start of the Iraq war. What I remember from that time is the utter impenetrability of the elite prowar consensus. If you tried to point out that the Bush administration was obviously cooking up a bogus case for war, one that didn’t bear even casual scrutiny; if you pointed out that the risks and likely costs of war were huge; well, you were dismissed as ignorant and irresponsible.
It didn’t seem to matter what evidence critics of the rush to war presented: Anyone who opposed the war was, by definition, a foolish hippie. Remarkably, that judgment didn’t change even after everything the war’s critics predicted came true. Those who cheered on this disastrous venture continued to be regarded as “credible” on national security (why is John McCain still a fixture of the Sunday talk shows?), while those who opposed it remained suspect.
And, even more remarkably, a very similar story has played out over the past three years, this time about economic policy. Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam’s alleged weapons of mass destruction.
Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they’ve been wrong about everything (why do people keep treating Alan Simpson as a wise man?), while critics of the consensus are regarded as foolish hippies even though all their predictions — about interest rates, about inflation, about the dire effects of austerity — have come true.
A nice healthy dose of New Deal style Keynesian Economics is all that’s needed. But that’s not going to happen until there’s serious push back from the left. The sad truth is that it’s not possible to do what’s needed for our economy to rebound in our current political system.
Richard Wolff was on Bill Moyers & Company this week and the discussion was about our economic system. And the discussion turned to the lack of criticism of capitalism in our country, Taming Capitalism Run Wild.
Here’s an excerpt:
BILL MOYERS: But so few have done that. As you know, as you’ve written, as you have said, we’ve not had much of a debate in this country for, I don’t know, since the Great Depression over the nature of the system, the endemic crisis of capitalism that is built into the system. We have simply not had that kind of debate. Why do you think that is?
RICHARD WOLFF: Well, I think we have had it from time to time. We have had some of the greatest economists in the tradition, for example, Thorstein Veblen, at the beginning of the 20th century, a great American economist, very critical of the system. Someone who taught me, Paul Sweezy, another Harvard graduate. These are people who have been around and at various times in our history, the beginning of the 20th century, during the 1930’s, again in the 1960’s, there was intense debate.
There has been that kind of thing in our history. I mean, we as Americans, after all, we take a certain pride, which I think is justified, we criticize our school system. We just spent two years criticizing our health delivery system in this country. We criticize our energy system, our transportation system.
And we want to believe, and I think it’s true, that to criticize this system, to have an honest debate, exposes flaws, makes it possible to repair or improve them, and then our society benefits. But then how do you explain, and that’s your question, that we don’t do that for our economic system?
For 50 years, when capitalism is raised, you have two allowable responses: celebration, cheerleading. Okay, that’s very nice. But that means you have freed that system from all criticism, from all real debate. It can indulge its worst tendencies without fear of exposure and attack. Because when you begin to criticize capitalism, you’re either told that you’re ignorant and don’t understand things, or with more dark implications, you’re somehow disloyal. You’re somehow a person who doesn’t like America or something.
BILL MOYERS: That emerged, as you know, in the Cold War. That emerged when to criticize the American system was to play into the hands of the enemies of America, the Communists. And so it became disreputable and treasonous to do what you’re doing today.
RICHARD WOLFF: And for my colleagues, it became dangerous to your career. If you went in that direction, you would cut off your chances of getting a university position or being promoted and getting your works published in journals and books, the things that academics need to do for their jobs. So yes, it was shut down and shut off. And I think we’re living the results. You know, if I were–
BILL MOYERS: Of the silence? Of–
RICHARD WOLFF: Yes. Of the lack of debate. We’re living in an economic system that isn’t working. So I guess I’m a little bit like one of those folks in the 12-step programs. Before you can solve a problem, you have to admit you got one. And before we’re going to fix an economic system that’s working this way, and producing such tensions and inequalities and strains on our community, we have to face the real scope of the problem we have. And that’s with the system as a whole and at the very least, we have to open up a national debate about it. And at the most, I think we have to think long and hard about alternative systems that might work better for us.
BILL MOYERS: I was intrigued to hear you say elsewhere that this is not just about evil and greed. And yet you went on to say capitalists and the rich are determined not to bear the costs of the recent bailouts or the crisis itself. You even go so far as to suggest, as to question their patriotism, and that they may not have the country’s interest at heart. If that’s not greed, what is it?
RICHARD WOLFF: Oh, I think it isn’t greed. It’s– and let me explain why. Yes, I’m critical of corporations and the rich because they do call the shots in our society, and so that brings on them a certain amount of criticism, even though they don’t like it. So I will do that. But beyond that, let me absolve them in the following way. Bankers do what this system goads them to do.
If you talk to a banker, he or she will explain to you, “These are the things that will advance the interests of my bank. These are the problems I have to overcome. And that’s what I try to do.” And my understanding, and I’ve looked at this in great de– is that– that’s correct. They’re not telling a story. They’re doing. They’re following the rules. They do the things that advance their interests and they avoid the things that would damage their interests.
That’s what they’re hired to do as executives or as leaders of their institutions. And that’s what they do to the best of their ability. So for example, I’m not enthused about arresting these people or punishing them in this or that way. And the reason is simple, if we get, I won’t mention any names, but we get some banker and we haul him up in front of a court, and we find out he’s done some things that are not good.
And we substitute the next one. He gets arrested though, he gets fined, he gets removed. The next one is subject to the same rewards and punishments. The same inducements. The same conditions. If we don’t change the system, we’re not going to change the behavior of the people in it. So in a sense, I do absolve them even when they are greedy, because they’re doing what this system tells them to do. And if we don’t change the system, substituting a new crop will not solve our problem.
I recommend watching the whole thing. If your belief in the current system is solid then you shouldn’t have a problem. Hearing the other side shouldn’t scare anyone. There’s also some good history in the discussion. Until we have an honest discussion of what’s wrong with out economic system, we’re unlikely to fix our current economic problems.
More from Richard Wolff and Joe Stiglitz in the extended post.
On virtually every single fact here, though, Scarborough is wrong.
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Does America “know” the problem is with Medicare? In fact, poll after poll shows Americans, for better or worse, think just the opposite.
Maybe I’m a little too surprised here because I don’t watch much Joe Scarborough. He’s indicative of elite opinion in that he understands budget deficits in moralistic terms and has little grasp of economic or budgeting concepts. Exposing him to contextualized analysis only seems to make him angrier.
Instead, they rely on what they heard somebody say the facts are; hearsay economics. Of course, they don’t listen to any old bum on the street; they listen to people of repute, people in their circle. But the repute in question has nothing to do with technical expertise; hey, Admiral Mullen is a serious person, so if he says something on any subject, such as economics, it must be solid.
And where do the reputable people get their information? Why, it’s what they heard somebody in their circle say. It’s hearsay economics all the way down.
You can see how this leads to the incestuous amplification I’ve written about. Everyone they know — tous le monde, as Tom Wolfe used to say — says that we have exploding spending and the deficit is a crucial problem. How could it not be true?
It may seem hard to believe that this sort of petty small-group sociology exerts a vast influence on actual policy, and that it is actually responsible for millions of lost jobs. But the more I look at it, the more that seems to be right.
A sharp and surprisingly persistent slowdown in the growth of health care costs is helping to narrow the federal deficit, leaving budget experts trying to figure out whether the trend will last and how much the slower growth could help alleviate the country’s long-term fiscal problems.
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The slowdown has occurred in both government and overall health spending. From 2009 to 2011, total health spending grew at the lowest annual pace since the government started keeping records 52 years ago, a trend that seems to have continued last year. In the 2012 fiscal year, Medicare spending per beneficiary grew just 0.4 percent. The new Congressional Budget Office data said that overall Medicare outlays grew 3 percent in 2012, the slowest rate since 2000.
Hmm…what happened between 2009 and 2011 related to health care?
Despite the hand-wringing from conservatives and media types about the federal debt and deficits, these charts make it clear that America’s problem isn’t that the government is spending too much. Rather, it’s that the government isn’t spending enough. Investments into infrastructure, education, teachers, public workers, and other programs could boost the economy. Instead, Washington has turned its attention to cutting spending, and the results have been dire, even if they are totally predictable to anyone who has read about the plight of the European economy over the last three years.
There is an astounding level of confusion surrounding the current US deficit. There are three irrefutable facts about the deficits:
First, the United States has large deficits because the collapse of the housing bubble sank the economy.
Second, if we had smaller deficits the main result would be slower growth and higher unemployment.
Third, large projected long-term deficits are the result of a broken health care system, not reckless government “entitlement” programs.
Of course this is nothing new. Economists like Baker and Paul Krugman have been saying this for a while, Kick That Can.
The key point is this: While it’s true that we will eventually need some combination of revenue increases and spending cuts to rein in the growth of U.S. government debt, now is very much not the time to act. Given the state we’re in, it would be irresponsible and destructive not to kick that can down the road.
Right now the central challenge is to reignite the economy — getting jobs back, improving wages, and restoring growth.
Deficit reduction moves us in the opposite direction. That’s because most consumers (whose spending is 70 percent of economic activity) are still losing ground, and businesses won’t expand and hire without more consumers.
So government has to be the spender of last resort.
Under these circumstances, increasing taxes on the middle class (as, for example, Republican legislators and governors are eagerly doing by raising sales taxes, and as the federal government did last month by raising Social Security taxes) makes it even harder for consumers to spend. Which means slower growth and fewer jobs.
Likewise, cuts in government spending, such as occurred in the fourth quarter of 2012, cause the economy to contract — as it did in the fourth quarter.
In other words, we’re still having the wrong discussion. It shouldn’t be how to cut the budget deficit. It should be how to bring back good jobs and economic growth.
Deficit hawks and government-haters are still framing the debate. That bodes ill for all of us.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
- American author Upton Sinclair
There has been a whole bunch of economic mis-information, related to the Great Recession, going around in the MSM for years now. Much of it has to do with anti-Keynesians out there that was exposed when Paul Krugman appeared on Joe Scarborough’s show this week.
If anyone wants to blame the greater severity of the donwturn on the stimulus they would have a hard story to tell. Most of the hit was before a dollar of the stimulus was spent. Employment in March of 2009 was 5.4 million before its year ago level.
Of course CBO was overly optimistic about the pace of the turnaround. It predicted that employment would rise by 1.7 million in 2010 even if we did nothing. Someone may have a story about how this increase would have happened had it not been for the stimulus (lower interest rates?), but it is difficult to envision what that story would look like.
The other point that this chart makes nicely is that the predicted gains from the stimulus were small relative to the size of the downturn. CBO predicted that the maximum benefit from the stimulus would be in 2010 when employment would be 2.4 million higher than without the stimulus. This needs to be repeated a few hundred thousand times the stimulus was only projected to create 2.4 million jobs.
That is not rewriting history or making it up as we go along. This is a projection from an independent agency made at the time the stimulus was passed. The economy ended up losing over 7 million jobs. At its peak impact, the stimulus was only projected to replace 2.4 million of these jobs. And after 2010 the stimulus’ impact quickly went to zero as the spending and tax cuts came to an end.
How can anyone be surprised that the stimulus did not bring the economy back to full employment? No one expected it to be large enough to reverse the impact of a slump of this magnitude.
President Obama and his team deserve lots of criticism for failing to recognize the severity of the downturn. They deserve even more blame for not acknowledging this fact, and that their stimulus was inadequate for the task at hand.
But their errors do not change the reality. The stimulus was not designed to create 7 million jobs. Why would Joe Scarborough or anyone else be surprised to see that it didn’t?
Why? See the quote at the top.
And finally another these pieces of misinformation, that government spending and the size of government has ballooned since President Obama took office. Government spending is at it’s lowest point since the 1950′s, Government outlays rising at slowest pace since 1950s.
f all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.
As would-be president Mitt Romney tells it: “I will lead us out of this debt and spending inferno.”
Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true.
Government spending under Obama, including his signature stimulus bill, is rising at a 1.4% annualized pace — slower than at any time in nearly 60 years.
But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.
Even hapless Herbert Hoover managed to increase spending more than Obama has.
As it turns out, since the start of the great recession the unprecedented shrinkage of the U.S. public sector has hampered economic growth and likely added a full point to the unemployment rate.
By this measure, the era since the Great Recession began has been marked by unprecedented fiscal austerity.
How big a deal is this? Government consumption and investment is about $3 trillion; if it had grown as fast this time as it did in the Bush years, it would be 12 percent, or $360 billion, higher. Given a multiplier of more than one, which is what the IMF among others now thinks reasonable under current conditions, that ends up meaning GDP something like $450 billion higher, which is 3 percent — and an unemployment rate 1.5 points lower.
So fiscal austerity is the difference between where we are now and an unemployment rate not much above 6 percent. It’s a policy disaster.
What all of this shows is that our economic policy since the Great Recession has been all wrong. First a stimulus plan that was way too small, and then austerity and a focus on the deficit.
This could change with a new stimulus, rehiring teachers, and rebuilding our country’s infrastructure, as a start. But nothing will change until more Americans understand it doesn’t have to be like this. See the reality of our recent failed economic policies and demand their government focus on putting people back to work. Until then this depression will continue.
Paul Krugman’s been taking a lot of undeserved s&#t for years now. Mainly because he’s been right about the economy. This has come up again because he was on “Morning Joe” on Monday and they didn’t like what he had to say.
Paul Krugman went on Morning Joe and challenged the Grand Wisdom of the Austerians. Joe Scarborough went and had aconniption fit worthy of a medieval prelate being confronted with heliocentrism for the first time. In Scarborough’s world, to believe that the deficit is anything less than a sword of Damocles is to be insane and unworthy of polite society. And yet, Krugman’s understanding of the economy is widespread, basic Keynesianism that has been proven right time and time again.
How is it that Scarborough lives in such an ideological bubble that standard Keynesianism is so shocking?
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Here at Hullabaloo we call it the Kool Kids Table, a pathway to power and social acceptance inaccessible to those who don’t hold the “right” views.
Do I believe that everyone in Joe Scarborough’s sphere of influence knows that Keynesianism is accurate and that Krugman is right, but chooses to say otherwise because it pads their bank account? Of course not. It takes a conspiracy theorist and an idiot to believe that. Washington is corrupt, but it’s not that corrupt.
No, most of these people believe what they say. I don’t doubt that Scarborough’s perplexed shock is genuine. Just like I believe that most of the conservative theologians who burned Giordano Bruno at the stake believed that our solar system was the only one of its kind. After all, anyone who believed otherwise wasn’t taken seriously and didn’t advance in the Church hierarchy. Everyone who was anyone knew better, and since Bruno refused to accept the conventional wisdom he had to be shunned and ultimately silenced. Bruno’s ideas were unserious and dangerous. The man had his head in the sand and couldn’t see what seemed obvious to everyone else.
Perhaps one day the Church of the Austerians will belatedly apologize to Keynes, Krugman, Stiglitz and all the other great economists whose names have been dragged through the mud. But not likely soon, and not during their lifetimes. In our own sordid lifetimes, Popes Simpson and Bowles will continue to bestow favors upon their cardinals, giving communion only to the Kool Kids who deserve it.
Krugman’s and the Keynesian argument is that most immediate issue we have is to put people back to work, not the deficit. Once the unemployment rate is back down to around 5% then it’s time to start working on the deficit. In other words were in a Depression – not a great one but one nonetheless – and if we don’t put people back to work will stay in it, or as today’s news shows, fall back into recession. (See this from a few years back from Robert Reich, My Father and Alan Greenspan).
The thing is Joe Scarborough and his friends at the Kool Kids Table can scoff at Krugman all they want. But that doesn’t change the fact that he is, and was, right.
Krugman was also on Washington Journal this morning, watch it then you’ll understand what’s going on.
As he’s so good at historian Rick Perlstein explains things so well. An excerpt from his latest post, Our Obama Bargain.
We’ve arrived at a question of character, or deep psychological disposition. I’ve always thought of Barack Obama’s obsession with a “Grand Bargain”—Democrats give something on spending, Republicans give something on taxes—as having very little to do at all with concrete policy questions. After all, the austerity Obama seems to want has more and more been revealed as bad policy. Bad politics, too, of course. More and more, in fact, I wonder whether in some deep wellspring of his being this isn’t ultimately the point: if it’s bad, then it must be good. After all, he’s always said such deals should “hurt.” In the rhetoric of hurt lives the magic thinking: that the pain in itself makes for noble transcendence. In itself—not in the policy outcome. [Emphasis added]
There’s something so arbitrary about it, so cliché: pick the one thing that Republicans are supposed to cherish most (tax cuts!). Pick the one thing Democrats are supposed to cherish most (spending!). If you get both to give up what they cherish, something transcendent has occurred; something mystical; something deep, deep inside America’s soul—healing!
It’s almost as if, were the Democrats’ most cherished nostrum was that the sky is blue; and if the Republicans’ most cherished nostrum were that the sky is red, Obama somehow imagines that if he can somehow get both to agree that the sky is purple, lo and behold, America will finally be a warm and conciliatory place.
But guess what! The sky is blue!
To cash out the allegory: Guess what! Spending more during a recession, and keeping faith with Medicare and Social Security, which are not in imminent crisis anyway, is great for the well-being of the country!
And guess what! Even if feckless Democrats are glad to entertain the notion that the sky just might be purple, pronouncing themselves as eager to cut spending as Republicans (vitiating, by the way, the very premise that big spending is some sort of hard-shell Democratic shibboleth), insane, Leninist Republicans will never, ever, ever, ever, ever stray from their conviction that it is red—in other words, that tax cuts magically create prosperity, always and everywhere, every time. Why, here’s Rush Limbaugh braying that very thing the other day.
And yet, for Obama work goes on, the cause endures, the hope still lives and the dream shall never die—that we can, all of us, some day, agree about things that are not true, that really help no one, but that, by mere virtue of the agreement, will render us no longer Red America and Blue America but the United States of American. And the sky? Everyone will say it is purple. And this will be counted as a great victory.
To be continued. Next time I write about Barack Obama’s biography—and try to puzzle through where this perverse conception of the ways of the world comes from.
I think that shows that Obama’s goal is to get a so-called grand bargain (SCGB) no matter the consequences. And that’s not why he was reelected, The President’s Priorities Are Not In Order.
I’m not entirely sure that’s what the election is about. It certainly wasn’t about the primacy of The Deficit among our various economic problems. Every time The American People getpolled about the issues that are most important to them, including in the exit polling done in real-time during the election the president just cited, The Deficit finishes pretty far up the track behind unemployment and a generic category called The Economy. What becomes important is in what way is that generic category defined. The general public seems to think that The Economy is defined by how many people are working and how many people are not. The political elite, including the president, and the courtier press that services that elite, all seem to define the economy through the deficit. The cognitive dissonance in Washington is about how best to deal with an economy defined by the deficit. The cognitive dissonance in the country is about how best to deal with an economy that is being defined at the highest levels of the government in a way that the rest of the country finds odd and inadequate. So when the general public hears the president say this…
As I said on the campaign, one component to growing our economy and broadening opportunity for the middle class is shrinking our deficits in a balanced and responsible way. And for nearly two years now I’ve been fighting for such a plan, one that would reduce our deficits by $4 trillion over the next decade, which would stabilize our debt and our deficit in a sustainable way for the next decade. That would be enough not only to stop the growth of our debt relative to the size of our economy, but it would make it manageable so it doesn’t crowd out the investments we need to make in people and education and job training and science and medical research — all the things that help us grow.
…it thinks the president has his priorities in the wrong order. When he talks about The American People, and the Middle Class thereof, he ought not to convince himself that he was re-elected because he’s the guy who’ll best bring down The Deficit. He got re-elected because the other guy convinced America that he wouldn’t much care if people ate grass by the side of the road. The people who voted for this president did not do so because they wanted a balanced program to bring down the deficit. They did so because they thought he was less likely to make their everyday lives harder than they already are. Because, as the blog’s First Law Of Economics states: Fk The Deficit. People Got No Jobs. People Got No Money.
As Atrios says, “..if you fix the jobs problem you largely fix the deficit problem. The reverse is not true. If you “fix” the deficit you kill the jobs.” It’s really that simple put people back to work and the economy will be fine. No a SCGB that’s neither grand or a bargain for the people of this country.
It’s quite a time we’re having here. After convincing much of the public that the reason they had no jobs and no money was Teh Deficit, suddenly the existential threat we faced was the deficit reduction plan they’d all been clamoring for. Now that we’ve avoided the deficit reduction plan, we can go back to talking about how the problems are that your grandma is too rich and also, too, Teh Deficit.
Grow the damn economy and the deficit disappears. The end.
Krugman points out his issues with what this deals is likely to mean for the future, That Bad Ceiling Feeling.
So, why am I feeling so despondent, and why do so many other progressives, like Noam Scheiber, feel the same? Because of the way Obama negotiated. He gave every indication of being more or less desperate to cut a deal before the year ended — even though going over the fiscal cliff was not at all a drop-dead moment, since we could have gone weeks or months without much real economic damage.
Now, given his evident antsiness to cut a deal in this case, how credible is his promise to hang tough over the debt ceiling, which is a much brighter red line? He may say that he absolutely, positively won’t negotiate over the ceiling — but nothing in his past behavior makes that believable.
Maybe this time will be different. Maybe the Treasury is secretly preparing to invoke the 14th amendment, or issue a trillion-dollar platinum coin, or direct that the whole budget gap be taken out of spending dear to Republicans. But I have to say that I now expect Obama to cave on the ceiling; and so, of course, do the Republicans, which means that the crisis is going to happen.
The only thing that might save this situation is the fact that Obama has to be aware just how much is now riding on his willingness to finally stand up for his side; if he doesn’t, nobody will ever trust him again, and he will go down in history as the wimp who threw it all away.
But even that may not be enough. I guess we’ll see.
Put all that together and here’s what the fiscal cliff accomplished then: It affirmed to Republicans that Obama will do pretty much anything he can to avoid a debt default, regardless of what he says. It affirmed the White House anxiety that the GOP might not blink before we default. To put it mildly, that’s quite an asymmetry. I want to believe the president can get through the next stage in this endless budget stalemate without accepting some of the more dangerous spending cuts conservatives are demanding. But at this point I’m having a hard time seeing it.
A President who’s too willing to compromise and the GOP crazies in Congress who who know it. Obama wants a “legacy defining” deal that, for him, must involve entitlement cuts, and only he knows why. Why he’s so eager to inflict pain on the least and leave those at the top mostly unscathed continues to be a mystery.
It’s time those of us on the left realize that the deals he keeps cutting are what he wants, and he’s a moderate conservative when it comes to social and economic policy. He’s not a Keynesian or a New Dealer.
The resolution to our economic issues is right in front of us for all to see. Grow the damn economy and the deficit disappears. The end. But there’s is no one in a position of power right now that is willing to pursue that agenda. Until there is the current ginned up crisis schemes will persist.
State leaders like to brag about Texas’ fast growing economy and low unemployment, but rarely do they mention the high poverty rate and so far they don’t appear inclined to pass any new laws to deal with it.
The unemployment rate and the creation of new jobs are the statistics most often cited by Gov. Rick Perry to brag on Texas, and unemployment is among the lowest in the country at 6.2 percent. That’s well below the national average of 7.7 percent.
Perry also uses the Texas Enterprise Fund and the Emerging Technology Funds to encourage employers to relocate to Texas and create new jobs in the state, adding hundreds of jobs every year. Employment, though, is not the only measure of economic prosperity. There is the question of quality of life.
The number of Texans living in poverty rose for a third consecutive year in 2011, adding more than 214,000 people to total 4.6 million. That’s 18.5 percent of the population, 3 percent higher than the nation as a whole, according to the U.S. Census Bureau. [Emphasis added]
It also does a great job of pointing out the difference between Republicans and Democrats in Texas, when it comes to fixing the problem.
The two biggest predictors of poverty are poor education and chronic health problems. Only about 80 percent of Texans have a high school diploma, the second lowest in the country, and Texas has the highest number of uninsured citizens.
Politicians of all stripes decry the high poverty rate in a Texas, but what differs is how to deal with it. Republicans hold every statewide elected office, control both houses of the Legislature and Perry’s appointees direct every state agency.
Perry’s oft-repeated formula for economic growth is low taxes, few regulations and limited lawsuits. Going into the legislative session that begins Jan. 8, he has promised to limit state spending to less than population growth plus inflation.
To help the poor and unemployed, he has proposed requiring drug testing as a condition for some people to receive welfare benefits, to make sure they are employable.
“Being on drugs makes it much harder to begin the journey to independence, which only assures individuals remain stuck in the terrible cycle of drug abuse, desperation and poverty,” Perry said last month.
“Extending taxpayer-funded benefits while ignoring a behavior that could make it virtually impossible for someone to enter the workforce or finish school, sends them down the road to a much bleaker future.”
Democrats are pushing for state government to provide services they believe will help people move out of poverty, including restoring $5.4 billion cut from the public school budget and nearly $1 billion cut from higher education.
Democrats also want the state to expand Medicaid to provide 1.5 million Texans with health insurance at a minimal cost to the state through 2020. Most Democrats fiercely oppose the drug testing proposal.
“To automatically assume that a single mother, a recently unemployed veteran, or a teacher who lost his or her job because of Governor Perry’s budget cuts is a drug user is shameful,” state Rep. Trey Martinez Fischer, D-San Antonio, said. “When a family is in crisis, we have a moral obligation to provide assistance as soon as possible.” [Emphasis added]
The GOP is for more of the same and demonizing the poor and less fortunate, the Democrats are for finding reality-based solutions that help everyone get ahead.
For all intents and purposes, it would seem that 2012 was a bit more than just OK for a lib-lab like myself. It provided more hope–at least more ganas to fight–for public policies beneficial to Latinos. And because the policies would benefit Latinos, they would benefit most everyone else–even the 1%. Of course, I speak in a national sense, since Texas Latinos have more of a fight against the Tea Party’s scorched earth agenda in the Texas Legislature.
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Let’s face it, when Republicans are in power, the only policies having anything to do with Latinos have been negative–Voter ID, cuts in public education, sanctuary cities laws, etc. Democrats, although defending on most aspects of the progressive agenda Latinos seem to support, failed on comprehensive immigration reform, which I’ve argued encompasses all other issues in one way or another, and was the basis of most of the negativity coming from Republicans.
But in 2012, it seems to me that we have a political savings account in which we’ve saved up our well-earned political pennies to expend on a positive political agenda. And it’s time we do. Not only the voters, but any progressive Latino elected official, too. The Latino electeds should not just wait to be told that it’s their turn, and neither should the Latino electorate wait. Whatever the outcome, it is the fight that matters and empowers us for the future.
Now, it may seem to any right-wing Republican or to any white liberal who thinks he/she is doing Latinos a favor, that I’m being too Latino-centric. Well, I started this blog because no one was mentioning Latinos in the progressive conversation, unless it was to chastise our voter turnout on the day after election day. So, let’s toss the hurt feelings aside and begin an inclusive progressive movement. Don’t try to do Latinos any favors with pats on the head, but do some listening, instead.
In 2012, Latinos sent a message and have become part of the conversation–even though most of the TV talking heads on Sunday morning aren’t Latinos, but that’s a whole other battle. But it is up to the Latino electorate (and not just those individual Latinos on end-of-year “Top 10? lists) to continue pushing beyond Election Day to ensure our elected officials create public policy that is beneficial to all.
