A Radically Simple Solution

If you missed today’s Obama presser, here is all you really need to know about what he said: 

We’re not Greece; we’re not Portugal…It turns out we don’t have to do anything radical to solve this problem.

We don’t need to “gut” social programs or stop investing in our country’s future, Obama said, what we need is,

modest adjustments to get our house in order.

Those modest adjustments, of course, must be put in place soon and must stay in place over time, but Obama—seemingly the only non-radical in Washington—calmly and rationally told the American people that, “We don’t need a Constitutional Amendment to do our jobs,” but only a commitment to do what Obama says “80% of the American people” want done: fix the debt problem with a balanced approach—a mix of spending cuts and revenue increases.

In a weird sort of way, it really is that easy.  The truth is that we don’t need to do anything radical because the solution is radically simple: cut spending and raise taxes.

If only the radicals would shut up and govern.

America Aint Broke, But The Fix Is In

Michael Moore, filmmaker and gifted liberal propagandist, gave a great speech in Madison on Saturday.  It began:

America is not broke.

Now, maybe I loved Moore’s speech so much because I, too, have argued that America is not broke.  It’s simply not true. No matter what you hear on television or radio or read in the papers, it’s not true.

Most of that nonsense comes from panic-inducing politicians and pundits who represent a segment of the population who will benefit from your fear, from your sense that America is failing and on the edge of financial ruin.

Politifact, the fact-checker, posted an article about two weeks ago refuting the whole notion that states are broke.  The article was set in the context of the Wisconsin fiasco, brought on by Governor Scott Walker, who,

started using the “broke” description as he unveiled his controversial budget-repair bill, which would force state employees to pay more for health care and pensions and curtail collective bargaining rights for most public employees.

The article cited five Walker quotes, which are typical of what you hear all over these days:

I don’t have anything to negotiate. We are broke in this state. We have been broke for years.

The bottom line is we are trying to balance our budget and there really is no room to negotiate on that because we’re broke.

We’re broke. We don’t have any more money.

You can’t really negotiate if you don’t have any money to negotiate with.

The facts are clear: Wisconsin is broke and it’s time to start paying our bills today – so our kids are not stuck with even bigger bills tomorrow.

This stuff is sort of like another popular phrase we have all heard a thousand times, sometimes even from the lips of President Obama, who should know better:  “We have to live within our means.” 

“Means”?  What does that mean?  If it simply means we have to get closer to balancing our budget, we can all agree.  We do.  But if it means what one writer cited by Politifact thinks it means, then, well, we shouldn’t agree:

There may be talk about governments being bankrupt and insolvent when what is meant is, “We don’t want to raise taxes and don’t want to spend so we have to cut.”

Politifact demolished the idea that “broke” actually means “bankrupt.”  A University of Wisconsin-Madison professor, Andrew Reschovsky, put Walker’s hysterical claims in proper perspective with another point I have made over and over:

“That’s obviously absurd,” Reschovsky said. “We obviously aren’t broke. The analogy to a household is really a fallacious one.”

He said the government has powerful tools at its disposal to make ends meet: taxes or manipulating fees. You could also put off some spending or shift some debt into the next fiscal year — tricks that state budget offices have routinely used.

No, government budgets aren’t like household budgets, something Obama also says way too much.  Governments can tax; they have the power to responsibly increase their revenues, if the will is there.

But like Republicans everywhere, Governor Walker refuses to consider raising taxes.  In fact, he cut them when he took over, adding to the state’s deficit problems.  So, it’s just false to use the word broke.  Or, “We have to live within our means,” if by means one happens to mean a grossly underfunded government.

Here is how Michael Moore put it:

Contrary to what those in power would like you to believe so that you’ll give up your pension, cut your wages, and settle for the life your great-grandparents had, America is not broke. Not by a long shot. The country is awash in wealth and cash. It’s just that it’s not in your hands. It has been transferred, in the greatest heist in history, from the workers and consumers to the banks and the portfolios of the uber-rich.

Calling the idea that our nation is broke the “Big Lie,” Moore said,

For us to admit that we have let a small group of men abscond with and hoard the bulk of the wealth that runs our economy, would mean that we’d have to accept the humiliating acknowledgment that we have indeed surrendered our precious Democracy to the moneyed elite.

He also made yet another point I tried to make a while back in Grandma Margie’s Magic Pie—you can see how great minds think alike here, right?  Moore said,

They control the message. By owning most of the media they have expertly convinced many Americans of few means to buy their version of the American Dream and to vote for their politicians. Their version of the Dream says that you, too, might be rich some day – this is America, where anything can happen if you just apply yourself! They have conveniently provided you with believable examples to show you how a poor boy can become a rich man, how the child of a single mother in Hawaii can become president, how a guy with a high school education can become a successful filmmaker. They will play these stories for you over and over again all day long so that the last thing you will want to do is upset the apple cart — because you — yes, you, too! — might be rich/president/an Oscar-winner some day! The message is clear: keep your head down, your nose to the grindstone, don’t rock the boat and be sure to vote for the party that protects the rich man that you might be some day.

I had pointed out that I knew people who received Social Security and Medicare—Democratic programs—who couldn’t wait to vote for Republican budget-slashers last November.  I knew people whose children enjoyed free and reduced lunches—a Democratic program—who couldn’t wait to go to the polls and punish liberals.  And I knew union members—long supported by Democrats—who would salivate as they cast their votes for the very people out to destroy their union.

Mostly because of the false idea perpetuated by the wealthy class, that anyone can be rich and those nasty liberals and Democrats want to ruin everyone’s chance at success and make everyone a ward of the state.

Saying our country is broke is just the latest way of convincing the working class of voting against their economic self interests. But perhaps Governor Walker’s actions in Wisconsin have, at least for the next election cycle, motivated enough folks to work to throw out a large number of Republicans and restore at least some semblance of fiscal sanity without further devastating the American worker.

While We Were Away, Republicans Were Trying to Kill The Economy

While the mess in Wisconsin drags on, the economic recovery remains fragile and anemic.

And the Republicans in Congress—almost unnoticed—are doing everything they can to exacerbate its fragility and deprive it of much-needed iron—government spending.

Most every economist this side of Rush Limbaugh understands that there is a deficiency in demand in our economy.  That’s one reason (but not the only one) why American businesses are sitting on a Chris Christie-size pile of cash.   But what to do about the demand problem is the issue.

The Republican answer is austerity.  Crippling austerity, it turns out.  Last week, Speaker Boehner famously said he doesn’t much care (“so be it”) if the GOP spending cuts kill jobs, because they would be government jobs.

But yesterday, the Financial Times published a story indicating that it won’t just be government workers who take a hit from Republican budget-cutting hysteria. The headline was:

Goldman sees danger in US budget cuts

The story began:

The Republican plan to slash government spending by $61bn in 2011 could reduce US economic growth by 1.5 to 2 percentage points in the second and third quarters of the year, a Goldman Sachs economist has warned.

Even if—to avoid a government shutdown—Democrats managed to whittle down the budget cuts in a compromise deal with Republicans, say, to $25 billion, that will still “lead to a smaller drag on growth of 1 percentage point in the second quarter.”

Mark Zandi, chief economist at Moody’s Analytics, and former John McCain campaign adviser, concurs:

The betting is that we’ll see cuts somewhere close to $25-, $30 billion that take affect beginning in the second quarter of this year. And that could shave growth by as much as a percentage point. So it would weigh on growth. It would have longer lasting affects, but near-term it would be a negative.

Kudos to at least one Senate Democrat Chuck Schumer, who said,

This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy.

Unfortunately, the cut-and-grow fantasy is not that easy to kill.

Paul Krugman, wrote a few days ago:

It’s amazing how this whole crisis has been fiscalized; deficits, which are overwhelmingly the result of the crisis, have been retroactively deemed its cause. And at the same time, influential people around the world have seized on the idea of expansionary austerity, becoming ever more adamant about it as the alleged historical evidence has collapsed.

Since the fall of 2008, there has emerged two diametrically opposed approaches to solving our (and the world’s) economic predicament:

(1) Stimulate the economy through government (deficit) spending until consumer demand picks up sufficiently to sustain a strong recovery

(2) Drastically cut government spending because deficits are a drag on the economy

It appears to me that the balance of economic opinion—from real economists—agrees with (1).  But Republicans—energized by anti-government deficit-phobes in the Tea Party movement—have successfully changed the debate from nurturing the economy back to health and creating jobs to killing labor unions, dismantling government programs, and making draconian cuts in government spending.

It’s fair to ask: What does killing Big Bird and collective bargaining have to do with lowering the unemployment rate?

Mark Thoma, Professor of Economics at the University of Oregon, wrote in The Economist:

Policymakers are not taking proper account of the risk of an extended period of stagnation. We should be pursuing additional fiscal stimulus along with quantitative easing as insurance against a stagnant economy that persists into the future, in fact this should have happened months ago.

He wrote that in October of 2010.

But Thoma is a real economist.  He doesn’t just play one on TV or radio.  And as Krugman said,

From where I sit, it looks as if the ascendant doctrines in our policy/political debate are coming precisely from people who don’t know and don’t care about technical economics. The revival of goldbuggy sentiment, the fear of hyperinflation in the face of high unemployment, the continuing force of the notion that tax cuts don’t increase the deficit, aren’t coming from some subtle battle among mathematical modelers; they’re coming from the same people who reject evolution, climate science, and more. They don’t need no stinking technical analysis. The truth is that the economics profession is proving far less relevant to public debate, even in the face of economic crisis, than was dreamed of in our philosophy.

Now, whether you think it good or ill that professional economists have lost their clout, the fact remains that in their place have come fiscal and monetary policy geniuses like Michele Bachmann and Glenn Beck and, God forbid, Ozark Billy Long.  People like these three have more to do with how we are fighting this crisis than those who have spent a lifetime studying economics.

And if that doesn’t scare you, then you must be a wealthy Republican.

[J.S. Applewhite / AP (left, center); Cliff Owen / AP]

Unimaginable

Two years ago, who would have thought that the Huffington Post, a liberal-minded news source, would have headlined a story with this:

Here’s the opening paragraph:

WASHINGTON – President Barack Obama, less than two months after signing tax cuts for the wealthiest Americans into law, is proposing a budget to congress that attacks programs that assist the working poor, help the needy heat their homes, expand access to graduate-level education and undermine that type of community-based organizations that gave the president his start in Chicago.

And who would have thought two years ago that a Republican—Ron Paul—would appear on television and in the context of the budget call our Democratic president a “warmonger”?

All weekend I heard Jack Lew, Obama’s budget director, on the cable shows trying to explain why the President’s cuts were not only necessary, but courageous.  Well, okay.  But they certainly aren’t representative of the Democratic Party I used to know.  I’ve never heard of a Democrat arguing, for instance, that we should cut $100 billion from Pell Grant programs, have you?

Mr. Lew, who was President Clinton’s last budget director,  was on CNBC’s Squawk Box this morning, again defending the President’s budget, due to be released today.  He did make one good point:

I left this job ten years ago with a surplus of $5.6 trillion over the next ten years; I came back with deficits of $10 trillion over the next ten years. 

I suppose it’s bad manners these days to point out why Mr. Lew found things in such bad shape, or maybe it’s simply that everyone has forgiven the Bushies for their tax-cutting frenzy, since Mr. Obama seems to have partially embraced their strategy, too.

But I find it bad manners to talk about massive budget cuts—domestic discretionary spending, as Obama bragged this morning, will go back to Eisenhower levels—without talking about the enormous revenue short fall, brought on by a starve-the-government-beast philosophy. I never heard Mr. Obama mention that in his short budget speech this morning.

Such a philosophy used to be the property of the Republican Party, but it is increasingly being embraced, to some degree or another, by Democrats.

The federal government is spending about 25.3% of GDP.  But it is taxing the country at about 14.4% of GDP.  What’s wrong with that picture?  Why should all of the pressure be on the spending side, especially when Democrats—which is supposed to be a goverment-friendly party—control the White House and the Senate? 

To be fair, the budget projections in the President’s new budget do show that in ten years, revenues would be 20% of GDP, and spending will decrease to 23.1%.  But no one believes House Republicans will agree to raise revenues so responsibly.  There mission is to kill government, not fund it.

In any case, the President’s $3.73 trillion budget contains some $1.1 trillion in budget cuts over the next ten years, which according to The Wall Street Journal, amounts to about  a 14% reduction in the projected debt over that time.  About one-third of the savings would come from tax increases, including some on the wealthy, but not nearly enough to make up for the tax-cut deal Obama made with Republicans at the end of last year.

Besides the cuts noted at HuffPo, the budget does manage to offer up $78 billion in defense cuts, even as we are spending somewhere around $2 billion a week—that’s every week—in Afghanistan and another $ 1 billion a week in Iraq. 

On both issues—tax hikes for the wealthy and defense budget cuts—Obama would have the American people with him if he were to go farther.  A poll at the end of last year showed that 61% of Americans prefer tax increases for wealthy Americans as a “first step” toward tackling the deficit.  Next in line was cutting defense spending, at 20%. So, there is room to act responsibly on the revenue side, as well as the spending side.

Predictably, the Right says Obama’s budget doesn’t go far enough.  Speaker John Boehner said Obama’s budget “continues to destroy jobs by spending too much, borrows too much and taxes too much.”  He also falsely claimed, “We’re broke.”

Congressman Paul Ryan, budget guru for the fiscal-sky-is-falling Republican Party, said,

Presidents are elected to lead, not to punt. And this president has been punting.

Even  deficit hand-wringers on the Democratic side are chiming in with criticism, not of the President’s dramatic cuts, but of his failure to do more. Erskine Bowles, the Democratic co-chairman of Obama’s debt commission, said:

The budget goes nowhere near where they will have to go to resolve our fiscal nightmare.

Republican Joe Scarborough said this morning on his show that the whole thing was “depressing.”  He complained that the administration is “slashing like crazy” the relatively small discretionary part of the budget—about 15% of federal spending—while “they don’t the courage to go after the part of the budget that causes the debt crisis.”

By courage, of course, Scarborough means going first on offering cuts in Social Security, Medicare, and Medicaid.  But why would Obama want to do that?  Tea Party Republicans claim they were elected as serious budget cutters, pledging to change the game in Washington.  Why not let them offer up their “courageous” plan first?  So far, they have offered nothing on entitlements, hoping, I suppose, that Obama would take the bait and offer up something first. 

But I can still remember the last campaign in which many Republicans demagogued cuts in Medicare Advantage, which cuts were used as a partial funding instrument of the health care reform act. They tried to sell senior citizens on the idea that Democrats were jeopardizing Medicare.  So, this time, Republicans get to go first.

John Boehner did pledge that “it’s all coming,” speaking of the GOP’s long-term deficit-reduction strategy.  And when it gets here, Obama’s budget cutting, which doesn’t look all that good right now to many liberals, may suddenly look pretty good.  And the President may be able to take advantage of the division in the Republican ranks between the kill-government-at-all costs wing and those who just want to wound government so severely it will never walk again.

That is if he doesn’t cut another deal with them.

Republicans Off To An Amusing Start

“I get strength everyday just going to my Facebook site.”

—Speaker John Boehner

It’s been a fun beginning of the 112th Congress, at least on the Republican-controlled House side.

There were two congressmen who cast unconstitutional votes before they were sworn in—they played hooky during the official ceremony on Wednesday to attend a fundraiser. Now, those are two Republicans who have their priorities straight!

There was the matter of fulfilling the Pledge to America’s pledge to America to cut the budget by “at least $100 billlion in the first year alone.” Would you settle for a down payment, America? When asked by NBC’s Brian Williams about specific budget cuts, Boehner the Bawler, who has staked his career on cutting spending, said, “I don’t think I have one off the top of my head.”

There was a Jesus-invoking heckler, who during the Mystical Reading of the Constitution, interrupted the reader to congratulate President Obama on not being born in America. Praise God. And when the Weeping Speaker was given a chance to chastise birthers in the Republican conference, he declined, saying, “It’s not up to me to tell them what to think.”

Then there was the Speaker Weeper informing us that the Congressional Budget Office, a non-partisan and long-trusted source of budgetary scoring, is not to be trusted in the case of its estimate of the effects of killing the health care law. The CBO has estimated that repealing the Affordable Care Act will add $230 billion to the deficit. So, the Republicans will simply ignore the CBO and move on. They have their own budget scorer, thank you.

As for our own congressman, he tweeted about Folgers coffee, and after he was sworn in he tweeted again: “Got my official member pin number 400 … no more Congressman-Elect now you can call me Billy #112thFreshman.” No, thanks, Ozark Billy!

Finally, we learned that the Grim Weeper has put Michele Bachmann on the Intelligence Committee. Lord, have mercy! Put Ted Nugent in charge of House security. Put Rush Limbaugh in charge of the House pharmacy. But for God’s sake don’t put Michele Bachmann on a panel that oversees the CIA, the National Security Agency and all the other intelligence-gathering folks.

She’ll tell Glenn Beck everything!

Only two more years to go.

Once A “Dream” City, Neosho Now A Nightmare

It’s something like poetic justice that a Republican-dominated, small-government lovin’ place like Neosho, Mo., is among the first in our Southwest Missouri enclave of ultra-conservatives to experience what all of America would be like, should the Tea Party movement become dominant across the land.

Rejecting a property tax increase last Tuesday, 60% of Neosho voters said, “Go ahead, make our day,” to Mayor Richard Davidson and others in positions of responsibility, as they warned of even more drastic budget cuts coming, if voters refused to pay for city services.

According to news reports in the Joplin Globe and in today’s editorial, it’s possible that Neosho could lose up to half its police and fire contingent, and fee increases will likely place some activities previously subsidized by the city out of reach for a lot of folks.

The editorial mentioned something I had forgotten:

Several years ago, under the administration of [Republican] Gov. Matt Blunt, Neosho was tabbed as one of Missouri’s “Dream” cities. It was a program aimed at supplying selected towns with the tools to help improve quality of life and infrastructure.

Dream, indeed.

It’s time that people around these parts stop dreaming extremist conservative Republican dreams and join the world of the responsible.

Government is not evil; the people who run government are not thieves trying to steal every last penny from taxpayers. Policemen, firemen, teachers, food inspectors, air-traffic controllers, and so on, are part of what makes modern life relatively safe and stable.

Public golf courses, airports, museums, municipal sports leagues, libraries, and other trappings of civilization, are part of what makes modern life more enriching and enjoyable.

Social Security, Medicare, Medicaid, and access to health insurance make modern life a little less scary.

Civilization has a price.  Neosho residents will get as much of it as they are willing to pay for. Right now, that isn’t much.

 

UK Candidates And USA Republicans Mum About Budget Cuts

I’ve been trying to follow the election in the UK between Labour Party incumbent Gordon Brown (who screwed up royally yesterday by calling a voter a “bigoted woman”), David Cameron (Conservative Party), and fast-rising Nick Clegg (Liberal Democrats*). 

A real possibility exists that after the May 6 election, no party will have a majority of MP’s in Parliament, which would be the first hung parliament since 1974 and would make for interesting politics. 

But the real reason I mention all this is the following item, which illustrates that it’s not just American politicians who have trouble facing the hard facts about deficits and debts: 

The Institute for Fiscal Studies (IFS) has said none of the three largest parties at Westminster has come “anywhere close” to making clear where cuts would be made to meet their deficit reduction targets over the next four years. 

Here at home, Republicans don’t even have “deficit reduction targets,” not to mention specific budget cuts they are willing to defend.  They just whine about Obama’s spending and agitate for tax cuts for the wealthy. 

As a side note about the UK election and the parliamentary form of government, here is a list of the parties running for seats in Parliament, other than the three biggies mentioned above: 

Democratic Unionist Party; Scottish National Party; Sinn Fein; Plaid Cymru; Social Democratic & Labour Party; Ulster Conservative & Unionist New Force; Respect (Respect, Equality, Socialism, Peace, Environmentalism, Community, and Trade Unionism); UK Independence Party; Green Party (England & Wales); British National Party; Scottish Green Party; Alliance Party; Green Party (Northern Ireland); English Democrats; Scottish Socialist Party; Trade Unionist and Socialist Coalition; Traditional Unionist Voice     
 _________________________________________________________

*They’re not what you may think. 

 

 

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