The Centrist Cop-Out

July 28, 2011

By PAUL KRUGMAN

The facts of the crisis over the debt ceiling aren’t complicated. Republicans have, in effect, taken America hostage, threatening to undermine the economy and disrupt the essential business of government unless they get policy concessions they would never have been able to enact through legislation. And Democrats — who would have been justified in rejecting this extortion altogether — have, in fact, gone a long way toward meeting those Republican demands.

As I said, it’s not complicated. Yet many people in the news media apparently can’t bring themselves to acknowledge this simple reality. News reports portray the parties as equally intransigent; pundits fantasize about some kind of “centrist” uprising, as if the problem was too much partisanship on both sides.

Some of us have long complained about the cult of “balance,” the insistence on portraying both parties as equally wrong and equally at fault on any issue, never mind the facts. I joked long ago that if one party declared that the earth was flat, the headlines would read “Views Differ on Shape of Planet.” But would that cult still rule in a situation as stark as the one we now face, in which one party is clearly engaged in blackmail and the other is dickering over the size of the ransom?

The answer, it turns out, is yes. And this is no laughing matter: The cult of balance has played an important role in bringing us to the edge of disaster. For when reporting on political disputes always implies that both sides are to blame, there is no penalty for extremism. Voters won’t punish you for outrageous behavior if all they ever hear is that both sides are at fault.

Let me give you an example of what I’m talking about. As you may know, President Obama initially tried to strike a “Grand Bargain” with Republicans over taxes and spending. To do so, he not only chose not to make an issue of G.O.P. extortion, he offered extraordinary concessions on Democratic priorities: an increase in the age of Medicare eligibility, sharp spending cuts and only small revenue increases. As The Times’s Nate Silver pointed out, Mr. Obama effectively staked out a position that was not only far to the right of the average voter’s preferences, it was if anything a bit to the right of the average Republican voter’s preferences.

But Republicans rejected the deal. So what was the headline on an Associated Press analysis of that breakdown in negotiations? “Obama, Republicans Trapped by Inflexible Rhetoric.” A Democratic president who bends over backward to accommodate the other side — or, if you prefer, who leans so far to the right that he’s in danger of falling over — is treated as being just the same as his utterly intransigent opponents. Balance!

Which brings me to those “centrist” fantasies.

Many pundits view taking a position in the middle of the political spectrum as a virtue in itself. I don’t. Wisdom doesn’t necessarily reside in the middle of the road, and I want leaders who do the right thing, not the centrist thing.

But for those who insist that the center is always the place to be, I have an important piece of information: We already have a centrist president. Indeed, Bruce Bartlett, who served as a policy analyst in the Reagan administration, argues that Mr. Obama is in practice a moderate conservative.

Mr. Bartlett has a point. The president, as we’ve seen, was willing, even eager, to strike a budget deal that strongly favored conservative priorities. His health reform was very similar to the reform Mitt Romney installed in Massachusetts. Romneycare, in turn, closely followed the outlines of a plan originally proposed by the right-wing Heritage Foundation. And returning tax rates on high-income Americans to their level during the Roaring Nineties is hardly a socialist proposal.

True, Republicans insist that Mr. Obama is a leftist seeking a government takeover of the economy, but they would, wouldn’t they? The facts, should anyone choose to report them, say otherwise.

So what’s with the buzz about a centrist uprising? As I see it, it’s coming from people who recognize the dysfunctional nature of modern American politics, but refuse, for whatever reason, to acknowledge the one-sided role of Republican extremists in making our system dysfunctional. And it’s not hard to guess at their motivation. After all, pointing out the obvious truth gets you labeled as a shrill partisan, not just from the right, but from the ranks of self-proclaimed centrists.

But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

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Messing With Medicare

July 24, 2011

By PAUL KRUGMAN

At the time of writing, President Obama’s hoped-for “Grand Bargain” with Republicans is apparently dead. And I say good riddance. I’m no more eager than other rational people (a category that fails to include many Congressional Republicans) to see what happens if the debt limit isn’t raised. But what the president was offering to the G.O.P., especially on Medicare, was a very bad deal for America.

Specifically, according to many reports, the president offered both means-testing of Medicare benefits and a rise in the age of Medicare eligibility. The first would be bad policy; the second would be terrible policy. And it would almost surely be terrible politics, too.

The crucial thing to remember, when we talk about Medicare, is that our goal isn’t, or at least shouldn’t be, defined in terms of some arbitrary number. Our goal should be, instead, to give Americans the health care they need at a price the country can afford. And throwing Americans in their mid-60s off Medicare moves us away from that goal, not toward it.

For Medicare, with all its flaws, works better than private insurance. It has less bureaucracy and, hence, lower administrative costs than private insurers. It has been more successful in controlling costs. While Medicare expenses per beneficiary have soared over the past 40 years, they’ve risen significantly less than private insurance premiums. And since Medicare-type systems in other advanced countries have much lower costs than the uniquely privatized U.S. system, there’s good reason to believe that Medicare reform can do a lot to control costs in the future.

In that case, you may ask, why didn’t the 2010 health care reform simply extend Medicare to cover everyone? The answer, of course, is political realism. Most health reformers I know would have supported Medicare for all if they had considered it politically feasible. But given the power of the insurance lobby and the knee-jerk opposition of many politicians to any expansion of government, they settled for what they thought they could actually get: near-universal coverage through a system of regulation and subsidies.

It is, however, one thing to accept a second-best system insuring those who currently lack coverage. Throwing millions of Americans off Medicare and pushing them into the arms of private insurers is another story.

Also, did I mention that Republicans are doing all they can to undermine health care reform — they even tried to undermine it as part of the debt negotiations — and may eventually succeed? If they do, many of those losing Medicare coverage would find themselves unable to replace it.

So raising the Medicare age is a terrible idea. Means-testing — reducing benefits for wealthier Americans — isn’t equally bad, but it’s still poor policy.

It’s true that Medicare expenses could be reduced by requiring high-income Americans to pay higher premiums, higher co-payments, etc. But why not simply raise taxes on high incomes instead? This would have the great virtue of not adding another layer of bureaucracy by requiring that Medicare establish financial status before paying medical bills.

But, you may say, raising taxes would reduce incentives to work and create wealth. Well, so would means-testing: As conservative economists love to point out in other contexts — for example, when criticizing programs like food stamps — benefits that fall as your income rises in effect raise your marginal tax rate. It doesn’t matter whether the government raises your taxes by $1,000 when your income rises or cuts your benefits by the same amount; either way, it reduces the fraction of your additional earnings that you get to keep.

So what’s the difference between means-testing Medicare and raising taxes? Well, the truly rich would prefer means-testing, since they would end up sacrificing no more than the merely well-off. But everyone else should prefer a tax-based solution.

So why is the president embracing these bad policy ideas? In a forthcoming article in The New York Review of Books, the veteran journalist Elizabeth Drew suggests that members of the White House political team saw the 2010 election as a referendum on government spending and that they believe that cutting spending is the way to win next year.

If so, I would respectfully suggest that they are out of their minds. Remember death panels? The G.O.P.’s most potent political weapon last year — the weapon that caused a large swing in the votes of older Americans — was the claim that Mr. Obama was cutting Medicare. Why give Republicans a chance to do it all over again?

Of course, it’s possible that the reason the president is offering to undermine Medicare is that he genuinely believes that this would be a good idea. And that possibility, I have to say, is what really scares me.

Hello from the Root River Trail.

The Michele Bachman Show?

If McCain Had Won

http://www.truthdig.com/report/item/if_mccain_had_won_20110715/

Posted on Jul 15, 2011

By Fred Branfman

Democrats were united on one issue in the 2008 presidential election: the absolute disaster that a John McCain victory would have produced. And they were right. McCain as president would clearly have produced a long string of catastrophes: He would probably have approved a failed troop surge in Afghanistan, engaged in worldwide extrajudicial assassination, destabilized nuclear-armed Pakistan, failed to bring Israel’s Benjamin Netanyahu to the negotiating table, expanded prosecution of whistle-blowers, sought to expand executive branch power, failed to close Guantanamo, failed to act on climate change, pushed both nuclear energy and opened new areas to domestic oil drilling, failed to reform the financial sector enough to prevent another financial catastrophe, supported an extension of the Bush tax cuts for the rich, presided over a growing divide between rich and poor, and failed to lower the jobless rate.

Nothing reveals the true state of American politics today more, however, than the fact that Democratic President Barack Obama has undertaken all of these actions and, even more significantly, left the Democratic Party far weaker than it would have been had McCain been elected. Few issues are more important than seeing behind the screen of a myth-making mass media, and understanding what this demonstrates about how power in America really works—and what needs to be done to change it.

First and foremost, McCain would have undoubtedly selected as treasury secretary an individual nominated by Wall Street—which has a stranglehold on the economy due to its enjoying 30 to 40 percent of all corporate profits. If he didn’t select Tim Geithner, a reliable servant of financial interests whose nomination might have allowed McCain to trumpet his “maverick” credentials, whoever he did select would clearly have also moved to bail out the financial institutions and allow them to water down needed financial reforms.

Ditto for the head of his National Economic Council. Although appointing Larry Summers might have been a bit of a stretch, despite his yeoman work in destroying financial regulation—thus enriching his old boss Robert Rubin and helping cause the Crash of 2008—McCain could easily have found a Jack Kemp-like Republican “supply-sider” who would have duplicated Summers’ signal achievement of expanding the deficit to the highest level since 1950 (though perhaps with a slightly higher percentage of tax cuts than the Obama stimulus). The economy would have continued to sputter along, with growth rates and joblessness levels little different from today’s, and possibly even worse.

But McCain’s election would have produced a major political difference: It would have increased Democratic clout in the House and Senate. First off, there would have been no tea party, no “don’t raise the debt limit unless we gut the poor,” no “death panel” myth, no “Obama Youth” nonsense. Although there would have been plenty of criticism from the likes of Rush Limbaugh, the fact would have remained that McCain, a Republican, Caucasian war hero would never have excited the tea party animus as did the “Secret-Muslim Kenyan-Born Big-Government Fascist White-Hating Antichrist” Obama. Glenn Beck would have remained a crazed nonentity and been dropped far sooner by Fox News than he was. And Vice President Sarah Palin, despised by both McCain and his tough White House staff, would have been deprived of any real power and likely tightly muzzled against criticizing McCain’s relatively centrist (compared to her positions) policies.

Voters would almost certainly have increased Democratic control of the House and Senate in 2010, since the Republicans would have been seen as responsible for the weak U.S. economy. Democrats might even have achieved the long-desired 60 percent majority needed to kill the filibuster in one or both houses.

Democratic control of the House and Senate fostered by disastrous Republican policies would have severely limited McCain’s ability (as occurred with George W. Bush) to weaken Social Security, Medicare, Medicaid, unemployment insurance and other programs that aid those most in need. (Yes, domestic spending might have been cut less if McCain had won.)

And had McCain proposed “health insurance reform,” because health insurers saw a golden opportunity to increase their customer base and profits while retaining their control, the Democrats would at least have passed a “public option” as their price for support. And possible Health and Human Services Secretary Newt Gingrich—placed in that position in a clever move to keep him away from economic or foreign policy—might have even accelerated needed improvements in computerizing patient records and other high-tech measures needed to cut health care costs, actions that he touted in his book on the subject.

In foreign and military policy, McCain would surely have approved Gen. David Petraeus’ “Afghanistan surge,” possibly increasing the number of U.S. troops there by 40,000 instead of 33,500. But Gen. Stanley McChrystal would probably have remained at the helm in Afghanistan, since he and his aides would never have disparaged McCain to Rolling Stone. McChrystal might have continued a “counterinsurgency” strategy, observing relatively strict rules of engagement, unlike his successor, Petraeus, who tore up those rules and has instead unleashed a brutal cycle of “counterterror” violence in southern Afghanistan. (Yes, far fewer Afghan civilians might have died had McCain won.)

McCain, like Obama, would probably have destabilized nuclear-armed Pakistan and strengthened militant forces there by expanding drone strikes and pushing the Pakistani military to launch disastrous offensives into tribal areas. And he would have given as much support as has Obama to Israeli Prime Minister Netanyahu’s opposition to a peace deal because he believes that present policies of strangling Gaza, annexing East Jerusalem, expanding West Bank settlements and walling off Palestinians are succeeding. (It is possible, however, that a McCain secretary of state might not have incited violence against unarmed American citizens—as did Hillary Clinton when she stated that Israelis, who killed nine unarmed members of the 2010 Gaza flotilla, “have the right to defend themselves” against letter-carrying 2011 Gaza flotilla members.)

While McCain would have wanted to keep 100,000 U.S. troops in Afghanistan until 2014, he might have been forced to reduce their numbers as much as has Obama. For McCain would have faced a strengthened and emboldened Democratic Congress, which might have seen electoral gold in responding to polls indicating the public had turned against the Afghanistan War—as well as a far stronger peace movement united against Republicans instead of divided as it now is between the desires for peace and seeing an Obama win in 2012.

Most significantly, if McCain had won, not only would Democrats be looking at a Democratic landslide in the 2012 presidential race, but the newly elected Democratic president in 2013 might enjoy both a 60 percent or higher majority in both houses and a clear public understanding that it was Republican policies that had sunk the economy. He or she might thus be far better positioned to enact substantive reforms than was Obama in 2008, or will Obama even if he is re-elected in 2012.

Franklin Delano Roosevelt took office in March 1933 after a 42-month Depression blamed entirely on the Republicans. Although he had campaigned as a moderate, objective conditions both convinced him of the need for fundamental change—creating a safety net including Social Security, strict financial regulation, programs to create jobs, etc.—and gave him the congressional pluralities he needed to achieve them. A Democratic president taking office in 2013 after 12 years of disastrous Republican economic misrule might well have been likewise pushed and enabled by objective events to create substantive change.

Furious debate rages among Obama’s Democratic critics today on why he has largely governed on the big issues as John McCain would have done. Some believe he retains his principles but has been forced to compromise by political realities. Others are convinced he was a manipulative politico who lacked any real convictions in the first place.

But there is a far more likely—and disturbing—possibility. Based on those who knew him and his books, there is little reason to doubt that the pre-presidential Obama was a college professor-type who shared the belief system of his liberalish set: that ending climate change and reducing nuclear weapons were worthy goals, that it was important to “reset” U.S. policy toward the Muslim world, that torture and assassination were bad things, that Canadian-style single-payer health insurance made sense, that whistle-blowing and freedom of the press should be protected, Congress should have a say in whether the executive puts the nation into war, and that government should support community development and empowering poor communities.

Upon taking office, however, Obama—whatever his belief system at that point—found that he was unable to accomplish these goals for one basic reason: The president of the United States is far less powerful than media myth portrays. Domestic power really is in the hands of economic elites and their lobbyists, and foreign policy really is controlled by U.S. executive branch national security managers and a “military-industrial complex.” If a president supports their interests, as did Bush in invading Iraq, he or she can do a lot of damage. But, absent a crisis, a president who opposes these elites—as Obama discovered when he tried in the fall of 2009 to get the military to offer him an alternative to an Afghanistan troop surge—is relatively powerless.

Whether a Ronald Reagan expanding government and running large deficits in the 1980s despite his stated belief that government was the problem, or a Bill Clinton imposing a neoliberal regime impoverishing hundreds of millions in the Third World in the 1990s despite his rhetorical support for helping the poor, anyone who becomes president has little choice but to serve the institutional interests of a profoundly amoral and violent executive branch and the corporations behind them.

The U.S. executive branch functions to promote its version of U.S. economic and geopolitical interests abroad—including engaging in massive violence which has killed, wounded or made homeless more than 21 million people in Indochina and Iraq combined. And it functions at home to maximize the interests of the corporations and individuals who fund political campaigns—today supported by a U.S. Supreme Court whose politicized decision to expand corporations’ control over elections has made a mockery of the very notion of “checks and balances.” The executive branch’s power extends to the mass media, most of whose journalists are dependent on executive information leaks and paychecks from increasingly concentrated media corporations. They thus serve executive power far more than they challenge it.

No one more demonstrates what happens to a human being who joins the executive branch than Hillary Clinton, a former peace movement supporter whose 1969 Wellesley commencement address stated that “our prevailing, acquisitive, and competitive corporate life is not the way of life for us. We’re searching for more immediate, ecstatic and penetrating modes of living”; praised “a lot of the New Left [that] harkens back to a lot of the old virtues”; and decried “the hollow men of anger and bitterness, the bountiful ladies of righteous degradation, all must be left to a bygone age.” Clinton the individual served on the board of the Children’s Defense Fund, promoted helping the poor at home and Third World women abroad and at one point was even often compared to Eleanor Roosevelt.

Although her transformation began once she decided to try to become president, it became most visible after she joined the executive branch as secretary of state. The former peace advocate has now become a major advocate for war-making, a scourge of whistle-blowers and a facilitator of Israeli violence.

But while rich and powerful elites have always ruled in America, their power has periodically been successfully challenged at times of national crisis: the Civil War, the Progressive era, the Depression. America is clearly headed for such a moment in the coming decade, as its economy continues to decline due to a parasitic Wall Street, mounting debt, strong economic competitors, overspending on the military, waste in the private health care sector and elites declaring class war against a majority of Americans.

Naomi Klein has written penetratingly of “Disaster Capitalism,” which occurs when financial and corporate elites benefit from the economic crises they cause. But the reverse has also often proved true: a kind of “Disaster Progressivism” often occurs when self-interested elites cause so much suffering that policies favoring democracy and the majority become possible.

The United States will clearly face such a crisis in the coming decade. It is understandable that many Americans will want to focus on re-electing Obama in 2012. Although Democrats and the country would have been better off if McCain had won in 2008, this is not necessarily true if a Republican wins in 2012—especially if the GOP nominates Sarah Palin or Michele Bachmann.

But however important the 2012 election, far more energy needs to be devoted to building mass organizations that challenge elite power and develop the kinds of policies—including massive investment in a “clean energy economic revolution,” a carbon tax and other tough measures to stave off climate change, regulating and breaking up the financial sector, cost-effective entitlements like single-payer health insurance, and public financing of primary and general elections—which alone can save America and its democracy in the painful decade to come.

Arlo Guthrie in Madison!

Are you part of the problem?

July 14, 2011

Getting to Crazy

By PAUL KRUGMAN

There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief — of the black-humor variety — in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy.

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.

Why, yes, it has. But this isn’t something that just happened, it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye.

And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.

Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

And even the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.

Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.

Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.

Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.

But there has been no such price. Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, then received an award for fiscal responsibility.

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem.

The Brown Shirts are on the march.

On another note, the gun nuts of the State of Wisconsin have proudly joined the other ‘conceal carry’ states in making it legal for any paranoid, violence prone idiot to carry a gun in public, ready to do battle with the forces of evil.

Yet one more example that our great American society is swirling the drain in it’s race to the bottom.  We like to pride ourselves in being the greatest country on earth, but continue to fail miserably in providing in the basics of safety and health care to our citizens; still with a higher infant mortality rate far beyond all other ‘civilized’ nations, more deaths by firearms per year than even the drug war riddled Mexico….

But who cares!  The Brown Shirts  are marching and taking over.  Maybe they’re right….  Maybe its time we all arm ourselves in anticipation of the revolution that seems headed our way.

And the economy continues to tank…

July 10, 2011

No, We Can’t? Or Won’t?

By PAUL KRUGMAN

If you were shocked by Friday’s job report, if you thought we were doing well and were taken aback by the bad news, you haven’t been paying attention. The fact is, the United States economy has been stuck in a rut for a year and a half.

Yet a destructive passivity has overtaken our discourse. Turn on your TV and you’ll see some self-satisfied pundit declaring that nothing much can be done about the economy’s short-run problems (reminder: this “short run” is now in its fourth year), that we should focus on the long run instead.

This gets things exactly wrong. The truth is that creating jobs in a depressed economy is something government could and should be doing. Yes, there are huge political obstacles to action — notably, the fact that the House is controlled by a party that benefits from the economy’s weakness. But political gridlock should not be conflated with economic reality.

Our failure to create jobs is a choice, not a necessity — a choice rationalized by an ever-shifting set of excuses.

Excuse No. 1: Just around the corner, there’s a rainbow in the sky.

Remember “green shoots”? Remember the “summer of recovery”? Policy makers keep declaring that the economy is on the mend — and Lucy keeps snatching the football away. Yet these delusions of recovery have been an excuse for doing nothing as the jobs crisis festers.

Excuse No. 2: Fear the bond market.

Two years ago The Wall Street Journal declared that interest rates on United States debt would soon soar unless Washington stopped trying to fight the economic slump. Ever since, warnings about the imminent attack of the “bond vigilantes” have been used to attack any spending on job creation.

But basic economics said that rates would stay low as long as the economy was depressed — and basic economics was right. The interest rate on 10-year bonds was 3.7 percent when The Wall Street Journal issued that warning; at the end of last week it was 3.03 percent.

How have the usual suspects responded? By inventing their own reality. Last week, Representative Paul Ryan, the man behind the G.O.P. plan to dismantle Medicare, declared that we must slash government spending to “take pressure off the interest rates” — the same pressure, I suppose, that has pushed those rates to near-record lows.

Excuse No. 3: It’s the workers’ fault.

Unemployment soared during the financial crisis and its aftermath. So it seems bizarre to argue that the real problem lies with the workers — that the millions of Americans who were working four years ago but aren’t working now somehow lack the skills the economy needs.

Yet that’s what you hear from many pundits these days: high unemployment is “structural,” they say, and requires long-term solutions (which means, in practice, doing nothing).

Well, if there really was a mismatch between the workers we have and the workers we need, workers who do have the right skills, and are therefore able to find jobs, should be getting big wage increases. They aren’t. In fact, average wages actually fell last month.

Excuse No. 4: We tried to stimulate the economy, and it didn’t work.

Everybody knows that President Obama tried to stimulate the economy with a huge increase in government spending, and that it didn’t work. But what everyone knows is wrong.

Think about it: Where are the big public works projects? Where are the armies of government workers? There are actually half a million fewer government employees now than there were when Mr. Obama took office.

So what happened to the stimulus? Much of it consisted of tax cuts, not spending. Most of the rest consisted either of aid to distressed families or aid to hard-pressed state and local governments. This aid may have mitigated the slump, but it wasn’t the kind of job-creation program we could and should have had. This isn’t 20-20 hindsight: some of us warned from the beginning that tax cuts would be ineffective and that the proposed spending was woefully inadequate. And so it proved.

It’s also worth noting that in another area where government could make a big difference — help for troubled homeowners — almost nothing has been done. The Obama administration’s program of mortgage relief has gone nowhere: of $46 billion allotted to help families stay in their homes, less than $2 billion has actually been spent.

So let’s summarize: The economy isn’t fixing itself. Nor are there real obstacles to government action: both the bond vigilantes and structural unemployment exist only in the imaginations of pundits. And if stimulus seems to have failed, it’s because it was never actually tried.

Listening to what supposedly serious people say about the economy, you’d think the problem was “no, we can’t.” But the reality is “no, we won’t.” And every pundit who reinforces that destructive passivity is part of the problem.

We Need Jobs!

This ain’t rocket science folks…. Unemployment rates go up and the stock market goes down.  SO CREATE SOME JOBS!  Yes; it’s going to require we spend some money.  What the hell is wrong with another New Deal initiative?  When people have money, regardless the source, they spend it, there by raising product demand.

Of course another way is for these GOP ‘super patriots’ to get off there ass and take some chances on the American Public instead of only themselves!  What happened to all the bail-out funds?  They surely didn’t create any jobs; just saved some rich guy’s ass and gave his buddies larger salaries and bonuses.  Something’s wrong here.

Say it ain’t so Mr. President!

Is Mr. Obama so frightened by the GOP Extremists that he is riding their ideological coattails, or has he actually shifted his beliefs?  It’s hard to tell some times and getting scary  the way he’s been talking lately…

July 7, 2011

What Obama Wants

By PAUL KRUGMAN

On Thursday, President Obama met with Republicans to discuss a debt deal. We don’t know exactly what was proposed, but news reports before the meeting suggested that Mr. Obama is offering huge spending cuts, possibly including cuts to Social Security and an end to Medicare’s status as a program available in full to all Americans, regardless of income.

Obviously, the details matter a lot, but progressives, and Democrats in general, are understandably very worried. Should they be? In a word, yes.

Now, this might just be theater: Mr. Obama may be pulling an anti-Corleone, making Republicans an offer they can’t accept. The reports say that the Obama plan also involves significant new revenues, a notion that remains anathema to the Republican base. So the goal may be to paint the G.O.P. into a corner, making Republicans look like intransigent extremists — which they are.

But let’s be frank. It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth.

One striking example of this rightward shift came in last weekend’s presidential address, in which Mr. Obama had this to say about the economics of the budget: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”

That’s three of the right’s favorite economic fallacies in just two sentences. No, the government shouldn’t budget the way families do; on the contrary, trying to balance the budget in times of economic distress is a recipe for deepening the slump. Spending cuts right now wouldn’t “put the economy on sounder footing.” They would reduce growth and raise unemployment. And last but not least, businesses aren’t holding back because they lack confidence in government policies; they’re holding back because they don’t have enough customers — a problem that would be made worse, not better, by short-term spending cuts.

In his brief remarks after Thursday’s meeting, by the way, Mr. Obama seemed to reiterate the Herbert Hooveresque view that deficit reduction is what we need to “grow the economy.”

People have asked me why the president’s economic advisers aren’t telling him not to believe in the confidence fairy — that is, not to believe the assertion, popular on the right but overwhelmingly refuted by the evidence, that slashing spending in the face of a depressed economy will magically create jobs. My answer is, what economic advisers? Almost all the high-profile economists who joined the Obama administration early on have either left or are leaving.

Nor have they been replaced. As The Wall Street Journal recently noted, there are a “stunning” number of vacancies in important economic posts. So who’s defining the administration’s economic views?

Some of what we’re hearing is presumably coming from the political team, whose members seem to believe that a move toward Republican positions, reminiscent of former President Bill Clinton’s “triangulation” in the 1990s, is the key to Mr. Obama’s re-election. And Mr. Clinton did, indeed, rebound from a big defeat in the 1994 midterms to win big two years later. But some of us think that the rebound had less to do with his rhetorical move to the center than with the five million jobs the economy added over those two years — an achievement not likely to be repeated this time, especially not in the face of harsh spending cuts.

Anyway, I don’t believe that it’s all political calculation. Watching Mr. Obama and listening to his recent statements, it’s hard not to get the impression that he is now turning for advice to people who really believe that the deficit, not unemployment, is the top issue facing America right now, and who also believe that the great bulk of deficit reduction should come from spending cuts. It’s worth noting that even Republicans weren’t suggesting cuts to Social Security; this is something Mr. Obama and those he listens to apparently want for its own sake.

Which raises the big question: If a debt deal does emerge, and it overwhelmingly reflects conservative priorities and ideology, should Democrats in Congress vote for it?

Mr. Obama’s people will no doubt argue that their fellow party members should trust him, that whatever deal emerges was the best he could get. But it’s hard to see why a president who has gone out of his way to echo Republican rhetoric and endorse false conservative views deserves that kind of trust.

Test post

Just trying out the zoom.

More bullshit from the GOP!

If I were a more violent man I would be advocating armed revolution against the greedy bastards who have so thoroughly monopolized the country’s economy.  Can there be any doubt about the brazen lies and deceptions of the right-wing cabal that continues to propagate the lies inherent in the ‘trickle down’ philosophy?  Here’s another bit of wisdom on the topic from Mr. Krugman…

July 3, 2011

Corporate Cash Con

By PAUL KRUGMAN

Watching the evolution of economic discussion in Washington over the past couple of years has been a disheartening experience. Month by month, the discourse has gotten more primitive; with stunning speed, the lessons of the 2008 financial crisis have been forgotten, and the very ideas that got us into the crisis — regulation is always bad, what’s good for the bankers is good for America, tax cuts are the universal elixir — have regained their hold.

And now trickle-down economics — specifically, the idea that anything that increases corporate profits is good for the economy — is making a comeback.

On the face of it, this seems bizarre. Over the last two years profits have soared while unemployment has remained disastrously high. Why should anyone believe that handing even more money to corporations, no strings attached, would lead to faster job creation?

Nonetheless, trickle-down is clearly on the ascendant — and even some Democrats are buying into it. What am I talking about? Consider first the arguments Republicans are using to defend outrageous tax loopholes. How can people simultaneously demand savage cuts in Medicare and Medicaid and defend special tax breaks favoring hedge fund managers and owners of corporate jets?

Well, here’s what a spokesman for Eric Cantor, the House majority leader, told Greg Sargent of The Washington Post: “You can’t help the wage earner by taxing the wage payer offering a job.” He went on to imply, disingenuously, that the tax breaks at issue mainly help small businesses (they’re actually mainly for big corporations). But the basic argument was that anything that leaves more money in the hands of corporations will mean more jobs. That is, it’s pure trickle-down.

And then there’s the repatriation issue.

U.S. corporations are supposed to pay taxes on the profits of their overseas subsidiaries — but only when those profits are transferred back to the parent company. Now there’s a move afoot — driven, of course, by a major lobbying campaign — to offer an amnesty under which companies could move funds back while paying hardly any taxes. And even some Democrats are supporting this idea, claiming that it would create jobs.

As opponents of this plan point out, we’ve already seen this movie: A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.

What the tax holiday did do, however, was give big corporations a chance to avoid paying taxes, because they would eventually have repatriated, and paid taxes on, much of the money they brought in under the amnesty. And it also gave these companies an incentive to move even more jobs overseas, since they now know that there’s a good chance that they’ll be able to bring overseas profits home nearly tax-free under future amnesties.

Yet as I said, there’s a push for a repeat of this disastrous performance. And this time around the circumstances are even worse. Think about it: How can anyone imagine that lack of corporate cash is what’s holding back recovery in America right now? After all, it’s widely understood that corporations are already sitting on large amounts of cash that they aren’t investing in their own businesses.

In fact, that idle cash has become a major conservative talking point, with right-wingers claiming that businesses are failing to invest because of political uncertainty. That’s almost surely false: the evidence strongly says that the real reason businesses are sitting on cash is lack of consumer demand. In any case, if corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?

It wouldn’t, of course; claims that a corporate tax holiday would create jobs, or that ending the tax break for corporate jets would destroy jobs, are nonsense.

So here’s what you should answer to anyone defending big giveaways to corporations: Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending.

What our economy needs is direct job creation by the government and mortgage-debt relief for stressed consumers. What it very much does not need is a transfer of billions of dollars to corporations that have no intention of hiring anyone except more lobbyists.

Kick Their Ass Mr. President!

June 30, 2011

To the Limit

By PAUL KRUGMAN

In about a month, if nothing is done, the federal government will hit its legal debt limit. There will be dire consequences if this limit isn’t raised. At best, we’ll suffer an economic slowdown; at worst we’ll plunge back into the depths of the 2008-9 financial crisis.

So is a failure to raise the debt ceiling unthinkable? Not at all.

Many commentators remain complacent about the debt ceiling; the very gravity of the consequences if the ceiling isn’t raised, they say, ensures that in the end politicians will do what must be done. But this complacency misses two important facts about the situation: the extremism of the modern G.O.P., and the urgent need for President Obama to draw a line in the sand against further extortion.

Let’s talk about how we got here.

The federal debt limit is a strange quirk of U.S. budget law: since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending decisions, why require an additional vote on debt? And traditionally the debt limit has been treated as a minor detail. During the administration of former President George W. Bush — who added more than $4 trillion to the national debt — Congress, with little fanfare, voted to raise the debt ceiling no less than seven times.

So the use of the debt ceiling to extort political concessions is something new in American politics. And it seems to have come as a complete surprise to Mr. Obama.

Last December, after Mr. Obama agreed to extend the Bush tax cuts — a move that many people, myself included, viewed as in effect a concession to Republican blackmail — Marc Ambinder of The Atlantic asked why the deal hadn’t included a rise in the debt limit, so as to forestall another hostage situation (my words, not Mr. Ambinder’s).

The president’s response seemed clueless even then. He asserted that “nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse,” and that he was sure that John Boehner, as speaker of the House, would accept his “responsibilities to govern.”

Well, we’ve seen how that worked out.

Now, Mr. Obama was right about the dangers of failing to raise the debt limit. In fact, he understated the case, by focusing only on financial confidence.

Not that the confidence issue is trivial. Failure to raise the debt limit — which would, among other things, disrupt payments on existing debt — could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset.

But confidence isn’t the only thing at stake. Failure to raise the debt limit would also force the U.S. government to make drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece. And don’t believe the nonsense about the benefits of spending cuts that has taken over much of our public discourse: slashing spending at a time when the economy is deeply depressed would destroy hundreds of thousands and quite possibly millions of jobs.

So failure to reach a debt deal would have very bad consequences. But here’s the thing: Mr. Obama must be prepared to face those consequences if he wants his presidency to survive.

Bear in mind that G.O.P. leaders don’t actually care about the level of debt. Instead, they’re using the threat of a debt crisis to impose an ideological agenda. If you had any doubt about that, last week’s tantrum should have convinced you. Democrats engaged in debt negotiations argued that since we’re supposedly in dire fiscal straits, we should talk about limiting tax breaks for corporate jets and hedge-fund managers as well as slashing aid to the poor and unlucky. And Republicans, in response, walked out of the talks.

So what’s really going on is extortion pure and simple. As Mike Konczal of the Roosevelt Institute puts it, the G.O.P. has, in effect, come around with baseball bats and declared, “Nice economy you have here. A real shame if something happened to it.”

And the reason Republicans are doing this is because they must believe that it will work: Mr. Obama caved in over tax cuts, and they expect him to cave again. They believe that they have the upper hand, because the public will blame the president for the economic crisis they’re threatening to create. In fact, it’s hard to avoid the suspicion that G.O.P. leaders actually want the economy to perform badly.

Republicans believe, in short, that they’ve got Mr. Obama’s number, that he may still live in the White House but that for practical purposes his presidency is already over. It’s time — indeed, long past time — for him to prove them wrong.