I am grading essays and papers on currency crises (circa 1999-2002) and financial crises (the last one) and basically all those kinds of crises the tend to come from out of control speculation and the government encouraging the wrong kinds of things. This mostly happens because rich people donate to the campaigns of politicians and own newspapers and media outlets. Politicians want to get reelected and get more powerful and more rich. Rich businesses and investors want to get more powerful and rich. It’s kind of the perfect alignment of shared interests based on lust and greed and all the baser instincts. Isn’t it terrible when the facts get in the way? So, they just ignore them or consider them an alternative liberal opinion. It drives me nuts.
So, BB asked to me write something about what I research and teach and usually regurgitate to you. You know that the austerity narrative has theoretically fallen apart. Well, it’s also falling apart via the numbers, data, facts and reality So, let’s start out with some very bad, awful, terrible horrible Dubya Bush Policy 10 years ago and why tax cuts for the rich still don’t do good things for the economy or now, even the investment markets. This is written by economist Bruce Bartlett who was an adviser to the Reagan administration.
Ten years ago this month, Congress enacted the third major tax cut of the George W. Bush administration. Its centerpiece was a huge cut in the tax rate on dividends. Historically, they had been taxed as ordinary income, but the Bush plan, enacted by a Republican Congress, cut that rate to 15 percent. The tax rate on ordinary income went as high as 35 percent.
This initiative originated with the economist R. Glenn Hubbard, who had been chairman of the Council of Economic Advisers when the proposal was sent to Congress. Mr. Hubbard was a strong believer that the double taxation of corporate profits – first at the corporate level and again when paid out as dividends – was a major economic problem.
During the George H.W. Bush administration, Mr. Hubbard had been deputy assistant secretary of the Treasury for tax policy and wrote a Treasury report advocating full integration of the corporate and individual income taxes.
Mr. Hubbard had also spearheaded enactment of big tax cuts in 2001 and 2002 that he said would jump-start the American economy. In an op-ed article in The Washington Post on Nov. 16, 2001, he predicted that the soon-to-be-enacted 2002 tax cut, which President Bush signed on March 9, 2002, would “quickly deliver a boost to move the economy back toward its long-run growth path.”
Mr. Hubbard predicted that it would create 300,000 additional jobs in 2002 and add half a percentage point to the real gross domestic product growth rate.
There is no evidence that the tax cut had any such effect. The unemployment rate remained above 5.7 percent all year, rising to 5.9 percent in November and 6 percent in December. The real G.D.P. growth rate fell each quarter of 2002, and by the fourth quarter growth was at a standstill. Hence the need for yet another big tax cut.
The idea of the 2003 legislation was to raise dividend payouts, thereby bolstering personal income, and raise the prices of common stock, which would improve household balance sheets. As President Bush explained in his signing statement, “This will encourage more companies to pay dividends, which in itself will not only be good for investors but will be a corporate reform measure.” He also said the dividend tax cut would “increase the wealth effect around America and help our markets.”
The Treasury Department issued a fact sheet on July 30 asserting that the decline in dividends had been a cause of the weak stock market and noting that dividend payouts had risen since enactment of the tax cut on May 28.
Subsequent research, however, found that the increase in dividends was a short-term phenomenon and mainly at companies where stock options were a major form of executive compensation. A 2005 Federal Reserve Board study found that the United States stock market did not outperform European stock markets after the dividend cut. Nor did stocks qualifying for lower dividend taxes outperform those, such as real estate investment trusts, that did not qualify for lower dividend taxes. Non-dividend paying stocks slightly outperformed dividend-paying stocks, and many corporations that did pay higher dividends scaled back stock repurchases by a similar amount.
So, this is yet another example where Republican economic policy is totally out of step with outcomes, data, and reality. Yet, they keep repeating that it works the way it doesn’t work just because, remember, the agenda is greed, power, and more wealth to the already greedy, powerful and wealthy. The deal is they get it wrong, got it wrong, and continue to get it wrong but that doesn’t stop them from trying to weasel their way into a narrative that says, hey, this really isn’t wrong. There’s still some validity there and all economists must be liberals like Paul Krugman who are just talking up their philosophical line. Take austerity economics, please. I mean it. Take it and those idiots who push it to hell and leave them there. Still, the very serious people want to take this very seriously even when it is just plain seriously wrong. Take Michael Kinsley, please. He can report from Hell.
I’ve spent a rather alarming portion of this week wading into intellectual pissing matches, so I’m loath to respond to Michael Kinsley’s response to last week’s brouhaha over austerity policies. But one paragraph does merit some pushback. After noting the backlash to his last column, Kinsley writes the following:
There are two possible explanations. First, it might be that I am not just wrong (in saying that the national debt remains a serious problem and we’d be well advised to worry about it) but just so spectacularly and obviously wrong that there is no point in further discussion. Or second, to bring up the national debt at all in such discussions has become politically incorrect. To disagree is not just wrong but offensive. Such views do exist. Racism for example. I just didn’t realize that the national debt was one of them.
Kinsley assumes that it must be the second explanation, and then goes on from there.
I can’t speak for anyone else who pushed back against Kinsley’s column from last week. Speaking for myself, however, I blogged about it because Kinsley was “spectacularly and obviously wrong.” I say this because almost everything I wrote in my response to Kinsley I knew at age 18 after taking Economics 101 in college.
To explain, let me focus on Kinsley’s motivation for thinking that the austerians have a point:
Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run. This doesn’t mean that they have forgotten the lessons of Keynes and the Great Depression. It means that they remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to.
This is wrong for three reasons, one pedantic and two substantive. First, to be pedantic, the austerity debate is about the wisdom of using expansionary fiscal policy — i.e., running a significant federal budget deficit — to alleviate downturns. Paul Volcker was the chairman of the Federal Reserve and thereby responsible for setting monetary policy. He had nothing to do with fiscal policy. This is a distinction that I learned in my first few lectures on macroeconomics. So either Kinsley phrased this badly or he’s confused about what this debate is about.
It just keeps coming down to the fact that most journalists and politicians simply do not know what they are talking about when it comes to economics. So, they assume an economist like Paul Krugman has a liberal bias on all things–including the color of the sky and the laws of gravity and demand–and they make the worse assumption that those arguing Republican policy these days must have a valid point when the only point is, yes, you know it … to deliver more wealth, power and influence to themselves and their friends that already have it. Some times a lie really is just a lie.
A wonderful example of the myopia of the deficit scolds…
The background is that Michael Kinsley wrote a particularly bad column last week about “austerity,” a key point of which was based on factually incorrect memories of what went wrong in the 1970s; as you can imagine, this earned him plenty of corrections and dismissals from people who used access to accurate economic and government policy statistics.
Kinsley was quite taken aback by this, apparently, and wrote a follow up to defend himself. Dan Drezner has already pointed out that Kinsley is still relying on the same inaccurate memories that got his first column into trouble, but I actually found a different part of Kinsley II more interesting, in which he thinks he’s caught Paul Krugman in a contradiction.
Paul Krugman takes credit for good economic news whenever it happens. On Krugman’s blog site (“The Conscience of a Liberal”) last week were two bits of prose side-by-side. One was an ad for his latest book, End This Depression Now! “How bad have things gotten?” the ad asks rhetorically.” How did we get stuck in what now can only be called a depression?” Right next door is Krugman’s gloat about the recent pretty-good economic news. “So where are the celebrations,” he asks, “now that the debt issue looks, if not solved, at least greatly mitigated?” Greatly mitigated? By what? Certainly not by anyone taking Paul Krugman’s advice. He has been, in his own self-estimate, a lone, ignored voice for reason crying out in an unreasoning universe.
What’s the problem? The linked post by Krugman isn’t a gloat about good economic news! It is, to be sure a gloat; it’s a gloat about deficits…Krugman goes so far as to call lower deficits “progress,” although as I read it he’s really just saying that lower deficits should be counted as progress from the point of view of the deficit scolds.
What’s happening here is that Kinsley is projecting onto Krugman a classic deficit scold mistake; Kinsley is conflating the federal budget deficit with the economy. Krugman isn’t doing that; it’s purely Kinsley’s invention.
It gets, however, to exactly why Kinsley was buried under a large pile of abuse after his first column. Well, in part; the other part, as Krugman notes elsewhere, is “the existence now of a policy blogosphere…which makes bluffing harder.” Say something factually inaccurate these days, and you’re going to get slammed; it seems that some pundits who preceded that development find it hard to get used to it.
I still have no idea why journalists feel they just know everything about economics compared to say, knowing everything about Brownian motion or performing brain surgery. It’s the same with politicians. They just seem to confuse a really complex subject that most people really struggle with in college and never take beyond that with something like a political science class or a journalism class. You don’t even get real economic stuff until you way up there in school. The introductory stuff is like the ABCs and they don’t even seem to grasp that. Anyway, stop confusing getting facts wrong with just another opinion …
You have to wonder if there’s any hope for a political party that has to train its elected officials on what to say about rape and how to talk to women and minorities. They need more than just simple work on their message, their messengers, and their milieu. Is it possible to get personality, conscience, and brain transplants for so many people?
Here’s just an example of the insensitivity and tone deafness: “House Republicans Meet at a Former Slave Plantation to Practice Talking to Black People”.
Besides partaking in discussions about the debt ceiling and gun restrictions, GOP congressmen and women will also be getting schooled in the fine art of how to have “successful communication with minorities and women.”
One might presume that people elected to high office in America have at least a general understanding of how to talk to and about minorities and women without saying unimaginably offensive things, but one would be wrong. Far too many Republicans have a remarkable way of saying the absolutely wrong thing time and again about everything from rape to Kwanzaa. Sadly, a lesson about why it’s wrong to equivocate about a woman being raped or why it’s not a great idea to make all your House committee chairs white men is exactly what the GOP needs.
And what better place to talk about making inroads with oppressed groups than in a room named after a famous Williamsburg plantation, located in the tony Kingsmill Resort, which itself is on the site of another plantation? The GOP has heard your complaints, blacks and Latinos and women, and they’re going to try to suss it out while sitting atop dead slave bones.
The Press hasn’t really had any access but drivel keeps dribbling out of the Williamsburg Back to Recreating Reality and History Fest. I’m not holding out much hope that they’ll come out of their echo chamber with any radical paradigm shifts.
What we do have: The itinerary of the half-week meting. Among the panels:
- Polling Session (“What Happened and Where Are We Now?”), featuring Dave Winston (who produced Boehner’s poll which suggested that cuts-for-a-debt-limit-hike were popular), Kellyanne Conway, and the Tarrance Group’s David Sackett.
- What is the Role of the Republican Majority in the 113th Congress? with Bill Kristol and the influential-among-conservatives WSJ columnist Kim Strassel.
- American Trends — How Is America Changing?, with election prognosticator Charlie Cook.
- Who Speaks for Middle America?, with National Review’s Kate O’Berine and Ramesh Ponnuru, and EPPC’s Jim Capretta
- How to Communicate Principles in Today’s Media Environment, with Ari Fleischer, Frank Luntz, and onetime Bachmann/Romney debate coach Brett O’Donnell.
– Common Ethics Pitfalls, with two attorneys from Wiley Rein LLP.
- Successful Communication with Minorities and Women, with a female moderator (Rachel Campos-Duffy), a female consultant (Ana Navarro), a female congressman (Rep. Jaime Herrera Buetler), and three congressmen who are neithor female nor minorities: Rep. Adam Kinzinger, Rep. Scott Rigell, and Rep. Frank Wolf.
I’ve decided that a lot of their problems have to do with the fact that most of them have blind faith and think that’s a good thing. They keep offering up things that have never worked and will not work. Blind faith suggests you should just do it regardless of anything but blind faith. As long as they operate from this frame, they have no hope of ever becoming relevant again.
All you have to do is look at various quotes on evidence from great minds and you’ll get the major difference between a great mind and today’s crop of republicans. This is one of my favorite quotes on the difference between those really seeking the truth and solutions and those that just cling to whatever belief they really, really, really want to believe.
In scientific study, or, as I prefer to phrase it, in creative scholarship, the truth is the single end sought; all yields to that. The truth is supreme, not only in the vague mystical sense in which that expression has come to be a platitude, but in a special, definite, concrete sense. Facts and the immediate and necessary inductions from facts displace all pre-conceptions, all deductions from general principles, all favourite theories. Previous mental constructions are bowled over as childish play-structures by facts as they come rolling into the mind. The dearest doctrines, the most fascinating hypotheses, the most cherished creations of the reason and of the imagination perish from a mind thoroughly inspired with the scientific spirit in the presence of incompatible facts. Previous intellectual affections are crushed without hesitation and without remorse. Facts are placed before reasonings and before ideals, even though the reasonings and the ideals be more beautiful, be seemingly more lofty, be seemingly better, be seemingly truer. The seemingly absurd and the seemingly impossible are sometimes true. The scientific disposition is to accept facts upon evidence, however absurd they may appear to our pre-conceptions.
Republicans have faith in pre-conceptions that-even when proven wrong continuously–they believe just require a little cosmetic messaging makeover so the rest of us will see where they are coming from and embrace their ideology. They don’t seem to understand that those of us that find blind faith to be defined as “embrace of complete ignorance” don’t find anything they say the least bit compelling as a result. They assume they just need to become better dog whistle whisperers and the dogs, the cats, the dolphins, and all manner of animals will come.
Paul Ryan came out of the snakepit long enough to dribble the usual economic memes that completely deny economic theory, evidence, and policy needs. They continue to link the debt ceiling increase–which is necessary because they’ve already spent a lot of money–to spending less money on things they hate which usually gives them hard little willies. They want to punt yet again on the debt thing until they figure out a way to get their way without looking like the jerks the really, truly are.
The House’s Republicans, assembled at a retreat outside Williamsburg, Virginia, are discussing the “virtues” of passing a short-term increase in the federal debt limit.
So says Rep. Paul Ryan, the House Budget Committee chairman from Wisconsin.
“We are discussing the possible virtues of a short-term debt-limit extension so that we have a better chance of getting the Senate and White House involved in the discussion,” Ryan told reporters outside the private meetings.
Internal GOP polls back the GOP image problem: A mere 11 percent of respondents thought national spending and deficits were the most important issue facing the American public. Thirty-five percent pegged the economy as the top issue. The GOP has had a tough time connecting the two.
Yes, the GOP has a tough time connecting the two because every one knows their austerity pogrammes have nothing to do with creating jobs and economic well-being and everything to to do with their faith based economics which basically keep enriching and empowering their billionaire donor base and corporate overlords. Perhaps, as Tiger Beat on the Potomac suggests, they need to focus on a bigger question?
Times have changed for Republicans. For much of the past decade, they have been rallying around making permanent the Bush-era tax rates. Now, many have voted to let those rates lapse on high-income earners while keeping low middle-class rates. Now tax reform — long a Republican mantra — seems a distant possibility.
The fractured majority, the last bastion of power for Republicans in Washington, faces a more existential question: What does it mean to be a Republican during a second Obama term? How can they exact legislative victories from Obama while driving forward their own agenda in a town where they have just a sliver of control?
And what exactly is a Republican agenda at a time when complicated fiscal issues — on which Republicans used to have a distinct polling advantage — are at the fore?
Let me suggest something here. Republican policies hurt every one but the extremely wealthy. They declare very long wars with very large, unpaid bills for non-US Defense related purposes and none of them die for any of it. They assign women, minorities, and GLBTs to less-than-equal citizen status based on specific religious whims and allow the proliferation of assault weapons while they hide up in gated fortresses. The force us to rely on dirty, climate destroying fossil fuels all the while ignoring the extreme weather around us and the resulting disasters. They give their friends monopoly profit from death, pestilence, and war. None of this makes the majority of Americans happy and the majority of Americans want none of it if you actually poll them honestly. None of this brings economic prosperity. None of this increases US median incomes, quality of life, or public safety, health or security. In short, we continually get the same agendas that have been proven disastrous and costly over and over and over again. We tell them no in elections and polls. They just regroup to find better ways to tell us just have a little more faith. Then, their rich asshole benefactors like Pete Peterson and the Koch Brothers spread money around trying to convince every one in the country that up is really done. We’ve seen this repeatedly since the 1980s. A lot of us have wised up to it.
House Republicans heard it loud and clear Wednesday: They are unpopular, and need to change their ways.Speaker John Boehner’s House Republican Conference is more disliked now than when it took the majority two years ago, lawmakers and aides here found out. After taking a bruising in the 2012 elections, the Republican Party needs an image makeover and the GOP must learn to relate better to voters.
Ya think when polls show that communism in America is more popular than House Republicans that all they need is an image makeover?
David Winston, a top GOP pollster and close adviser to Boehner, unveiled the House Republicans’ most recent favorable rating based on his own analysis: It came in at a barrel-scraping 27 percent.
House Democrats’ numbers are a full 19 points higher at 46 percent. Winston’s analysis: Neither party is popular, but the GOP is less so. The lawmakers heard that the way to turn things around is for the party to pivot squarely to the economy and jobs — the chief concerns of most voters.
After an election dominated by a steady stream of gaffes by the GOP’s presidential nominee, Mitt Romney, and some of its highest-profile candidates, some of the speakers at Wednesday’s retreat counseled the GOP on how to turn things around. Doing so will be paramount as the party enters a period of tense conflict with President Barack Obama over fiscal matters like the nation’s debt ceiling and the sequester.
Domino’s Pizza CEO J. Patrick Doyle explained to House Republicans how he remade his company’s brand.
At the tail end of a panel, Winston and fellow Republican pollsters Kellyanne Conway and Dave Sackett urged the GOP to work hard to relate better to voters. That’s why, the pollsters said in a question-and-answer session, Romney lost his bid for the White House — because no one identified with the aloof-seeming wealthy former venture capitalist whom Democrats painted as way out of touch with the average voter.
Romney may not have been likable but his message–that 47% of us are grifters–was even more unlikable and the voting public resoundingly defeated all of that. I’m still waiting to hear the results from this panel: the National Review’s Ramesh Ponnuru, journalist Kate O’Beirne and James Capretta of the American Enterprise Institute will explore “Who speaks for middle America?”. It’s going to be a bit like watching Marlon Perkins describing what it’s like to wrestle a tiger by standing in front of the video showing some one else doing it. Can any one think of three people less likely to get the middle class than those three? Maybe they could’ve gotten George Will, Tom Brokaw, and David Brooks to do it less believably than that. I’m actually thinking Romney could probably do a better job. At least, he never spent most of his days in the Washington DC beltway elite bubble.
I’m still of the opinion that the Republican party needs to go the way of the WHIGS. I can’t see them ever rising above representing any one but the American Equivalent of the Saudi Royal Family and the Taliban ever again. But then, I’m a researcher so I always test my hypotheses against evidence rather than begging you all to just take it on blind faith.
Yes, yes … the fiscal bunny slope has been somewhat solved and the press has moved on to discussing the next big self-inflicted fiscal crisis coming up in February. ( I guess we’re adopting the term “March Madness” just to make it all exciting and discussable.) We’re still in the land of economic surreality instead of theory. It worries me. The basic problem is that this country has forgotten its economic history, lessons and theory. Fiscal policy should not be based on political memes and lurching from one crisis to the next. Here’s some things to think on from economists.
Economist Nouriel Roubini points out that we’ve been let down by our political leaders who just don’t get that our basic problem is really one of development. We’ve had substantial growth in upper incomes and corporate profits, yet we’re going nowhere in all the quality of life and economy numbers. We have a tax policy that encourages folks like Romney to strip money out of functional businesses, shut them down, and move the proceeds to offshore bank accounts to avoid paying taxes that support basic features of a civilized country. How is this kind of wealth creation helping our economy? How is treating speculative gambling to tax favors instead encouraging actual business building creating a future upon which we can sustain our civilization? Why isn’t the press looking at the fiscal drag this cliff solution creates a well as the bigger issue of austerity facing us in March? Austerity has done the UK no favors and is crushing parts of the Eurozone. Why are the media and the political elite focusing on policies that look like Herbert Hoover’s revenge? Why feed the drone economy while starving granny?
President Barack Obama and his allies will argue that the deal concluded on Tuesday raises only $600bn of revenues over 10 years rather than their initial target of $1.4tn – and therefore there is further room for tax rises, at least for the wealthy. Republicans will argue that spending should now be radically cut, since this week’s deal did not address that side of the national balance sheet. (Even the 2011 debt ceiling deal reduced prospective spending by $1tn).
In the meantime, the likely fiscal adjustment in 2013 will be about 1.4 per cent of gross domestic product. (Spread between the expiry of the payroll tax cut, the increase in the tax rates of the rich, and some eventual cuts to spending.)
This translates into a 1.2 per cent of GDP drag on the economy during the year. If the economy was happily growing above trend – at say 3.5 per cent – that would not be such a big deal, as growth would still be above 2 per cent. In the past few quarters growth already averaged about 2 per cent. So the US could quite easily come perilously close to stall speed this year – or worse, if the eurozone crisis worsens.
The longer-term picture is bleaker still. The reality is that America is yet to wake up to the full extent of its fiscal nightmare. Even the typical Republican voter is not – being on average older and poorer than a Democrat voter – in favour of gutting the welfare state. Tea Party extremists are more noise than signal. That is why the plans of Mitt Romney and Paul Ryan, the Republicans’ losing presidential ticket, postponed all the tough spending cuts on Social Security and Medicare by a decade.
Neither Democrats nor Republicans recognise that maintaining a basic welfare state, which is right and necessary in our age of globalisation, rapid technological change and demographic pressure, implies higher taxes for the middle class as well as for the rich. A deal that extends unsustainable tax cuts for 98 per cent of Americans is therefore a pyrrhic victory for Mr Obama.
Yes, they continue to eye cuts in social security under the guise of tackling the deficit. Economist Dean Baker reminds us that Social Security has nothing to do with the Federal Deficit. Yet, there’s Simpson and Bowles yacking up that granny starving canard again! Let’s chain link our grandparents in the name of a lie, please!! Baker is right. Budget hysteria is a growth industry driven by lies and has nothing to do with what’s really happening in our real economy.
While the promotion of budget hysteria is one of the largest industries in Washington, the most important and widely ignored fact about the budget situation is that we have large deficits today because the collapse of the housing bubble sank the economy. This is not a debatable point.
The budget deficit was just 1.2 percent of gross domestic product in 2007. Before the collapse of the housing bubble the deficit was projected to remain low for the next decade and the debt-to-G.D.P. ratio was actually falling. This would have been the case even if the Bush tax cuts were allowed to continue.
When the bubble burst and the economy plummeted, tax collections fell. We also spent more on unemployment insurance and other benefits for unemployed workers. And we had further tax cuts and stimulus spending to try to boost the economy. The automatic and deliberate steps taken to counter the downturn fully explain the large deficits we have seen the last five years.
Record low interest rates on government bonds demonstrate that the current deficits are not a real problem. But even if they were, it is difficult to see how cutting Social Security could to be part of the solution. Under the law Social Security is not supposed to be part of the budget. It is an entirely separate program financed on its own.
This is not just a rhetorical point. We can talk about Social Security facing a financing shortfall in the future precisely because it is solely financed by its own revenue stream.
What we really need is a recovery. That will not happen with all the fiscal policies being placed on the table right now. Let’s review one simple thing. As long as you have a good currency, federal debt instruments in demand, and a vast array of taxable assets in your country, there is no such thing as a ‘bankrupt’ government or excessive debt. But, don’t take my word for it. Let’s again, look at the economic studies and look at the demand for treasury bonds and bills. Markets see no problem with debt levels in most industrialized nations because they know that with development and growth there comes decreased deficits and pay down of debt.
The sovereign bond markets in America, Japan, Britain, and the euro area’s “core” do not seem to think so. These governments can borrow cheaply for decades at a time. While it is certainly possible that the markets are wrong, policymakers should probably pay more attention to investors and less to the fear-mongers, especially since economists do not know how much government debt is too much. In fact, there is good reason to think that many countries with their own currencies could become far more indebted without risking trouble. One reason is that many private investors do not own enough sovereign bonds.
It is important to remember that there is an absence of evidence that governments with their own currencies are too indebted. Those who argue otherwise point to the work of Carmen Reinhart and Kenneth Rogoff, the celebrated authors of This Time is Different. Their paper “Growth in a Time of Debt” claimed that sovereign debt creates a burden on the rest of the economy. (They summarise their points here.) But, as Robert Shiller and Paul Krugman have pointed out, Ms Reinhart and Mr Rogoff never explain how public indebtedness restrains growth. There may be other forces at work, especially since sovereign debt ratios are usually at their highest after wars and financial crises. In countries with their own currencies, private interest rates are now so low that many investors have been grasping for yield wherever they can find it, such as in the revived CLO market. When he evaluated the evidence, my colleague concluded that “debt matters, but the precise way that it matters isn’t as clear-cut as Reinhart-Rogoff seem to indicate”.
Why would private investors want to buy more sovereign debt? A previous post on the shortage of safe financial assets mentioned how pension plans in many countries need to buy more government bonds to avoid mismatches between their assets and liabilities …
Nearly all the red states in our country may be Greece and Portugal–with the exceptions of Texas and Florida–but the blue states are overwhelmingly Germany and they continually bail out those loser states. That’s why we are not the Eurozone. However, those red states sure are trying to blow up the very arrangement that keeps them in roads, schools, and police forces. Economist Clive Crook points out how these idiots have now created a situation where governing means we lurch between crisis because none of them appear to be able to accept the lessons learned from the civil war, the Great Depression, or about 60 year of economic and finance theory.
The latest fiscal deal does little to resolve those uncertainties. The spending-cut part has merely been delayed by two months. The tax increase for couples making more than $450,000, together with other changes and estimated savings in debt interest, shaves about $700 billion from the 10-year deficit. Savings of about $2 trillion will be needed to stabilize the ratio of public debt to national income. Bringing that ratio down to a safer level requires spending cuts and tax increases worth $4 trillion — the original “grand bargain” ambition.
Instead of dealing calmly with the problem, fiscal policy has settled into a mode of perpetual phony crisis. Phony doesn’t mean harmless, however. The risk of a real fiscal crisis gradually builds. Meanwhile, the cumulative effects of simulated crisis might be almost as bad. It’s the difference between an acute illness and a chronic wasting disease — one that’s beginning to look incurable.
Don’t tell me the economy just had a lucky escape. Whatever happens next, it has been paying for the fiscal standoff for months. It’s paying for what Congress might do with the next debt ceiling, and the one after that. The “significant uncertainty” that Geithner referred to has already held back the U.S. recovery. Another temporary fiscal patch isn’t a remedy. It’s just more of the same.
The economy needs a lasting fiscal compact that commands broad, bipartisan support. I can hear the groans. Not another call for compromise. Many Democrats and almost all Republicans find the idea disgusting. On Capitol Hill, it’s no longer enough for one side to win; the other has to be seen to lose. That attitude is the growing burden the economy has to carry.
Which brings me back to journalistic, political hacks that write columns like this one at Politico. (Glen Thrush and Reid J Epstein are the guilty wielders of the keyboards of ignorance here.) They just opine that Obama has a debt problem. Gee, guys, where did you get your doctorates in economics or finance? The place is aptly called Tiger Beat on the Potomac by Charles Pierce. They are all about being groupies to their DC stars. No Republican meme is too outrageously wrong for this e-dishrag.
The staggering national debt — up about 60 percent from the $10 trillion Obama inherited when he took office in January 2009 — is the single biggest blemish on Obama’s record, even if the rapid descent into red began under President George W. Bush.
Glenn Thrush and Reid Epstein’s Politico piece on President Obama’s “debt problem” helps capture a lot of what’s wrong with the larger debate and the political establishment’s confusion about fiscal matters.
It’s the same damn problem that happens when you watch MTP and Dancing Dave and Tom Brokaw discuss anything about economics. They don’t know a damn thing. They just repeat what they’ve heard from their local lying republican friends. Here’s more from Benen.
First, when there’s a global economic crash, and the government needs to invest to rescue the economy, large deficits are good, not bad, especially when borrowing is cheap and easy. Had the president focused on reducing the $1.3 trillion deficit he inherited from Bush/Cheney, instead of job creation and economic growth, the recession would have intensified, and yet, too many reports simply accept it as a given that higher deficits are worthy of condemnation.
Second, under Obama, as the economy started to improve, the deficit started to shrink anyway. Though the political establishment usually ignores these details, the deficit is $300 billion smaller now than when the president took office — marking the fastest deficit reduction since the end of World War II.
Third, Obama keeps pushing massive debt-reduction proposals on the table, as well as all kinds of policies that shrink the deficit (health care reform, cap and trade, Dream Act), but Republicans have opposed all of them.
For Politico, the fact that the national debt is nearly 60% larger necessarily makes this a major “blemish” on the president’s record. This only makes sense, of course, if one assumes that a larger debt is a bad thing — and given the circumstances, it’s not — and that it’s Obama’s policies that are responsible for the increase.
But as we’ve discussed before, that’s simply not the case. The facts are incontrovertible: towards the end of President Clinton’s second term, debt clocks that had been established in various U.S. locations had to be shut down — the deficit had been eliminated and the clocks had never been set to run backwards. By the time Clinton left office in 2001, the nation not only had a large surplus, it was also on track to pay off the entirety of its debt — roughly $5 trillion at the time — by the end of the decade.
Then the Bush/Cheney era happened. Republicans took a massive surplus and turned it into an even more massive deficit, adding the costs of two wars, two tax cuts, Medicare expansion, and a Wall Street bailout to the national charge card.
Sen. Orrin Hatch (R-Utah) later referred to the Bush/Cheney era as a time in which Republicans decided “it was standard practice not to pay for things.” In just eight years, GOP policymakers added $5 trillion to the debt in eight years.
But then Obama was just as reckless, right? Wrong. The key takeaway here is that it’s Republican policies, not the president’s agenda, that’s driving the national debt now and into the future.
Okay, so I’ve made this an extremely long, wonky post and your eyes are probably glazing over by now. The deal is this. We have a huge number of issues facing our country and we have press and a political party that just plain lies and spreads lies on the big ones. We can’t have a discussion on climate change science, or women’s health and reproduction and rape, or economics or a number of things because very few people bring data, science, statistics, and theory to the table. They bring hype and religious and ideological dogma. We continually see Republicans and press folks like Tom Brokaw say the economic equivalent of ‘women who get raped don’t get pregnant because their bodies shut down’ . They don’t even realize they are doing it and no one calls them on it because they get all the air time they want and economists get very little.
So, we’re on the verge of starving children and the elderly based on that level of discussion. How can we possibly get to a more fact-based reality and a healthier economy and democracy with this level of ignorance?
It’s rather amazing to me when a professed news junkie like me starts turning off a number shows that used to be the sole reason I kept cable TV and a TV around the house. CNN used to be on in the background during my at-home office hours. I used to luxuriate in bed on a Sunday Morning with a paper and some good interviews. But, that was before these stations have become permeated with panels of people who don’t do math, science, reality, facts or anything but knee-jerk memes. The panel handlers–supposed journalists–don’t appear to have any motivation to provide news or information. It seems to be all about accessing the same stale old politicians. This Sunday seemed to perfectly reinforce the narratives of the recent fact checking lows of journalists’ coverage of the 2012 elections. This is the situation where–in fairness to differing view points–we have to listen endlessly to Republicans tell us that the sky is green and grass is blue simply because they want it that way.
Political journalists had no doubt heard similar arguments many times before, mostly from left wing bloggers. But this time the charge was coming from two of the most consistent purveyors of conventional wisdom in town, bipartisan to a fault.
And they were pretty harsh in their critique of the media. “Our advice to the press: Don’t seek professional safety through the even-handed, unfiltered presentation of opposing views,” they wrote in the Post. “Which politician is telling the truth? Who is taking hostages, at what risks and to what ends?”
Initially, at least, Mann and Ornstein weren’t completely ignored. “We had really good reporters call us and say: ‘You’re absolutely right’,” Mann said. “They told us they used this as the basis for conversations in the newsroom.”
But those conversations went nowhere, Mann said.
“Their editors and producers, who felt they were looking out for the economic wellbeing of their news organizations, were also concerned about their professional standing and vulnerability to charges of partisan bias,” Mann said.
So most reporters just kept on with business as usual.
“They’re so timid,” Mann said.
Some reporters did better than others, Ornstein said, particularly crediting Jackie Calmes of the New York Times and David Rogers of Politico among a few others. “They grew a little bit more straightforward in what they do, and showed you can be a good, diligent unbiased reporter, report the facts, put it in context, and yet show what’s really going on,” he said.
Most reporters, however — including many widely admired for their intelligence and aggressive reporting — simply refused to blame one side more than the other.
Consider, Paul Krugman. He’s the only economist in the room frequently. What’s his reward? His credentials get questioned and his motivation simply because he speaks from the data, facts and theories that drive our shared discipline. WTF do George Will or Mary Matalin know about even basic economics or math for that matter? Do they actually have the chops to analyze Paul Ryan’s budget plan?
After Krugman called House Budget Committee Chairman Paul Ryan’s budget a “fake document” and the columnist said he was “amazed that people haven’t gotten that,” Will unsheathed his verbal sword and went at Krugman.
“I have yet to encounter someone who disagrees with you who you don’t think is a knave, or corrupt, or a corrupt knave,” Will said, borrowing a phrase founding father Alexander Hamilton used to rail against those unwilling to respect the good faith of their political opponents.
“No, I’ve got some people,” Krugman said, suggesting that some conservatives are indeed intellectually honest.
“Specifics have indeed been offered,” Will insisted, referring to Republican budget plans.
That face-off followed a couple of prickly interactions between Matalin and Krugman earlier in the program.
“The Republicans are unable to actually make concrete proposals” about resolving the fiscal cliff, Krugman said, claiming they’ve failed to offer “any specifics” about how they would rein in the deficit.
Matalin called Krugman’s remark “completely mendacious.”
“Are you an economist or a polemicist?” she asked with an expression suggesting she found the Princeton professor and winner of the 2008 Nobel Prize in economics to be insufferable. “Do you want to talk about economy or do you want to talk about polemics?” she said.
Matalin and Krugman also sparred over Medicare cuts, with the former aide to Vice President Dick Cheney insisting that any cut in payments to providers would impact beneficiaries and the Times columnist insisting that was not always the case.
As if Matalin were not peeved enough, Krugman chimed in later to correct her when she said John Maynard Keynes had said: “Ideas drive history. Ideas drive progress.”
“The actual Keynes quote is….’ideas which are dangerous for good or evil,’” Krugman said.
Perhaps Matalin shouldn’t have tried to quote Keynes (whom she sarcastically called “our hero”) to a Keynesian. Unsurprisingly, Krugman has written on the specific quote.
How can we get any serious discussions about policy when journalists appear unwilling and unable to take a role in actually fact checking and providing a framework for what’s real and what’s imagined narratives on simple things like data? Why do they allow politic pundits with no real basic knowledge of policy issues to name call, misquote, and basically lie? Matalin couldn’t even get a simple quote right in front of person who’d actually done a lot of research and writing on that simple quote.
As rumors swirl that Democrats may consider raising the Medicare eligibility age to reach a deal before the looming “fiscal cliff,” a top Senate Democrat expressed opposition to that option Sunday. Speaking on Meet the Press, Senate Majority Whip Dick Durbin (D-IL) said raising the age at which seniors can receive Medicare from 65 to 67 would leave retired seniors with a dangerous gap in their health coverage:
DAVID GREGORY (HOST): Senator, one point about Medicare. You say you want to put off this discussion until later. But bottom line, should the Medicare eligibility age go up? Should there be means testing to get at the benefits side, if you want to shore this program up, because 12 years as you say before it runs out of money?
DURBIN: I do believe there should be means testing. and those of us with higher income in retirement should pay more. That could be part of the solution. But when you talk about raising the eligibility age, there’s one key question. what happens to the early retiree? What about that gap in coverage between workplace and Medicare? How will they be covered? I listened to Republicans say we can’t wait to repeal Obamacare, and the insurance exchanges. well, where does a person turn if they are 65 years of age and the medicare eligibility age is 67? They have two years there where they may not have the best of health. They need accessible, affordable medical insurance during that period.
Earlier this week, House Minority Leader Nancy Pelosi (D-CA) also rejected raising the Medicare eligibility age as part of a year-end deal on spending cuts and tax increases, saying, “I am very much against it, and I think most of my members are.” President Obama was reportedly willing to support raising the Medicare eligibility age during 2011 debt negotiations, but has not said where he stands on the issue as part of the current deal.
A Congressional Budget Office study of the proposal to raise the Medicare age to 67 found it would have “little effect on the trajectory of Medicare’s long-term spending” because the youngest Medicare beneficiaries are the healthiest and least costly to the program. The costs, meanwhile, would include an estimated net increase of $5.6 billion in out-of-pocket health insurance costs for beneficiaries who would have been otherwise covered by Medicare, according to a Kaiser Family Foundation study. Seniors in Medicare Part B would also face a 3 percent premium increase, the study found, since younger and healthier enrollees would be routed out of Medicare and into private insurance. Beneficiaries in health care reform’s exchanges would see a similar spike in premiums with the addition of the older population.
At some point, some one outside of a Democratic partisan has to point out that the Republicans keep coming up with the same old tired things that only protect their rich benefactors. None of their policies provide fiscal discipline. None of their policies achieve jobs and economic growth. None of their policies or their asserted outcomes have shown to be remotely close to reality when exposed to rigorous analysis. When will the press stop supporting lies in the name of balanced coverage?
Also, why is Rupert Murdoch being allowed to purchase more newspapers and media outlets in this country when the ones he’s got his nasty old claws into now are nothing short of gossip and propaganda rags? There is an absolute conspiracy in this country among the plutocrats to dumb down our nations most important social institutions–our free press and our public education institutions–and to destroy the ones that create economic equality and justice. Those, of course, are labor laws, progressive taxation, public infrastructure, and safety net programs. They are currently trying to rewrite the message of the election to match what they wanted to be the outcome. Our only recourse is to continue to tell our elected officials that our votes should mean something. We need a person in office—like Al Gore’s VPship–that will go through all those agencies and start throwing out the Dubya left overs. Democrats need to start fighting for every Federal appointment and every attempt at any more grand bargains. You cannot bargain with liars nor should you take any of their policy suggestions seriously. Now is the time to hold the Democrats to account.
I rarely violate fair use and copy something in its entirety having been well schooled in that as a professor. However, Common Dreams has this great set of numbers that needs to be reprinted. We don’t profit from anything so hopefully, they’ll be forgiving. Also, I’m actively plugging the work they do so, they do have a subscribe button and a donate button. Also, please notice I’ve recognized the author of this great set of numbers too. So, forgive me but this is wonderful and here it is in its entirety. It also includes a great looking Banksy-like graphic.
Published on Monday, November 19, 2012 by Common Dreams
Ten Numbers the Rich Would Like Fudged
The numbers reveal the deadening effects of inequality in our country, and confirm that tax avoidance, rather than a lack of middle-class initiative, is the cause.
1. Only THREE PERCENT of the very rich are entrepreneurs.
According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate. Only 3.6 percent of taxpayers in the top .1% were classified as entrepreneurs based on 2004 tax returns. A 2009 Kauffman Foundation study found that the great majority of entrepreneurs come from middle-class backgrounds, with less than 1 percent of all entrepreneurs coming from very rich or very poor backgrounds. (photo: withayou via flickr)
2. Only FOUR OUT OF 150 countries have more wealth inequality than us.
In a world listing compiled by a reputable research team (which nevertheless prompted double-checking), the U.S. has greater wealth inequality than every measured country in the world except for Namibia, Zimbabwe, Denmark, and Switzerland.
3. An amount equal to ONE-HALF the GDP is held untaxed overseas by rich Americans.
The Tax Justice Network estimated that between $21 and $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world’s Ultra High Net Worth Individuals, that’s $8 to $12 trillion in U.S. money stashed in far-off hiding places.
Based on a historical stock market return of 6%, up to $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.
4. Corporations stopped paying HALF OF THEIR TAXES after the recession.
After paying an average of 22.5% from 1987 to 2008, corporations have paid an annual rate of 10% since. This represents a sudden $250 billion annual loss in taxes.
U.S. corporations have shown a pattern of tax reluctance for more than 50 years, despite building their businesses with American research and infrastructure. They’ve passed the responsibility on to their workers. For every dollar of workers’ payroll tax paid in the 1950s, corporations paid three dollars. Now it’s 22 cents.
5. Just TEN Americans made a total of FIFTY BILLION DOLLARS in one year.
That’s enough to pay the salaries of over a million nurses or teachers or emergency responders.
That’s enough, according to 2008 estimates by the Food and Agriculture Organization and the UN’s World Food Program, to feed the 870 million people in the world who are lacking sufficient food.
For the free-market advocates who say “they’ve earned it”: Point #1 above makes it clear how the wealthy make their money.
6. Tax deductions for the rich could pay off 100 PERCENT of the deficit.
Another stat that required a double-check. Based on research by the Tax Policy Center, tax deferrals and deductions and other forms of tax expenditures (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes), which largely benefit the rich, are worth about 7.4% of the GDP, or about $1.1 trillion.
Other sources have estimated that about two-thirds of the annual $850 billion in tax expenditures goes to the top quintile of taxpayers.
7. The average single black or Hispanic woman has about $100 IN NET WORTH.
The Insight Center for Community Economic Development reported that median wealth for black and Hispanic women is a little over $100. That’s much less than one percent of the median wealth for single white women ($41,500).
Other studies confirm the racially-charged economic inequality in our country. For every dollar of NON-HOME wealth owned by white families, people of color have only one cent.
8. Elderly and disabled food stamp recipients get $4.30 A DAY FOR FOOD.
Temporary Assistance for Needy Families (TANF) has dropped significantly over the past 15 years, serving only about a quarter of the families in poverty, and paying less than $400 per month for a family of three for housing and other necessities. Ninety percent of the available benefits go to the elderly, the disabled, or working households.
Food stamp recipients get $4.30 a day.
9. Young adults have lost TWO-THIRDS OF THEIR NET WORTH since 1984.
21- to 35-year-olds: Your median net worth has dropped 68% since 1984. It’s now less than $4,000.
That $4,000 has to pay for student loans that average $27,200. Or, if you’re still in school, for $12,700 in credit card debt.
With an unemployment rate for 16- to 24-year-olds of almost 50%, two out of every five recent college graduates are living with their parents. But your favorite company may be hiring. Apple, which makes a profit of $420,000 per employee, can pay you about $12 per hour.
10. The American public paid about FOUR TRILLION DOLLARS to bail out the banks.
That’s about the same amount of money made by America’s richest 10% in one year. But we all paid for the bailout. And because of it, we lost the opportunity for jobs, mortgage relief, and educational funding.
Bonus for the super-rich: A QUADRILLION DOLLARS in securities trading nets ZERO sales tax revenue for the U.S.
The world derivatives market is estimated to be worth over a quadrillion dollars (a thousand trillion). At least $200 trillion of that is in the United States. In 2011 the Chicago Mercantile Exchange reported a trading volume of over $1 quadrillion on 3.4 billion annual contracts.
A quadrillion dollars. A sales tax of ONE-TENTH OF A PENNY on a quadrillion dollars could pay off the deficit. But the total sales tax was ZERO.
It’s not surprising that the very rich would like to fudge the numbers, as they have the nation.
Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
Thank you Paul Bucheit and Common Dreams for making this available. Facts should speak louder than Republican memes.