TGIFriday Reads

Good Morning!

There’s been quite a few economists weighing in on the debate going on in congress about the budget.  Paul Krugman’s op-ed is on “The Austerity Delusion”. Krugman’s appalled that more policymakers aren’t concerned with the high rate of unemployment which is contributing to the deficit in several ways.  First, it decreases tax revenues.  Second, it increases state and federal expenditures.  Solve the jobs problem and the deficit will decrease.  He’s worried that all this austerity will just bring on another economic slowdown.

Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.

So jobs now, deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes. On one side, we’re constantly told that if we don’t slash spending immediately we’ll end up just like Greece, unable to borrow except at exorbitant interest rates. On the other, we’re told not to worry about the impact of spending cuts on jobs because fiscal austerity will actually create jobs by raising confidence.

Politico features a series of Former CEA members who signed  a letter of concern on the deficit and unsustainable US Budgets. Too bad that people like Greg Mankiw–advisor to Dubya–didn’t speak up when the spending problems were originated.  They mostly trace to Reagan and Bush administrations.  They all suggest using the Cat food commission report as the focus of discussions.  Hang on to your social security, folks!  It’s going to be a bumpy ride.

As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.

There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.

While the actual deficit is likely to shrink over the next few years as the economy continues to recover, the aging of the baby-boom generation and rapidly rising health care costs are likely to create a large and growing gap between spending and revenues. These deficits will take a toll on private investment and economic growth. At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008.

“The Moment of Truth” documents that “the problem is real, and the solution will be painful.” It is tempting to act as if the long-run budget imbalance could be fixed by just cutting wasteful government spending or raising taxes on the wealthy. But the facts belie such easy answers.

I suppose you know the professional insane Republican Michelle Bachmann is forming an exploratory committee for a possible presidential run.  I’d vote for any one’s dog before I’d consider Bachmann who doesn’t appear to have paid attention to any course she ever attended in school. I’ve never in my life heard any one outside of maybe a grade school that has such a bad grasp of American History, law, and politics.  I think she should’ve just gotten a mail order degree.  Education appears to have been wasted on her.

CNN has exclusively learned that Rep. Michele Bachmann will form a presidential exploratory committee. The Minnesota Republican plans to file papers for the committee in early June, with an announcement likely around that same time.

But a source close to the congresswoman said that Bachmann could form the exploratory committee even earlier than June so that she could participate in early Republican presidential debates.

“She’s been telling everyone early summer,” the source told CNN regarding Bachmann’s planned June filing and announcement. But the source said that nothing is static.

“If you [debate sponsors] come to us and say, ‘To be in our debates, you have to have an exploratory committee,’ then we’ll say, ‘Okay, fine…I’ll go file the forms.'”

Speaking of Republicans, a former aide to Sen. John Ensign has just been indicted for violating conflict of interest laws.

The Justice Department announced the indictment late Thursday, which charges Doug Hampton with seven counts of violating criminal conflict of interest laws for allegedly engaging in unlawful communication with Ensign’s office, violating the Senate’s “revolving door” policy.

According to the indictment, after Hampton left Ensign’s office in 2008 he “knowingly and willfully made, with the intent to influence, communications to staff members of the U.S. senator” on behalf of an energy company he was employed by at the time.

Hampton is alleged to have sought the assistance of Ensign and other staff members for help in moving forward a proposal to build a power plant in eastern Nevada.

Hampton, if convicted, could face up to five years in prison for each of the seven counts in the indictment.  He is set to be arraigned in U.S. District Court in Washington, D.C. on March 31.

Ensign is retiring.  Probably because of all the scuttlebutt around his affairs and possibly what may come out of this prosecution.  Maybe Tom Delay will have a new cell mate on the way.

Glenn Greenwald has written an excellent piece in Salon on withering Miranda rights under the Obama administration.   You may want to check it out.

The number of instances in which Obama has violently breached his own alleged principles when it comes to the War on Terror and the rule of law are too numerous to chronicle in one place. Suffice to say, it is no longer provocative or controversial when someone like Yale Law Professor Jack Balkin writes, as he did the other day, that Obama “has more or less systematically adopted policies consistent with the second term of the George W. Bush Administration.” No rational person can argue that or even tries to any longer. It’s just a banal expression of indisputable fact.

Today, the Obama DOJ unveiled the latest — and one of the most significant — examples of its eagerness to assault the very legal values Obama vowed to protect. The Wall Street Journal reports that “new rules allow investigators to hold domestic-terror suspects longer than others without giving them a Miranda warning, significantly expanding exceptions to the instructions that have governed the handling of criminal suspects for more than four decades.” The only previous exception to the 45-year-old Miranda requirement that someone in custody be apprised of their rights occurred in 1984, when the Rehnquist-led right-wing faction of the Supreme Court allowed delay “only in cases of an imminent safety threat,” but these new rules promulgated by the Obama DOJ “give interrogators more latitude and flexibility to define what counts as an appropriate circumstance to waive Miranda rights.”

Just hope you never get classified as a terrorist or you’ll disappear down some rabbit hole.  You should also read William Grieder over at The Nation on How Wall Street Crooks Get Out of Jail.

Instead of “Old Testament justice,” federal prosecutors seek “authentic cooperation” from corporations in trouble, urging them to come forward voluntarily and reveal their illegalities. In exchange, prosecutors will offer a deal. If companies pay the fine set by the prosecutor and submit to probationary terms for good behavior, perhaps an outside monitor, then government will defer prosecution indefinitely or even drop it entirely. The corporation thus avoids the stigma of a criminal trial and the bad headlines that depress stock prices. More to the point, the “deferred prosecution agreement,” as it’s called, allows the company to escape the more severe consequences of criminal conviction—the loss of banking and professional licenses, charters, deposit insurance or other government benefits, including eligibility for federal contracts and healthcare programs. In other words, the punishment prescribed in numerous laws.

“With cooperation by the corporation, the government may be able to reduce tangible losses, limit damage to reputation, and preserve assets for restitution,” the Justice Department’s authorizing memorandum explained in 2003. “A deferred prosecution or non-prosecution agreement can help restore the integrity of a company’s operations and preserve the financial viability of a corporation that has engaged in criminal conduct.”

The favored argument for the more conciliatory approach was that criminal indictment may amount to a death sentence for a corporation. The fallout will destroy it, and the economy will lose valuable productive capacity. The collateral consequences are unfair to employees who lose jobs and stockholders who lose wealth. Corporate defenders cited Arthur Andersen, the giant accounting firm that imploded after it was convicted in 2002 of multiple offenses in Enron’s collapse. But was it the firm’s indictment or its criminal behavior that caused clients, accountants and investors to abandon it?

A better name for the Justice Department’s softened policy might be “too big to prosecute.”

Wanna rob a bank?  Don’t do it with a gun.  Just become its President and do what you want to do.

Here’s a disturbing headline from Egypt (h/t to Minx):Secret shame of Egypt’s army: Women protesters were forced to have ‘virginity checks’ after being arrested in Tahrir Square,

Women arrested by the Egyptian police during protests in Cairo’s Tahrir Square were subjected to forced ‘virginity tests’, according to Amnesty International.

Eighteen demonstrators were detained after army officers cleared the square on March 9 at the end of weeks of protest.

Amnesty today said that the women had been beaten, given electric shocks and then subjected to strip searches while being photographed by male soldiers.

They were then given ‘virginity checks’ and threatened with prostitution charges if medics ruled they had had sex, according to the charity.

Just when you think things will get better, something comes along that just makes things look worse.

So, what’s on your reading and blogging list today?