Thank you Sir May I have Another?

Oh, the economic hardships of giving up those charitable deductions!

White House minions Ken Baer and David Plouffe tried the hard sell on a few liberal and progressive bloggers in a teleconference on Monday Night according to Susie Madrak at C&L. Yes, it was yet another access blogger telethon where the White House tries to sell  the progressive blogs with all the readership on the way to “Tote dat barge! Lift dat bale!”  for the reelection effort and this stinker of a White House Budget.  After all, the Republican we have in the White House now will be marginally less evil than the Republican we could get in the White House then if every one doesn’t just bend over and ask for more.

Although the minions said the budget asked for “shared sacrifice’, Plouffe had a difficult time coming up with concrete examples on how the very rich in the country would be doing their share of the sacrificing.  The only examples they could provide were less deductions for mortgages and no deductions for charitable giving.   I’m sure all the folks relying on charitable giving aren’t thinking the sacrifice part of the deal goes to their rich donors.  Do they really think honest liberals will agree with this let alone try to sell it to others?

A conference call with Congressional Budget Office spokesman Ken Baer and White House adviser David Plouffe tonight was probably aimed at growing indignation in the blogosphere over the proposed Obama budget, which features your proverbial draconian cuts to just about every social program — except Social Security and Medicare.

It’s good that the administration is engaging in these calls because we get to hear more details about their budget instead of the usual MSM drone, but I’m not sure that bloggers are happy with the overall conversation since once we got into the details of arguing different cuts, it looked as though we were buying into the White House frame that the cuts were urgently needed in the first place, and many of us don’t believe that’s true.

The audio of the call is in our media player–above. What do you think?

Baer’s opening remarks focused on “shared sacrifice.”

My question: “When you’re talking about shared sacrifice, clearly, the working and middle class is getting a disproportionate slam everywhere they turn with this budget, and you’re talking about a few, what sound like token items to the rest of us out here, and I wonder how you rationalize that during this severe economic recession.”

Baer said people got that impression from the stories that were released early, without looking at the big-budget picture. (Click here.)

David Dayen at FDL was also on the call.  His post draws similar conclusions. There’s an insane explanation of why the White House version of draconian cuts is better because of  the timing of undesirable cuts.  It seems straight out of newspeak world.  It appears that the White House is still very confused about basic economics and multipliers.  They appear to believe that March is an unsafe time for cuts but by October, recessionary budget cuts will be hunky dory.

Didn’t the mess they made of the first opportunity to get a stimulus right teach them anything? Do they really think they can finesse every economic variable to acquiesce to a hope and dream speech at a particular point in time?  After all, they’ve done such a bang up job with the labor market already that we still have record rates of long term unemployed and full on market exits.  How do you get a president re-elected when the lowest unrealistic unemployment rate you can offer up is around 7.5%?  Even the Gipper was getting  nervous about a re-election attempt with rates that high.  Reagan’s administration switched to massive recapitalization of the military ala Keynesian stimulus to buy a re-election boost.

WTF do these people think we’re smoking over here in our pajama wearing hippy dreamland? The only thing I can figure is that this delay buys enough time to get through an election cycle so that the first wave hits but not the tsunami of recessionary anti-stimulus as the impact multiplies through out the economy.  This way, Obamas gets to still happy talk  some of the people all of the time about how things are getting better without looking like a complete liar.  He also fights off conservative angst about deficit improvement before the next recession takes hold and makes everything much, much worse.

My question was this: Where does the Administration think demand will come from to reverse a three-year demand shortfall if you cut budgets in the immediate term at a time when 14 million people are unemployed, if state budgets show the same contraction, if trade remains in imbalance and if corporations are sitting on $2 trillion in cash? In other words, do you think economy can generate its own demand right now? I added this for Plouffe to give it a political angle: The budget predicts 8.2% unemployment at the end of 2012. No President has ever run for re-election with unemployment over 7.8% since 1948. Do you think it’s worth cutting budgets over the next two years and reducing aggregate demand at a time when 14 million Americans are unemployed, if the political benefit appears to be facing re-election with the highest unemployment in recorded history?

So here was the answer. Plouffe said that the employment estimates, they hope are conservative. (Actually, one criticism of the budget I heard yesterday was that the projections were pretty aggressive and above what CBO projects for the next few years.) He said that there is a lot of positive trajectory in terms of job growth, though not nearly enough, he stressed. He said that the President has said repeatedly that we cannot jeopardize the recovery with the budget, and that it does not have negative effects on the economy in terms of hiring and growth.

I don’t know how he can say that. Simple math indicates that taking $90 billion out of the economy, which this does in the first fiscal year starting in October, would have negative effects. The positive trajectory on job growth, reflected by two consecutive months of reductions in the topline unemployment rate by 0.4%, have not carried with it actual hiring growth, and could be attributed to noise in the data and rejiggering of population statistics. So when you’re talking about actual job growth, not many economists see it yet. And sucking money out of the economy when states are contracting and businesses aren’t spending will necessarily reduce that hiring.

This is when Ken Baer stepped in. And his answer was baffling. He said that the President’s budget covered Fiscal Year 2012, which was “a bit away,” and that the budget was constructed so that the cuts wouldn’t go into effect until a little later. Republican cuts from the current budget year will start March 5 if they get their way, and there’s a risk there.

I haven’t seen a complete list of invitees, but my guess is that there wasn’t an economist among them.  Yup, it’s a tough life when you join the league of uncommon bloggers.