Sign Krugman's "Manifesto For Economic Sense"

By Isaiah J. Poole, cross-posted from Campaign for America's Future

Tom Tomorrow

Economists Paul Krugman and Richard Layard, the latter of the London School of Economics, today posted a "Manifesto for Economic Sense" that lays out a sound framework for reviving the global economy.

"I’ve been arguing for a long time that policy makers have misunderstood the nature of our economic crisis, mistaking symptoms for causes, and responding in ways that make the situation worse," Krugman wrote yesterday on his blog at The New York Times. The goal of the manifesto is, in the words of the manifesto itself, to "offer the public a more evidence-based analysis of our problems" and change the direction of the economic debate away from austerity and toward using government as a kindle for rebuilding the middle class.

"A key priority now is to reduce unemployment, before it becomes endemic, making recovery and future deficit reduction even more difficult," the manifesto says.

Many of the signatures on the manifesto are those of economists and policy experts, but you are encouraged to sign the manifesto as well to show your agreement with its basic principles.

In an op-ed in the Financial Times, Krugman and Layard explained the thinking behind the manifesto. "More than four years after the financial crisis began, the world’s major advanced economies remain deeply depressed, in a scene all too reminiscent of the 1930s," the piece begins, because their economic leaders, and conservatives in the United States, insist on replicating the failed economic strategies of the 1930s before the New Deal.

Instead, the manifesto calls for economic experts and policy makers to speak up more loudly against the arguments that "austerity will increase confidence and encourage recovery"—there is no evidence that austerity policies are having that effect anywhere in the world—and that a key causes of our weak economic recovery are structural, rather than a general lack of spending and demand.

The statement echoes the same themes of our own 2010 "Don't Kill Jobs" economic manifesto, signed by more than 300 economic experts. That statement urged the president and Congress to "redouble efforts to create jobs and send aid to the states whose budget crises threaten recovery by forcing them to lay off school teachers, public safety workers, and other essential workers. It also makes sense to invest in public service jobs—and in infrastructure projects for transportation, water, and energy conservation that will make our economy more productive for years to come."

If our political leadership had taken that message to heart in 2010, it would not have been necessary for Krugman and Layard to post their own manifesto with the same message. But Washington conservatives still refuse to admit the failures of their policies and end their wrong-headed obstruction in Congress. It's exasperating to have to repeat the message over and over, but as the Krugman-Layard manifesto concludes, "The whole world suffers when men and women are silent about what they know is wrong."

Mitt Romney And The Odor Of Mendacity

Didn't you notice a powerful and obnoxious odor of mendacity in this room?... There ain't nothin' more powerful than the odor of mendacity... You can smell it.  -- Tennessee Williams from Cat on a Hot Tin Roof

Several months ago, Paul Krugman wrote about Mitt Romney's dishonest campaign and penchant for uttering false and fraudulent statements:  "Won’t Mr. Romney pay a price for running a campaign based entirely on falsehoods? He obviously thinks not, and I’m afraid he may be right."

Krugman went on to predict that "Romney will probably be called on some falsehoods" but "most of the news media will feel as though their reporting must be “balanced,” which means that every time they point out that a Republican lied they have to match it with a comparable accusation against a Democrat — even if what the Democrat said was actually true or, at worst, a minor misstatement."

Fast forward to last week's article in the New York Times, "Fact-Checking Obama and Romney," which stated that:

Mr. Obama and Mr. Romney are filling speeches with facts and figures designed to enhance their case and diminish the other guy’s, in the process often making assertions fundamentally at odds with one another. Along the way, both candidates are at times stretching the truth, using statistics without context, exaggerating their own records and misrepresenting their opponent’s. 

A classic example of balance and false equivalence, the article concluded that "[d]etermining who is the worse dissembler can be a subjective exercise, even in an age when news organizations, blogs and partisan groups blitz out regular fact-checks.

But while the Obama campaign's rhetoric can be at times misleading, it cannot be compared to Romney's incessant lying.  Steve Benen at Rachel Maddow's blog has been chronicling Romney's lies for months.  (See his 23rd weekly installment here.)

As Michael Cohen of the Guardian summarizes Romney's "cavalcade of untruths" and concludes:

Granted, presidential candidates are no strangers to disingenuous or overstated claims; it's pretty much endemic to the business. But Romney is doing something very different and far more pernicious. Quite simply, the United States has never been witness to a presidential candidate, in modern American history, who lies as frequently, as flagrantly and as brazenly as Mitt Romney.

And how can Romney get away with it?  Cohen explains:

Now, in general, those of us in the pundit class are really not supposed to accuse politicians of lying – they mislead, they embellish, they mischaracterize, etc. Indeed, there is natural tendency for nominally objective reporters, in particular, to stay away from loaded terms such as lying. Which is precisely why Romney's repeated lies are so effective. In fact, lying is really the only appropriate word to use here, because, well, Romney lies a lot. But that's a criticism you're only likely to hear from partisans.

Pollsters and pundits seems to agree that the election will be extremely close.  Whether the media will ignore the powerful and obnoxious odor of mendacity that surrounds Mitt Romney will be a key factor in the outcome.

Quote Of The Day

"So the Ryan budget is a fraud; Mr. Ryan talks loudly about the evils of debt and deficits, but his plan would actually make the deficit bigger even as it inflicted huge pain in the name of deficit reduction. But is his budget really the most fraudulent in American history? Yes, it is."

Paul Krugman, Pink Slime Economics

Gingrich Is Right About One Thing: Romney Is A Liar

DonkeyHotey

Newt Gingrich called his fellow Republican a liar, and the media, including the venerable New York Times, reports this as evidence that Newt is frustrated with the state of the campaign and as a reminder of what a nasty and caustic guy Newt can be.  But, as Steve Benen correctly notes, the real story here is not that Newt called Mitt out for "not telling the truth," but that reporters seem taken aback by this statement and have not come to this obvious conclusion themselves.

Case in point is Romney's false claim that 2 million jobs have been lost under the Obama Administration, which he repeatedly asserts and about which he is rarely challenged.  As Greg Sargent explains:

Romney is taking into account the fact that the economy continued hemorraghing jobs at a furious rate after Obama took office — before Obama’s stimulus passed. But the figures show that once it became law, monthly job loss declined over time, and turned around in the spring of 2010, after which the private sector added jobs for over 20 straight months, totaling around 2.2 million of them.

Paul Krugman provides this handy chart to show how misleading Romney's assertion really is:

As Krugman concludes:

Does this look to you like a president who “lost jobs”, or like a president who inherited an economy in free fall? You can accuse Obama of not doing enough to promote recovery — and I have (although the biggest villain here was Romney’s own party). But to claim that Obama caused the job loss is indefensible.

What is also indefensible is the failure of the rest of the media to confront Romney on his dishonesty. 

Where's The Middle?

Dead Armadillo

As the right keeps moving right, the mainstream media keeps trying to find the center.  The rules of the game require that we have two opposing camps with reasonable solutions to be found in the middle.  All we need is a little bipartisanship and compromise and everything will be alright.

This means blaming "Congress" as a whole, ignoring that one side is too willing to compromise and the other refuses to budge.  It has led pundits like Thomas Friedman to chastise President Obama for not seeking policies he has clearly sought, and tiresome pleas for a Third Party, which advocates for exactly what Obama and centrist Democrats are hoping to achieve.

Greg Sargent puts it this way:

Self-styled “centrist” columnists have a perennial problem on their hands. They have built reputations by calling for middle-of-the-road solutions to our problems. Yet they can’t acknowledge that Obama and Democrats are the ones who are offering solutions that are genuinely centrist, because that would constitute “taking sides.” This would imperil their “brand,” which rests heavily on transcending partisanship, and on their ongoing insistence that the future depends on following a middle ground between the parties.

 Today, Paul Krugman writes that the Republicans will not pay any political price for its intransigence when the Super Committee fails because the news media won't point out that only one side refused to compromise.  In a not-so-veiled swipe at Friedman, Krugman makes the point perfectly:

Oh, and let me give a special shout-out to “centrist” pundits who won’t admit that President Obama has already given them what they want. The dialogue seems to go like this. Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?” Mr. Obama: “I support a mix of spending cuts and tax hikes.” Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?”
You see, admitting that one side is willing to make concessions, while the other isn’t, would tarnish one’s centrist credentials. And the result is that the G.O.P. pays no price for refusing to give an inch.

Wall Street Whines

Nicholas Kristof wrote a great column on Sunday, in which he tapped into the "primal scream of democracy" that has become the Occupy Wall Street movement.  He described the frustration driving OWS as stemming from economic equality, and the "growing sense that lopsided outcomes are a result of tycoons’ manipulating the system, lobbying for loopholes and getting away with murder." 

As it becomes clear that the movement is resonating with more and more Americans, the financial industry, as Paul Krugman notes, has gone from "contemptuous dismissal" of Occupy Wall Street to "whining" about it.

Not surprisingly, Tom Tomorrow captures the mood on Wall Street perfectly.  (Read the whole comic by clicking on the Tom Tomorrow badge on the right of the blog.)

As Krugman explains:

Until a few weeks ago it seemed as if Wall Street had effectively bribed and bullied our political system into forgetting about that whole drawing lavish paychecks while destroying the world economy thing. Then, all of a sudden, some people insisted on bringing the subject up again. And their outrage has found resonance with millions of Americans. No wonder Wall Street is whining.

Panic Of The Plutocrats

Quote of the Day, from Paul Krugman:  "So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth."

Krugman Knows What To Do

Yesterday, while the stock market went into freefall, Paul Krugman called for "a little self-indulgent calm," and posted on his website this great acoustic version of the Arcade Fire song We Used To Wait.



Now it is time to get agitated again.  In today's column, Krugman explains, as he has done repeatedly over many months, that "the economy isn’t recovering, and Washington has been worrying about the wrong things."   Of course, the Republicans won't change their tired tune.  They "won’t stop screaming about the deficit because they weren’t sincere in the first place: Their deficit hawkery was a club with which to beat their political opponents, nothing more — as became obvious whenever any rise in taxes on the rich was suggested. And they’re not going to give up that club."

But, it is important to note that "the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite — including at least some senior figures in the Obama administration — hadn’t agreed that deficit reduction, not job creation, should be our main priority."

So how to turn this around?  It requires more than President Obama again promising to "pivot" to jobs and then merely proposing symbolic measures.  "The Fed needs to stop making excuses, while the president needs to come up with real job-creation proposals. And if Republicans block those proposals, he needs to make a Harry Truman-style campaign against the do-nothing G.O.P."  Wouldn't that be music to our ears.

Obama Is No "Great Progressive Hope"

Tom Tomorrow

Paul Krugman once again warns about the dire consequences that would ensue if the debt limit isn't raised while noting the complacency of the mainstream media in assuming that, in the end, both parties will come together and do what must be done.  As Krugman points out, "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."

The Republican attempt to use the debt ceiling to extort concessions from the Democrats is a new phenomenon.  When former President Bush added more than $4 trillion to the national debt, Krugman explains, Congress voted to raise the debt ceiling seven times "with little fanfare."  But it should have been obvious when Obama gave in to the Republicans on extending the Bush tax cuts what was coming next, and it was remarkably short-sighted that the deal did not also include raising the debt limit, "so as to forestall another hostage situation."

Krugman explains that the failure to raise the debt limit would force the government to make "drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece."  Nevertheless, "Obama must be prepared to face those consequences if he wants his presidency to survive."


It became even more obvious that the Republicans were using the "threat of a debt crisis to impose an ideological agenda" when they walked out of the negotiations after Democrats had the temerity to raise the issue of "limiting tax breaks for corporate jets and hedge-fund managers as well as slashing aid to the poor and unlucky."  They expect Obama to cave since he caved previously over tax cuts, and they also believe "the public will blame the president for the economic crisis they’re threatening to create."  In fact, as some Democrats have finally begun saying, and Krugman asserts, "it's hard to avoid the suspicion that G.O.P. leaders actually want the economy to perform badly."

Tragically, as Krugman pointed out on his blog, Obama's July 2nd radio address provided once again "the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy, all in just two sentences," as follows:

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.

So, it sure doesn't seem like Obama is not going to draw a line in the sand.  Instead, "the great progressive hope," continues to "fall all over himself to endorse right-wing economic fallacies."  It feels like a another cave is in the works.

Lying And Lunacy As The Economy Tanks

Eric Alterman recently wrote about the willful ignorance of a large swath of the Republican Party.  Rick Perlstein put it somewhat differently:  They are liars.  Either way, together with feckless Democrats and a complicit media, the consequences are dire.

As Alterman contends, the lying and lunacy of the Republicans serve "as a smoke screen for a conservative class war against the poor and middle class."  Thus, whatever the state of the economy, Republicans insist on deep cuts to social spending in order to attain their goals of shrinking the federal government and crushing liberal institutions.  They hammer on the long-term deficit as the greatest danger to an economic recovery and, lo and behold, it becomes "conventional wisdom," as Paul Krugman says, "that the deficit, not unemployment, [is] Public Enemy No. 1 — a conventional wisdom both reflected in and reinforced by a dramatic shift in news coverage away from unemployment and toward deficit concerns."

As Robert Reich contends, "the Republican lie that the nation’s long-term budget deficit is responsible for high unemployment would be laughable if it weren’t so tragically irrelevant to the current situation."  Reich warns that we may be heading for a double dip recession.  He urges Washington to immediately attack the problem of jobs and wages and stop the "monumental distraction of the games being played over the debt ceiling and long-term budget deficit."   

Republicans, of course, perpetuate such distractions, and call for more spending cuts.  All too predictably, they blame the poor jobs report that was just released on the Obama Administration's “over-taxing, over-regulating and over-spending.”  This makes no economic sense but that won't stop them from saying it or the media from reporting it -- or the Democrats from meeting them halfway.   However, as Jed Lewison argues, what is needed is not more cuts but more stimulus:  "The Obama administration needs to repeatedly and loudly make the case for investing in America, lest they end up getting blamed for the GOP's foolish budget austerity."

Economics For Dummies

It is up to Paul Krugman, once again, to explain that "slashing spending in the face of high unemployment is a mistake."  (See, e.g., What Krugman Said; Must Read Krugman.)

There used to be a consensus that the twin problems caused by the financial crisis -- huge budget deficits and soaring unemployment -- "had to be tackled in sequence, with an immediate focus on creating jobs combined with a long-run strategy of deficit reduction."  But, as Krugman maintains, "these days you’re not considered serious in Washington unless you profess allegiance to the same [austerity] doctrine that’s failing so dismally in Europe."  Krugman explains that "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." 

While, "a serious fiscal plan for America would address the long-run drivers of spending, above all health care costs, and it would almost certainly include some kind of tax increase," these things are not even being discussed.  There is no serious discussion of "using Medicare funds effectively" and "the official G.O.P. position — barely challenged by Democrats — appears to be that nobody should ever pay higher taxes."  So what we are left with is "talk is about short-run spending cuts."  As Krugman concludes, "we have a political climate in which self-styled deficit hawks want to punish the unemployed even as they oppose any action that would address our long-run budget problems."

It is infuriating that with few exceptions (see Debate Shift), Obama and his fellow Democrats continue to buy into the Republican frame that requires tightening our belts and cutting domestic programs.  (See Why Can't Democrats Do The Right Thing.)  They fail to see that it is both economically and politically unsound to continue to focus on the deficit and spending cuts rather than job creation and investment.  As Krugman says, "jobs now, deficits later . . . is the right strategy."

Macro Economics

The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans. -- Joe Nocera, N.Y. Times

Rather than writing the same thing over and over again, I should create a keyboard macro to save time.  An issue invariably arises, usually involving the economy, which provides a golden opportunity for the Democrats to demonstrate that they are the Party that cares about regular, working people while the Republicans are shamelessly in the pocket of Big Business and the ultra-wealthy.  Extending the Bush tax breaks is a perfect example.  The current budget debate in which the Republicans only want to cut domestic programs but nothing else and are threatening to shut down the government is another.  All the Democrats have to do is stay united and stay principled.  But other than a few lonely progressives, the Democrats, including the President, invariably cave and their message remains forever muddled.

Here they go again.  If the Democrats could ever be savvy enough to create a symbol to demonstrate their zeal for protecting the public from the greed, corruption and unaccountability of the financial industry it would be Elizabeth Warren.  She is a brilliant Harvard law professor who argued for a new agency to protect consumers before the financial crisis hit.  She chaired the Congressional Oversight Panel tasked with investigating the bank bailout, where took on the financial giants as well as the government.  She also comes across as warm and earnest, speaking in plain-spoken terms with a southern accent. 

Elizabeth Warren has been tasked by President Obama with setting up the new Consumer Financial Protection Bureau, which was a key part of the reforms that were passed in the wake of the financial meltdown.  An independent agency that will be operational in July, it will have the power to regulate credit cards, mortgages and other financial products.  Last week, Warren appeared before Congress and explained the agency's goals: "We firmly believe in the importance of making prices clearer, making risks more obvious, and cutting back on the fine print and legalese that can make it impossible for families to compare a mortgage or credit card with two or three others."

Naturally, the Republicans want to skewer Elizabeth Warren and gut the power of an agency that is being set up to protect ordinary Americans from big financial institutions.  According to news reports, the Republicans are concerned the agency will be "too powerful and are trying to portray Warren as the "unaccountable" head of a bureaucracy immune from oversight.  They want to cut its funding and control what's left by replacing a single director with a 5-member board.

CNN reported that "the hearing was one of the more hostile Warren has yet faced on Capitol Hill."  Joe Nocera in the Times described her as being treated by Republicans like a "pinata."  Paul Krugman wrote that the Republicans "lined up to grill and attack" her even though the accusations made no sense.  According to Krugman, the point was "to ensure that neither she nor anyone with similar views ends up actually protecting consumers."  He explained that for Republicans, "people like Ms. Warren . . . who warned that we were heading for a debt crisis before it happened" threaten their attempts to revise recent history and argue that the financial crisis was caused by too much regulation, not too little. "Such people must therefore be demonized, using whatever tools are at hand." 

One key question remains is who will be appointed to run the agency.  Elizabeth Warren is the obvious choice.  Krugman again: 

Given Ms. Warren’s prescience and her role in shaping financial reform legislation — not to mention her effective performance running the Congressional panel exercising oversight over federal financial bailouts — it was only natural that she be appointed to get the new consumer protection agency up and running. And it’s hard to think of anyone better qualified to head the agency once it goes into action.  The fact that she’s so well qualified is, of course, the reason she’s being attacked so fiercely. Nothing could be worse, from the point of view of bankers and the politicians who serve them, than to have consumers protected by someone who knows what she’s doing and has the personal credibility to stand up to pressure.

And this is where the opportunity comes for the President and his fellow Democrats.  Krugman wonders whether "the Obama administration will see the war on Elizabeth Warren for what it is: a second chance to change public perceptions" about who is truly to blame for the financial crisis.  "By the sheer craziness of their attacks on Ms. Warren, however, Republicans are offering the administration a perfect opportunity to revive the debate over financial reform, not to mention highlighting exactly who’s really in Wall Street’s pocket these days. And that’s an opportunity the White House should welcome."

Debate Shift

The Democrats have allowed the Republicans to dictate the terms of the budget discussions.  With Obama and most Democrats buying into Republican talking points about the overarching importance of solving the long term deficit problems immediately, the discussion has been limited not only on how much to cut, but on how much to cut from domestic discretionary spending.  Finally, a mainstream Democratic leader is seeking to re-frame the debate.

New York Senator Charles Schumer has, in stark contrast to the Republicans, come up with a coherent plan that would actually reduce the deficit.  He persuasively argues that any agreement on the budget must go beyond simply cutting funds to discretionary domestic programs.  Schumer's key point, which bears repeating over and over, is that the Republicans are not about reducing the deficit, they are about reducing government.  As he puts it:  "Right now a very small, very intense ideological tail is wagging the dog over in the House of Representatives.  Their fervor for spending cuts is not grounded in deficit reduction at all.  Instead the far right wing has deliberately confused two separate issues. They've conflated reducing the deficit -- which is not their true priority -- with cutting government -- which is."

The cuts Schumer's progressive plan calls for include reductions in military spending and subsidies to agribusiness and the gas and oil industries.  It seeks to crack down on tax dodges and income shelters of big corporations.  Schumer is also pushing for a surtax on millionaires and billionaires.  At the same time, he insists that Social Security is off limits.

As Steve Benen at The Washington Monthly put it:  "For weeks, the Republican line has been that we're in the midst of a budget crisis -- which they prefer to forget they're largely responsible for -- but the resolution must come by approving brutal, job-killing cuts to a small portion of the larger budget. Schumer, in effect, was telling the GOP it's time to expand the party's horizons -- if there's a genuine crisis, why not look at the rest of the budget, too?"

Ezra Klein explains why this "might prove a clarifying moment."

If Republicans are only willing to consider cuts to non-defense discretionary spending as part of a deficit-reduction deal, then whatever their aim is, it's not really deficit reduction. That's not how you reduce the deficit. If they're only willing to consider deep cuts to this year, as opposed to policies that would save a larger amount of money over the next few years, then it'll raise the possibility that they're motivated more by the specifics of an unwise campaign promise than by concern over the budget. Either "we're broke" or we're not. But if the answer is that we are -- and that's certainly what John Boehner has said in the past -- then it's time we started acting like it. The idea that you can balance the budget simply by doing things liberals don't like and Americans don't notice is a campaign fiction, not a plausible fiscal philosophy.

Republicans are pretending to care about budgets and deficits, at the state and national level, when their true goals are to gut social programs that help the disadvantaged and the middle class, and to destroy liberal institutions.  In an insightful article, The Strategy Behind the Budget Battles, Professor Allan Lichtman discussed the long-sought Republican strategy to defund organizations that provide the American left with its political power and its "hard currency."  This can be seen in the way the GOP is going after unions, Planned Parenthood, NPR, and legal services for the poor, while not touching tax subsidies for agribusiness and big oil.

Good for Schumer for seeking to "broaden the playing field," as he termed it, and for putting the Republicans on the defensive for once.  If the rest of the Democrats join in this could get interesting.

[Related posts:  Do The Right Thing; Crazy-Making Democrats, Telling the Truth About Social Security, Dead Armadillos; Let 'Em Eat Catfood; Must Read: Krugman]

Why Can't Democrats Do The Right Thing?

I am not an economist, but I get to play one here in cyberspace, and speaking as a cyber-economist, it is obvious that before tackling the long term deficit problem, the government first must stimulate the economy to create jobs and ensure a more robust recovery.  It is also obvious that the Republicans are exploiting the concerns over the deficit to support their never-changing argument that we must cut domestic discretionary spending, i.e., gut social programs that help the disadvantaged, poor and middle class.  Notwithstanding the consensus from mainstream economists (and me) that cutting federal spending now will cost jobs, President Obama and his centrist allies have bought into Republican talking points by repeatedly stressing the importance of national "belt-tightening," and proposing freezes and cuts to domestic programs and agencies.

And so, with Republicans framing the issue and threatening to shut down the government if they don't get agreement on the draconian spending cuts they seek, Democrats, typically, are all over the place, with many seeking their usual combination of compromise and capitulation.

Instead of a debate over how much to cut, wouldn't it be incredible if the Democrats not only spoke with one voice, but if that voice were Oregon Representative Jeff Merkley's?:

The GOP budget plan will destroy 700,000 jobs. The last thing our nation can afford right now is further job losses. We need to be creating jobs, not destroying jobs.
There are common-sense budget cuts that could reduce our deficits without wrecking the economy or attacking working families. We can start by cutting back on the bonus tax breaks for millionaires and billionaires that Republican leaders insisted on just ten weeks ago. We could end tax subsidies for oil companies and save tens of billions of dollars in the process.
Republican House Speaker John Boehner summarized his perspective on the Republican budget as follows: if people might lose their jobs, 'So be it.' You might think the House Republican leaders would show some humility after their failed agenda turned record surpluses into massive deficits in 2001, or after their policies reduced the wages of working Americans during the modest expansion in the middle of the decade, or after they burned down the economy with unregulated derivatives and predatory mortgage securities in 2008.
Apparently not. Their proposals are exactly the same: give massive tax cuts to the wealthiest, shred the safety net, and eliminate investments that would help restore American economic leadership.

Despite what the Republicans say, and what the media reports, a solid majority of Americans care more about jobs than deficits, and are not in favor of steep budget cuts.  Merkley's principled position is not only right on policy, it is also right on politics.  This is so obvious to me, a mere self-anointed cyber-expert.  Why isn't it obvious to all but the most progressive Democrats?

[Related posts:  Crazy-Making Democrats, Telling the Truth About Social Security, Dead Armadillos; Let 'Em Eat Catfood; Must Read: Krugman]

Does Obama Have A Secret Plan?

There were several items in the Times today which, when put together, seemed to say a lot about the current state of our political and economic situation. I think there can be little dispute that the economy is the most import issue that we face. While there was some good economic news today the recovery, such as it is, is fragile. Paul Krugman's column today focused on the Republicans' seemingly relentless determination to destroy it. Krugman observed that the cuts proposed by Republicans seem to be calibrated to do the most possible damage to the economy in the short term and to the nations future in the long term.

So what are the Democrats planning to do? According to another piece in the Times today they are planning to offer more cuts. Again we see "negotiations" Democrat style. They offer $4 billion in cuts last week, the Republicans continue to insist on their $61 billion. So this week the Democrats offer $6.5 billion, including, according to the Times, economic development funding, because who needs that. And what will the Republicans offer in return. I'll go out on a limb and say they will still want $61 billion in cuts. Now I realize that the Republicans are not likely to get the full amount they want, but as long as the Democrats keep negotiating with themselves they will get more than they otherwise would.

This brings us to the last piece in the Times that caught my eye today, one titled "Less Drama in White House After Staff Changes." Its about the changes in the White House since RahmAxelrod are out and William Daley and David Plouffe are in. There was a bunch of stuff about atmospherics and how people are happier now that Rahm is not yelling at them all the time. But here is the stuff that caught my eye:

White House officials say the goal is to achieve a long-term victory — by bagging a budget deal, or the credit for trying — not to win each day’s news cycle. On two successive weekends, for example, the White House passed up chances to score points against the House Republicans.

Note that the goal is not a good deal, its not to stop Republicans from destroying the economy or hurting the needy, its about getting a deal or at least credit. In other words, its about getting the President reelected. The problem with this strategy is that if the Republicans destroy the economy it is going to make it much tougher for the President to be reelected whether he gets credit for the budget deal that destroys it or not (though given the slate of likely challengers he is probably still in good shape). But there's more.

Last Saturday, Mr. Daley addressed Democratic governors who were meeting in Washington and did not even utter the word “Republican,” let alone throw partisan red meat by lambasting the House Republicans’ proposed cuts in education, health services, border control and other programs important to financially struggling states — a purposeful omission, officials said.

Similarly, a week earlier when the House approved those cuts by a party-line vote before dawn, the White House remained silent, though many of Mr. Obama’s priorities would be slashed.
Frustrated Democratic lawmakers and interest groups have been railing to White House aides that Mr. Obama is forfeiting opportunities to draw the public’s attention to what the Republicans’ cuts would mean for programs popular with most voters, including the coveted independents. The aides respond that the time will come for Mr. Obama to join the attack, should Republicans press their agenda and refuse to compromise.

What this bit in the article suggests is that there is some line that the Republicans could cross that would make the President say no. Of course he has given no hint what that line is so the Republicans keep pressing and they have the field to themselves. Why, its all part of the plan

“One of the lessons of the last two years is that if the president weighs in all the time, it’s less impactful,” said Dan Pfeiffer, who remains as the communications director. “But if he weighs in at a moment of his choosing when the public is paying attention, it will be more influential.”

So he is just biding his time waiting for the moment to strike? Maybe, but in the meantime he has ceded the field to the Republicans (having already accepted their framing of the deficit as the problem). Maybe he can work some magic with some kind of strategic strike, but more likely he's just going to get rolled again.

State of the Unions

"The game goes like this.  Destroy private-sector health and retirement benefits, and then say, 'Hey, how come those public employees get such good benefits?'"  Pro-union consultant quoted by E.J. Dionne.

It isn't that public sector unions are so powerful -- far from it.  Government workers have been making concessions on wages and benefits in state after state for several years.  It is only that they are stronger than their counterparts in the private sector, which isn't saying much.  Systematic efforts to undermine unions by private business has resulted in what Henrik Hertzberg calls a "catastrophic decline."  Public sector unions have not grown, but have merely "held steady."  This is because, as Hertzberg puts it, unlike factories, "government agencies cannot be relocated to China," nor can government agencies as easily flout labor laws -- at least the laws currently on the books.

And now, after what E.J. Dionne describes as "years of efforts to undermine unions in the private economy," the public-sector unions have become the target.  At least the prolonged nature of the standoff in Wisconsin has allowed the media to finally catch up to the real story.  Although early reporting lazily accepted Gov. Walker's contention that he and his Republican allies were merely trying to deal with the budget crisis by reining in greedy state workers, this became harder to accept once it was learned that the unions had already agreed to the cuts the Governor asked for. 

Progressives have understood from the beginning what this is about.  Unions are still seen by the right as the most significant organized opposition to Republican candidates.  As Paul Krugman wrote last week, this is an attempt to "exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy."  Or as Rachel Maddow described:  It is about "trimming the power of labor unions to organize voters, gather campaign cash and swing elections."

And if it works?  According to Hertzberg:  "If a Republican Party that has lately become rigidly, fanatically 'conservative' can succeed in reducing public-sector unions to the parlous condition of their private-sector brethren, then organized labor -- which, for all its failings . . . remains the only truly formidable counterweight to the ever-growing political power of the [super-rich] --  will no longer be anything close to a match for organized money."  Or as Dionne writes, "Eviscerating the power of the unions would make Republicans and Democrats alike more dependent than ever on rich and powerful interests and undercut the countervailing strength of working people."

Luckily, as Greg Sargent notes, it doesn't appear that the public unions are that easy to scapegoat after all.  A New York Times/CBS News poll just out finds that "a majority of Americans say they oppose efforts to weaken the collective bargaining rights of public employee unions and are also against cutting the pay or benefits of public workers to reduce state budget deficits."   This is consistent with an earlier Gallup poll.   The more the issue is framed -- as it should be -- as an attempt to roll back workers' rights and not about solving budget crises, most Americans side with the unions.  As the real story is being told, the Democrats and protesters, with the public on their side, appear to be gaining the upper hand. 

[Related post:  Badger Zeitgeist]

Crazy-Making Democrats

Wild and Crazy Guys

We already know that the Republican Party has become a bastion of right wing zealots, who, as Paul Krugman points out today, are exploiting the current fiscal crisis to achieve their overarching goals of privatization and union-busting.  We already know that the Republican Party, as Kevin Drum puts it, is more extreme, more united and less compromising than ever before.  We already know that the Republican Party insists on severe cuts in discretionary spending, particularly for social programs, despite clear evidence that this will not just hurt real people but will do damage to the economic recovery.  And, finally, we already know that the Republicans will use the threat of a government shutdown to achieve a large part of their agenda.

And the Democrats?  It is a long-held tenet in the mental health field that when treating a delusional patient, it is important to not challenge their delusions.  Eventually, after gaining the patient's trust and the medication begins to work, a skilled professional can nudge the patient back to reality.  Politics, however, is not psychology, and budget negotiations are a far cry from therapy -- and, in any event, the Republicans don't seem to be medicated or amendable to treatment.  But rather than call out the Republican crazies, President Obama and the Democrats have bought into their delusions. 

As Fuzzyone has pointed out, including in a typically incisive post today, Democrats have adopted Republican talking points about the need for belt-tightening and budget cutting.  They continue do so despite a recently publicized independent report explaining that spending cuts passed by the Republican-dominated House of Representatives would be a drag on the economy and push us back towards a recession. 

President Obama and the Democrats should be arguing that we need more stimulus not less (see Must Read Krugman) and we need to be spending money on infrastructure and not gut vital social programs.  But instead, the Democrats are trying to be "reasonable," proposing to cut billions of dollars from domestic programs in the hope that this will placate the crazy Republicans.  The problem, as we have seen repeatedly, is that once you join the Republicans in their delusional world, there is no possibility of finding a rational accommodation.  What we badly need is a reality check.

Telling the Truth about Social Security

It was refreshing to see President Obama's OMB director telling the truth about Social Security in, of all places, U.S.A. Today. As Joan McCarter at DailyKos (whose post brought this to my attention) points out this is a welcome act for Democrats, which we need more of.

It is true that Social Security is now paying out more than it takes in as Baby Boomers start to retire, but it is also true that those Boomers paid in a lot when they were working and the result is a huge surplus in the Social Security Trust Fund, enough to keep the program solvent till at least 2037. The problem is that there is no money in the trust fund, just government bonds that need to be cashed to pay for Social Security. It is paying off those bonds that causes the problem. The question then is how to do that. One way is to cut Social Security in the future, which would both hurt the neediest most and hurt future growth as people with less money spend less. Another solution would be to raise revenues to pay our bills, but President Obama took that off the table for at least two years with his terrible tax deal in December.

As Paul Krugman pointed out recently, the real driver of the deficit in the long term is health care costs. As Krugman correctly noted, the health care bill did have some measures to contain those costs, but not enough. While the cuts proposed by both Obama and the Republicans will hurt real people and probably stunt economic growth, their impact on the deficit is barely visible to the naked eye. Beyond a couple of Op-Eds and blog posts there does not seem to be any really serious conversation about these rather basic facts.

[Related posts:  Let 'Em Eat Catfood]

Stage Fright

There I was in the men's room at the Marriott Hotel in Monterey, CA yesterday afternoon, and who should be next to me taking care of business but Alan K. Simpson, the former Republican Senator from Wyoming, and recent co-chair of President Obama's National Commission on Fiscal Responsibility aka The Catfood Commission.  (He is a very tall man, by the way.)  There was so much I could say to him and there was nothing he could do but stand there and take it.

I could call out this unrepentant deficit hawk for his cruel and short-sighted recommendations as co-chair of the commission, which called for "deep cuts in domestic and military spending . . . limiting or eliminating popular tax breaks in return for lower rates, and benefit cuts and an increased retirement age for Social Security."  I could confront him with repeating what Paul Krugman has referred to as a "zombie lie," "that Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first."  Or I could scold him for his insensitive and sexist remarks, including his latest in which he compared Social Security to "a milk cow with 310 million tits"

I could even reach back and go after his disgraceful performance at Clarence Thomas's confirmation hearings, when he notoriously smeared Anita Hill with innuendo, waiting until she concluded her testimony to announce, without providing any details or substantiation, that "I really am getting stuff over the transom about Professor Hill."

Or I could have just peed on his famous size 15 shoes.

So what did this fierce critic of Alan Simpson and all he stands for do?  Well, when Simpson looked over and said, "hello," I responded with a meek, "hi," and nothing more, as he zipped up, washed up and walked out.

Party at the SOTU

As President Obama gets ready to deliver his State of the Union address, there is much speculation about what he will say and how he will say it.  David Corn writes about what he thinks progressives want from Obama's SOTU and concludes that those on the left -- even more than specific policy initiatives -- will be looking to see "how vigorously he will fight the newly empowered Republicans."

This progressive has written repeatedly and with great frustration about Obama's predilection for compromise and bipartisanship.  (See, e.g., Greider on Obama, No Se Puede, Holy Pointless Gimmick; What Krugman Said.)  I certainly would love to see a more combative speech from Obama, where he exposes Republican hypocrisy and makes a bold case for a progressive agenda.  I know that is not going to happen.  What I would settle for is a speech that does not adopt Republican talking points, especially about the need for belt-tightening and the over-arching importance of deficit reduction.

The New York Times reported Sunday that Obama plans to take a "centrist" approach and strike a theme of "national unity" in his speech.  Unfortunately, the more Obama tries to find common ground with Republicans, the more the ground keeps shifting -- and shifting to the right.  Obama will thankfully argue that we must spur the economy by investing in infrastructure, education and technological innovation.  But I am afraid he will also tip his hat to Republicans by stating that such spending must be tempered with the need to reduce the deficit, which will only succeed in giving cover to Republicans, who want to make deep spending cuts and prohibit any new government spending. 

Instead of searching for where Democrats and Republicans can agree, Obama should be gearing up for a defense of his spending priorities by explaining what it would mean to adopt Republican policies.  In this regard, he has been given a great gift -- if he would only take it -- with the selection of House Budget Committee Chairman Paul Ryan to provide the GOP response to the SOTU.  Rep. Ryan drafted a radical plan for reducing the deficit, known as the "Roadmap for America's Future," that Paul Krugman explained "is a fraud that makes no useful contribution to the debate over America's fiscal future."  Obama should anticipate Ryan's inevitable plea in rebuttal for budget cuts and no new spending by explaining what the Republicans truly have in mind.  The American public should know that the Roadmap calls for massive cuts to social programs, partial privatization of Social Security, severe cuts to Medicare, which is to be replaced by a voucher program, and more tax cuts for the wealthy.

Ryan and his fellow Republicans want to privatize Social Security and have been pushing the myth that Social Security is in dire crisis.  And Obama?  It is telling that the liberal Democrats in the House felt compelled to urge Obama to make it clear that he will not agree with Republicans to cut or make changes to Social Security.  As the letter from the co-chairs of the Congressional Progressive Caucus explains, the SOTU provides Obama with a " unique opportunity to set forth a framework of democratic values and to call for protecting Social Security for generations to come."  At the very minimum, this is an opportunity he should not pass up.

[Related posts:  Dead Armadillos; Let 'Em Eat Catfood; Must Read: Krugman]