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."

The Big Lie Coup d'Etat

By Robert Reich, cross-posted from his website

JP Morgan Chase,  Goldman Sachs, BP, Chevron, WalMart, and billionaires Charles and David Koch are launching a multi-million dollar TV ad buy Tuesday blasting President Obama over the national debt.

Actually, I don’t know who’s behind this ad because there’s no way to know. And that’s a big problem.
The front group for the ad is Crossroads GPS, the sister organization to the super PAC American Crossroads run by Republican political operative Karl Rove.

Because Crossroads GPS is a tax-exempt nonprofit group, it can spend unlimited money on politics — and it doesn’t have to reveal where it gets the dough.

By law, all it has to do is spent most of the money on policy “issues,” which is a fig leaf for partisan politics.
Here’s what counts as an issue ad, as opposed to a partisan one. The narrator in the ad Crossroads GPS is launching solemnly intones: “In 2008, Barack Obama said, ‘We can’t mortgage our children’s future on a mountain of debt.’ Now he’s adding $4 billion in debt every day, borrowing from China for his spending. Every second, growing our debt faster than our economy,” he continues. “Tell Obama, stop the spending.”
This is a baldface lie, by the way.

Obama isn’t adding to the debt every day. The debt is growing because of obligations entered into long ago, many under George W. Bush – including two giant tax cuts that went mostly to the very wealthy that were supposed to be temporary and which are still going, courtesy of Republican blackmail over raising the debt limit.

In realty, government spending as a portion of GDP keeps dropping.

As I said, I don’t know who’s financing this big lie but there’s good reason to think it’s some combination of Wall Street, big corporations, and the billionaire Koch brothers.

According to the reliable inside-Washington source “Politico,” the Koch brothers’ network alone will be spending $400 million over the next six months trying to defeat Obama, which is more than Senator John McCain spent on his entire 2008 campaign.

Big corporations and Wall Street are also secretly funneling big bucks into front groups like the U.S. Chamber of Commerce that will use the money to air anti-Obama ads, while keeping secret the identities of these firms.

Looking at the all the anti-Obama super PACs and political fronts like Crossroads GPS, Politico estimates the anti-Obama forces (including the Romney campaign) will outspend Obama and pro-Obama groups by 2 to 1.

How can it be that big corporations and billionaires will be spending unlimited amounts on big lies like this one, without any accountability because no one will know  where the money is coming from?

Blame a majority of the Supreme Court in its grotesque 2010 Citizens United vs. Federal Election Commission decision — as well as the IRS for lax enforcement that lets political front groups like Crossroads GPS or the U.S. Chamber of Commerce pretend they’re not political.

But you might also blame something deeper, more sinister.

I’m not a conspiracy theorist (you can’t have served in Washington and seriously believe more than two people can hold on to a big story without it leaking), but I fear that at least since 2010 we’ve been witnessing a quiet, slow-motion coup d’etat whose purpose is to repeal every bit of progressive legislation since the New Deal and entrench the privileged positions of the wealthy and powerful — who haven’t been as wealthy or as powerful since the Gilded Age of the late 19th century.

Its technique is to inundate America with a few big lies, told over and over (the debt is Obama’s fault and it’s out of control; corporations and the very rich are the “job creators” that need tax cuts; government is the enemy, and its regulations are strangling the private sector; unions are bad; and so on), and tell them so often they’re taken as fact.

Then having convinced enough Americans that these lies are true, take over the White House, Congress, and remaining states that haven’t yet succumbed to the regressive right (witness Tuesday’s recall election in Wisconsin).

I desperately hope I’m wrong, but all there’s growing evidence I may be right. 


Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Beyond Outrage

The Jobs Babble

 By Robert Borosage, cross-posted from Campaign for America's Future

Anne-Maree Hunter

The Jobs Babble

Everyone is talking jobs and saying nothing. The inadequate recovery is sputtering and no one is doing anything. In the war on unemployment, no one has picked up a gun. We’re going through the motions, waiting for the misery to ratchet up, the cities to blow, corporate profits to tank before anything is done.

Bill Maher captured the reality when he mused that it wasn’t surprising Republicans thought Democrats had a secret plan if Obama were re-elected, because they hadn’t told anyone about what they planned to do. The Democratic appeal, he suggested, is “vote for us, we’re lame, but the other guys are nuts.” And so they are.

Romney’s campaign, of course, is all about jobs, twenty-four seven. Actually, it is all about the absence of jobs. Romney offers no coherent plan to produce jobs, beyond a generic, “Trust me, I’m the man from Bain.” Good luck with that. House Speaker John Boehner is “on message,” as they say, repeating relentlessly his question: “Where are the jobs?” But Boehner and his Tea Party compatriots have no plan for jobs either. Instead they have a plan for austerity – deep cuts in spending in every government service except the military.

Last weekend, Ross Douthat, one of the few pundits for whom the label “thoughtful conservative” isn’t an oxymoron, tried to imagine a Romney recovery. He used the book by Edward Conard, Romney’s former partner at Bain, to suggest the Bain vision: Greed is good. The Bush economy was humming. More inequality, more financialization, more speculation will renew America. So embrace the current Republican agenda – deregulate Wall Street, cut top end taxes, slash government spending, and let her rip.

This is, of course, Romney and Boehner’s agenda. Only problem with it is that, as Paul Krugman has noted, we’re already living in a mild version of that policy. Republicans forced Obama to sustain the top end Bush tax cuts, as a price of getting unemployment insurance and the payroll tax cut for workers. Government spending – state, local and federal – is going down, not up, contrary to right-wing fantasies. Government workers are being laid off, not hired.

We know the result. Sputtering growth, record corporate profits, growing inequality, declining household incomes, mass unemployment. Boehner’s “job creators” aren’t creating jobs. Douthat is smart enough to realize that the Bush economy didn’t work for most Americans even before it blew up. So he invokes a study by a Chicago conservative, Luigi Zingales, who suggests that what ails America is a corrupted crony capitalism similar to what plagues his Italian homeland. Zingales, and Douthat call conservatives to embrace a “free-market populism,” that will roll back the subsidies, tax dodges, and cartels in private and public sector.

But even Douthat couldn’t get himself to believe that Romney, much less Boehner’s Republicans, could summon up the courage for that. These Republicans fight to the death in defense of billion dollar subsidies to Big Oil and Big Agra and Big Pharma. The Koch brothers aren’t funding “free market populism;” they are expecting a huge return on their investment – and they’ll get it if Romney wins.

But if Republicans have nothing to say about jobs, neither do Democrats. They are terrified by polls that say voters are concerned about deficits. So every jobs program has to be “paid for” – and almost by definition, small. Obama issues a “to do list” for Congress that even his aides have a hard time pretending to be excited about.

Ironically, there really isn’t much of a secret about what needs to be done. The only question is how deep the crisis must go, how crippling the pain must be, before it gets done.


Paul Krugman and Joseph Stiglitz have been campaigning for action. But we don’t need to take Nobel Prize winning economists as our guide. This week the sober conservative editors of the Financial Times detailed the common sense steps that were needed from America.

First, they called on the Federal Reserve to announce another round of qualitative easing. But with interest rates at record lows, there is little scope for monetary policy. With a yield of 1.45%, 10 year Treasury bonds are now cheaper than free. (They are earning less than the inflation rate). Investors are essentially paying the US to hold their money in a safe place.

Those same low interest rates offer the US a remarkable opportunity to rebuild the country. There will never be a better time to do the “internal improvements” that we need to make – rebuilding roads, bridges, mass transit, sewers, fast trains, airports, and retrofitting public buildings, building up renewable energy and more.

This is work that must be done. But now we can borrow the money at virtually no cost to finance it, and put to work a construction industry that is now idled, and help get the economy going. As the editors of the Financial Times conclude, “whatever is invested at these rates is likely to pay for itself in higher growth and revenues. “ This is what most would call a no brainer.

This isn’t all that should be done. Reviving Richard Nixon’s “revenue sharing” – a tip of the hat to E.J. Dionne – would send money to states and localities to rehire teachers and cops. The President has suggested a jobs corps for veterans, so no one who risks their life in battlefields abroad will be cut down in economic crossfire at home. That could sensibly be expanded with urban and green corps, targeted to areas of obscene levels of youth unemployment, to insure that young people under 25 don’t start their lives in idleness, depression, drugs and despair. And we should start making the long term investments – in world class education from pre-K to college, in research and development, in new energy – vital to our economic future.

These can be paid for by ending the subsidies Republicans protect, shutting down corporate tax havens, and fair taxes on Wall Street speculation and the rich.

Most sensibly, this program for revival and renewal would be accompanied by a hard knuckled, no holds barred, everything on the table drive to get our books in order once the economy recovers. That requires unrelenting focus on the three things that drive our budget out of whack. Not Social Security and Medicare, but the real deal: shackling Wall Street which just blew up the economy and effectively doubled our debt to GDP; ending our commitment to endless wars and policing the world which we cannot afford; and fixing our broken health care system, the most corrupted of our crony capitalism, now squandering about twice what other advanced countries spend per capita on health care with worse results. Everything else – the so called “grand bargain” that would trade cuts in Medicare and Social Security for tax reforms – is simply using the crisis to take another hit out of working families. When the rewards aren’t shared, shared sacrifice is for suckers. When you weren’t invited to the party, you shouldn’t be stuck with the bill.

The Zombie Rises: The Return Of Simpson-Bowles

By Robert Borosage, cross-posted from Campaign for America's Future

Take a good look at Europe - bloody riots in Athens and Madrid, rising unemployment, spreading poverty and suicide, and a deepening recession - because the current American elite consensus bizarrely wants to drive America down that same path.

Europe's miseries come from imposing austerity before recovering from the recession caused by the financial collapse. Conservatives in Germany and England inflicted harsh measures to enforce budget discipline - hiking taxes, cutting spending.

In the US, the Obama recovery plan and the deal with Republicans over extending the Bush tax cuts combined to limit and slow the imposition of austerity. The result: Europe is sinking, while the US economy retains slow, but halting growth.

But now the deficit hawks are gearing up for another run at driving the US back into economic recession.

At the end of the year, we face a train wreck. After the November election, the Bush tax cuts, the payroll tax cut and extended unemployment benefits expire. The automatic cut - "sequester" in budget speak - of nearly 10% of military and domestic discretionary spending (everything except guaranteed programs like Medicare and Social Security and interest on the national debt) kicks in. We even hit the debt limit to add to the high stakes.

If all this is allowed to occur, it will subtract over 3% of GDP from an economy growing at 2.5% or less. A drop back into recession would be almost inevitable. So a deal is needed.

But the deal in everyone's head is some kind of "grand bargain," like that almost cut by House Speaker John Boehner and President Obama last year, or like that outlined by the co-chairs of the President's deficit commission, Erskine Bowles and Alan Simpson (which failed to gain the needed votes to pass the commission).


Centrist Democrat Kent Conrad, chair of the Senate Budget Committee, has announced that he will use the Simpson Bowles recommendations as a guideline for budget negotiations that he assumes will take place in the lame duck Congress have the election.

There's lots not to like in Simpson-Bowles which marches under the banner of "shared sacrifice" at a time when 1% of the population is capturing 93% of the rewards of growth, while paying the lowest tax rates in living memory.

But the horror is less the bad terms of the supposed bargain, than its zombie like infliction of austerity on an economy barely out of the emergency room.
We've still got some 23 million people in need of full time work. We haven't recovered the jobs that were lost in the collapse, much less the jobs needed for young people coming into the economy. Wages are still failing to keep pace. Nearly one in four mortgages are under water; foreclosures are rising.

Yes, we have trillion dollar deficits. But austerity - some deal that raises taxes and cuts spending now - will put more people out of work and make reducing deficits even harder.

After experiencing the horrors of this misguided policy, European leaders will eventually turn back to trying to get their economies moving again. What we need this fall is a different grand bargain - a global agreement, like that that was forged in early 2009, for coordinated action by governments to reflate the economy - to borrow and spend to put people back to work.

For this to occur, the bipartisan elite fixation about inflicting austerity now must be challenged. If we are to avoid a lost decade or worse, we need action to support still weak and staggering economies. Global coordination would be the best way to achieve that. That requires putting a stake in Simpson Bowles, the Boehner-Obama grand bargain and other zombies.

In this country, the necessary remedies are clear. With interest rates near zero, a decrepit infrastructure that must be rebuilt, a construction industry flat on its back, anyone with a whit of business sense would finance a massive Rebuild America program over the next few years, put people back to work, and build the sinews vital for a more competitive economy. We will never have a better opportunity to make the investments that we will have to make anyway.

We should send money to states to rehire teachers, make universities affordable, and strengthen not weaken our public schools. It's simply nuts to make kids pay the price of Wall Street's follies.

And if we could get beyond ideological perversities, we'd set up a green corps, an urban corps, and a jobs corps to guarantee a job for every veteran and young person under 25. No one should risk their life for the country and return to an economy with no place for them. Young people are coming out of school into the worst economy since the Great Depression. Condemning them to idleness is a recipe for depression, drugs, crime, and misery. And we will all pay dearly for a lost generation.

Certainly, we have to be serious about getting our books in order. The wealthy and the corporations should pay more so we can afford the investments we need. But the overwhelming source of our long-term budget woes comes from projections of soaring health care costs. If we paid for health care at the rate other industrial countries do (with better results), we would be projecting surpluses, not deficits.

But right now, the focus should be on putting people back to work and getting the economy moving. Until that happens, austerity - as Europe is now experiencing - is a contagion, not a cure.

The Relentless Austerity Fetish

Lemmings

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

Europe's in crisis. Unemployment is at a fifteen-year high after climbing for ten straight months, thanks to the austerity measures imposed on it by conservative leaders in France, Germany, and the international financial community.

But if you think things are bad over there, imagine what they'll be like if Republican budget measures are imposed here. The GOP budget makes European austerity look like summer camp.

Ever wonder why lemmings jump off cliffs?

While England Slept

Great Britain blazed the trail for Europe with a series of steep cuts to government spending - and it soon led the continent in economic misfortune. Unemployment skyrocketed, consumer confidence plummeted, and growth stagnated.

That's what austerity economics does to struggling economies. When you ask already-beleaguered middle class and lower-income people to bear the burden for the mistakes that made other rich the results are predictable: real income falls, demand for goods and services drops, and the entire economy drops back into a death spiral.

You'd think that Europe and the world would have learned from Britain's mistakes, but they haven't. In fact, even Britain hasn't learned from its mistakes. As the New York Times reports, the UK is doubling down on the madness.

In its latest round of budget announcements the government announced that it's continuing to push for additional spending reductions but wants to cut taxes for the wealthiest citizens, including those who got rich from the bank speculation that broke the economy! As critics have correctly observed, the UK government is paying for this rich person's tax cut through a 'stealth tax' on low-income retirees.

Britain's misplaced emphasis on reducing government deficits is even backfiring where deficits are concerned. From the Times: "The Office for National Statistics said Wednesday that Britain's budget deficit almost doubled in February, to £15.2 billion, far exceeding economists' expectations of about £8 billion. "


Kamikaze Europe

Now the rest of Europe is following Great Britain's lead. Unemployment is officially 10.8 percent and expected to reach 11 percent soon. Seventeen million people are out of work.

Austerity mania spread through Europe like a plague. Unemployment's now at 23.6 percent in Spain and 21 percent in Greece. How is a country expected to lower its deficits when a quarter of its working population isn't paying taxes and doesn't have disposable income? Apparently the financial geniuses running things there didn't think about that.

Ireland was once touted as austerity's success story. They're not bragging on Old Eire much now that it's officially back in a recession. Spain's problems disprove the theory that government debt is the source of all economic woes since, as Paul Krugman notes, Spain has been a much more thrifty government spender than Germany. Further austerity measures there are going to be disastrous.

Then there's Greece. According to reports, there are no working traffic lights left in the city of Athens. People have taken to bartering for goods and services in a world where many people have little or no sources of currency income while the streets swarm with formerly middle-class Greeks who are now being described as 'the new poor.'

In fact, there are encampments of the working poor throughout Europe. Even the leading European economy, Germany, is losing ground because of Chancellor Merkel's obsession with austerity measures - while France, the other austerity leader, is also struggling.

What do they plan to do, now that they have the benefit of experience? More austerity, according to reports. Merkel even thinks that's the road to her own re-election.

The Home Front

Which gets us to the United States. The Republicans in Congress have just passed a budget that makes Europe's austerity measures seem positively genteel. Rep. Paul Ryan, the Pied Piper of nihilist economics, said when it passed that we're in a "debt-driven crisis, and so we have an obligation -- not just a legal obligation but a moral obligation -- to do something about it."

That budget's "moral obligation" doesn't extend to our military budget, which the Republicans voted to massively expand - or to tax breaks for millionaires and billionaires, whose current historically low tax rates will plunge if their budget ever goes into effect. And, as we now know, the GOP budget would essentially shut down every other function of government that Americans have valued for the last century and a half. 62 percent would come from programs for lower-income people and Pell grants to help young people go to college.

And what a time for austerity: As Matt Stoller notes, one in seven Americans is being pursued by debt collectors. Student loan debt exceeded $1 trillion last year, even as young people face sky-high unemployment. 8.8 percent of student loans defaulted in their first two years of payment last year and more than one-fourth of student loan payments are now delinquent.

Robert Schiller, arguably the world's top economic expert on real estate, says that prices for suburban real estate aren't coming back in our lifetime. Consumer debt is soaring. US growth is expect to turn even more sluggish, which even has Ben Bernanke pushing for more government action.

But while the projected deficit reductions in the GOP budget are a hoax, the cuts to vital programs, including its hidden cuts to Medicare, aren't. As Mike Konczal notes, states like Florida are a preview of a Ryan-budget America. Konczal coauthored an article with Bryce Covert which showed that "Of the eleven states in which Republicans came into power in 2010 -(five) lost more than 2.5 percent of their workforce from December 2010 to December 2011."

Bargain Basement

The budget-cutting rhetoric of the right is too often echoed by Democrats, at a time when they (or someone) should be proposing a more common-sense and more humane approach to the economy. Talking about deficits today is the moral equivalent of lecturing firefighters about water conservation while the town is burning down.

We need to put out the fire first. We urgently need spending to create jobs, especially when the government can borrow money for virtually nothing. Or, to put it another way -

This is your country:



(employment, United States)
This is your country on austerity:



(Konczal, Covert)
And yet there are still those in the White House and Congress who dream of a "grand bargain" with the Republicans, like the one the President nearly finalized last year - a bargain that would send the nation's economy over a cliff.

Lemmings

People used to believe that lemmings committed mass suicide. Scientists now say that they're following migration patterns which sometimes lead them straight into the ocean. Either way, a lot of them drown because they followed the tail of the rodent in front of them.

The US seems determined to cling to Europe's ragged tail as it plunges into the icy waters below. The Republicans would drown our economy in a way that would make Europe's problems seem mild by comparison. (At least they still have working governments over there.) But few Democrats are willing to challenge the austerity fundamentalism that's gripped Washington. Instead they prefer to debate means to an austere end, rather than the end itself.

It's all insane. But this Ryan budget - now the official budget of Republicans in Congress, and warmly embraced by presumptive GOP candidate Mitt Romney - is the biggest sign of insanity yet.
Not that our national leaders are lemmings. Far from it. They're intelligent economic actors behaving in a way that ensures they'll receive future rewards. That means if we don't like the way this story ends, we'll have to change it ourselves.

No, politicians aren't the lemmings in this story. Until the time comes when we demand something different from our leaders in Washington ...... we are.

Populism And Pain In Obama's Budget Proposal

By Karen Dolan, cross-posted from Other Words

Mitt Romney said it this way:

"I'm not concerned about the very poor. We have a safety net there. If it needs a repair, I'll fix it. I'm not concerned about the very rich, they are fine....I'm concerned about the very heart of America."

President Barack Obama said it this way:

"We can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules — from Washington to Wall Street to Main Street. That’s the America we believe in."

Both want to appeal to a hurting middle-class electorate. Only one has a populist message with appeal and effect. He most likely will win re-election in 2012.

Obama's $3.8 trillion 2013 budget proposal, with its 10-year outlook, is by design a populist campaign tool. Though not politically viable now, his newly released budget is critically important in this election year both for the values it reflects, the vision it promotes and the potential it promises.

Obama's budget has a populist tone, appeals to the middle class, and has some good proposals, both on investment and revenue-raising. But it also reflects the strict spending caps mandated this past summer by the Budget Control Act and hits some struggling families hard. It doesn't go nearly far enough in revenue-raising. For instance, it does't propose a tax on financial transactions that would curb Wall Street's worst speculation or propose significant corporate tax reform that would actually raise needed funds. And, by reducing non-security discretionary spending from its current 3.1 percent of GDP to a 50-year low of 1.7 percent over the next decade, a lot of pain will set in when the populism starts to wears off.


Let's start with the good. Among the good proposals on investment side:

• The extension of the payroll tax cut and unemployment benefits through the end of 2012.
• School modernization and plans to retain teachers and first responders.
• Project Rebuild which helps to match unemployed in distressed communities with those communities'  infrastructure needs.
• A small business tax credit that incentivizes new hiring.
• Increased child care funding.
• Improvements in Earned Income Tax Credit and Child Tax Credit.
• Tax incentives for manufacturers that keep and create jobs here in the United States.
• A National Infrastructure Bank that would fund projects that increase sustainable transportation and infrastructure investment.
• A total of $850 million in Race to the Top education proposals intended to improve the quality of education from early childhood through higher education.
• Efforts to make college more affordable through sustaining Pell grant funding, keeping interest on student loans from increasing, and reining in tuition hikes.
• A 7 percent increasing in new biomedical research grants.
• Support for a more sustainable economy through goals of increasing electric car production, doubling the share of "clean energy" electricity sources, and reducing the energy consumed by buildings by 20 percent by 2020.

And, among good proposals on the revenue side:

• Support sustainable energy and environment innovations by eliminating 12 tax breaks to the oil, gas, and coal industries by $41 billion over the next 10 years.
• Spend $487 billion less on the military over the coming decade.
• Make the "Buffet Rule" law, ensuring that millionaires pay a 30  percent tax rate on un-earned income.
• Let the Bush Era tax cuts for families making over $250,000 a year expire.

On to the bad. Here are some aspects of Obama's proposed budget that aren't as good as they might first seem:

• According to the Citizen's For Tax Justice, although the Obama plan proposes revenues from letting Bush era tax cuts expire for couples making over $250,000, it makes permanent 78 percent of the Bush tax cuts at a cost of $3.4 trillion over the next 10 years.
• Obama's proposal to replace the Alternative Minimum Tax with the "Buffet Rule" may not produce any new revenue at all.
• Details remain undisclosed about corporate tax reform proposals, but Obama has suggested they will be revenue-neutral. How is that a good thing?
• Even with this modest reduction in Pentagon spending, Obama's budget proposal still leaves an extreme imbalance between military and non-military spending.

Now, for the Ugly: Last year's Budget Control Act mandated $1 trillion in discretionary cuts. Much of that must come from programs that low-income people rely on for critical human needs. After a hard year of cuts in 2011, this budget proposal calls for a devastating 14 percent cut in social spending. Here are some examples where cuts occur:

• Health care services, career opportunities programs for low-income people.
• Children's mental health services.
• Housing for disabled people.
• Housing for people with HIV/AIDS.
• Rental Assistance benefits for low-income people.
• Home heating assistance for low-income people.
• Community Development Block Grants which help to fund critical human need services.
• Programs in the Environmental Protection Agency.
• Programs in the National Park Service.

This budget proposal will appeal to the middle class and puts Obama in a more popular position than Romney as the 2012 presidential election season heats up. But while this budget has the populist thrust of cutting long-term deficit and debt by attempting to balance spending cuts and revenue increases, it falls short. It bolsters some needed programs, but unnecessarily defunds others. By not calling for all of the Bush era tax cuts to expire, not calling on Wall Street to pay its fair share through enacting a small levy on speculative financial transactions, not cutting military base and war spending deeply enough and not calling for the kind of corporate tax reform that will produce revenue, Obama is letting the 1 percent off rather easy, while the rest of us, especially the poor, shoulder  the pain.

What The 2013 Budget Says About The Fight For Our Future

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

DonkeyHotey

One does not have to accept all of the specific choices in the administration's budget to appreciate the fact that the administration is trying to lay the groundwork for a broad and sustainable economic recovery, while the administration's opponents continue to be hell-bent on austerity policies that would stall that recovery.

President Obama explained his vision today in an address today at the Northern Virginia Community College. As reported by Politico:

“At a time when our economy is growing and creating jobs at a faster clip, we’ve got to do everything in our power to keep this recovery on track,” Obama said at Northern Virginia Community College. “We can settle for a country where a few people do really, really well, and everybody else struggles to get by, or we can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules, from Washington to Wall Street to Main Street.”

Meanwhile, The Washington Post reported today that Republican leaders on Capitol Hill, in addition to their usual complaints that Obama's policies would leave "America drowning in debt," reprised a version of their Medicare privatization plan. Yes, that same voucher plan that was roundly rejected by a majority of Americans when Rep. Paul Ryan, the chairman of the House Budget Committee, persuaded House Republicans to back it last year. That plan exemplifies the Republican economic agenda: A few people would do really, really well as congressional conservatives fight to maintain inequitable, record-low tax rates for the wealthiest Americans; everybody else would struggle to get by in a world where what were once shared commitments, such as Medicare to maintain the health of seniors, are turned into yet another opportunity for private gain and another source of economic insecurity for the vast majority of Americans.

This contrast will be exemplified vividly this week when the House of Representatives begins debate on funding for the nation's transportation network. The White House budget includes a $476 billion, six-year funding commitment for highways and public transportation, and administration officials were working with the Senate toward turning that commitment into legislation.

This is a huge spending commitment to make, but President Obama recognizes correctly that some investments can't be compromised, even at a time of large budget deficits. Even so, this is a fraction of what groups such as the American Society of Civil Engineers say America needs for a globally competitive economy. Nonetheless, this transportation spending will generate hundreds of thousands of jobs in the near term in areas ranging from construction to engineering to beautification, and in the long term this spending will establish a platform for a more efficient and greener economy.



Conservatives are girding to attack this. They argue that the funding source that has traditionally paid for road and transit improvements, the gasoline tax, won't yield enough money to pay for the president's spending plan. (At the same time, they object to increasing the gas tax so that it could.) House Speaker John Boehner has indicated that he wants to curtail federal support for public transportation, a direct slap at tens of millions of workers (and job-seekers) who depend on buses and trains to get to work. Other cuts would slap the face of commuters who use bike paths or parents whose children are protected by the federal Safe Routes to School program. And, to pay for what spending they are willing to sign off on, key conservatives in Congress are attaching to the bill oil drilling in environmentally sensitive areas, such as the Arctic National Wildlife Reserve, and forcing approval of the game-over-for-the-planet Keystone XL pipeline, risking environmental havoc at a time when we should be moving away from a fossil-fuel economy.

The contrast plays out throughout the budget. While the White House is embracing such policies as the "Buffett Rule," which would tax unearned income at the same level as wages and pushing for more fairness in the tax code, congressional conservatives accuse the administration of "class warfare"—even as they continue their own "class warfare" against government programs that provide millions of economically struggling Americans with a level of economic security and a means to climb the economic ladder.

The particulars of the Obama 2013 budget may not survive the Washington political grinder, but here's what should: the debate between a government that works for the benefit of ordinary people, operating on the principles that we should all work together to rise together and that those who benefit the most have the most obligation to support the opportunity of others, and a government that works the hardest for those with the most, and, to paraphrase the words of presidential candidate Mitt Romney, "doesn't worry" about those with the least.

In the coming days progressives in Congress will offer their own budget framework, which will draw the contrast in even more stark terms, and demonstrate that we as a nation do not have to accept the conservative austerity economics that are playing out to such disastrous effect in countries such as Greece. Whether it's the Obama administration budget or a progressive alternative, it is important to show that one set of budget decisions will point millions of Americans closer to their American dream of broadly shared prosperity, while conservative critics will drive us toward a dystopian economic future.

Austerity For Dummies

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

"I feel stupid," someone said the other day. "I consider myself well-informed, but I have no idea what the term 'austerity economics' really means."

Actually it's not that complicated, and most of the lesson plan can be found in today's headlines.

We'll explain austerity to you in six steps, and we promise it it won't take more than 900 words. Since adults read an average of 250-300 words per minute - and we know all of you are above average - our little course shouldn't take more than three minutes.

It's certainly worth knowing. Despite its many failures, "austerity economics" keeps remaking - and unmaking - the global economy. The only disagreement at this weekend's Republican debate was over which candidate would push austerity more aggressively. And austerity dominated the political agenda last year - "Deficit Commission," anyone? - until Occupy came along.

Merriam-Webster named "austerity" the "Word of the Year" for 2010. But like the monster from a 1950's science-fiction movie, it just keeps on growing. This week alone the name was invoked in government houses from Athens to Lagos.

What is this creature called "austerity," and why does it still hold so much power? If you've got three minutes, let's get started.


1. What is it?

The Longman Dictionary of Contemporary English defines "austerity" as "when a government has a deliberate policy of trying to reduce the amount of money it spends."

Wikipedia calls it "a policy of deficit-cutting, lower spending, and a reduction in the amount of
 benefits and public services provided," adding that it's "sometimes coupled with increases in taxes to pay back creditors to reduce debt."

Got that? Austerity backers want government to spend less on benefits and public services, and to pay back its creditors more quickly. Higher taxes aren't part of the plan and they're strictly optional.

2. What's austerity supposed to accomplish?

Austerity advocates don't just see lower deficits and reduced debt as tools to promote long-term economic health. They consider them ends in themselves - sometimes even as moral values.
Many austerity advocates see government spending as inherently evil. That goes for all government spending, including police, teachers, nurses, and firefighters.

Sure, some of them will admit there can be necessary evils or useful evils - usually weapons procurement or law enforcement. But spending is always evil.

Other people aren't philosophically opposed to government spending, but have been convinced that it has become unaffordable today.

3. What's the theory behind austerity economics?

To answer that, it's important to understand that the economics profession has been systematically taken over by well-funded conservative academics. They've created elaborate theoretical constructs to prove that government spending is economically destructive.

These include theories like 'Barro-Ricardo equivalence,' which says people won't spend money when they know their government's incurring debts they'll have to pay someday. Conservative economists like Robert Barro insist this is true even in times of widespread unemployement, like now, and argue against stimulus spending to create jobs.

Oddly, they find this theory more compelling than the idea that people aren't spending money because they don't have jobs.

Then there's supply-side economics, which argues that the best way to grow the economy is by cutting taxes. That means smaller government. Supply-siders also rely on the "Laffer curve," which says people will stop investing, producing, and creating jobs if taxes are too high.

Austerity advocates also argue that international markets will lose confidence in governments if they don't curb spending and will charge them higher interest. So they even push cuts in Social Security, which doesn't even add to the deficit, because macroeconomists consider it 'government spending.'

4. Do these theories make sense?

Economists argue about this kind of thing ferociously, but we can look at the record and reach some common-sense conclusions about whether these theories are right or wrong:

Barro-Ricardo Equivalence: Wrong. To affect demand, government spending would have to be much higher than it is today.
Supply-Side Economics: Ridiculously wrong. We've had lower taxes and less regulation for more than a decade. Where are the jobs?
Laffer Curve: Also wrong. This country had a 70% tax rate or higher for top earners and the economy was doing much better than it is today. At 98% or higher, as the top rates once were in Great Britain, this could be a legitimate concern.

But now? Nah.

5. Does austerity work?

A resounding no. That's the conclusion reached in this paper from the International Monetary Fund. (The IMF was once the world's leading enforcer of austerity measures.)

And here are some clips from this week's headlines:

Austerity Reigns Over Euro Zone as Crisis Deepens, New York Times: " Europe’s leaders braced their nations for a turbulent year, with their beleaguered economies facing a threat on two fronts: widening deficits that force more borrowing but increasing austerity measures that put growth further out of reach."
Euro-Zone Manufacturing Activity Falls for Fifth Month, Wall Street Journal: " Manufacturing activity in the euro zone declined for the fifth straight month in December, although less sharply than earlier in the fourth quarter, according to a survey of purchasing managers released Monday. The survey is consistent with other indicators of recent activity, and together the numbers suggest the euro-zone economy contracted during the final three months of the year."
Merkel, Sarkozy stress growth a priority in eurozone crisis, call for quick Greek accord, Washinggton Post: "The German and French leaders stressed Monday that boosting economic growth in the 17-nation eurozone is a priority, a recognition that the focus on austerity cuts is unlikely to get Europe out of its debt crisis. Some analysts fear excessive austerity measures will take a heavy toll on weakening economic growth and push the eurozone into recession this year, in turn hindering the region’s deficit-cutting efforts.

Austerity's been a disaster for Great Britain and Europe, yet leaders are demanding more of the same - there, and here. They're ignoring the approaches that have worked in the past, as in the Great
Depression: Invest in short-term growth, put people back to work, and then address long-term deficit issues once the economy's back on its feet.

6. Why do people still push austerity?

Some do it because they're still under the influence of economists indoctrinated in that profession's conservative intellectual orthodoxy.

It's also in many politicians' interests to promote austerity, since wealthy and powerful people like the idea of lowering their own taxes.

One thing's for sure: They're not doing it because they're looking at the facts.
__________________

That wasn't too bad, was it? And it only took 877 words. If you were one of those who felt you didn't understand austerity, hopefully this has helped. You probably realize now that you understood more than you realized. In fact, you were never the problem.

The real problem with austerity economics is that there's less there than meets the eye.

That hasn't stopped leaders all over the world from insisting that it's the solution to the very problems it has caused, or which it has made worse. They're trying to impose even more of it on the global population.

Who's the dummy now?

R.I.P. Austerity Economics (1921-2011)

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

This is the time of year when we're reminded of all the famous people who died over the last twelve months, a list which includes two of my favorite guitar players (Hubert Sumlin and Cornell Dupree). But there were also some notable non-human deaths in 2011, especially in the world of economic policy.

One of those deaths should have completely altered the political debate in Washington. The name of the deceased was "Austerity Economics," and it was first glimpsed in a 1921 paper by conservative economist Frank Wright. Austerity died of natural causes brought on by prolonged exposure to reality.

But the debate in Washington didn't change nearly enough after its passing. In the nation's capital, dead things still rule the night. 

Why Austerity?

"Austerity economics" backers claim that today's economic woes can only be fixed by dramatic reductions in government spending, which will lead to increased private-sector confidence and therefore to greater investment and growth.

But it's never worked. And if investors have lost confidence in the U.S. government's fiscal stability, they're sure not acting that way. There hasn't been this much demand for Treasury bonds since the government began tracking it twenty years ago, and they haven't performed as well since the go-go 1990s.

It's easy to understand austerity's attraction for power elites inside and outside of government. The people who suffer from austerity budgets aren't the kinds of people they know personally, since they're typically public employees like teachers, police, firefighters and the administrators of social programs; people who need government assistance, like the poor; and middle-class people with the temerity to either grow old or become disabled.

Austerity's attraction became even greater in the U.S. because once it became conventional wisdom that tax increases on the wealthy was "politically infeasible." That made it a program whose sole purpose was to cut government spending, lowering the pressure to increase taxes on the wealthy from today's historically low levels.

For a one-percenter, what's not to love? 



Austerity Comes of Age

The idea's been around in one form or another since that 1921 paper, and the International Monetary Fund (IMF) had been imposing it on Third World nations for decades.

But 2009 was the year that austerity really came of age. That was the year that a wealthy stockbroker's son named David Cameron began campaigning for Prime Minister of Great Britain on an explicitly pro-austerity platform.

It was also the year that Cameron helped to form a group named European Conservatives and Reformists (ECR) dedicated to electing like-minded politicians across Europe and helping them collaborate on ways to slash government spending. It was also the year that right-leaning Angela Merkel won reelection as the Chancellor of Germany with a stronger mandate than she'd been given in her first term.

With Nicolas Sarkozy as President of France, Great Britain was the only major European power not yet in the hands of the corporate-backed austerity crowd. 

The Global Sado-Erotic Thrill Machine

That changed with Cameron's election as Prime Minister in May 2010, an event that threw pro-austerity Americans into throes of near-erotic ecstasy. And if that sounds like hyperbole, consider conservative Anne Appelbaum's reaction to Cameron's budget in September of 2010:

Vicious cuts." "Savage cuts." "Swingeing (sic) cuts." The language that the British use to describe their new government's spending-reduction policy is apocalyptic in the extreme. The ministers in charge of the country's finances are known as "axe-wielders" who will be "hacking" away at the budget. Articles about the nation's finances are filled with talk of blood, knives, and amputation.
And the British love it.

What can I say? There are people who collect serial-killer memorabilia, too. But Appelbaum wasn't just speaking for herself. It became unacceptable for any politician in Washington, Democrat or Republican, to advocate anything other than an austerity budget for the United States.

And it was more than an economic strategy to its backers. Austerity became a way to demonize those who had suffered most from the banking abuses and self-indulgences of the wealthy, a totemic "blame the victim" response that turned the political debate into a grotesque inversion of morality. Again, Appelbaum:

"Not only is austerity being touted as the solution to Britain's economic woes; it is also being described as the answer to the country's moral failings."

Bad Metaphors vs. Good Economists

The Democratic President of the United States, Barack Obama, jumped onto the bandwagon with both feet by repeatedly lecturing Americans on the need for government to stop "spending beyond its means." Obama recycled the popular conservative metaphor of a family that has to sit around the kitchen table and decide how much money it has to spend.

That's one of the worst metaphors in modern politics. Does a family establish its own currency -- especially one that has the unique position of the dollar? Can a family borrow money at rates so low they're effectively less than zero? Would a family let Grandma go hungry because Junior bought too many Porsches out of the family kitty and then gambled it away on lousy mortgage investments?

The world's top economists, those who had successfully predicted the crisis of 2008, tried telling the rest of the world what was wrong with the idea: Joblessness and consumer fears were killing any chance of real recovery. More short-term spending was needed to get the economy moving again. Austerity would make things worse, not better.

But nobody listened. Austerity's S&M-like attraction had the world's elites in its grip. 

Death of a Delusion

And then something else came into the picture: Reality.

Cameron's austerity budget had a shattering effect on the already-struggling British economy. His government's financial stability was downgraded five times during his first year in power and retail sales had fallen 2.5 percent. Household income was projected to fall an additional 2 percent if his austerity plans were carried forward. Britain's modest employment gains were reversed, youth unemployment reached record levels, and income inequality was the worst it had been in more than half a century.

Anne Appelbaum's erotic dreams had become Great Britain's nightmare.

As Europe's ruling austerity class pushed forward with their plans, even the IMF tried to dissuade them. It was clear to anyone who wasn't blinded by ideology or political cynicism that austerity economics was a failed program. Even in countries like Greece, where government was far graver than elsewhere, the austerity programs imposed from outside threatened to destabilize society while other reasonable measures like improved tax collection were still not taken seriously enough.

And now the entire Eurozone hangs in the balance. Bankers became wealthy by treating governments as if they were mortgages, lending recklessly and pocketing their fees without considering the long-term reliability of their loans. European leaders insisted for months they were take the kind of sensible steps that should've been taken in the United States by requiring bankers to accept at least part of the losses for the bad loans they had issed.

That plan was quietly dropped last month. "Austerity economics" never calls for austerity from those who have gotten rich by being irresponsible, only from those who didn't benefit from it at all. 

The Afterlife

President Obama has dropped his austerity rhetoric, at least for the time being, but the Republicans have not. Listening to Mitt Romney discuss economics is like having a doctor wave a dead chicken over your head and saying he's decided to cast a spell on you rather than operate on that thing they found in your X-rays.

Aside from the bill introduced this month by the House Progressive Caucus to almost no media attention, there's no comprehensive plan for dropping this country's ineffective austerity strategy and replacing it with an agenda that works.

Rational solutions to our economic problems are being ignored. There won't be a real debate about alternatives to austerity until an entire political party, not just part of it, adopts this kind of program. Until then there will be chaos. And where there is chaos, austerity's powerful advocates can step in and take charge.

Austerity economics died in 2011 and is survived by the British, German, and French governments as well as the GOP and large portions of the Democratic Party. Instead of sending flowers, the family has asked the public to abandon all hopes of future economic growth.

Progressive Caucus Challenge: Restore The American Dream

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

While the rest of Congress is arguing over how to continue a payroll tax cut that will not dramatically improve the economy over the next year, members of the Congressional Progressive Caucus planned to introduce legislation today that its leaders assert would create more than 4 million jobs and reduce the deficit by more than $2 trillion over the next 10 years.

Just as the Progressive Caucus People's Budget was the only serious proposal offered in Congress to meaningfully address both the short-term need for economic stimulus and the long-term need for deficit reduction, "The Restore the American Dream for the 99% Act" is the most serious effort to bring together the tools needed to address today's economic crisis. It is a direct answer to the economic anger at the heart of the Occupy movement.

It is also destined in today's political environment to the same fate as the People's Budget—in other words, utter defeat, assuming it even manages to come to a vote in the Republican-controlled House. The legislation's value is as a statement of the kind of budget policy discussion America needs—and it is a sharp contrast from the latest poison pill offered by congressional Republicans, which seeks to force on the American public the potentially environmentally catastrophic Keystone XL pipeline in exchange for another year of a payroll tax cut that has helped add up to about $1,000 year to workers' take-home pay.

Progressive Caucus co-chairmen Reps. Keith Ellison, D-Minn., and Raul Grijalva, D-Ariz., are scheduled to present the legislation at a news conference today inside the Capitol.


The legislation would authorize the creation of several "corps" that will quickly offer jobs to unemployed people doing such essential work as repairing school buildings, maintaining public parks, completing neighborhood energy efficiency and conservation projects, and providing health care and other public services in underserved areas. One of the corps would be devoted to rehiring teachers and first responders laid off by cash-strapped state and local governments.

Under the legislation would also mandate that 75 percent of the goods and services the federal government buys be made in America, toughen initiatives designed to help small businesses get federal contracts, and allocate $50 billion for highway, public transportation, and electrical grid improvement projects. To counter China's currency manipulation, which artificially drives down the cost of Chinese imports, the legislation would set a countervailing tariff. It would also include language protecting the long-term unemployed and wounded veterans from hiring discrimination.

Included in the bill are provisions that would raise $800 billion through a surcharge on millionaires, end tax subsidies for fossil fuel companies, and impose a small excise tax on the sale of stocks and bonds. It would extract budget savings through such steps as ending the war in Afghanistan as well as cutting close to $200 billion from the defense budget through such measures as eliminating unneeded weapons systems and cutting in half the military forces now based in Europe.

Also, the legislation tackles some of the unfinished business of health care reform: it creates a pubic health insurance option that would be available through health care exchanges, which is expected to drive down federal health care spending by almost $90 billion. Allowing Medicare to bargain with pharmaceutical companies to get bulk discounts, a move that Republicans and some drug-company-funded Democrats have blocked in the past, would help save more than $150 billion.

To preserve Social Security benefits and the financial integrity of the Social Security trust fund, the legislation would raise the cap on earnings taxed by Social Security above its current $106,800.
This legislation helps set up the debate we should be having about the direction of the country in the coming months. The Republicans, of course, would like the country focused on its dissatisfaction with an unemployment rate well above 8 percent as President Obama enters the fourth year of his presidency. They do not want the country to count the number of proposals they rejected that would have lifted the economy, and the fortunes of working-class and middle-class households, had it not been for their unrelenting obstruction. They certainly don't want people to count the job-killing toll of the Republican proposals, which can be seen in states controlled by Republican governors and legislatures.

The Progressive Caucus legislation offers a different choice. We can put people to work today building the foundation of the economy of the future, or allow the stubborn subservience of congressional conservatives to millionaires and big corporations to cause more economic pain, widen the gulf between the very wealthy and struggling workers, and fuel more Occupy movements.

Super Committee Headlines You'll Never See

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

Discussion of the "Super Committee" debacle continues to misguide and misinform the public in an all-too-familiar way. Once again the consensus in the media and among political leaders reflects the misperceptions of an insular Washington culture, rather than the economic or political realities of most Americans.

The Republican and Democratic co-chairs said today that "we end this process united in our belief that the nation's fiscal crisis must be addressed." That's how this exercise in misplaced priorities ends: With a "bipartisan" statement about the urgency of our "fiscal crisis" - deficits - rather than our massive and much more immediate economic crisis of jobs and stagnating wages. And with that, the media onslaught begins. Now we'll see hundreds of new headlines screaming that the Committee "failed."

What we won't see are headlines explaining what really happened: That this failure was inevitable; that it reflects the wishes of most people, Republicans as well as Democrats; that Occupy Wall Street played a large part in the outcome; that Republicans never intended to compromise and Democrats shot themselves in the foot; that this "failure" will be good for most businesses - and for the rest of us too; or that a misguided and right-leaning consensus turned leaders of both parties into cheerleaders for ill-timed budget cuts even as the economy continued to burn down all around them.

Here are seven more accurate - and more eye-catching - headlines you won't see in your major media outlets.

OCCUPY MOVEMENT WINS MAJOR VICTORY
Unpopular 'Supercommittee' Deal Stymied by Popular Opinion
 
Democrats tried. They really tried. They were ready to accept deal points that the polls - and their hearts - should have forced them to refuse: Benefit cuts to Social Security and Medicare. A permanent extension of the Bush tax cuts for the wealthy. A deal that was heavily weighted toward spending cuts, rather than revenues, even during an economic crisis.

They might very well have done it, too, except for one thing: The Occupy movement has changed the subject from the Washington-driven theme of deficits to the economic hardships faced by most people in this country. Sure, the Tea Party is getting credit (yes, I said "credit") for killing a disastrous deal, and it's true that it played an important role.

But so did the Occupy movement. There was talk of occupying Congress, and even occupying the "Super" meeting's meeting space in the now-infamous Room 200. A march and rally is scheduled for tomorrow, and an Occupy group walking from Wall Street to Washington is scheduled to arrive the day after tomorrow.

Democrats who signed on to this deal were going to feel the wrath of the 99%, and there's no way they couldn't have known it. People who have spent the last two years wishing that they had a Tea Party of their own, one that would pressure Dems the way the Tea Party pressures Republicans, can now rest easy. It's here. And it's changing things.

The moral for Democrats? Embrace jobs and growth, not cuts and austerity. You'll thank yourself next November. Some Republicans will probably thank you, too ...


GOP VOTERS HOLD "EXTREME" VIEW OF CUTS - EXTREMELY "LIBERAL," THAT IS
"Left" Anti-Supercommittee Views Supported by Almost 3 Out of 4 Republicans
 
We're already hearing that the unwillingness of some Democrats to sign on to cuts in Social Security and Medicare - the few, the proud, the real Dems - is a sign of "ideological rigidity on the extreme left." Pundits are referring to Senators like Bernie Sanders and Representatives like the members of the House Progressive and African-American Caucuses.

Extreme left? Their position is supported by three out of four voters - Republican voters, that is. A new poll confirms what previous polls have shown: Once voters have these proposed deals explained to them, they hate them.

Nearly three out of voters are against changing Social Security's cost of living adjustment (COLA), as the White House and some Democratic supercommittee members were prepared to do. That includes 70% of Republicans and 78% percent of seniors, who turn out to vote in larger numbers than other age groups.

The next time somebody says these Democrats were being too ideologically rigid, ask them what's wrong with representing the party's rank and file. Especially when that includes other party's rank and file too.

GOP 'COMPROMISE' HOAX SPREAD BY PRESS, PUNDITS
Supposed "compromise" was actually more extreme than ever

It seems almost unkind to point to this piece by Ruth Marcus, who said last week that she was "uncharacteristically optimistic" that the Committee actually would reach a deal. Then we're reminded that she writes for the Washington Post, newspaper for the Federal government's "company town."

Why was Ms. Marcus optimistic? Because, as her headline reads, "Republicans were (making) room for tax increases after all." Why? Because far-right Sen. Pat Toomey and far-right Rep. Jeb Hensaerling were moving away from their "no new taxes" rhetoric and offering, in her words, "a deal that included — gasp! — a net increase in tax revenue from the current level."

She added: "I don’t mean this in a disrespectful way, but pigs are flying here, folks."

Flying? No. Squealing? I wouldn't say that - too disrespectful. But why the enthusiasm from Ms. Marcus? Because, she says, "he once-sacred principle of not raising taxes — any taxes, ever — has been breached."

But it hadn't been. As she herself is fair enough to point out, Republicans were still offering a tax cut, given that Bush's cuts are due to expire. And the deal they offered wasn't a cut for most Americans - only for the wealthiest among us. They were actually proposing another slashing of the high-end rate, which is scheduled to go back to 39+%, down to 28%. In return they were offering "revenues" - by eliminating tax deductions the middle class depends on, especially in these difficult time.

Ms. Marcus and dozens of other commentators have successfully pushed the idea that "both sides were willing to compromise," but were styming by "extremists" in their own party. Not true. Extremists run the Republican Party. And as for the Democrats ...

DEMS DEMAND TO GO ON RECORD AS EAGER TO CUT SOCIAL SECURITY, MEDICARE
Party Leaders Deny Defending Popular Programs, Insist They Were Prepared to Gut Them 
 
There's a great narrative for the Democrats here, if they're willing to take it: We said 'no' to cutting your benefits to protect rich people. Instead they're insisting on making it clear to the American people that they did no such thing. White House Press Secretary Jay Carney said that it was Republican intransigence on taxes, not Democratic willingness to bend on these programs, that scuttled the deal. Combined with Carney's past statements supporting that unpopular COLA cut, that means the Administration is still on record as saying it wasn't prepared to defend these benefit from cuts that the public despises. Instead, Carney bemoaned the GOP's refusal to sign on to a 'grand bargain' that would have done exactly that.

The Democratic supercommittee members were even more flatfooted. "If we fail to do this it will define 2012 going forward," Sen. John Kerry said last week. That's insisting on defining a victory - "We defended your benefits from the party of the rich!" - as failure.

If Dems had any illusions that Republicans wouldn't use this against them, they should already have been dispelled. "“It is another example of failed leadership," said Mitt Romney. "(Obama) has not taken personal responsibility to get the super committee to find ways to balance the budget and cut spending.”

Which gets us to our next headline.

WASHINGTON MOURNS MISSED CHANCE TO ENSURE A 'LOST DECADE'
Leaders lament lost opportunity to create a decade of economic misery 
 
From CNBC: "The austerity measures being rolled out in countries across Europe will have a devastating effect on the living standards of its population, an economist told CNBC Friday.

"These reforms are going to be devastatingly impacting (sic) on the population in these countries. We are looking at a decade of lost living standards across most of Europe."


The economist, James Shugg from Wespace, added that austerity measure, while "part of the solution, will "deepen the downturn." Here's the paradox: They're only "part of the solution" because no one in Washington seems willing to address our real economic problems in a genuine way.

BUSINESS LEADERS CELEBRATE SUPERCOMMITTEE FAILURE
At least they won't make things worse, executives say. 
 
We keep hearing that "business" wants these cuts, but that's only true for the mega-corporations and billionaires that dominate the Washington conversation. What do the other businesses say, the ones that hire people and help to grow the economy?

As Business For Shared Prosperity reports in a new pess release, some of their leaders are celebrating the "defeat."

“Demand drives business, not tax cuts,” said Lew Prince, said the managing partner of a St. Louis music store. “I hire more workers if I think I’ll do more business." Austerity cuts means a stagnating economy. That means people don't buy as much as they once did at Lew Prince's store. And that means fewer jobs.

Frank Knapp, who is the President and CEO of the South Carolina Small Business Chamber of Commerce and Vice Chairman of the American Sustainable Business Council, was even more blunt: “I’m sick of people who wrecked the economy and their defenders in Congress blaming others for killing jobs. The high-end Bush tax cuts are a big part of the problem – not the solution. We need revenue for real job creation and economic renewal, not more job-killing budget cuts, job-killing corporate tax dodging and job-killing millionaires and billionaires not paying their fair share of taxes."

Which gets us to our last headline:

IN SURPRISE DEVELOPMENT, TERRIBLE IDEA NOT WORKING OUT WELL
Pundits, Washington leaders today expressed surprise and dismay at failure of unpopular committee to agree on widely-hated cuts 
 
That's it. No body, just the headline. Some stories just write themselves.

Stopping The Austerity Train Wreck

Robert Reich explains on his website with his usual clarity how "Washington is on another planet" and that whether or not the Super Committee reaches an agreement or not, "Washington is on the road to making budget cuts that will slow the economy, increase unemployment, and impose additional hardship on millions of Americans."

 
 He lists four "super principles" that ought to guide the Super Committee:

FIRST: no cuts before jobs are back – until unemployment is down to 5 percent. Until then, the economy needs a boost, not a cut. Consumers – whose spending is 70 percent of the economy – don’t have the money to boost the economy on their own. Their pay is dropping and they’re losing jobs.

SECOND: Make the boost big enough. 14 million Americans are out of work, and 10 million are working part time who need full-time jobs. The President’s proposed jobs program is a start but it’s tiny relative to what needs to be done. It would create fewer than 2 million jobs. We need a big jobs program – rebuilding America’s crumbling infrastructure, and including a WPA and Civilian Conservation Corps.

THIRD: To pay for this, raise taxes on the super-rich. It’s only fair. Never before has so much income and wealth been concentrated at the very top, and taxes on the top so low. Go back to the 70 percent marginal tax we had before 1980. And include more tax brackets at the top. It doesn’t make sense that any income over $375,000 is taxed at the same 35 percent, even if it’s a billion dollars. And tax all sources of income at the same rate, including capital gains.

FOURTH: Cut the budget where the real bloat is. Military spending and corporate welfare. End weapons systems that don’t work and stop wars we shouldn’t be fighting to begin with, and we save over $300 billion a year. Cut corporate welfare – subsidies and special tax breaks going to big agribusiness, big oil, big pharma, and big insurance – and we save another $100 billion. 

 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

The Super Committee Must Fail

Donkey Hotey

Robert Borosage has long been a leading voice for progressive politics in the United States. He is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future, vital organizations which develop policies, message and issue campaigns to help forge an enduring majority for progressive change.  The following is prepared testimony from Borosage delivered today to the Congressional Progressive Caucus's Hearing on Jobs, cross-posted from Campaign for America's Future.

I thank the Congressional Progressive Caucus for holding this hearing. I am honored by the invitation to participate. I want to the salute the CPC, and its co-chairs Rep. Keith Ellison and Rep. Raul Grijalva, for being a voice of reason in a Congress and a Capitol that has lost its way. Your leadership – from the People’s Budget, to this summer remarkable Jobs Tour, to the “Rebuild the American Dream” Jobs Framework that you have championed – has provided Americans with a clear way out of the mess that we are in. And now, as we head towards what is a foolish debate about the potential recommendations of the Super Committee, that misbegotten offspring of the calamitous debt ceiling deal this summer, your leadership and your voice are more important than ever.

Today, I want to speak candidly about the situation this nation faces. Tomorrow, tens of thousands of Americans across this country will demonstrate to demand jobs, not cuts, from the Congress. They demand action on jobs, and opposition to cuts in Social Security, Medicare, Medicaid and services vital to Americans. These demonstrators represent the 99%. As poll after poll has shown, they give voice to the priorities of the vast majorities of Americans. Authorities can remove Occupy Wall Street from Liberty Park, but they cannot silence an idea whose time has come. And this Congress should take heed.

Let me lay out the case clearly and make three points. 1. For this nation to succeed, the Super Committee must fail. 2. It is time to put people to work. 3. Shared Sacrifice is for suckers.


1. The Super Committee Must Fail

If a drunken bus driver were careening down the wrong road that leads directly off a steep cliff, we would want him to fail to get where he is going. That is exactly the case with the Super Committee. They are headed down the wrong road and it will be ruinous if they succeed in getting where they are going.

This is a nation with 26 million people in need of full-time work. Wages are not keeping up with prices. Poverty, now at record levels, is spreading. One in five homes with a mortgage is underwater. Companies are sitting on trillions in profits waiting for customers. Over the past eleven years, we have added 30 million more people and lost 1.8 million private sector jobs.

And next year, an economy that is barely growing will be hit with severe shocks. The boost provided by recovery act spending will come to an end. If unemployment insurance and the payroll tax cut are also not renewed, JPMorgan Chase analysts project that will cut growth by 1.5 to 2%. More and more mortgages in arrears will face foreclosure, with ruinous effect on their neighbors. Even if the Euro somehow survives, Europe is headed back into recession, with knock-off effects on our exposed banks and investment houses and on export markets.

We should be having a fierce argument about how to put people to work and get this economy going. Republicans should be demanding tax cuts, Democrats public investment and jobs programs. Instead the Super Committee is peddling austerity, pushing Republicans to accept tax hikes (or at least pretend to accept them) and Democrats to embrace cuts in Social Security and Medicare. This is grand folly.

The best deficit reduction plan is to put people back to work. In fact, America does not have a short-term debt problem. If we have a recovery, then our deficits will come down to manageable levels by the end of the decade. If we don’t have a recovery, then austerity will simply make things worse – forcing more workers onto food stamps and unemployment insurance, and lowering revenues.

We see the effects of austerity in Europe. The European Commission now predicts that Europe’s economy will “stagnate well into 2012” and threatens a “deep and prolonged recession.” In Greece, severe budget cuts have combined with economic recession to constrict GDP by 5.5% this year, with unemployment soaring. In Portugal, austerity cuts led the government to project the economy will shrink there by 5%. And, as Sprach Analyst and other global economic firms note, “the slower the growth, the harder the European debt crisis will be to resolve. Government austerity is actually making matters worse.”

We need a sizable, sustained and serious jobs program now. And we cannot turn to austerity, to getting our books in order, until we put people back to work. If the Super Committee were to be useful, it would report out – with its expedited voting powers – a bold and sustained jobs proposal, combining increases in spending – on infrastructure, on direct public jobs programs, on aid to states and localities, on mortgage relief for homeowners – with cuts in taxes to enlist Republicans. It would then make the trigger for any turn to austerity not an arbitrary date, but when Americans are going back to work, and unemployment is down to 4 or 5%.

Instead what we have is Washington’s version of an old Steve Martin routine. “I can tell you,” he used to say, “how to make a million dollars and not pay taxes. First, assume a million dollars, then don’t pay taxes.” The Super Committee says it can tell us how to recover and reduce deficits without paying much in taxes. First, assume a recovery.

But we can’t assume a recovery that is not taking place. First, stop going down a road that leads over a cliff. And start putting people to work.

2. Put People To Work

We know how to put people to work in a recession. The CPC “Rebuild the American Dream” Jobs Framework details the basic elements. The People’s Budget shows that the country can afford to do it – indeed can’t afford not to do it. Let me focus on a couple of elements of this agenda.

First, it is bizarre that those who claim we should let markets rule then choose to ignore what markets are saying. We will never have a better opportunity to rebuild America than we have right now. The need to renovate America’s decrepit and outmoded infrastructure is apparent. It is now dangerous to our lives and costly to our economy. Across the country, the construction industry is idle, with millions of skilled and unskilled workers ready to work. Work to be done and people to do it. And at this moment, investors across the world are, in essence, paying the US to allow them to store their money in our bonds. They are paying us to borrow money from them. Anyone with any business sense would jump at this alternative. We should be borrowing money, essentially for free, in large amounts to rebuild this country and put people to work.

Second, youth unemployment in this country for those aged 16-19 is at the same level it was in Egypt when the Arab Spring erupted. For the first time in half century, a majority of young people from 16-24 is not working. We have a generation of veterans returning from wars, students graduating from high school that can’t find jobs. This crushes hopes and destroys self-confidence. We’re witnessing 18 suicide attempts among veterans a day. No nation can afford to write off a generation. We should make government the employer of last resort for every person under 25. Create urban and green corps; subsidize small businesses and non-profits to put people to work. Let’s have this debate across the country.

Third, the other elements of the CPC Jobs Framework – a manufacturing strategy based on making it America, transforming our trade and industrial policies, a commitment to taking a lead in the green industrial revolution that is sweeping the world, an investment agenda in education and training to insure that our people are the best trained in the world – are vital to building a new foundation for growth and shared prosperity. The stark reality is that we can’t go back to the old economy and should not want to. That economy was not working for most Americans. The top 1% captured all of the rewards of growth over the last decade, while the typical household lost ground. It was built on bubbles and debt and unsustainable trade imbalances. I salute the CPC for demanding a new strategy for growth, not simply a short-term stimulus that cannot work
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3. Shared Sacrifice is for Suckers

Once the economy recovers and people go back to work, it will then be time to face our long-term debt challenge, and get our accounts in order. Here too, however, the Super Committee is headed down the wrong road.

Republicans have argued that we should balance our budget with spending cuts only – calling for dismantling Medicare, cutting Medicaid and Social Security, and exacting deep cuts in everything from education to child nutrition. Democrats have called for “shared sacrifice,” offering to trade cuts in Medicare and Social Security for tax increases on the rich.

But, when the rewards of growth are not shared, shared sacrifice is for suckers. The reality is that we face a huge mess because Wall Street went on a wilding that blew up the economy. Most Americans weren’t even invited to the party. Now under the banner of shared sacrifice, they are being asked to clean up the mess. Bull. Send the bill to those who had the party. And in fact, seniors and savers and homeowners are already paying a steep price for Wall Street’s excesses, as the policies of the Treasury Department and the Federal Reserve -- focusing on propping up otherwise insolvent banks – has resulted in seniors getting low returns on their savings, homeowners getting no relief on their mortgages, and taxpayers paying the price of the economic ruin left by the banks.

To then suggest that the most vulnerable in the society “share in the sacrifice” or pay more to clean up the mess is an insult.

Worse, it gets our long-term debt problem wrong. We need to hike taxes on the wealthy and on Wall Street to help pay for the mess they created and to provide the funds, once people are back to work, to continue investing in America.

But our long-term debt problem is not a spending problem or a tax problem. It is the product of a broken health care system. We pay nearly twice per capita what the rest of the industrial world pays on health care, with worse results. If we paid simply the average per capita of the industrial world, we would project surpluses in our long-term projections.

Cutting Medicare -- raising the eligibility age as some Democrats have proposed, dismantling it and turning into a voucher as Republicans have suggested -- does nothing for the soaring costs of our health care system. It simply pushes more of those costs on to those least able to afford them -- the elderly, the poor, the disabled.

The cure to our long-term budget problem is to get health care costs under control. That requires taking on the drug companies, the insurance companies and the private hospital complexes that drive prices. Obama’s health care plan is a first step down that road. A public option and negotiating bulk savings on prescription drugs would save even more. The Veteran’s Administration has modeled other savings, in electronic records and more. Medicare for all is where we will eventually end up.

But whatever the solution, no one should be confused about the problem. It isn’t out of control spending. It isn’t greedy seniors, generational warfare, or an “entitlements crisis.” It is a broken health care system, a service that every other industrial country has handled better than we have. Don’t ask the vulnerable to pay more of the out of control costs. Get the costs under control.

You can’t get the right answer if you aren’t asking the right question. At this point, the Super Committee is asking all the wrong questions, and coming up with all the wrong answers. I urge the Progressive Caucus members to do whatever they can to insure that it fails in its effort to drive this economy back over a cliff.