Quote of the Day

“The wrong turn we’ve taken in economic policy — our obsession with debt and ‘entitlements,’ when we should have been focused on jobs and opportunity– was of course, driven in part by the power of wealthy vested interest.  but it wasn’t just raw power.  The fiscal scolds also benefited from a sort of ideological monopoly:  for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.

“Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008.  This is going to change the discourse — and, eventually, I believe, actual policy.”

Paul Krugman, “Obama Gets Real,” NYT

It’s been so frustrating to me that during and since the Great Recession, we’ve sacrificed growth by focusing too much on each year’s deficit and the national debt.  Of course, deficits were going to spike when unemployment was so high and we were paying out so much more for unemployment benefits, food stamps, Medicaid, etc. and taking in so much less in revenues.  But we behaved as if that was not just a temporary circumstance, but our long-term destiny, and thus prolonged and deepened that temporary state, weakening us as a country and cruelly crushing a whole lot of families unnecessarily.  Keynes is (still) right, Paul Ryan is wrong, and Ayn Rand was a novelist, not an economist.  It’s time for the Prez and the Dems to lead us out of this economic wilderness.

Europe Sees the Light, as U. S. Opts for Darkness

The misguided GOP focus on deficits and austerity in the U. S. is messing up the whole world’s economy.  From the NYT*:

“The Europeans lately have slightly eased their austerity policies, after four years of deep spending cuts and rising taxes that many economists blame for keeping the Continent in recession long after America’s ended.

“And the Obama administration, after years of pressing Europe to adopt American-style stimulus measures, is now presiding — if reluctantly — over European -style austerity that is measurably slowing its recovery. …

“The new reality in the Unites States reduces the president’s already limited leverage in his fiscal debate with Europeans…even as Europe’s woes continue to act as a drag on its trading partners, including the United States.”

I would force every Republican member of Congress to write “Keynes was right” on the blackboard 1,000 times.

*  “Lines Blur in U.S.-Europe Debate on Austerity,” Jackie Calmes

Policy of the One Percent, by the One Percent, for the One Percent

From “The 1 Percent’s Solution,” Paul Krugman, NYT:

“Thus, the average American is somewhat worried about budget  deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face.  And how should the budget deficit be brought down?  The wealthy favor cutting federal spending on health care and Social Security — that is “entitlements” — while the public at large actually wants to see spending on those programs rise.

“You get the idea:  The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor.  What the top 1 percent wants becomes what economic science says we must do.

“[T]he years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers.

“And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make.  To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?”

 

The New Sheriff of Wall Street

President Obama has made an excellent choice to head the SEC — Mary Jo White.

She is a former federal prosecutor who was the first woman to head the U. S. Attorney’s Office in Manhattan, a really coveted and prestigious job.  Outside of government, she has been a defense lawyer for white-collar criminals, so she knows how their schemes are structured and disguised.

Very smart, very tough, very dedicated.

The buzz is that Obama chose a woman, given that he’s been getting heat for so many male appointments, but to me the important thing is that he picked someone who is really sharp and capable.  My first thought on seeing the news wasn’t “Oh, great, he picked a woman,” but “Oh, great, she’s going to kick some Wall Street ass.”

House Extends Debt Ceiling

The House of Representatives has approved a GOP plan to extend the debt ceiling till May 19.  The vote, 285-144, was pretty much along party lines.

The Senate has indicated it will support the plan, and the President will sign it.

The GOP has decided to focus instead on the upcoming sequester and the expiration of the continuing budget resolution as a way to force spending cuts.  They believe there will be less political fallout from proceeding this way rather than fighting over the debt ceiling.

 

The Deficit? Fuhgeddaboudit.

A little Krugman* to get your weekend off to a good start:

“The budget deficit isn’t our biggest problem, by a long shot.  Furthermore, it’s a problem that is already, to a large degree, solved.  The medium-term budget outlook is great, but it’s not terrible either — and the long-term outlook gets much more attention than it should.

“Recently the nonpartisan Center on Budget and Policy Priorities took Congressional Budget Office projections for the next decade and updated them to take account of two major deficit-reduction actions:  the spending cuts agreed to in 2011, amounting to almost $1.5 trillion over the next decade; and the roughly $600 billion in tax increases on the affluent agreed to at the beginning of this year.  What the center finds is a budget outlook, that, as I said, isn’t great but isn’t terrible:  It projects that the ratio of debt to G.D.P., the standard measure of America’s debt position, will be only modestly higher in 2022 than it is now.

“The center calls for another $1.4 trillion in deficit reduction, which would completely stabilize the debt ratio; President Obama has called for roughly the same amount.  Even without such actions, however, the budget outlook for the next 10 years doesn’t look at all alarming.

“Now, projections that run further into the future do suggest trouble, as an aging population and rising health care costs continue to push federal spending higher.  But here’s a question you almost never see seriously addressed:  Why, exactly, should we believe that it’s necessary, or even possible, to decide right now how we will eventually address the budget issues of the 2030s?

“It’s time to focus on other stuff — like the still-depressed state of the economy and the still-terrible problem of long-term unemployment.”

Instead of wringing our hands about the deficit/national debt, we need to roll up our sleeves and focus on growth and good jobs.  That’s the best thing we can do for the 2030s right now.

* “The Dwindling Deficit,” NYT

Quote of the Day

“My debt limit nightmare scenario goes something like this: Nothing of any substance happens for the next month or so. Then, a few days before the government’s borrowing authority lapses, House Republicans pass legislation pairing deep spending cuts — some specific, some asterisked — with a debt limit increase. The Senate, gridlocked by filibuster, can’t pass a clean debt limit bill, so instead they pass nothing. Republicans skip town claiming they’ve done their job, leaving Democrats to choose between surrender and economic havoc.”

Brian Beutler, Talking Points Memo