Saturday, December 08, 2012

Instead Of Talking About Deficit Reduction During An Economic Crisis, Why Isn't The Focus On Stimulus And Job Creation?


With Democrats like Baucus & Landrieu, who needs Republicans?

Despite the announcement yesterday that unemployment had ticked down to 7.7%, as Krugman pointed out in his Times column, the crisis that this country is facing now is not a ginned up "Fiscal Cliff" but a real live jobs crisis that is gnawing away at our economy from the inside.
[W]e may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff. ... [T]here is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now-- except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now-- namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.

When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.

There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.

Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.
Just as The Times published Krugman's piece, Jobs Not Cuts, a coalition of progressive activist groups and some labor unions released their first ad that does put some pressure on mass unemployment. Here's the one they're running in Virginia against conservative Democrat Mark Warner, who is up for reelection in 2014 and who is a steadfast advocate of the Fiscal Cliff Mentality and a Grand Bargain meant to balance the Budget on the backs of working families.

Warner is a perfect target. However, the other two corporate whores who have the ads running for their constituents, Claire McCaskill (D-MO) and Denny Rehberg (R-MT), are a waste of money. Rehberg was defeated last month and his time in Congress can be measured in hours. McCaskill next has to worry about what voters think in 2018. Better targets would be Republicans who could be vulnerable in 2014-- Susan Collins, Miss McConnell, Saxby Chambliss and Lindsey Graham in the Senate and dozens of GOP House members (like Paul Ryan, Fred Upton, Buck McKeon, John Mica)-- and the Democrats facing reelection battles who are working behind the scenes to toss working families overboard like Mary Landrieu and Mark Pryor in the Senate and the three Blue Dogs who have refused to sign the discharge petition, John Barrow, Jim Matheson and Mike McIntyre, in the House.

Yesterday is was barely sunrise when we looked out how badly the Democratic strategists had picked the battlefield terrain for the Grand Bargain-- bad for working families, wonderful for the wealthy families who finance our political elite's cushy careers. Democrats are fighting the wrong battles and preparing the "win" hollow victories while "compromising" with ravenous Republican predators by cutting right to the bone when it comes to the American social contract itself. As Chris Hayes points out in Twilight of the Elites, "[T]he political system seems more or less completely deaf to any cries for more stimulus and direct job creation. As soon as stocks had recovered [from the Bush crash of 2008] and a modicum of growth was restored, the dominant conversation in Washington among both Republicans and Democrats was about how and how much to cut the deficit. The White House spoke of its 'pivot' to deficit concerns, while Wall Street, conservative think tanks, and the Republican Party all devoted themselves to sounding increasingly dire alarms about the size of the U.S. government's debt and advocating a radical deconstruction of the country's basic framework for providing social insurance." With the campaign finance system the way it is now-- especially after Citizens United, the distance between our political elites and normal people is too great for effective representative government. Hayes:
[T]he core lesson of the financial crisis: the increasing inequality, compartmentalization, and stratification of America in the post-meritocratic age served to seduce those at the top into an extremely dangerous, even pathological, kind of complacency. The ship sprung a leak down in the lower decks, flooding the servants' quarters, and no one up top realized it would bring down the whole thing. The cocktails continued to flow, the band continued to play, and the party rollicked on Wall Street throughout the housing bubble, even as subprime borrowers drowned, as their lives and wealth and homes were destroyed. But the water kept coming in, and it climbed deck by deck, until, eventually, the music stopped and the party ended, and it looked like the entire thing might go down.

Given what a close call it was for those on the top deck, for the Jamie Dimons and the bankers and the titans of industry and all the members of the 1 percent, you would think that the single most important lesson they would take away from the near miss would be this: You ignore the fate of those on the bottom deck at your peril. An economy divided into "subprime" and "prime" is dangerously precarious; the predations tolerated in the former will, sooner or later, come to feast on those who make up the latter.

And yet, astonishingly, this lesson has gone almost entirely unheeded. We once again have a bifurcated economy, a prime economy and a subprime economy. Our government institutions responded with nearly unprecedented swiftness and force to save, and then revive, the prime economy. Yet they are letting the subprime economy fend for itself, to suffer through a period of drought and privation as bad as anything in eighty years. "If your personal wealth is predominantly in capital markets," says Damon Linker, a lawyer at the AFL-CIO, who served on the TARP Congressional Oversight Panel, "well then you had a hell of a scare, but you're 70 percent on the way back to where you were in 2007. If your personal wealth is predominantly in your home, you're fucked. And approximately 80 percent of people in the U.S., their only asset is their home."
"So why," asked Krugman yesterday, "aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position. Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs-- and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense. No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds-- and, of course, the unemployed don’t hire lobbyists or make big campaign contributions. So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy-- and it’s also an outrage."

Which brings up the uncomfortable question no one ever wants to ask: what the hell is the purpose of the Democratic Party if it's controlled at the top by corrupt corporate shills like Steny Hoyer, Debbie Wasserman Schultz, Joe Crowley and Steve Israel... and corporate senatorial bottom-feeders like Mary Landrieu, Mark Pryor, Joe Manchin, Claire McCaskill, Max Baucus, Tom Carper and Mark Warner? And, as if to answer, Krugman rushed out a blog post in the evening warning Obama that he's about to make an awful mistake by bowing the right-wing demands and raising the Medicare eligibility age.
[R]aising the Medicare age is terrible policy. It would be terrible policy even if the Affordable Care Act were going to be there in full force for 65 and 66 year olds, because it would cost the public $2 for every dollar in federal funds saved. And in case you haven’t noticed, Republican governors are still fighting the ACA tooth and nail; if they block the Medicaid expansion, as some will, lower-income seniors will just be pitched into the abyss.

Second, why on earth would Obama be selling Medicare away to raise top tax rates when he gets a big rate rise on January 1 just by doing nothing? And no, vague promises about closing loopholes won’t do it: a rate rise is the real deal, no questions, and should not be traded away for who knows what.

So this looks crazy to me; it looks like a deal that makes no sense either substantively or in terms of the actual bargaining strength of the parties. And if it does happen, the disillusionment on the Democratic side would be huge. All that effort to reelect Obama, and the first thing he does is give away two years of Medicare? How’s that going to play in future attempts to get out the vote?

If anyone in the White House is seriously thinking along these lines, please stop it right now.
As I've been warning all year, Obama is going to utterly destroy whatever value is left in the Democratic Party brand. It's why, in part, I didn't vote for him last month. Nor did I vote for the two corporate shills up for reelection for U.S. Senate and House of Representatives where I live, Dianne Feinstein and Blue Dog Adam Schiff.

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