Wednesday, January 07, 2009

It's time to leave economic recovery to the grownups, and have the wingnut obstructionists shut the hell up


When Paulson and Bernanke put their heads together . . . oh, don't get me started. Enough! We need some real economic vision and real political courage, and we need them now.

"These guys literally can’t conceive of any solutions outside their particular box. If it’s not tax cuts (but never for the middle or working class) or spending cuts (always from the middle or working class), they’re helpless. That’s why you saw "Paulson and Bernanke flailing around like dying fish last fall as they struggled to justify their criminal actions in destroying their economy -- they literally don’t understand anything but how to enrich themselves at others’ expense."
-- Martin at Boztopia, in a post yesterday, "The Definition of Insanity"

by Ken

We're going to come back in a moment to David Sirota's discovery, during an appearance on Fox Noise, of the Noisemakers' enthusiastic participation in a blunt rewrite of history. I had to laugh, though, when I went back to my writeup, based on David's account in his weekly newspaper column, and saw the head I'd written: "Is it fear of a new New Deal that has the Right feverishly rewriting the history of the old one?"

Talk about wishful thinking! "A new New Deal," eh? Well, yes, I think the Right is sweating bullets over the possibility that the new administration could come up with an economic stimulus plan with such vision and audacity that it might not only in time turn the economy around but leave us with a legacy of achievement worthy of comparison with the New Deal's.

Alas, that prospect seems to exist only in the Republican's nightmares. It's certainl not the impression I'm getting from the bits and pieces of the contemplated Obama package which have leaked out. For cripes' sake, we're reduced to debating whether the tax cuts it apparently contains are a concession to Republicans or were part of the president-elect's plan all along.

This is discouraging. Not surprising, but discouraging all the same. But heck, we've known all along it was going to come to this. With almost two weeks still to go before the inauguration, here we are already.

President-elect Obama still gives every indication of believing in his "postpartisan" world, where lions and lambs and goldfish and wingnuts all join hands and sing "We Shall Overcome" and agree their way to a Better Future for All. There is as yet no way of proving conclusively that he's wrong -- again, he hasn't even been inaugurated yet -- but so far all the signs point that way, and I don't see any signs to the contrary. None.

And oops . . . oh yes, at this particular moment, the country's economic future is hanging in the balance.

One more time: Republicans don't believe in bipartisanship

It's time once again to repeat the words of timeless wisdom Digby graciously let us print here last month -- and by gosh I'll keep quoting them until the message gets through. Although she was talking specifically about the developing Republican plan to obstruct the nomination of Attorney General-designate Eric Holder, I'm sure she would be the first to agree that the general principles enunciated here apply in exactly the same way to the cretinous blithering of "Miss Mitch" McConnell and "Sunny John" Boehner, lately plastered all over the teevee, concerning emerging details of the Obama stimulus package. Digby:
This is just how Republicans act as an opposition party. It's about tying Holder to Clinton to Obama (and "Chicago politics" and "smell tests" and "honor") and creating an ongoing sense that there is something fetid and corrupt about Obama even though there's nothing specific anyone can point to. They simply see the destruction of Obama as the most expedient way to return to power and they will go after him personally and obstruct his agenda at every possible turn.

They really do believe that bipartisanship is date rape -- they have done for the past 30 years. And there aren't any Republican political professionals who didn't come up in that school. To them, this is what politics are all about. Since they have paid no price for this beyond a fairly even ebb and flow of electoral politics there's been no reassessment of their methods. Dems don't play the blame game. Republicans do.

Dealing with a ruthless obstructionist opposition party that always operates in bad faith and never misses an opportunity to weaken the president was always going to be part of Obama's challenge. (And it doesn't matter if the public hates it -- the whole point is to wear them down until it's just too exhausting to resist.)

In fairness to Miss Mitch and Sunny John, they may not be entirely as stupid as one would naturally be led to believe by their nonsensical blithering. At some (unspecified) point, stupidity shades into sheer dishonesty. It's the Modern Republican Creed: If every word out of your mouth isn't a flagrant, off-the-wall lie, then baby, you got some 'splainin' to do.

Only at this moment I don't think we have much allowable tolerance for standard Republican bullshit. You'd think they would have noticed the speed at which the economy is falling apart, and responded in the context of the known difficulty of reversing that kind of downward spiral. In a nutshell, it's a whole lot easier to get the various players in the economic machine to lose confidence and retreat than to regain confidence and commit to the long, hard fight back. And it's not just a matter of confidence, of course. All the economic forces gradually become aligned against growth. Right now, for example, entrepreneurs who wanted to fight back couldn't borrow money to do so anyway -- you see how this works?

Oh, I'm sure at least some of the GOP obstructers know this. It's just, what reason is there to think they give a damn? Why should they, especially now that Republicans won't have to be the ones announcing each month's horrific job-loss and other scarifying numbers?

The people known to most Republican officeholders are weathering the storm just fine, thank you. Why, Miss Mitch and Sunny John can probably live the rest of their lives just off of the money they've pocketed from lobbyists and the Treasury in their years of government "service." As for hardship suffered by their constituents, well, boohoo! Blaming the economic catastrophe that resulted from all those years of Republican economic bullshit on the Democratic president and Congress is their ticket back into power.

As I suggested at the top, it's not just the urgent timing of the stimulus package that spooks me. Most of what's leaked out about what's going to be in the Obama package sounds like tired old crap. Tax cuts, for goodness' sake?

Here's Martin in the Boztopia post I quoted at the top:
Narrowing the window to the tired old paradigm of cutting taxes and hoping that the money will flow back into the economy won’t work. It hasn’t worked for over thirty years, since the phrase “trickle down economics” entered our collective vocabulary.

The definition of insanity, it is famously said, is to do the same thing over and over again in the hope of different results. For Obama’s team to push these miniscule tax cuts and huge corporate tax breaks as some kind of economic salvation is not only change I most definitely don’t believe in, it’s a virtual echo of Bush’s demand that we go shopping as a way to serve after 9/11.

And that, to coin a phrase, is fucking nuts.

From what we're hearing, a crucial component of planning the Obama package is a desire for bipartisan approval. The talk on Rachel Maddow's show last night was that the Obama people want a package that will pass the Senate with 80 or 90 votes. The question is, what do they have to do to achieve that? And is there any reason to go through it?

In a Monday blog post called "Is Obama relying too much on tax cuts?," Paul Krugman allowed that there is a case to be made for including tax cuts in the stimulus package:
There's a problem with a public-investment-only stimulus plan, namely timing. We need stimulus fast, and there's a limited supply of "shovel-ready" projects that can be started soon enough to deliver an economic boost any time soon. You can bulk up stimulus through other forms of spending, mainly aid to Americans in distress -- unemployment benefits, food stamps, etc.. And you can also provide aid to state and local governments so that they don't have to cut spending -- avoiding anti-stimulus is a fast way to achieve net stimulus. But everything I've heard says that even with all these things it's hard to come up with enough spending to provide all the aid the economy needs in 2009.

What this says is that there's a reasonable economic case for including a significant amount of tax cuts in the package, mainly in year one.

"But," he said, "the numbers being reported -- 40 percent of the whole, two-year plan -- sound high. And all the news reports say that the high tax-cut share is intended to assuage Republicans."
And that’s bad news.

Look, Republicans are not going to come on board. Make 40% of the package tax cuts, they'll demand 100%. Then they'll start the thing about how you can't cut taxes on people who don't pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they'll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid -- which would undermine that part of the plan, too.

At the moment, we're dealing with an opposition so removed from reality that their automatic penetration therefrom is to bluff their way back to their make-believe world.

The RWNM's alternative to reality

Which brings me back to David Sirota's experience on Fox Noise. The issue was a little bombshell dropped by a wingnut guest: the bald assertion that the New Deal prolonged the Great Depression. When David challenged this, a pair of Fox Noise-paid wackjobs insisted it's accepted fact.

It's not fact. It's bullshit. I
t's based on the recession that set in in the late '30s when the Roosevelt administration backed off the New Deal -- and resorted to the sort of fiscal "prudence" peabrains like Miss Mitch and Sunny John would approve. The real economic argument from this should be the exact opposite: that President Roosevelt should have forged ahead instead of retreating.

David has written a follow-up piece, on Campaign for America's Future's Our Future blog, in which he reports:
I've received an overflow of angry email from conservatives citing Amity Shlaes since-discredited book "The Forgotten Man" as "proof" that the New Deal prolonged the Great Depression. But note -- the operative phrase is "since-discredited." As University of California historian Eric Rauchway has noted, Shlaes both wholly omits some relevant data and deviously manipulates other numbers.
I encourage you to check out the grisly details in David's piece. But the strategy is familiar in what passes for conservative "scholarship." Some bozo takes a few tiny factoids -- stuff the person is either too stupid or crazy to understand, or simply too dishonest dishonest to represent accurately -- and twists it through an advanced psychotic lie warp, eventually turning the whole pile of crap into the nonreality the yokel had set out to "prove" in the first place. "Scholarship," right!

So now they've got their lousy book (or, increasingly, thanks to the burgeoning right-wing crap-publishing industry, a shelfful of books), standing against the combined body of work by actual scholars. Naturally, actual scholars call their book crap, but that doesn't matter, because crap is what makes the great Right-Wing Noise Machine function. Rush and Billo and Sean and their horde of imitators feed their worshipers a steady diet of nothing but crap. The RWNM is a veritable feast of crap.

Let's be clear: The scope of our problem says we don't have the luxury of pretending that these people have any stake in truth, fairness, or any aspect of reality that doesn't lead to the enrichment of themselves and their cronies.

It's a fact that nobody knows for a fact how to legislate our way out of a recession plummeting into a depression. Obviously there's no simple formula. But there are economists with an accumulated body of knowledge and a good enough track record to warrant careful listening to. Needless to say, this shouldn't include any of the people whose "thinking" helped get us into this mess -- unless they can explain convincingly how they were wrong before but are right now.

I think we need to listen to those people and see where they are in broad agreement, and make that the basis of the stimulus plan. We also need those people to help us with a major educational effort -- to explain in terms that can be understood by ordinary folk why they think their solutions will contribute to solving the problem.

We need some real vision now

Is it any wonder that the liars of the RWNM don't want Americans thinking about the legacy of the WPA and all the other public-works projects initiated under the New Deal, a legacy that is literally still all around us?

But we also need some political will. As Paul Krugman wrote in his blog the other day:
Look, Republicans are not going to come on board. Make 40% of the package tax cuts, they'll demand 100%. Then they'll start the thing about how you can't cut taxes on people who don't pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they'll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid -- which would undermine that part of the plan, too.
And as Martin wrote in his Boztopia piece:
Obama and his team have got to think bigger than this if they’re going to succeed. They have the momentum, they have the support, and thanks to Franken being confirmed as Senator from Minnesota (finally!), they have the votes (assuming you count Joe Lieberman or one or two GOP moderates) to push through some truly ambitious legislation that can fundamentally reorient the way our country works, lives, and builds wealth.
Now Republicans are hardly the only problem. There are plenty of Democrats who don't get it either, and are happy to trade the national interest either for some short-term political points or for some long-term enrichment of their benefactors. The new president and Majority Leader Reid and Speaker Pelosi all have to deal with them. What we have to recognize is that these people have nothing to contribute to the solution, even if some of them would actually like to. (We can't ever forget that a lot of the obstructionists view their obstruction as a politically winning strategy.)

If these people insist on being in the room while the grownups try to hammer out a serious economic recovery package that can be enacted quickly, I guess that's okay, as long as they keep their damned pieholes shut. But the minute Miss Mitch or Sunny John or any of those other assholes opens his or her mouth, I say shoot the bastard.

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At 10:56 PM, Anonymous Anonymous said...

Prof. Benjamin Shalom Bernanke Exposed

"The debate about the ultimate causes of the prolonged Japanese slump has been heated. There are questions, for example, about whether the Japanese economic model, constrained as it is by the inherent conservatism of a society that places so much value on consensus, is well-equippedto deal with the increasing pace of technological, social, and economic change we see in the world today.

The problems of the Japanese banking system, for example, can be interpreted as arising in part from the collision of a traditional, relationship-based financial system with the forces of globalization, deregulation, and technological innovation (Hoshi and Kashyap, forthcoming). Indeed, it seems fairly safe to say that, in the long run, Japan’s economic success will depend largely on whether the country can achieve a structural transformation that increases its economic flexibility and openness to change, without sacrificing its traditional strengths.

In the short-to-medium run, however, macroeconomic policy has played, and will continue to play, a major role in Japan’s macroeconomic (mis) fortunes. My focus in this essay will be on monetary policy in particular. Although it is not essential to the arguments I want to make—-which concern what monetary policy should do now, not what it has done in the past—-I tend to agree with the conventional wisdom that attributes much of Japan’s current dilemma to exceptionally poor monetary policy-making over the past fifteen years (see Bernanke and Gertler, 1999, for a formal econometric analysis).

Among the more important monetary-policy mistakes were 1) the failure to tighten policy during 1987-89, despite evidence of growing inflationary pressures, a failure that contributed to the development of the “bubble economy”; 2) the apparent attempt to “prick” the stock market bubble in 1989-91, which helped to induce an asset-price crash; and 3) the failure to ease adequately during the 1991-94 period, as asset prices, the banking system, and the economy declined precipitously

Bernanke and Gertler (1999) argue that if the Japanese monetary policy after 1985 had focused on stabilizing aggregate demand and inflation, rather than being distracted by the exchange rate or asset prices, the results would have been much better. Bank of Japan officials would not necessarily deny that monetary policy has some culpability for the current situation. But they would also argue that now, at least, the Bank of Japan is doing all it can to promote economic recovery.

For example, in his vigorous defense of current Bank of Japan (BOJ) policies, Okina (1999, p. 1) applauds the “BOJ’s historically unprecedented accommodative monetary policy”. He refers, of course, to the fact that the BOJ has for some time now pursued a policy of setting the call rate, its instrument rate, virtually at zero, its practical floor. Having pushed monetary ease to 2 Posen (1998) discusses the somewhat spotty record of Japanese fiscal policy; see especially his Chapter 2.its seeming limit, what more could the BOJ do? Isn’t Japan stuck in what Keynes called a “liquidity trap”?

I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively. However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed.

My objective here is not to score academic debating points. Rather it is to try in a straightforward way to make the case that, far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism."

Prof. Benjamin Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For presentation at the ASSA meetings, Boston MA, January 9, 2000.

A Credit Free, Free Market Economy will correct all of those dysfunctions.

The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay.

In This Age of Turbulence People Want an Exit Strategy Out of Credit,

An Adventure in a New World Economic Order.

A Specific Application of Employment, Interest and Money [For Economists].

Press release of my open letter to Chairman Ben S. Bernanke:

Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work.

Yours Sincerely,
'MC Shalom'
Shalom P. Hamou
Chief Economist - Master Conductor
1776 - Annuit Cœptis.


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