Below is an excerpt from my most recent e-book: Real Fiscal Responsibility, Vol. I: The Progressive Give-up Formula. The book is volume I of II critiquing austerity politics at the Federal level in the United States. It exposes its fallacies, its closed-mindedness and futility, and especially its reliance on wrong-headed conceptions of fiscal sustainability and fiscal responsibility.
In this volume, I relate neoliberalism, the Washington Consensus, and austerity politics pushed by the powers that be among the DC Village progressives, and the ideas of fiscal sustainability and fiscal responsibility, to the perspectives of Modern Money Theory (MMT), including MMT-based ideas about fiscal sustainability and responsibility. I also explain what I mean by real fiscal responsibility, rather than faux fiscal responsibility, and apply these ideas to an analysis of the US Government during the term of Jimmy Carter. I begin my analysis of current progressive ideas and activities by examining the views of Senator Bernie Sanders, and Elizabeth Warren, and then continue by analyzing the operation of the give-up formula among Congressional and DC progressives during the period 2009 - 2010, when the Democrats had big margins in Congress. I then move to the period 2011 – the present. Next, I analyze the Campaign for the American Future and its New Populism Campaign, and then conclude by relating the give-up formula to real fiscal responsibility.
The Peter G. Peterson Foundation (PGPF) and its allied army of associated deficit hawks want the Congressional Budget Office (CBO), the General Accountability Office (GAO), and the Office of Management and Budget (OMB) to do fiscal gap accounting and generational accounting on an annual basis and, upon request by Congress, to use these accounting methods to evaluate major proposed changes in fiscal legislation. Generational Accounting is an invalid long-range projection method that doesn't take into account inflation, the projected value of the Government's capability to issue fiat currency and reserves in the amounts needed to fulfill Congressional appropriations, and re-pay its debts, the projected non-Government assets corresponding to government liabilities, the likely economic impacts of Government spending, surpluses, and deficits, the impact of accumulating errors on projections, and the biases inherent in pessimistic AND contradictory assumptions. It is a green eye shade method that ignores both economic and political reality.
If you want America to end deficit terrorism and austerity, and to have the fiscal policy space it needs to begin to restore the American Dream, then you need to defeat proposed policies or legislation which puts building blocks in place to bias fiscal policy towards austerity and the economic decline it will surely produce for ourselves, our children, and for their children. Proposed policies and legislation of this kind must be defeated for the following seven reasons. Read more about Beware of Policies and Legislation Based on the Generational Accounting Scam
The deficit is now down to under 3% of GDP, and in contemplating that fact, Paul Krugman asks why the deficit hawks aren't celebrating the precipitous fall from nearly 10% of GDP a few years ago. He then explains that:
Far from celebrating the deficit’s decline, the usual suspects — fiscal-scold think tanks, inside-the-Beltway pundits — seem annoyed by the news. It’s a “false victory,” they declare. “Trillion dollar deficits are coming back,” they warn. And they’re furious with President Obama for saying that it’s time to get past “mindless austerity” and “manufactured crises.” He’s declaring mission accomplished, they say, when he should be making another push for entitlement reform.
All of which demonstrates a truth that has been apparent for a while, if you have been paying close attention: Deficit scolds actually love big budget deficits, and hate it when those deficits get smaller. Why? Because fears of a fiscal crisis — fears that they feed assiduously — are their best hope of getting what they really want: big cuts in social programs.
My Congressman, Jim Moran, is retiring this year and his seat is up for grabs in the VA – 8th Congressional District. This is a solidly blue district made even more solid by the Republican gerrymander following their win in the disastrous elections (for poor people, for women, for the middle class, and for minorities) of 2010 in Virginia. So, the question is, which of the eleven candidates who are running in the primary will win it, and become the heavy favorite to win the Congressional election in November.
The heavy primary favorite is Don Beyer, a noted auto dealer in Northern Virginia, who has served as Lieutenant Governor twice, and also as Ambassador to Switzerland. My impression of Ambassador Beyer has been favorable. I have a friend who bought cars from him over many years and who had his Volvos serviced at his dealership all the while, and he had nothing but good things to say about the integrity of the service he received.
That said, however, and personal characteristics aside, I'd like Beyer to clarify his positions on the issues. So, I'm addressing this open letter to him. Read more about An Open Letter to Don Beyer, VA – 8th Candidate for Congress
Paul Krugman's recent post makes some good points about the myth of the undeserving poor. But does he have a nervous tic?. When criticizing conservative economic views, doesn't he always seem to genuflect slightly to conservative opinion in order to appear "reasonable"? In this post he says:
"I’ve noted before that conservatives seem fixated on the notion that poverty is basically the result of character problems among the poor. This may once have had a grain of truth to it, but for the past three decades and more the main obstacle facing the poor has been the lack of jobs paying decent wages. But the myth of the undeserving poor persists, and so does a counterpart myth, that of the deserving rich."
What "grain of truth" ever existed in this story? Where is the empirical evidence that the poor were ever more "lazy" than the rich or had other "character defects" (Not K's words) that the rich don't have in abundance, as well? I don't think there is any. What the conservatives believe is pure BS. Some people are certainly "lazier" than others. But there's no evidence that this aspect of character is class-based. It's just prejudice, myth, and conservative fairy tales, which they embrace in place of authentic religion, run rampant. Read more about Professor Krugman's Nervous Tic?
Make ‘em Prove the Causality before They Cause Any More Suffering: Part Three, Reinhart - Rogoff Retrospective
This post is a more complete statement of my conclusions based on the analysis in Parts One and Two of this series. Read more about Make ‘em Prove the Causality before They Cause Any More Suffering: Part Three, Reinhart - Rogoff Retrospective
In Part One, I asked whether the Carmen Reinhart/Kenneth Rogoff study and book didn’t show that, on average, nations experiencing debt-to-GDP ratios above 90% had negative rates of economic growth? And I said the answer to the question was “no.” But I didn’t explain why that was true. Read more about Make ‘em Prove the Causality before They Cause Any More Suffering: Part Two, the Fall and After
Last week, Reps. Michael Honda, Keith Ellison, Raul Grijalva, Jan Schakowsky, John Conyers, Barbara Lee and Lynn Woolsey stalwarts of the Congressional Progressive Caucus (CPC) begged for mercy from “the Gang of Eight” in a letter.
Here's what they said and my commentary on their “loser liberalism.”
”Thank you for your work - past and present - towards solving one of the greatest policy challenges facing us today: the unsustainable path of our national debt. We appreciate the bipartisan and collaborative spirit with which you've approached your negotiations. . . .”
Thanks vanguard progressives for embracing the major premise of the austerity ideology, namely that the national debt is on an unsustainable path. I'm here to tell you that this idea is false and also terribly harmful to progressive aspirations to end economic stagnation and get everyone, who wants to be, employed at a living wage. You can't win an argument if you start by agreeing with your opponent's false premise. Read more about These Folks are Soooo Clever . . .
The polling since the conventions shows that Democrats are doing better than expected. President Obama now apparently has a clear lead over Mitt Romney. Democratic Party control of the Senate seems likely to survive this election year of many more Democratic rather than Republican Senate seats up for election. And, even in House races, it looks like the Democrats will pick up a number of seats; though whether they can pick up enough seats to take back the House is still an unlikely prospect, and without the House President Obama's second term is likely to be much like his last year and three-quarters, rather than his first two years. Read more about Promises for America
Alan Grayson's e-mail on Moody's warning that it might reduce the US's AAA rating, suggested that Moody's was either threatening a downgrade because it wants to get the Bush tax cuts for the rich extended, or, alternatively, that “Moody's is living in what Aristophanes called "Cloud Cuckoo Land."” He says this because Moody's is upset about the possibility that the US may go over the so-called “fiscal cliff,” even though if it did, it would theoretically result in $560 Billion of deficit reduction annually, without further legislative changes, and it makes no sense on the surface for a rati Read more about Alan Grayson's Right; But He Misses the Larger Point
Bob Woodward's releasing a new book, so we are now seeing articles based on it. A few days back, The Washington Post published the ”Inside story of Obama’s struggle to keep Congress from controlling outcome of debt ceiling crisis.” This account is a pretty downbeat one of how our political leaders and President Obama handled the debt ceiling crisis of the summer of 2011. I want to comment on what for me was the most salient point: that during the crisis, the President had no “Plan B” to get around the debt ceiling beyond negotiating a deal with Congress. Read more about No Plan B?
Who else thinks the President's speech didn't include any plans to create the 29 million full-time jobs for the dis-employed? Please raise your hand!
About jobs he said:
”We can help big factories and small businesses double their exports, and if we choose this path, we can create a million new manufacturing jobs in the next four years.”
On Monday, Dean Baker decided that Robert Samuelson needed a lesson in National Income Accounting. Dean said:
”National income really is very basic stuff. It gets taught in every intro econ class. Anyone writing on economics should know it inside out. They should be able to do it blindfolded, with one hand tied behind their back, and standing upside down.
Even though I deny that there is a deficit/debt/debt-to-GDP ratio problem, I thought I'd get in on the fun everyone is having this month and offer my own deficit reduction plan. It prescribes 1) Keeping average interest rates at 0.0226; 2) finding a way to increase the growth in nominal GDP from an average annual change ratio of 1.044 (CBO’s assumption about growth) to a more historically (since 1940) typical average annual change ratio of 1.072.; and 3) putting a stop to increasing health care costs by passing Medicare for All immediately. The first two changes would result in deficit reductions in CBO-based projections of $8.3 Trillion from 2011 to 2020. The absolute value of the national debt increases from $9.2 Trillion in 2010 to $10.7 Trillion in 2020, and the debt-to-GDP ratio declines from 69% in 2010 to 37% in 2020. Read more about A New “Progressive” Deficit Reduction Plan