The Congressional Progressive Caucus (CPC) recently issued its “Better Off Budget” document as an alternative to the White House/OMB document, and the coming House budget document, a Republican/conservative alternative. The “Better Off Budget” has received enthusiastic evaluations from writers affiliated with the DC progressive community. Richard Eskow's recent treatment is typical and provides other reviews that are laudatory. These “progressives” clearly see the CPC budget as anything but an austerity budget. But is it, or is it not? Read more about Still Not Over: CPC Update
If the President's budget were enacted by Congress, and OMB's projections over the next decade hold, it would almost certainly mean economic stagnation punctuated by recession over the next decade. Would it also mean austerity, however? Let's see.
The Sector Financial Balances (SFB) model is an accounting identity, and these are always true by definition alone. The SFB model says: Read more about No, Virginia, the Austerity Era Is Not Over
Why is it that Washington village “progressives,” and their associates in other parts of the country who are nevertheless part of the Washington village culture, often ask useful questions, but, almost always deliver, underwhelming answers? Here's an example from Richard Eskow, probably the best writer at Campaign for the American Future. Read more about How to Restore the Good Name Of Government
Let's look again at the new populism through the lens provided by Robert Borosage in his recent attempt to tell us what it is about. He says:
The apostles of the new inequality have unrelenting sought to starve the public sector. President Reagan opened the offensive against domestic investments. Perhaps the hinge moment was in the final years of the Clinton administration when the budget went into surplus, and Clinton, the finest public educator of his time, pushed for paying down the national debt rather than making the case for public investment. He left the field open for George W. Bush to give the projected surpluses away in tax cuts skewed to the top end.
The hinge moment wasn't then. It was when he decided, either early in his first term, or even before he took office, to rely on deficit reduction coupled with low interest rates from Alan Greenspan, on the advice of Robert Rubin and Larry Summers, rather than on deficit spending on human capital investments as advocated by Robert Eisner and Robert Reich. Rubin's victory in the internal debates within the Administration was well-known at the time (1993), and set the deficit reduction course that played along with the Fed's bubbles to create the private sector debt-fueled “goldilocks” prosperity, and surpluses of his second term. By the time Clinton faced the choice Borosage refers to, the die had already been cast. It was very unlikely that Clinton would turn away from further Government austerity policy, and turn instead toward investments in infrastructure, public facilities and “human capital.”
But this is a side point, the real focus of this passage is the notion that the Clinton surpluses were good because they created an opportunity for public investment by using those surpluses. The trouble with this, is that it is a point purely about politics and communications which neglects the economic fact that the surpluses of the Clinton's term, as well as his deficit reduction policies, were bad for the US because they reduced or eliminated private sector surpluses causing a growth in private sector debt in Clinton's “goldilocks” economy. Read more about The New Populism Needs to Get This Straight
It's easy to recognize that after many years of trade deficits accompanying implementation of trade agreements beginning with NAFTA the US needs to change what it's doing. Many, including Robert Borosage of the Campaign for the American Future (CAF), advocate for balanced trade and they contrast that with the so-called “free trade” policies we have now. The case for balance trade policy is summarized by Borosage this way during his discussion of the policies favored by the New Populism:
Our global trade policies have been defined by and for multinational banks and companies. They have shipped good jobs abroad and driven wages down at home, while racking up unprecedented and unsustainable trade deficits. Those imbalances, as the International Monetary Fund and former Federal Reserve Chair Ben Bernanke have noted, contributed directly to blowing up the global economy.
The new populists demand balanced trade policies. . . .
So, we need “a balanced trade policy” meaning one that reduces trade deficits because it will support lower unemployment by keeping “good jobs” here, drive wages up rather than down, be more sustainable, and won't contribute to a collapse of the global economy. But, is that the only or the best way to get these outcomes? Read more about Who Needs a Balanced Trade Policy?
I gotta love Bernie Sanders, because he seems so much like people I grew up with and like myself too, and he also seems to have that passion for equality and democracy that is so important for the future of America. Sometimes I think Bernie is one of the few champions of the people left in Congress. But I also think that along with other progressives he has constructed chains for himself that prevent him from being as effective a champion of the people as he otherwise might be.
His chains are the chains of either false beliefs or a decision not to speak the truth about fiscal matters for fear that the “very serious people” in the Washington village will marginalize him even more than they do right now. I can't say which of these is true, but I think whichever reason is operative, his self-shackling reduces his effectiveness. Read more about Bernie Sanders: Self-shackled Champion of the People
Yesterday on Fox, Senator Dick Durbin said:
WALLACE: I'm going to talk about ObamaCare on a second, but you're not answering my question. Why does taxes -- why do taxes have to be on the table? Why can't you just make a deal, short-term spending for long-term entitlement reform -- which, Senator, you support and President Obama support. You have supported the idea of some entitlement reform.
DURBIN: That's right. I do, and I'll tell you why -- because Social Security is going to run out of money in 20 years. I want to fix it now, before we reach that cliff.
Medicare may run out of money in 10 years, let's fix it now. And that means addressing the skyrocketing cost of health care. That's what ObamaCare is focused on, and yet, the Republicans want nothing to do with it.
If we don't focus on the health care and dealing with the entitlements, the baby boom generation is going to blow away our future. We don't want to see that happen. We want to make sure that Social Security and Medicare are solid.
The “. . . may run out of money. . . . ” and “. . . dealing with entitlements. . . “ memes, in reply to Chris Wallace's question suggests that a deal trading increased revenues for Social Security and other entitlement cuts is acceptable to him. So, Durbin's argument is that because Social Security Trustee and CBO projections, based on very pessimistic economic growth projections for the whole period, show a shortfall in the Social Security “Trust Fund” in 20 years, it is acceptable to make entitlement cuts now if the Democrats can get increased revenue from higher taxes, as if entitlement “reform” were the only way to meet the perceived Social Security solvency problem. But who would it be acceptable to? Read more about Dick Durbin Insults Everyone Else's Intelligence About Social Security
Not you, Corrente. You know who.
Well it seems this continuing debacle every 3 months has ceased, for now. However, I really can't get over this pathetic celebration over the really low bar involved with regard to avoiding what I call a political default on the public debt. This is the same embarrassing type of celebration that ensued in 2011. We need to get real. Despite the government being opened up again, there's nothing to celebrate. We've already lost. After all, the debt ceiling was a precious gift Obama bestowed onto John Boehner in the 2010 tax deal as he put his full faith in Speaker John Boehner hands, as he took the full faith and credit of the United States hostage.
Of course, it was a deal struck between both of them to put who they called the "extremists" of both their parties in check, for a grand bargain like in 1983 when Tip O'Neil and Ronald Reagan cut social security. President Obama and Speaker Boehner weren't fooling everyone, though. Just those involved in their hyper deluded, hyper partisan, claptrap. To some of us, this was entirely predictable and preventable. Now people are suffering because some people, blinded by their hyper-loyal partisan illusions, couldn't or didn't want to see what was there. Maybe their lack of sight reveals they don't really care? It doesn't matter though. This will continue to be what we go through when some of this crap continues again in 4 months in February, regardless.
This austerity government will reopen at sequester levels of funding; a sequester I predicted would be born out by the stupid Super Committee from the super austerity Budget Control Act of 2011, which I saw was inevitable since the 2010 tax deal led to the first, now ongoing, debt ceiling debacle; a miniature crisis to crisis government with no plans to invest in its citizens' future. Anything else is possible though, from government shutdowns over the false prospect of defunding Obamacare, to any austerian Senator or Congressman using the threat of default for whatever demands they want.
We, the so called professional left as the White House derisively called us, warned about this. Anyone who denied this can either apologize now or forever restrain from speaking about matters regarding politics, civics, political deals, and the debt ceiling. We told all of you back in 2011 around this same time when that debacle was coming to its end — until this one and the next one 4 months down the line — that this was no victory. Read more about Go Ahead, Celebrate — You're Celebrating Failure
Provided that the Senate and House follow through on the scenario now on the table, it looks like the game of chicken worked for the Democrats this time. We're off the hook on default and Government shutdown for now, and Washington village pundits are in full-throated cries of celebration.
Congress is off the hook too. They don't have to offer any solutions to real, rather than manufactured, problems.
The President is also off the hook, he won't, for now, need to exercise any of the options, like minting the coin, using consols, or premium bonds, or asset sales to the Fed, or others available to him to render the debt limit legislation impotent. So, he gets to preserve debt limit threats from the Republicans as a negotiating tool they can use to “force” him into entitlements cuts later on. Read more about Off the Debt Limit Hook for at Least the Next Four Months
This is Part VI of a six part series replying to a claim by the President at his recent White House News Conference. Part I covered the News Conference and the first two (the selective default, and the exploding option) of seven options the President might use to try save the US from defaulting in the face of continued deadlock in the Congress on raising the debt limit or repealing the law enabling it in its entirety. Part II discussed Platinum Coin Seigniorage, invoking the 14th amendment to justify continuing to issue conventional Treasury debt instruments, and consols. Part III discussed premium bonds, and Treasury sales of the Government's material and cultural assets to the Federal Reserve. Part IV, then evaluated all seven options in light of variations among them in likely degree of legal difficulties they might face, and also the likely impact of each on confidence in the bond markets, if used. Part V then summarized my evaluation of the seven options. This part will end the series by saying first, what the President ought to do, and then by saying what I think he is most likely to do. Read more about Rationalization and Obligation, Part VI: What He Ought to Do, What He Probably Will Do
This is Part V of a six part series replying to a claim by the President at his recent White House News Conference. Part I covered the News Conference and the first two (the selective default, and the exploding option) of seven options the President might use to try save the US from defaulting in the face of continued deadlock in the Congress on raising the debt limit or repealing the law enabling it in its entirety. Part II discussed Platinum Coin Seigniorage, invoking the 14th amendment to justify continuing to issue conventional Treasury debt instruments, and consols. Part III discussed premium bonds, and Treasury sales of the Government's material and cultural assets to the Federal Reserve. Part IV, then evaluated all seven options in light of variations among them in likely degree of legal difficulties they might face, and also the likely impact of each on confidence in the bond markets, if used. Read more about Rationalization and Obligation, Part V: Differences Are Everything
In Part I, Part II, and Part III, I listed and analyzed seven options, analyzed them and also pointed out that the President's 14th amendment option, actually makes turning to the 14th as a justificat Read more about Rationalization and Obligation, Part IV: Differences Among Options
In Part I of this six-part series I presented the President's explanation of why he can't use alternative options for coping with the default threat arising out of refusal to raise the debt ceiling, a summary of the kinds of difficulties characterizing it, and discussed two of seven options, selective default, and the exploding option, the President has to deal with it, apart from the way he seems to have chosen. Read more about Rationalization and Obligation, Part III: Premium Bonds, and Asset Sales
This six-part series is a reply to the President's glossing over the options open to him apart from playing “chicken” with the Republicans over the debt ceiling. Part I, presented the President's explanation, a summary of the kinds of difficulties characterizing it, and discussed two of seven options, selective default, and the exploding option, the President has to deal with it, apart from the way he seems to have chosen. Part II will discuss his platinum coin, 14th amendment, and consols.
Platinum Coins, the 14th amendment, and Consols
3. Using the authority of a 1996 law to mint proof platinum coins with arbitrary face values in the trillions of dollars to fill the Treasury General Account (TGA) with enough money to cease issuing debt instruments, and even enough to pay off the existing debt. This option, originating with beowulf (Carlos Mucha) in its Trillion Dollar Coin (TDC) form has gotten a lot of attention. But a variation of it in its High Value Platinum Coin Seigniorage (HVPCS) form, requiring except in my own writing.
The difference in the TDC and HVPCS variations in their political implications are great. The TDC looks like a temporary expedient to get around debt ceiling problems, whose use can be repeated when needed. But, it doesn't quickly remove the political problem of “the national debt” from consciousness as one of our most serious political problems. On the other hand, minting a $60 T coin would change the background of politics by providing for relatively rapid payoff of the debt subject to the limit without balanced budget-creating recessions. Read more about Rationalization and Obligation, Part II: Coins, the 14th, and Consols
The media and politicians in both parties are still largely echoing the Administration's framing of the fiscal situation and absolving the President of his share of the blame for the debt limit crisis. They're reinforcing his message They're also preparing the way for a compromise, that will, almost certainly, result in hurtful cuts to Government spending including renewed consideration of "the Great Betrayal," also known as “the Grand Bargain,” including passage of the chained CPI cuts to Social Security over the objections of a large majority of the American people.
The mainstream news outlets still haven't seriously questioned the President's claims that There Is No Alternative (TINA) to just facing down the Republican's shutdown and debt ceiling related threats without giving in or resorting to any options to de-fang the debt ceiling threat. They have begun to mention other options, but in a way that is largely supportive of the President's reluctance to use them. In reinforcing TINA, the mainstream is allowing the President to escape from responsibility and obligation, while, ironically, allowing him to characterize himself as “the adult in the room.”
When it comes to our repeated and unwelcome debt ceiling crises, President Obama is like the person who says he has a problem, but when confronted with a variety of options for alleviating or even solving the problem, comes up with some rationalization about why each will not work. After awhile, it becomes obvious that the person with the problem doesn't want any help help solving it, but actually loves having it, and is fixated on a single objective having little to do with solving the problem (“the Great Betrayal”), that is very difficult to get, and wants to claim that there is no alternative, because, as the problem produces more and more negative effects he/she will be able to push through that objective. Read more about Rationalization and Obligation, Part I: No Magic Bullets?