deficits

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 below the fold...

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 below the fold...

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 below the fold...

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 below the fold...

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.”

Read below the fold...

Here's the next group of Ryan's follies from his answer to the President's 2011 SOTU.

On bureaucracy and innovation:

”Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked – and it won’t work now.”

That may be. But depending on the big banks and big US corporations to either get lending going again, or to bring innovation and jobs to the United States also won't work. What will work is for the Government to increase aggregate demand by deficit spending in areas of the economy we want to grow.

“Bureaucracy” is just a scare term. The big corporations that Ryan, the Republicans, and many Democratic Congresspeople serve are all just as bureaucratic, and in the case of the health insurance companies, even more bureaucratic than the Government. The dirty little secret of the social sciences is that bureaucracy comes with large size whether we're talking about private or public organizations. So, unless Ryan has plans to break up the large banks, insurance companies, pharmaceutical companies, telecommunications companies, and exporters he loves so much, he really ought to shut up about “bureaucracy,” because his precious private sector has absolutely nothing to crow about when it comes to that feature of large organizations.

If we don't like bureaucracy, then what we need is regulation that will break up large organizations, making them illegal beyond a certain size. Then perhaps we might create functioning markets and be able to shrink the Federal government too. But this kind of solution is off the table for Ryan and Romney since regulation is a no-no from the standpoint of their ideology. Read below the fold...

Still more Ryan's follies from his answer to the President's 2011 SOTU.

On the Affordable Care Act (ACA)

”Then the President and his party made matters even worse, by creating a new open-ended health care entitlement.

“What we already know about the President’s health care law is this: Costs are going up, premiums are rising, and millions of people will lose the coverage they currently have. Job creation is being stifled by all of its taxes, penalties, mandates and fees.”

Read below the fold...

More on Ryan's follies and the overall quality of thinking we find in this young “guru”! Here's more from his answer to the President's 2011 SOTU.

”On this current path, when my three children – who are now 6, 7, and 8 years old – are raising their own children, the Federal government will double in size, and so will the taxes they pay.”

It will be roughly 19 years until Ryan's children are raising their own children, and guess what? GDP will be between two and three times what it is now, and, as we've already seen there's no reason why taxes should be any higher as a percentage of income for most people, unless of course, people like Ryan keep lowering taxes for the rich and raising them for everyone else in order to achieve a damaging budgetary surplus.

Hopefully, the tax rates for the top 2% of the population will be far higher than they are now, and estate taxes will return to their levels in the 1950s, so that gentlemen like Congressman Ryan can begin to pay their fair share again, and the United States can once again have a wealth distribution that is more equal than the likes of Russia, China, Turkey, and Jordan. Read below the fold...

In celebration of Paul Ryan's nomination, and in consideration of his reputation among Washington, DC villagers as a fiscal guru, I thought it might be fun to do a series of posts, of which this is the first, critiquing examples of Ryan's past wisdom. Here's the first example:

”We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.”

The debt referred to here by the Congressman is the accounting construct of the national debt subject to the limit, or the face value of the debt instruments the Government has yet to redeem. But just why the “burden of debt” is so crushing, or even a burden at all to you and I really needs to be explained carefully by Ryan and the other deficit hawks to the rest of us.

I don't see any public debt burden on myself or any American people at all either at present or in the future. Why? Because a burdensome debt is one that you and I will personally have to pay back, and we just won't ever have to pay the public debt of the US back from taxes that we are asked to pay to the Government. That is, we won't unless Congress and people who believe the things Mr. Ryan believes, decide to pay the debt by levying taxes, cutting Government spending, and running Government surpluses until it is paid. Read below the fold...

House leaders have agreed on a compromise continuing spending resolution at the same level as before from October 2012 through March 2013. It's likely now that the President(s?) will probably try to make the money available for deficit spending, as of today, last through the time period of the continuing resolution so that one deal including both the budget and raising the debt limit can be made by March of 2013. Read below the fold...

(Author's Note: This post updates Part Three of a series reviewing Warren Mosler's book: The 7 Deadly Innocent Frauds of Economic Policy. The updating is prompted by a post by Hannah at DailyKos offering a “. . . a Review Sort of” of Warren's book. Read below the fold...

(This Open Letter to Bernie Sanders was posted on November 20. I'm very glad I can now post it here on my favorite political blog.)

Dear Bernie,

Today, you told the “Democrats stop caving in . . . ” to the interests of corporations, the tea party, wealthy individuals, and the Republicans in Congress. The only problem with your fiery statement is that you began it by “caving in” to them yourself. You did this by immediately legitimizing their frame of reference by saying:

“Here is something we all can agree on: Federal deficits are a serious problem.”

Read below the fold...

Here are steps the President can take to win the battle for full employment over the opposition of the Republicans.

-- First, tell Americans that they have A RIGHT to a job at a decent wage with decent fringe benefits. If the private sector can't provide these jobs, then the Government must intervene to secure this right by implementing a Federal Job Guarantee (FJG).

Read below the fold...

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.

Read below the fold...

My friend and MMT mentor, Warren Mosler offered this fine, simply stated speech to President Obama for September 8th.

My fellow Americans, let me get right to the point.
I have three bold new proposals to get back all the jobs we lost, and then some.
In fact, we need at least 20 million new jobs to restore our lost prosperity and put America back on top.
First let me state that the reason private sector jobs are lost is always the same.
Jobs are lost when business sales go down.
Economists give that fancy words- they call it a lack of aggregate demand.
But it’s very simple.
A restaurant doesn’t lay anyone off when it’s full of paying customers,

Read below the fold...