Catfood commission plays 'Disaster Capitalism'

[j_b]

The two deficit-hawk extremists President Obama put in charge of his fiscal commission released their personal suggestions for cutting the federal budget deficit on Wednesday. [..]

 

[T]aken as a whole, the plan authored by Erskine Bowles and Alan Simpson would have devastating effects on the government and its ability to help the most vulnerable in our society, and it would put the squeeze on the middle class, veterans, the elderly and the sick - all in the name of an abstract goal that ultimately only a bond-trader could love.

 

Deficit commission proposal

 

Thank you Obama.

[prole]

Barack "Hoover" Obama. Fuck 'em.

[prole]

Obama top advisor, David Axelrod, on not letting the Bush tax-cuts expire:

 

"We have to deal with the world as we find it," Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. "The world of what it takes to get this done."

 

Sound familiar? It should be tattooed on the forehead of every Democrat in America. Did you hear any such mewling tripe during Bush's eight years in office? Nope.

 

The funny thing is, the blame for the inevitable radioactive social fallout from this and the austerity plan (for the rest of us) will fall squarely on the Obama Administration. In the era of back and forth incumbent backlash it seems we won't be "waiting for ubermensch" for very long.

Edited November 11, 2010 by prole

[j_b]

Somehow, all of this while Obama is out of the country ...

 

It wouldn't have happened differently if they had planned on a one term presidency. We may get a worthwhile 3rd party candidacy, so it may not have been in vain after all.

[j_b]

The Hijacked Commission

By PAUL KRUGMAN

Published: November 11, 2010

 

Count me among those who always believed that President Obama made a big mistake when he created the National Commission on Fiscal Responsibility and Reform — a supposedly bipartisan panel charged with coming up with solutions to the nation’s long-run fiscal problems. It seemed obvious, as soon as the commission’s membership was announced, that “bipartisanship” would mean what it so often does in Washington: a compromise between the center-right and the hard-right.

 

My misgivings increased as we got a better feel for the views of the commission’s co-chairmen. It soon became clear that Erskine Bowles, the Democratic co-chairman, had a very Republican-sounding small-government agenda. Meanwhile, Alan Simpson, the Republican co-chairman, revealed the kind of honest broker he is by sending an abusive e-mail to the executive director of the National Older Women’s League in which he described Social Security as being “like a milk cow with 310 million tits.”

 

We’ve known for a long time, then, that nothing good would come from the commission. But on Wednesday, when the co-chairmen released a PowerPoint outlining their proposal, it was even worse than the cynics expected.

 

Start with the declaration of “Our Guiding Principles and Values.” Among them is, “Cap revenue at or below 21% of G.D.P.” This is a guiding principle? And why is a commission charged with finding every possible route to a balanced budget setting an upper (but not lower) limit on revenue?

 

Matters become clearer once you reach the section on tax reform. The goals of reform, as Mr. Bowles and Mr. Simpson see them, are presented in the form of seven bullet points. “Lower Rates” is the first point; “Reduce the Deficit” is the seventh.

 

So how, exactly, did a deficit-cutting commission become a commission whose first priority is cutting tax rates, with deficit reduction literally at the bottom of the list?

 

Actually, though, what the co-chairmen are proposing is a mixture of tax cuts and tax increases — tax cuts for the wealthy, tax increases for the middle class. They suggest eliminating tax breaks that, whatever you think of them, matter a lot to middle-class Americans — the deductibility of health benefits and mortgage interest — and using much of the revenue gained thereby, not to reduce the deficit, but to allow sharp reductions in both the top marginal tax rate and in the corporate tax rate.

 

It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans. And what does any of this have to do with deficit reduction?

 

Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?

 

The answer is no, for a number of reasons — including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor.

 

But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.

 

Still, can’t we say that for all its flaws, the Bowles-Simpson proposal is a serious effort to tackle the nation’s long-run fiscal problem? No, we can’t.

 

It’s true that the PowerPoint contains nice-looking charts showing deficits falling and debt levels stabilizing. But it becomes clear, once you spend a little time trying to figure out what’s going on, that the main driver of those pretty charts is the assumption that the rate of growth in health-care costs will slow dramatically. And how is this to be achieved? By “establishing a process to regularly evaluate cost growth” and taking “additional steps as needed.” What does that mean? I have no idea.

 

It’s no mystery what has happened on the deficit commission: as so often happens in modern Washington, a process meant to deal with real problems has been hijacked on behalf of an ideological agenda. Under the guise of facing our fiscal problems, Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old — tax cuts for the rich and erosion of the social safety net.

 

Can anything be salvaged from this wreck? I doubt it. The deficit commission should be told to fold its tents and go away.

 

http://www.nytimes.com/2010/11/12/opinion/12krugman.html?ref=opinion

[j_b]

2 points:

 

- Krugman is using a euphemism when he says that Obama made a 'mistake'. Nobody makes these kinds of 'mistake' in politics. Obama effectively handed to the looters the opportunity to frame the discussion on deficit reduction. It is perfectly reasonable to ask why he did that and the answer probably has to do with my second point.

 

- there is no mandate to reduce the deficit at this point in time. In fact, reducing the deficit is far down the list of what concerns Americans today. The only mandate is to create jobs, not to cut the social safety net and lay off people like neoliberals and their "small government" sycophants are planning to do.

[JayB]

The two deficit-hawk extremists President Obama put in charge of his fiscal commission released their personal suggestions for cutting the federal budget deficit on Wednesday. [..]

 

[T]aken as a whole, the plan authored by Erskine Bowles and Alan Simpson would have devastating effects on the government and its ability to help the most vulnerable in our society, and it would put the squeeze on the middle class, veterans, the elderly and the sick - all in the name of an abstract goal that ultimately only a bond-trader could love.

 

Deficit commission proposal

 

Thank you Obama.

 

Whatever you do - don't touch the mortgage interest deduction!!!!

 

 

[JayB]

2 points:

 

- Krugman is using a euphemism when he says that Obama made a 'mistake'. Nobody makes these kinds of 'mistake' in politics. Obama effectively handed to the looters the opportunity to frame the discussion on deficit reduction. It is perfectly reasonable to ask why he did that and the answer probably has to do with my second point.

 

- there is no mandate to reduce the deficit at this point in time. In fact, reducing the deficit is far down the list of what concerns Americans today. The only mandate is to create jobs, not to cut the social safety net and lay off people like neoliberals and their "small government" sycophants are planning to do.

 

Actually - the primary factor driving public sector layoffs will be the refusal of public-sector unions to modify existing pay and benefit structures.

 

Exhibit A: King Country Sheriff's Union. Keep the 5% pay-hikes or cut 39 of your members from the payroll. Guess what happened?

 

 

[prole]

Still not understanding how cutting workers' wages and benefits (and I'm assuming laying off quite a few, as well) in a context of high unemployment is going to boost growth in an economy that is overwhelmingly dependent on consumption.

[Hugh Conway]

Whatever you do - don't touch the mortgage interest deduction!!!!

 

It must be wonderful supporting politicians who's ideology you don't back then being able to fall back on the ivory tower of asininity when shit don't work out.

[JayB]

Still not understanding how cutting workers' wages and benefits (and I'm assuming laying off quite a few, as well) in a context of high unemployment is going to boost growth in an economy that is overwhelmingly dependent on consumption.

 

Can you spell out precisely what you mean by "overwhelmingly dependent upon consumption"?

 

Here's a couple of questions to help get you started:

 

-What sorts of things do people do to generate the resources necessary pay for the things that they consume? Do those activities constitute consumption or production (per your understanding of each term)?

 

-What (per your understanding) happens to money that isn't used to fund present consumption?

 

 

 

[JayB]

Whatever you do - don't touch the mortgage interest deduction!!!!

 

It must be wonderful supporting politicians who's ideology you don't back then being able to fall back on the ivory tower of asininity when shit don't work out.

 

If you think that the mortgage interest deduction is good policy - just say so! You've got lots of company - probably roughly the same percentage that thought that the cash for clunkers plan made the country better off...

[prole]

Still not understanding how cutting workers' wages and benefits (and I'm assuming laying off quite a few, as well) in a context of high unemployment is going to boost growth in an economy that is overwhelmingly dependent on consumption in which consumer spending makes up 70% of all economic activity.

 

Can you spell out precisely what you mean by "overwhelmingly dependent upon consumption"?

 

Whoops!

[prole]

Of course then it will be time to define "consumer spending", "economic activity", "is", "the" and "a".

[JayB]

My hunch is that the capacity to recall and type the words in your first entry actually represent all that you understand about the topic.

 

What sorts of economic activity do consumers engage in to generate the resources that they then exchange for goods and services (trillions of dollars worth are imported) with a value equal to 70% of the national output each year?

 

If consumer spending on imported goods increased by 5% would domestic economic activity then necessarily be reduced by 5%?

 

 

[prole]

So then, you're not able to answer the question?

[JayB]

The only question to ponder is whether the the resources diverted away from the private economy to fund the government will either lay idle or be will result in lower economic output than if they were first diverted through the public sector.

 

Am I worried that the guy running a printing business will stare at his bank account in a state of bafflement wondering what to do with the money that he isn't paying in taxes? No. Even if he did - would the additional money in a bank account, money-market account, or other instrument be economically equivalent to the said money being buried in the back yard? No.

 

Is there any evidence to suggest that transferring the money, less administrative expenses, into a retired ferry worker's bank account so that he can spend it instead of the print-shop owner will increase output relative to the guy spending, saving, or investing it himself? No.

 

One of the key fallacies at work in your question is this presumption that because we collectively consume goods and services with a value equal to 70% of our total economic ouput - then the key to restoring prosperity is increasing "consumption" by any means necessary, including massive borrowing.

 

People seem to understand intuitively that they can't increase their prosperity through spending, but have evidently come to believe that something magic happens at the macro level that makes it possible for a country to become better off by increasing spending alone. There isn't.

[prole]

The only question to ponder is whether the the resources diverted away from the private economy to fund the government will either lay idle or be will result in lower economic output than if they were first diverted through the public sector.

 

Laying idle is exactly what they're already doing.

 

Am I worried that the guy running a printing business will stare at his bank account in a state of bafflement wondering what to do with the money that he isn't paying in taxes? No. Even if he did - would the additional money in a bank account, money-market account, or other instrument be economically equivalent to the said money being buried in the back yard? No.

 

So, we're back to tax cuts? Buried in the back yard or invested in Mongolian condos, either way it's pretty useless compared with a minor investment in taxes that could go to helping people back to work so they can buy his products.

 

Is there any evidence to suggest that transferring the money, less administrative expenses, into a retired ferry worker's bank account so that he can spend it instead of the print-shop owner will increase output relative to the guy spending, saving, or investing it himself? No.

 

Cut enough wages and benefits and this guy's print shop ain't going to be around for long!

 

One of the key fallacies at work in your question is this presumption that because we collectively consume goods and services with a value equal to 70% of our total economic ouput - then the key to restoring prosperity is increasing "consumption" by any means necessary, including massive borrowing.

 

Were you thinking that reducing "consumption" through wage cuts and layoffs were the key to restoring prosperity? Tell us more. Tell us how this is working out in the countries right now that are going through the kind of structural austerity you're advocating for here. Tell us how we'd be better off now if we'd followed your advice to allow GM to crater.

 

People seem to understand intuitively that they can't increase their prosperity through spending, but have evidently come to believe that something magic happens at the macro level that makes it possible for a country to become better off by increasing spending alone. There isn't.

 

The only one who believes in magic here is you. The examples of state spending (even deficit spending) resulting in net positives for society (and capitalism) are legion. What there aren't examples of are companies hiring workers when people aren't buying anything.

[mkporwit]