“Focusing On The Wrong Things”: Why We Should Stop Obsessing About The Federal Budget Deficit
I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both.
Deficit reduction leads us in the opposite direction—away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know—it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy.
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected—bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink.
The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low—or become even lower—on the middle class.
(Higher taxes on the rich won’t slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes won’t reduce their incentive to save and invest because they’re already doing as much saving and investing as they want. Remember: they’re taking home a near record share of the nation’s total income and have a record share of total wealth.)
Why don’t our politicians and media get this? Because an entire deficit-cutting political industry has grown up in recent years—starting with Ross Perot’s third party in the 1992 election, extending through Peter Petersen’s Institute and other think-tanks funded by Wall Street and big business, embracing the eat-your-spinach deficit hawk crowd in the Democratic Party, and culminating in the Simpson-Bowles Commission that President Obama created in order to appease the hawks but which only legitimized them further.
Most of the media have bought into the narrative that our economic problems stem from an out-of-control budget deficit. They’re repeating this hokum even now, when we’re staring at a fiscal cliff that illustrates just how dangerous deficit reduction can be.
Deficit hawks routinely warn unless the deficit is trimmed we’ll fall prey to inflation and rising interest rates. But there’s no sign of inflation anywhere. The world is awash in underutilized capacity As for interest rates, the yield on the ten-year Treasury bill is now around 1.26 percent—lower than it’s been in living memory.
In fact, if there was ever a time for America to borrow more in order to put our people back to work repairing our crumbling infrastructure and rebuilding our schools, it’s now.
Public investments that spur future job-growth and productivity shouldn’t even be included in measures of government spending to begin with. They’re justifiable as long as the return on those investments – a more educated and productive workforce, and a more efficient infrastructure, both generating more and better goods and services with fewer scarce resources – is higher than the cost of those investments.
In fact, we’d be nuts not to make these investments under these circumstances. No sane family equates spending on vacations with investing in their kids’ education. Yet that’s what we do in our federal budget.
Finally, the biggest driver of future deficits is overstated—rising health-care costs that underlie projections for Medicare and Medicaid spending. The rate of growth of health-care costs is slowing because of the Affordable Care Act and increasing pressures on health providers to hold down costs. Yet projections of future budget deficits haven’t yet factored in this slowdown.
So can we please stop obsessing about future budget deficits? They’re distracting our attention from what we should be obsessing about—jobs and growth.
BY: Robert Reich, The American Prospect, November 21, 2012
“Flim Flam Budgeter Paul Ryan”: Government Programs That Help Women Are “Creepy And Demeaning”
Mitt Romney surrogate Rep. Paul Ryan (R-WI) is criticizing the “Julia” interactive infographic released by the Obama campaign last week. The infographic shows how policies created and supported by President Obama’s administration help women, cradle to grave. Ryan thinks the whole idea of government services is “creepy” and “demeaning.”
“It suggests that this woman can’t go anywhere in life without Barack Obama’s government-centered society. It’s kind of demeaning to her,” Ryan said. “She must have him and his big government to depend on to go anywhere in life. It doesn’t say much about his faith in Julia.”
Because there’s nothing demeaning about going hungry and being unable to provide health care or education for your kids, Romney’s and Ryan’s preferred path for “Julia.” That “government-centered” society giving Ryan the creeps includes Head Start, public education, Pell Grants, health insurance, fair pay, access to birth control, prenatal care, small business loans and tax cuts, Medicare, and Social Security.
This part is good, too.
“Every one of those slides, I could go after their manipulation of statistics, and disentangle and unpack each of those talking points,” said Ryan. “It’s just the narrative that they’re trying to tell, that for this woman to succeed, she has to have a really big government.”
That coming from the flim-flam budgeter who insists that massive tax cuts for the wealthy will be revenue neutral (we still don’t know what loopholes he would close) and that the Pentagon can be wallowing in funds. This is the Very Serious guy who seems to think tax cuts are the unicorn poop fertilizer for prosperity for the nation.
By: Joan McCarter, Daily Kos, May 7, 2012
“Fact, Pseudo-Fact And Pure Imagination”: How Paul Ryan Escapes Scrutiny
Because of his pleasant demeanor, the Wisconsin congressman is rarely pressed on his radical agenda.
House Budget chairman Paul Ryan inhabits two, mutually exclusive spaces in Washington politics. He’s both a crusader for deficit reduction—the recipient of praise and accolades from the Beltway’s collection of deficit hawks—and a pure right-wing ideologue, whose budgets would gut the social safety net, slash taxes on the rich, and load the United States with trillions of dollars in debt. That he’s managed to do this without backlash from the Right or incredulity from the mainstream is a remarkable achievement, and as Jonathan Chait describes for New York Magazine, a product of his studied earnestness and ostentatious love of “wonkery”:
Seeming genuine is something Ryan does extraordinarily well. And here is where something deeper is at play, more than Ryan’s charm and winning personality, something that gets at the intellectual bankruptcy of contemporary Washington. The Ryan brand is rooted in his ostentatious wonkery. Because, unlike the Bushes and the Palins, he grounds his position in facts and figures, he seems like an encouraging candidate to strike a bargain. But the thing to keep in mind about Ryan is that he was trained in the world of Washington Republican think tanks. These were created out of a belief that mainstream economists were hopelessly biased to the left, and crafted an alternative intellectual ecosystem in which conservative beliefs—the planet is not getting warmer, the economy is not growing more unequal—can flourish, undisturbed by skepticism. Ryan is intimately versed in the blend of fact, pseudo-fact, and pure imagination inhabiting this realm.
The thing that comes across in Chait’s piece, more than anything, is the degree to which so many people simply don’t believe that Ryan is a right-wing ideologue. When given a choice between him and their lying eyes, they choose him, despite the fact that his budget would clearly result in a return to the pre-New Deal era, where government was mostly uninvolved in the economic life of the country, to the detriment of everyone.
To wit, Chait relays an interview with New York Times business columnist James Stewart, who assumes that Ryan would raise tax rates on capital gains as part of his budget plan, despite the fact that Ryan has been a vocal opponent of taxes on capital gains. Chait is baffled, and asks him to square the circle:
I asked Stewart why he believed so strongly that Ryan actually supported such a reform, despite the explicit opposition of his budget. “Maybe he’s being boxed in” by right-wing colleagues, Stewart suggested.
This is actually a problem for trying to challenge Ryan’s brand of reactionary conservatism; if the arbiters of mainstream discourse refuse to take Ryan on his stated terms—because he talks nice and works out a lot—then the public is necessarily less informed about what the Wisconsin representative wants for the United States. You can see this dynamic at work in today’s Times profile of Ryan, where we learn a lot about his popularity, his exercise regimen, and his love of noodling (catching catfish with your bare hands), and not very much about his plans or their implications.
Ryan’s ideas should discredit him—they are little more than an updated version of the policies that led us to the worst economy since the Depression. But people like to be hooked, and the earnest congressman is a great salesman.
By: Jamelle Bouie, The American Prospect, April 30, 2012
“Faith-Based Budgeting”: The New Testament According To Disciple Paul Ryan
Probably everyone has heard the New Testament story in which Jesus entered the temple and told the money changers, “You know, if you got a massive tax break, the benefits would probably benefit poor families eventually.” Or something like that, right?
That seems to be the message I’ve been hearing from the right this week. Over the weekend, evangelical megachurch pastor Rick Warren said the Bible “says we are to care about the poor,” but he also said he opposes “wealth redistribution,” adding, “When you subsidize people, you create the dependency.”
He’s not the only one adopting this theological approach.
House Budget Committee Chairman Paul Ryan (R-Wis.), whose budget plan recently passed the House in a party-line vote, says his faith contributed in shaping the proposal, which he says is consistent with Catholic teachings.
“A person’s faith is central to how they conduct themselves in public and in private,” Ryan said in an interview released on Tuesday by the Christian Broadcasting Network. “So to me, using my Catholic faith, we call it the social magisterium, which is how do you apply the doctrine of your teaching into your everyday life as a lay person?”
To be sure, Ryan’s spiritual beliefs are his own business, and his religious beliefs are between him and his conscience. I’m not going to pretend to be a theologian or try to interpret Scripture for him.
I can, however, point out the nation’s Roman Catholic bishops — the leaders of Ryan’s faith tradition — have urged Republicans to adopt a budget strategy that “requires shared sacrifice by all,” including additional tax revenues and eliminating unneeded military spending. In a letter last year, the bishops also characterized “massive cuts” to programs that benefit the poor as unacceptable. “The needs of those who are hungry and homeless, without work or in poverty should come first,” the bishops said, articulating a principle that the Ayn Rand acolyte considers ridiculous.
I can also point out that Ryan’s budget plan is simply brutal towards the poor.
The House Republican agenda gets “at least 62 percent of its $5.3 trillion in non-defense budget cuts over ten years from programs that serve people of limited means,” while also “giving a massive tax break to the wealthy.” This means redistributing wealth in the wrong direction — taking money from SNAP, Medicaid, and education, and redirecting that money towards those who are already rich.
If his read on the New Testament is that Jesus would cut food stamps while giving millionaires a tax break, Paul Ryan has a far more creative mind than I do.
I hate to break it to the right-wing Budget Committee chairman, but praying that dubious numbers will somehow add up doesn’t count as a budget shaped by faith.
By: Steve Benen, The Maddow Blog, April 12, 2012
“The Paul Ryan Cult” And The Gullible Center
So, can we talk about the Paul Ryan phenomenon?
And yes, I mean the phenomenon, not the man. Mr. Ryan, the chairman of the House Budget Committee and the principal author of the last two Congressional Republican budget proposals, isn’t especially interesting. He’s a garden-variety modern G.O.P. extremist, an Ayn Rand devotee who believes that the answer to all problems is to cut taxes on the rich and slash benefits for the poor and middle class.
No, what’s interesting is the cult that has grown up around Mr. Ryan — and in particular the way self-proclaimed centrists elevated him into an icon of fiscal responsibility, and even now can’t seem to let go of their fantasy.
The Ryan cult was very much on display last week, after President Obama said the obvious: the latest Republican budget proposal, a proposal that Mitt Romney has avidly embraced, is a “Trojan horse” — that is, it is essentially a fraud. “Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country.”
The reaction from many commentators was a howl of outrage. The president was being rude; he was being partisan; he was being a big meanie. Yet what he said about the Ryan proposal was completely accurate.
Actually, there are many problems with that proposal. But you can get the gist if you understand two numbers: $4.6 trillion and 14 million.
Of these, $4.6 trillion is the revenue cost over the next decade of the tax cuts embodied in the plan, as estimated by the nonpartisan Tax Policy Center. These cuts — which are, by the way, cuts over and above those involved in making the Bush tax cuts permanent — would disproportionately benefit the wealthy, with the average member of the top 1 percent receiving a tax break of $238,000 a year.
Mr. Ryan insists that despite these tax cuts his proposal is “revenue neutral,” that he would make up for the lost revenue by closing loopholes. But he has refused to specify a single loophole he would close. And if we assess the proposal without his secret (and probably nonexistent) plan to raise revenue, it turns out to involve running bigger deficits than we would run under the Obama administration’s proposals.
Meanwhile, 14 million is a minimum estimate of the number of Americans who would lose health insurance under Mr. Ryan’s proposed cuts in Medicaid; estimates by the Urban Institute actually put the number at between 14 million and 27 million.
So the proposal is exactly as President Obama described it: a proposal to deny health care (and many other essentials) to millions of Americans, while lavishing tax cuts on corporations and the wealthy — all while failing to reduce the budget deficit, unless you believe in Mr. Ryan’s secret revenue sauce. So why are centrists rising to Mr. Ryan’s defense?
Well, ask yourself the following: What does it mean to be a centrist, anyway?
It could mean supporting politicians who actually are relatively nonideological, who are willing, for example, to seek Democratic support for health reforms originally devised by Republicans, to support deficit-reduction plans that rely on both spending cuts and revenue increases. And by that standard, centrists should be lavishing praise on the leading politician who best fits that description — a fellow named Barack Obama.
But the “centrists” who weigh in on policy debates are playing a different game. Their self-image, and to a large extent their professional selling point, depends on posing as high-minded types standing between the partisan extremes, bringing together reasonable people from both parties — even if these reasonable people don’t actually exist. And this leaves them unable either to admit how moderate Mr. Obama is or to acknowledge the more or less universal extremism of his opponents on the right.
Enter Mr. Ryan, an ordinary G.O.P. extremist, but a mild-mannered one. The “centrists” needed to pretend that there are reasonable Republicans, so they nominated him for the role, crediting him with virtues he has never shown any sign of possessing. Indeed, back in 2010 Mr. Ryan, who has never once produced a credible deficit-reduction plan, received an award for fiscal responsibility from a committee representing several prominent centrist organizations.
So you can see the problem these commentators face. To admit that the president’s critique is right would be to admit that they were snookered by Mr. Ryan, who is the same as he ever was. More than that, it would call into question their whole centrist shtick — for the moral of my story is that Mr. Ryan isn’t the only emperor who turns out, on closer examination, to be naked.
Hence the howls of outrage, and the attacks on the president for being “partisan.” For that is what people in Washington say when they want to shout down someone who is telling the truth.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 8, 2012
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