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“There Are No Asterisks”: Those Who Wrap Themselves In The Constitution, Must Also Abide By The Constitution

Shortly after the 2010 midterms, as the newly elected House Republican majority was poised to start governing (I use the word loosely), the GOP officials had an idea for a symbolic gesture: they’d read the entire Constitution out loud. In January of this year, as the new Congress got underway, they did it again.

There wasn’t any harm in this, of course, but there wasn’t any point, either. It seemed to be the Republicans’ way of reminding the political world that they are the ones who truly love the Constitution. Sure, there are parts conservatives don’t like (the establishment clause, promoting the general welfare), and the right is eager to amend the document in a wide variety of ways, but for Tea Partiers and their allies, the Constitution has no greater champions than far-right congressional Republicans.

And if that’s still the case, Kristin Roberts has some bad news for them.

Have Republicans forgotten that they too must abide by the Constitution?

The document is explicit in its instruction to America’s federally elected officials — make good on the country’s debts. “The validity of the public debt of the United States,” the 14th Amendment states, “shall not be questioned.”

This is not some arcane biblical reference that needs to be translated from scraps of parchment. In fact, its purpose and intent are fairly well documented.

There’s been quite a bit of talk about exotic tactics President Obama may have to consider if congressional Republicans choose to push the United States into default on purpose. Maybe the White House can pursue a “14th Amendment option.” Maybe he can mint a “platinum $1 trillion coin.” Maybe the Treasury can create “Super Premium Bonds.” Maybe the president can do something to protect Americans from those who would do us deliberate harm, even if those people happen to be elected members of Congress. After all, if the validity of the public debt of the United States shall not be questioned, doesn’t Obama have a constitutional obligation to protect us from Republicans’ sociopathic tendencies?

Maybe it’s time to turn the question around on those who like to wrap themselves in the Constitution they claim to revere.

As this relates to Obama, there’s some disagreement among credible experts about whether the president can act unilaterally to circumvent the debt-ceiling law. Obama himself addressed the point yesterday, arguing that it really is up to Congress to complete this simple task and it wouldn’t do any good for him to experiment with creative alternatives.

But that only helps reinforce the importance of the question for congressional Republicans who swear to support the Constitution before they’re permitted to hold office. The document says, “The validity of the public debt of the United States shall not be questioned.” It doesn’t say anything about justifying extortion schemes, or holding the public debt hostage, or protecting the integrity of U.S. finances in exchange for right-wing goodies to satisfy U.S. House candidates who won fewer votes than their rivals.

Likewise, Article IV, Section 1 of the Constitution — known as the Full Faith and Credit Clause — doesn’t include any asterisks about what happens when one party really hates health care reform.

When the 14th Amendment was ratified, U.S. Sen. Benjamin Wade, an Ohio Republican, argued, “Every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”

Today’s congressional Republicans are prepared — some are eager — to betray this commitment, ignore their constitutional responsibilities, and put Americans’ wellbeing at risk for no particular reason.

Those who claim to cherish the Constitution have some explaining to do.

 

By: Steve Benen, The Maddow Blog, October 9, 2013

October 10, 2013 Posted by | Congress, Constitution, Debt Crisis | , , , , , , | Leave a comment

“The Big Fail”: Too Many Republicans Responsible For Economic Failure Retain Power And Refuse To Learn From Experience

It’s that time again: the annual meeting of the American Economic Association and affiliates, a sort of medieval fair that serves as a marketplace for bodies (newly minted Ph.D.’s in search of jobs), books and ideas. And this year, as in past meetings, there is one theme dominating discussion: the ongoing economic crisis.

This isn’t how things were supposed to be. If you had polled the economists attending this meeting three years ago, most of them would surely have predicted that by now we’d be talking about how the great slump ended, not why it still continues.

So what went wrong? The answer, mainly, is the triumph of bad ideas.

It’s tempting to argue that the economic failures of recent years prove that economists don’t have the answers. But the truth is actually worse: in reality, standard economics offered good answers, but political leaders — and all too many economists — chose to forget or ignore what they should have known.

The story, at this point, is fairly straightforward. The financial crisis led, through several channels, to a sharp fall in private spending: residential investment plunged as the housing bubble burst; consumers began saving more as the illusory wealth created by the bubble vanished, while the mortgage debt remained. And this fall in private spending led, inevitably, to a global recession.

For an economy is not like a household. A family can decide to spend less and try to earn more. But in the economy as a whole, spending and earning go together: my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall — and unemployment will soar.

So what can be done? A smaller financial shock, like the dot-com bust at the end of the 1990s, can be met by cutting interest rates. But the crisis of 2008 was far bigger, and even cutting rates all the way to zero wasn’t nearly enough.

At that point governments needed to step in, spending to support their economies while the private sector regained its balance. And to some extent that did happen: revenue dropped sharply in the slump, but spending actually rose as programs like unemployment insurance expanded and temporary economic stimulus went into effect. Budget deficits rose, but this was actually a good thing, probably the most important reason we didn’t have a full replay of the Great Depression.

But it all went wrong in 2010. The crisis in Greece was taken, wrongly, as a sign that all governments had better slash spending and deficits right away. Austerity became the order of the day, and supposed experts who should have known better cheered the process on, while the warnings of some (but not enough) economists that austerity would derail recovery were ignored. For example, the president of the European Central Bank confidently asserted that “the idea that austerity measures could trigger stagnation is incorrect.”

Well, someone was incorrect, all right.

Of the papers presented at this meeting, probably the biggest flash came from one by Olivier Blanchard and Daniel Leigh of the International Monetary Fund. Formally, the paper represents the views only of the authors; but Mr. Blanchard, the I.M.F.’s chief economist, isn’t an ordinary researcher, and the paper has been widely taken as a sign that the fund has had a major rethinking of economic policy.

For what the paper concludes is not just that austerity has a depressing effect on weak economies, but that the adverse effect is much stronger than previously believed. The premature turn to austerity, it turns out, was a terrible mistake.

I’ve seen some reporting describing the paper as an admission from the I.M.F. that it doesn’t know what it’s doing. That misses the point; the fund was actually less enthusiastic about austerity than other major players. To the extent that it says it was wrong, it’s also saying that everyone else (except those skeptical economists) was even more wrong. And it deserves credit for being willing to rethink its position in the light of evidence.

The really bad news is how few other players are doing the same. European leaders, having created Depression-level suffering in debtor countries without restoring financial confidence, still insist that the answer is even more pain. The current British government, which killed a promising recovery by turning to austerity, completely refuses to consider the possibility that it made a mistake.

And here in America, Republicans insist that they’ll use a confrontation over the debt ceiling — a deeply illegitimate action in itself — to demand spending cuts that would drive us back into recession.

The truth is that we’ve just experienced a colossal failure of economic policy — and far too many of those responsible for that failure both retain power and refuse to learn from experience.

By: Paul Krugman, Op-Ed Columnist, The New York Times, January 6, 2013

January 10, 2013 Posted by | Debt Crisis, Economic Recovery | , , , , , , , | Leave a comment

Why Mitch McConnell Should Avoid Discussing The Debt

Senate Minority Leader Mitch McConnell (R-Ky.) was asked about an extension of the payroll tax break yesterday, but instead of answering the question, the Republican changed the subject. The subject on McConnell’s mind was the debt.

“We have this problem at the risk of being repetitious, because we spend way too much. We now have a debt the size of our economy. We look a lot like Greece. We’re heading toward western Europe. If you want to see what happens, just look across the Atlantic. That’s the direction we’re headed in.

“Under this administration, we’ve run the national debt up 43 percent in just three years.”

McConnell first started equating the U.S. and Greece last summer, and the argument is not improving with age.

In every meaningful way, the comparison is just silly. The U.S. has extremely low interest rates and foreign investors are happy to loan us money; Greece has extremely high interest rates and no one is eager to loan the country money. The U.S. has its own currency; Greece has the euro. We have a manageable debt; Greece has a debt crisis. We’re a large country with an enormous economy; Greece is a small country with a small economy. We have one of the world’s most stable systems of government (at least for now); Greece’s government structure is suspect.

For a leading senator to tell a national television audience that the United States looks “a lot like Greece” is a clear reminder: McConnell is not to be taken seriously on these issues.

Incidentally, there’s also the matter of McConnell’s credibility on fiscal issues, or in his case, the lack thereof. The Republican leader voted for the Bush tax cuts, and added the costs to the national debt. He voted to finance the war in Afghanistan by adding the costs to the national debt. McConnell voted to put the costs of the war in Iraq onto the national debt. He supported a massive expansion of the government’s role in health care (Medicare Part D) and voted to pile all of its costs right onto the national debt. The GOP leader even backed the Wall Street bailout and added the bill to the national debt.

Perhaps Mitch McConnell should choose something else to complain about.

 

By: Steve Benen, The Maddow Blog, January 30, 2012

January 31, 2012 Posted by | Debt Crisis, Deficits | , , , , , , , | 3 Comments

Nobody Understands Debt

In 2011, as in 2010, America was in a technical recovery but continued to suffer from disastrously high unemployment. And through most of 2011, as in 2010, almost all the conversation in Washington was about something else: the allegedly urgent issue of reducing the budget deficit.

This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: when people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about — and the people who talk the most understand the least.

Perhaps most obviously, the economic “experts” on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring.

Any day now!

And while they’ve been waiting, those rates have dropped to historical lows. You might think that this would make politicians question their choice of experts — that is, you might think that if you didn’t know anything about our postmodern, fact-free politics.

But Washington isn’t just confused about the short run; it’s also confused about the long run. For while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.

And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan.

Of course, America, with its rabidly antitax conservative movement, may not have a government that is responsible in this sense. But in that case the fault lies not in our debt, but in ourselves.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, January 1, 2012

January 2, 2012 Posted by | Debt Crisis, Deficits, Economic Recovery | , , , , , | Leave a comment

Memo To Speaker Boehner: Time To Get Off “My Way Or The Highway” Hypocrisy

In a wide-ranging speech about jobs and the budget on Thursday, House Speaker John A. Boehner (R-Ohio) trumpeted the worthy goals of cleaning up the tax code and reducing long-term deficits, and he had a few promising words about how to achieve them. “If we want to create a better environment for job creation,” the speaker said, “politicians of all stripes can leave the ‘my way or the highway’ philosophy behind.”

Yet Mr. Boehner also insisted that Congress’s Joint Select Committee on Deficit Reduction has only “one option”: the Republican way.

President Obama has proposed a jobs plan, but there’s only one job the GOP wants.

Congress should remove inefficient carve-outs, credits and loopholes in the tax code, he said, but “not for the purposes of bringing more money into the government.” Tax increases “are off the table.” “Spending cuts and entitlement reform” are the only ways the joint committee can reach its $1.5 trillion deficit-reduction target.

Mr. Boehner isn’t the only one toughening his stance as the joint committee gets underway. President Obama is retreating from reforms to Social Security that he was ready to consider during the summer debt-limit negotiations. But Mr. Obama still expresses a willingness to reform Medicare, an ideological and political compromise.

Willingness on both sides is essential. Reams of expert studies have found that any deal to significantly reduce long-term deficits must achieve a balance between money-saving reforms to increasingly expensive entitlement programs and a sizable boost in federal revenue. Plans that don’t reflect this balance would fail because their math wouldn’t add up, they wouldn’t be politically durable, or both.

While planning for long-term fiscal sustainability, Congress also cannot risk enhancing economic hardship now by moving too quickly toward budget austerity. Mr. Obama’s recently announced jobs plan seeks to avoid this with new spending and temporary tax cuts that economists say will help guard against a double-dip recession. Here, too, however, Mr. Boehner indicated Thursday that the chances for cooperation with Republicans is limited, saying that he doesn’t favor “short-term gimmicks.”

Poll after poll has shown that Washington leaders’ inability to surrender ideological ground is poisoning Americans’ faith in their national leadership — perhaps even in the very institutions of government. Mr. Boehner and his party should live up to the speaker’s own standard — and leave the “my way or the highway” philosophy behind.

 

By: Editorial Board, The New York Times, September 16, 2011

September 18, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Debt Crisis, Economic Recovery, Economy, Elections, GOP, Government, Ideologues, Ideology, Jobs, Lawmakers, Medicare, Middle Class, Politics, President Obama, Republicans, Right Wing, Social Security, Tax Increases, Taxes, Teaparty, Unemployed, Wealthy | , , , | Leave a comment

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