“The Silence Of The Austerians”: Here’s Why 2014 Could Be The Year America Finally Ditches its Inane Deficit Obsession
The year 2013 will be seen as a year of crushing intellectual defeat for advocates of fiscal austerity. There were many smaller victories, but this big one came in April. Researchers at the University of Massachusetts examined the Austerian ur-paper, “Growth in a Time of Debt,” by Carmen Reinhart and Ken Rogoff, which said that countries whose debt-to-GDP ratio reaches 90 percent experience dramatically slower growth. The UMass folks found not only dodgy statistics and backwards causation, but a goof in the paper’s Excel spreadsheet. The causation and statistics errors were more serious, but the fact that elites around the globe had gleefully embraced something with a flub any office temp could understand was horribly embarrassing.
It was an intellectual rout that badly wrong-footed the Austerians, who have since been notably half-hearted in the face of a resurgent left now campaigning on economic justice. This includes, for example, increasing Social Security benefits, which was unthinkable two years ago, when the fight to stop benefits from being cut was nearly lost.
The question for 2014, then, will be whether this triumph can be consolidated and expanded into the policy sphere. Because despite the intellectual collapse, Austerian assumptions and reasoning still dominate United States policy, which is undertaking fiscal consolidation at a pace not seen since the WWII demobilization. If the current Austerian death grip on the framework of policy negotiation can be broken, there might be a chance.
The answer to this question turns on how one views intellectual debate. Given the history of the last few years, one could be forgiven for thinking it’s pointless. As the Polish economist Michal Kalecki demonstrated brilliantly, there are powerful cultural and class-based reasons for both political and business elites to favor austerity now.
We see this today, as Steve Randy Waldman has demonstrated, in the blatant double standards applied to austerity as compared to inequality or raising the minimum wage. Consider a recent paper by the liberal economist Jared Bernstein, which while outlining much excellent evidence about the economic harm of inequality, is stuffed with unnecessary hedging and hesitation. The Reinhart and Rogoff paper, by contrast, was weak even without knowing about the Excel and stats errors (as Paul Krugman, among others, observed at the time), but elites nearly tripped over their own feet seizing on it anyway. Their bogus “90 percent” conclusion was stated as economic fact by everyone from Paul Ryan to the Washington Post editorial board.
However, biased reasoning is different than no reasoning at all. Seizing on a fig leaf paper fulfills a deep psychological need. Current elites may be largely greedy, corrupt hypocrites, but the cultural credibility of science is such that what amounts to outright class warfare must have an “evidence-based” patina. It’s far too gauche to simply ram through one’s favored policies because you want all the money or to kick the poor.
Therefore, fiscal policy in 2014 and 2015 will hinge on whether the Austerian coalition can be split (assuming, as is probable, that progressive Democrats don’t sweep the 2014 midterms).
Roughly speaking, we’re talking about the center and the right, and there are good reasons to suppose that neither will be brought around. For the center, it takes an intellectual defeat roughly akin to the Battle of Trafalgar to get them to grudgingly abandon austerity. (And if some hack economist churns out another pro-austerity paper, they will probably grab it eagerly.) Meanwhile, “straight” reporters have been culturally conditioned to code deficit reduction as a non-ideological good thing, so even very recent straight reporting still contains buried Austerian assumptions.
And on the right, things look especially hopeless. Denial and motivated reasoning are so epidemic that even Mitt Romney believed the “unskewed” polls before the 2012 election. Ivory tower arguments alone are useless here.
However, all hope is not lost. The key is to change what is considered acceptable for budgetary negotiations. Right now, they all assume that any new spending must be “offset” by cuts elsewhere. That aversion to deficit spending is 100% Austerian.
So while Republicans are largely immune to evidence, it’s also true they don’t actually care about the deficit in and of itself. They favor reduced taxes on the rich, and cutting social insurance. What’s more, conservative reformists at places like National Affairs have gotten louder and bolder in their advocacy of new thinking, even including infrastructure spending.
So if the center, especially including President Obama, can be persuaded to drop their deficit obsession (and again, it’s hardly possible to overstate how badly this debate has been lost), we could trade tax cuts for some austerity relief, like re-extending unemployment benefits and food stamps. And, it’s important to note, both spending increases and tax cuts count as austerity relief. Tax cuts, especially on the rich, aren’t very good stimulus, but they still put money into people’s pockets.
But the main point is to shift ground for negotiation. This strategy of “tax cuts for more spending” has been suggested many times in the past few years and gone nowhere. But before that, it has been the basis for many successful bipartisan deals, including expanding Medicaid in the 80s and the CHIP program in the 90s.
So while the deck is stacked against the anti-Austerians, continuing the intellectual battle is by no account useless. It’s highly possible to influence even a crooked debate.
By: Ryan Cooper, The New Republic, February 5, 2014
“Deficit Of Truth”: What Republicans Hope You Don’t Know And Never Find Out
Listening to Republicans in Congress wailing incessantly about our spendthrift culture raises a nagging question: What would they do, besides talking, if they actually wanted to reduce federal deficits and, eventually, the national debt?
First, they would admit that President Obama’s policies, including health care reform, have already reduced deficits sharply, as promised. Second, they would desist from their hostage-taking tactics over the debt ceiling, which have only damaged America’s economy and international prestige. And then they would finally admit that basic investment and job creation, rather than cutting food stamps, represent the best way to reduce both deficits and debt, indeed the only way — through economic growth.
Fortunately for those Republicans and sadly for everyone else, the American public has little comprehension of current fiscal realities. Most people don’t even know that the deficit is shrinking rather than growing. According to a poll released on Feb. 4 by The Huffington Post and You.gov, well over half believe the budget deficit has increased since 2009, while less than 20 percent are aware that it has steadily decreased. (Another 14 percent believe the deficit has remained constant during Obama’s presidency.)
Unsurprisingly, perhaps, it is Republican voters, misinformed by Fox News, who most fervently and consistently insist on these mistaken ideas, with 85 percent telling pollsters that the deficit has increased. Less than a third of Democrats gave that answer. But nearly 60 percent of independent voters agree with the Republicans on that question and only 30 percent of Democrats understand the truth – an implicit repudiation, as The Huffington Post noted, of the president’s political decision to prioritize deficit reduction rather than job creation.
The facts are simple enough even for a Tea Party politician to understand. The federal deficit reached its peak – in dollar amount and as a share of the national economy – in 2009, which happens to be the year that Obama took office. Thanks to the profligate war and tax policies of the Bush administration — which undid the fiscal stabilization achieved under President Clinton — the Treasury had no financial margin when the Great Recession struck. Federal spending required to avoid another (and possibly far worse) worldwide Depression, combined with declining tax revenues that resulted from economic stagnation and tax cuts, all led inevitably to that record deficit.
Over the past five years, the red ink has swiftly faded. This year’s deficit will be about $514 billion, or about one-third of the $1.5 trillion deficit in 2009; next year’s will be even lower, at around $478 billion. As when Clinton was president, those marked fiscal improvements are mainly the product of a slowly recovering economy and growing incomes, along with federal budget cuts.
But not only is the good news about the shrinking deficit widely ignored; it isn’t actually good news at all. By avoiding a mostly mythical “budget crisis,” federal policy has created a very real jobs crisis that persists, with particular harm to working families. The latest Congressional Budget Office report on the fiscal outlook for the coming decade strongly suggests that the cost of reducing the deficit has been – and will continue to be – substantial losses in potential economic growth and employment.
The ironic consequence, as former White House economist Jared Bernstein recently explained, is that the fiscal outlook for the next 10 years will be somewhat dimmer than expected. In other words, we will return to higher deficits because fiscal austerity –enforced by Republicans and accepted by Obama – is still dragging the economy down.
To restore the kind of growth that lets families prosper and ultimately erases deficits, the Republicans would have to listen to the president — especially when he calls for public investment in infrastructure and an increased minimum wage, the first steps toward robust growth and fiscal stability.
If Americans understood the truth about deficits and debt – and how the federal budget affects their jobs and income – the congressional obstruction caucus, also known as the GOP, would have no other choice.
By: Joe Conason, The National Memo, February 6, 2014
“Is Barack Obama A Tyrant?”: Spoiler Alert, The Answer Is No
A typical State of the Union address is criticized for being a “laundry list,” little more than an endless string of proposals the president would like to see enacted. The criticism usually has two parts: first, most of the items on the laundry list will never come to pass, and second, it makes for a boring speech (the pundits who make the criticism seem to care more about the second part). Last night’s SOTU didn’t have the usual laundry list (which of course meant that it was criticized for being too vague), but the one specific proposal getting much attention today is President Obama’s idea to require that on future federal contracts, all workers be paid at least $10.10 per hour. So naturally, Republicans are crying that this is the latest example of Obama’s tyrannical rule, in which he ruthlessly ignores the law whenever he pleases.
As Ted Cruz wrote in today’s Wall Street Journal, “Of all the troubling aspects of the Obama presidency, none is more dangerous than the president’s persistent pattern of lawlessness, his willingness to disregard the written law and instead enforce his own policies via executive fiat.” Is there anything to this criticism? Is Obama more of a tyrant than, say, his immediate predecessor? Let’s take a look.
We’ve seen this again and again with Republican critiques of Obama, that a substantive criticism over a policy often gives way to a process criticism. For instance, Republicans often complain that the Affordable Care Act was “rammed through” Congress before anyone had a chance to know what was happening, by which they mean it was debated for over a year, sent through endless hearings, and eventually passed by both houses of congress and signed by the President, and how could that be legitimate? In this case, they know that debating the merits of a minimum wage increase is a political loser, since an increase is supported by between two-thirds and three-quarters of the public in every poll. So it’s much safer to criticize this executive order as inherently unlawful.
In this particular case, however, there’s no question that what President Obama has proposed is neither illegal nor particularly tyrannical. Does the president have the authority to set rules that federal contractors must abide by through an executive order? Yes he does. Does that extend to the wages of the employees who work on federal contracts? Yes it does. If Congress wanted to pass a law rewriting these rules, it could, but unless it does, the president can do it himself. And of course, the next president could reverse Obama’s rules if he or she chose.
So there’s nothing illegal or oppressive about this executive order; the problem conservatives have with it is substantive. It’s possible, however, that they have a broader case to make that Obama is a tyrant. This is a familiar debate, because all presidents chafe at the limits on their power, and many have tried to test those limits. For instance, George W. Bush pushed at the limits of presidential power mostly in the area of national security. I myself can recall using the “tyranny” word with regard to the case of Jose Padilla, whom you may recall as the “dirty bomber,” though the government eventually gave up their assertion that he planned to set off a dirty bomb. What was so dangerous about the Padilla case was that the official position of the Bush administration was that the president had the authority to order a U.S. citizen arrested on U.S. soil, then imprison him for life without charging him with any crime or giving him a trial. It also held that the courts had no right to examine their decision to do so. I do not exaggerate; that was their position. (In the end, when the Supreme Court was about to rule on the case and it was clear the administration would lose, they changed course and put Padilla through the civilian criminal justice system, after holding him for years without charge and subjecting him to a program of solitary confinement and sensory deprivation that quite literally drove him insane.)
There were other memorable ways the Bush administration asserted, sometimes quite openly, that it was above the law. Sometimes it would simply attach a new name to what it was doing; torture is illegal, so when we torture prisoners, we’re not actually torturing them, we’re using “enhanced interrogation.” My personal favorite may be when Dick Cheney proclaimed that as a member of the executive branch, he could use executive privilege as a justification for ignoring congressional subpoenas for documents, but that he was also exempt from laws covering the executive branch, because the vice president is also President of the Senate and therefore part of the legislative branch, though he isn’t subject to their rules either. Cheney declared himself a kind of quantum government official, existing simultaneously in both places yet in neither place, so that he was subject to no laws that restrained either branch.
As for President Obama, there are certainly some areas in which he has tested the limits of presidential power. Just like every president before him, he has made recess appointments when Congress is in something that may or may not qualify as a “true” recess (the Supreme Court is taking up this question). He ordered that deportations of “dreamers”—young people brought to America illegally who are completing school or military service—should be a low enforcement priority, which was a legal way of temporarily creating a situation similar to a law (the DREAM Act) that hasn’t yet been passed. And he has delayed some of the provisions of the Affordable Care Act like the employer mandate, which conservatives cried was outside his authority to do, complete with the requisite invocations of King George III. But as Simon Lazarus noted, delays of regulatory enforcement are common, and the courts rarely find the delay illegal unless it goes on indefinitely and can’t be justified.
In all these cases, it’s true that Obama sought ways to bend the law to his policy preferences. But in every case, he found a way, completely within the law. (As it happens, Obama has issued relatively few executive orders—168 so far, compared to George W. Bush’s 291, Bill Clinton’s 364, Ronald Reagan’s 381, and Franklin Roosevelt’s 3,522. The volume doesn’t tell you how many of the orders were constitutionally questionable, of course, but if he were really a tyrant one might think he’d work harder at it.) That’s what’s happening with the minimum wage; he can’t raise it for all workers without Congress passing an increase into law, but he can raise it for those who work on federal contracts, so that’s what he’s going to do.
You may recall that some conservatives have been calling Barack Obama a tyrant almost from the moment he took office. That’s because they viewed his very occupation of the White House as fundamentally illegitimate, so anything he does must by definition be outside the law. For months they railed angrily against White House “czars” who were supposedly wielding unaccountable power and were the prime evidence of Obama’s tyrannical rule, even though none of them could explain what a “czar” was and how it differed from a person who works on the White House staff. But that lessened their fury not a whit. And none of them were concerned in the least about the ways George W. Bush circumvented the law. That’s because they agreed with the substance of Bush’s policies.
So no, Barack Obama is not a tyrant. If conservatives want to argue that it would be a bad thing if people working on federal contracts made an extra buck or two, they should try to make that case. But I doubt they will.
By: Paul Waldman, Contributing Editor, The American Prospect, January 29, 2014
“Obama’s Best State Of The Union Speech”: Pretty Sure The Last Three Years Of His Presidency Won’t Be Boring
With a strong, optimistic beginning and an unforgettable ending, that may have been President Obama’s best State of the Union speech. Apparently none of the commentators who have been saying his presidency is on its last legs bothered to let him know.
He opened with a portrait of the country – not an America gripped by crisis or mired in despondency, but a sunny place where unemployment is falling, school test scores are rising, housing prices are recovering, deficits are shrinking and manufacturing jobs are coming home. “I believe this can be a breakthrough year for America,” Obama said. The big problem, he said, was the performance of the people sitting before him in the House chamber: “We are not doing right by the American people.” He went on to excoriate Congress for its insistence on trench warfare, challenged his opponents to “focus on creating new jobs, not creating new crises” and pledged that if Republicans won’t work with him, he will take executive action where possible.
But the president’s tone throughout the speech was buoyant, not sour. His defense of the Affordable Care Act was an observation that House Republicans’ first 40 useless votes to repeal the law really should suffice. Even when he bludgeoned the GOP over long-term unemployment benefits or the minimum wage, he did it with a smile. His argument for equal pay and family leave? “It’s time to do away with workplace policies that belong in a ‘Mad Men’ episode.” His call for raising the federal minimum wage to $10.10? “Join the rest of the country. Say yes. Give America a raise.”
There was much that Obama did not say. I heard only one vague, substance-free sentence about domestic surveillance. There was no real discussion of foreign policy until the speech neared the one-hour mark, and the really tough problems where U.S. ideals and interests are out of alignment – Egypt, for example – were not grappled with. The specific executive actions he has vowed to take are significant but not earth-shaking – with one exception: Obama promised to use his authority to regulate carbon emissions. If he is as serious about tackling climate change as he said tonight, this may turn out to be one of the most important speeches of his presidency.
The end of the speech, a tribute to wounded Sgt. 1st Class Cory Remsburg, was an indelible moment. To end with such a powerful story of bravery and resilience gave emotional depth to the overall theme of the speech: America is back. I don’t know how much of his agenda Obama will achieve. But I’m pretty sure the last three years of his presidency won’t be boring.
By: Eugene Robinson, Opinion Writer, The Washington Post, January 29, 2014
State Of The GOP: Misguided And Obsessed
Three years ago, obsession took hold of Republicans in Congress.
In the third week of January 2011, John Boehner’s newly-elected House held its first-ever vote to repeal the Affordable Care Act and go back to letting insurance companies do whatever they want. Fast forward to today — nearly 50 votes to repeal or undermine the law later — and it’s clear to the American people that Republicans in Congress aren’t on their side.
Pick an issue: Jobs. The economy. Education. Infrastructure. Minimum wage. Unemployment insurance. Immigration reform.
The list of failures, neglected issues and missed opportunities goes on and on — and shows without question that Republicans are on the side of special interests and the Tea Party, not the American people. No wonder poll after poll still shows House Republicans standing at record lows.
Boehner’s misguided agenda and one-note tenure have ignored what the American people want. In fact, independent, mainstream polls show that most Americans want to improve and fix the law, not repeal it. Americans know what repeal would cost them: giving the power back to insurance companies to discriminate, deny care, drop coverage, raise rates and drive hardworking Americans into bankruptcy.
On the Affordable Care Act and so many other issues that matter to the middle class, the message House Republicans have sent is clear: They are not on the side of hardworking American middle class families, and instead will do everything in their power to protect those who need help the least: the Washington special interests.
While House Republicans have obsessively voted to turn our health care system back over to insurance companies, that is far from the only damage they have inflicted on the people of this country. Their disastrous government shutdown — which they launched to oppose the Affordable Care Act — cost our economy $24 billion. They won’t extend unemployment insurance for struggling Americans who lost their jobs through no fault of their own and who are looking for work — all while they make sure that Big Oil gets its $40 billion in subsidies. They refuse to raise the minimum wage, while seeking maximum tax cuts for the rich. They have yet to pass anything that remotely resembles a jobs bill.
Those wrong priorities will come back to haunt them in November.
A few Republicans are making the first motions to run away from this unpopular approach and to deny their repeal-only agenda. They’re hoping that voters will think that they’ve woken up and found some common sense — but voters won’t forget nearly 50 votes, and they won’t forgive them for turning their backs on hardworking people.
Republicans’ flawed priorities are hurting real families in this country. With every repeal vote, John Boehner might get a kick out of conservative news headlines and the talk radio echo chamber, but what regular Americans see is a politician who cares more about wealthy insurance company contributors than helping their families.
Voters will have a choice this fall between Republicans’ wrong priorities, and problem-solving Democrats who have dedicated their lives to helping middle class families get ahead. I believe that choice will be clear.
By: Rep Steve Israel, Chairman of the Democratic Congressional Campaign Committee, CNN Opinion, January 28, 2014
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