“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 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 percent 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 had been the basis for many successful bipartisan deals, including expanding Medicaid in the 1980s and the CHIP program in the 1990s.
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, Web Editor of The Washington Monthly; Published in The New Republic, January 5, 2014
“Paul Ryan Lectures The Pope”: After All, “The Guy” Is From Argentina And Doesn’t Understand Capitalism
When 1.3 million Americans lose their unemployment benefits on Saturday, they can thank Rep. Paul Ryan. He took the lead in negotiating a bipartisan budget deal with Democratic Sen. Patty Murray, and on behalf of his party, held the line against continuing extended unemployment benefits for the long-term jobless.
Sure, a lot of Republicans share blame with Ryan. But he deserves extra-special (negative) credit for the deal, because he has lately had the audacity to depict himself as the new face of “compassionate conservatism,” insisting Republicans must pay attention to the problems of the poor. Friends say the man who once worshipped Ayn Rand now takes Pope Francis as his moral role model. Except he can’t help treating his new role model with arrogance and contempt.
It’s true that while knuckle-draggers like Rush Limbaugh attack the pope as a Marxist, Ryan has praised him, which I guess takes a tiny bit of courage since normally Republicans don’t like to buck the leader of their party. “What I love about the pope is he is triggering the exact kind of dialogue we ought to be having,” Ryan told the Milwaukee Journal-Sentinel. “People need to get involved in their communities to make a difference, to fix problems soul to soul.”
But he couldn’t suppress either his right-wing politics or his supreme capacity for condescension for very long. “The guy is from Argentina, they haven’t had real capitalism in Argentina,” Ryan said (referring to the pope as “the guy” is a nice folksy touch.) “They have crony capitalism in Argentina. They don’t have a true free enterprise system.”
Beltway journalists would have us believe Ryan’s love for the guy from Argentina is triggering genuine new interest in helping the poor. “My bet is that he’s on Pope Francis’ team,” a former Romney-Ryan advisor told BuzzFeed’s McKay Coppins, for a worshipful Ryan profile headlined “Paul Ryan finds God.”
I admit, I have been immune to Ryan’s various efforts to brand himself as a bright and innovative Republican over the years – and I continue to be. Let’s recall: The guy who impressed Ezra Klein as a serious albeit deficit-obsessed budget wonk turned out to be terrible at math – his heralded “Roadmap,” the Ryan budget, busted out the deficit for years and didn’t balance the budget until 2040, thanks to its generous tax cuts for the wealthy and corporations.
Now we’re supposed to believe Ryan is going to deliver an anti-poverty agenda as soon as the spring. “This is my next ‘Roadmap,’” Ryan told an aide, according to Coppins. “I want to figure out a way for conservatives to come up with solutions to poverty. I have to do this.”
Excuse me if I remain a skeptic. Ryan’s prescription for the poor is, and always has been, a dose of discipline. Even in 2010, with unemployment in his own district hovering around 12 percent, he voted against extending unemployment benefits on the grounds that they’d increase the deficit – and then reversed himself when they were coupled with an extension of Bush tax cuts, which of course added far more to the deficit than extended benefits.
Ryan has always defended his stinginess on safety net issues as tough love for the poor, giving them “incentives” to take a job, any job, to support their families.
“We have an incentive-based system where people want to get up and make the most of their lives, for themselves and their kids,” he says. “We don’t want to turn this safety net into a hammock that ends up lulling people in their lives into dependency and complacency. That’s the big debate we’re having right now.”
I don’t think Pope Francis would call our threadbare safety net a hammock.
Today, Ryan’s guide on the road to a GOP poverty agenda is the same man who has guided generations of Republicans into political self-congratulation and little else: Bob Woodson, a conservative proponent of what used to be touted as “black capitalism.” Now 75, Woodson runs the Center for Neighborhood Enterprise, and he helped inspire the dead-end “enterprise zone” movement beloved by some Republicans back in the 1980s and ’90s. Enterprise zones, which lowered taxes and created other incentives for businesses to invest and hire in low-income neighborhoods, were championed by the late Rep. Jack Kemp, who is one of Ryan’s political mentors. They have repeatedly been found to have “negligible” effects on employment, earnings and business creation in urban neighborhoods.
But Woodson apparently finds Ryan a one-man enterprise zone for restoring his national profile. (He last made headlines for attacking African-American Democrats at the GOP’s 50th anniversary of the March on Washington commemoration, insisting they let black issues languish while gays and immigrants became priorities.) Woodson is the star of Coppins’s Ryan piece, vouching for the Republican’s “authenticity” on poverty issues.
“The criminal lifestyle makes you very discerning, and everywhere I’ve taken Paul, these very discerning people have given me a thumbs up,” Woodson told Coppins. “You can’t lip synch authenticity around people like that.”
But when asked what Ryan has done tangibly for the poor, the Republican came up with one word: neckties. Apparently, according to Woodson, Ryan sent neckties to a classroom of teenagers after one admired his while he was visiting. So where conservatives used to preach that the poor should lift themselves up by their bootstraps, their new anti-poverty agenda involves neckties.
In the spirit of the holiday season, I have to admit there’s something a little bit touching about Ryan’s insistence that the GOP needs an anti-poverty agenda. Honestly, Jack Kemp would be a welcome addition to the modern Republican Party, which prefers to demonize the poor rather than empathize.
But forgive me if I can’t entirely believe in Paul Ryan’s “authenticity” on these issues. A guy so prideful that he thinks he can lecture the pope about capitalism doesn’t strike me as capable of the humility required to rethink his political beliefs. I have no doubt Pope Francis would support extended unemployment benefits, and a host of other policies to make life easier for poor people and help them find genuine opportunity. I don’t think he’d be satisfied with sending them neckties.
By: Joan Walsh, Editor at Large, Salon, December 28, 2013
“Merry Christmas From The GOP”: On December 28th Unemployment Benefits End For 1.3 Million Families
Three days after Christmas, unemployment benefits end for 1.3 million people who have exhausted their state unemployment benefits, but still can’t find a job.
To be eligible for unemployment benefits, you have to be actively looking for a job. Virtually all of these people would rather work, but can’t find a job in today’s economy where there are three applicants for every job available.
But when the budget deal was negotiated in Congress over the last several weeks, Republican negotiators refused to agree to continue those unemployment benefits. And at the same time, they demanded the continuation of tax breaks for big oil companies and loopholes for Wall Street billionaires who get their income from hedge funds.
Merry Christmas from the GOP.
Of course this kind of Christmas cheer comes from the same gang that routinely drags out the well-worn charge that progressives and Democrats are engaging in a “war on Christmas”. Maybe someone should force Republican Members of Congress to sit through a showing of “A Christmas Carol” and then explain why they think Ebenezer Scrooge is the hero.
Over the last decade the far right, that now dominates the GOP, has conducted a real war on the values that we celebrate at Christmas.
In case they missed it, Christmas is about giving, and sharing and loving your neighbor. It’s about family. Christmas has nothing to do with greed or selfishness or paying people poverty level wages so you can maximize your bottom line.
The Christmas spirit is not about cutting off an economic lifeline for over a million people so the wealthiest in the land can continue to prosper beyond imagining. And remember many of those same wealthy people who are doing so well are personally responsible for the recklessness that caused the Great Recession and cost the jobs of those whose unemployment benefits they now believe we can “no longer afford”.
You hear a lot from the right wing about having to make “tough choices” because some things “we just can’t afford”. Ironically those “things we cannot afford” never include the things that benefit the very wealthy.
In fact, as surprising as it may seem to many Americans, there is more bounty in the land this Christmas, than at any time in our nation’s history. Our income per capita – and our productivity per person – has increased by 80% over the last 30 years. But over those same 30 years, average incomes for most Americans were stagnant – and virtually all of that increased income and wealth went to the top 1%.
That is bad enough. But then to insist that our country “can’t afford” to continue paying unemployment benefits to people who can’t find a job – and by the way – cut off their benefits three days after Christmas – that is an outrage.
Many on the right are so out of touch with ordinary Americans that they argue that providing unemployment benefits makes people “dependent”. This of course completely ignores the fact that to qualify you have to have been working and lost your job for no fault of your own; you have to be actively looking for work; and the maximum benefits in many states are very low.
Ask the Koch brothers to support a family on the $258 per week maximum benefit in Louisiana, or the $275 per week maximum benefit in Florida – or even the $524 per week maximum benefit in Ohio.
People don’t want to stay on unemployment benefits. They want to find a job that provides them with income and benefits that allow them to give a better life to their families and their kids. They want to make a contribution and feel that they do worthwhile work. Most Americans want to be proud of what they do for a living – they don’t want to be “dependent” on anyone.
You have to be from another planet to believe that most people will become “dependent” on a total income of $275 per week.
Unemployment benefits provide workers and their families with an economic shot in the arm to get them through being laid off in an economy when jobs are still hard to come by.
And let’s be real clear why jobs are so hard to come by. Jobs are still hard to come by because of the policies of those very same right wing politicians who refused to reign in the orgy of reckless speculation on Wall Street that resulted in a ruinous financial collapse from which the economy is still recovering.
Jobs would be a lot easier to come by if the GOP did not do everything it could to block President Obama’s American’s Jobs Act that would create millions of jobs in both the public and private sectors by investing in teachers, and infrastructure.
Jobs would be a lot easier to come by if the GOP were not fixated on cutting government investment at a time when virtually all economists – including the Federal Reserve Chairman – believe we need more fiscal stimulus and that the policy’s of the Republicans in Congress continue to be a major drag on economic growth.
In fact the non-partisan Congressional Budget Office estimates that failing to continue federal unemployment benefits will cost the economy 240,000 jobs and slow the growth of the overall economy by .2%.
Those who receive unemployment benefits spend virtually every dime on the goods and services they need to live. That spending provides jobs to thousands of other Americans. So cutting federal unemployment benefits will actually create a quarter million more people who are unemployed. Great work GOP.
So here is the bottom line. It turns out that a society that reflects the spirit of Christmas – one where we have each other’s back – where we care about each other and not just ourselves – a society like that is better for everyone.
In fact, it turns out that the “moral” thing to do – the “right” thing to do – is also the “smart” thing to do.
It turns out that progressive values like loving your neighbor as your self – are the most precious possessions of humanity because they are the values that will allow us and our children to prosper and survive.
And that’s why the spirit of Christmas doesn’t just belong to Christians – or Catholics or Baptists or Episcopalians – or anyone. The Christmas spirit belongs to everyone on our small fragile planet. And that spirit embodies exactly the set of values that we must use to chart our course not just on Christmas Day but 365 days each year – including December 28th when over a million families will lose the economic lifeline that provides them a bridge to a better life.
By: Robert Creamer, The Huffington Post Blog, December 23, 2013
“The Meaning Of A Decent Society”: What Do We Owe One Another As Members Of The Same Society?
It’s the season to show concern for the less fortunate among us. We should also be concerned about the widening gap between the most fortunate and everyone else.
Although it’s still possible to win the lottery (your chance of winning $648 million in the recent Mega Millions sweepstakes was one in 259 million), the biggest lottery of all is what family we’re born into. Our life chances are now determined to an unprecedented degree by the wealth of our parents.
That’s not always been the case. The faith that anyone could move from rags to riches – with enough guts and gumption, hard work and nose to the grindstone – was once at the core of the American Dream.
And equal opportunity was the heart of the American creed. Although imperfectly achieved, that ideal eventually propelled us to overcome legalized segregation by race, and to guarantee civil rights. It fueled efforts to improve all our schools and widen access to higher education. It pushed the nation to help the unemployed, raise the minimum wage, and provide pathways to good jobs. Much of this was financed by taxes on the most fortunate.
But for more than three decades we’ve been going backwards. It’s far more difficult today for a child from a poor family to become a middle-class or wealthy adult. Or even for a middle-class child to become wealthy.
The major reason is widening inequality. The longer the ladder, the harder the climb. America is now more unequal that it’s been for eighty or more years, with the most unequal distribution of income and wealth of all developed nations. Equal opportunity has become a pipe dream.
Rather than respond with policies to reverse the trend and get us back on the road to equal opportunity and widely-shared prosperity, we’ve spent much of the last three decades doing the opposite.
Taxes have been cut on the rich, public schools have deteriorated, higher education has become unaffordable for many, safety nets have been shredded, and the minimum wage has been allowed to drop 30 percent below where it was in 1968, adjusted for inflation.
Congress has just passed a tiny bipartisan budget agreement, and the Federal Reserve has decided to wean the economy off artificially low interest rates. Both decisions reflect Washington’s (and Wall Street’s) assumption that the economy is almost back on track.
But it’s not at all back on the track it was on more than three decades ago.
It’s certainly not on track for the record 4 million Americans now unemployed for more than six months, or for the unprecedented 20 million American children in poverty (we now have the highest rate of child poverty of all developed nations other than Romania), or for the third of all working Americans whose jobs are now part-time or temporary, or for the majority of Americans whose real wages continue to drop.
How can the economy be back on track when 95 percent of the economic gains since the recovery began in 2009 have gone to the richest 1 percent?
The underlying issue is a moral one: What do we owe one another as members of the same society?
Conservatives answer that question by saying it’s a matter of personal choice – of charitable works, philanthropy, and individual acts of kindness joined in “a thousand points of light.”
But that leaves out what we could and should seek to accomplish together as a society. It neglects the organization of our economy, and its social consequences. It minimizes the potential role of democracy in determining the rules of the game, as well as the corruption of democracy by big money. It overlooks our strivings for social justice.
In short, it ducks the meaning of a decent society.
Last month Pope Francis wondered aloud whether “trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness…”. Rush Limbaugh accused the Pope of being a Marxist for merely raising the issue.
But the question of how to bring about greater justice and inclusiveness is as American as apple pie. It has animated our efforts for more than a century – during the Progressive Era, the New Deal, the Great Society, and beyond — to make capitalism work for the betterment of all rather merely than the enrichment of a few.
The supply-side, trickle-down, market-fundamentalist views that took root in America in the early 1980s got us fundamentally off track.
To get back to the kind of shared prosperity and upward mobility we once considered normal will require another era of fundamental reform, of both our economy and our democracy.
By: Robert Reich, The Robert Reich Blog, December 19, 2013
“Conservatives Have No Idea What To Do About Recessions”: Republicans Have Not The Wrong Answer, But No Answer
For the last five years, liberals have promoted three main economic policies to shorten or ameliorate the Great Recession and speed the recovery from it.
- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.
Most conservatives hate this agenda. As Mike Konczal notes, they bizarrely portray these policies as “corporatist” efforts to enrich the rich. But what’s really weird is conservatives have no alternative to this agenda they loathe.
To be clear, conservatives absolutely do have an economic policy agenda. They favor lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery. They favor these policies now, they favored them in 2008, and they favored them in 2004.
That is, conservatives favor the same set of economic policies when the economy is weak and when it is strong; when unemployment is high and when it is low; when few homeowners are facing foreclosure and when many are. The implication is that conservatives believe there is nothing in particular the government should do about economic cycles.
This is a big problem. Recessions are terrible. They create enormous misery by throwing people out of work and out of their homes. How can a political ideology have nothing to say about how to address recessions?
Perhaps conservatives believe that conservative economic policies will prevent recessions, making it unnecessary to have policies aimed at addressing them. That view would involve a distinctly unconservative degree of hubris.
Perhaps conservatives concede that recessions are terrible and sometimes inevitable, but genuinely believe that nothing productive can be done to address them. If that is so, how can they favor reductions in the social safety net? The argument for cutting welfare programs is that able-bodied people should work and will do so if denied the opportunity to receive benefits without working. But the defining characteristic of an economic down-cycle is that some people who would like to work cannot find work.
As with many economic issues, there is a gap between conservative wonks and conservative policymakers. Many conservative economic policy wonks break with the Republican party by favoring one or more recession-specific economic policies. Economists Luigi Zingales and Glenn Hubbard have called for aggressive programs to modify mortgages. Scott Sumner, David Beckworth, Josh Hendrickson and others have promoted monetary intervention to combat recessions. Michael Strain has promoted a suite of reforms, mostly aimed at the labor market, that would aim to cut unemployment in recessions.
But acceptance of these policies among actual Republican policymakers is near zero. The standard Republican answer for what to do about a bad economy is the same as their answer about what to do about a good economy. As with health care and bank regulation, economic recessions are a policy question to which conservatives have not the wrong answer, but no answer.
By: Josh Barro, Business Insider, December 16, 2013
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