“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
“It’s Not About Fundamentals”: The Internal Republican Phony War Intensifies
For the cynical-minded, today’s front-line reporting from the Struggle for the Soul of the Republican Party can induce bitter laughter: in response to “establishment” talk that Republicans need a clearer and more systematic conservative message that is marketed un-stupidly, some self-conscious conservative activists are “pushing back,” per a deeply confused WaPo piece from Paul Kane and Rosalind S. Helderman:
After nearly two weeks of listening to GOP officials pledge to assert greater control over the party and its most strident voices in the wake of Romney’s loss, grass-roots activists have begun to fight back, saying that they are not to blame for the party’s losses in November.
“The moderates have had their candidate in 2008 and they had their candidate in 2012. And they got crushed in both elections. Now they tell us we have to keep moderating. If we do that, will we win?” said Bob Vander Plaats, president of the Family Leader. Vander Plaats is an influential Christian conservative who opposed Romney in the Iowa caucuses 10 months ago and opposed Sen. John McCain’s candidacy four years ago.
So now the shallow trenches have been dug for the phony war:
The conservative backlash sets up an internal fight for the direction of the Republican Party, as many top leaders in Washington have proposed moderating their views on citizenship for illegal immigrants, to appeal to Latino voters. In addition, many top GOP officials have called for softening the party’s rhetoric on social issues, following the embarrassing showing by Senate candidates who were routed after publicly musing about denying abortion services to women who had been raped.
Yes, years from now conservatives will sit around campfires and sing songs about the legendary internecine battles of late 2012, when father fought son and brother fought brother across a chasm of controversy as to whether 98% or 99% of abortions should be banned; whether undocumented workers should be branded and utilized as “guest workers,” loaded onto cattle cars and shipped home, or simply immiserated; whether the New Deal/Great Society programs should be abolished in order to cut upper-income taxes or abolished in order to boost Pentagon spending. There’s also a vicious, take-no-prisons fight over how quickly to return the role of the federal government in the economy to its pre-1930s role as handmaiden to industry. Blood will flow in the streets as Republicans battle over how to deal with health care after Obamacare is repealed and 50 million or more people lose health insurance. Tax credits and risk pools or just “personal responsibility?”
Look, there could be a true “period for reflection” and “struggle for the soul of the Republican Party;” the list of heterodox conservative thinkers that David Brooks trots out in his latest New York Times column would provide a good starting point. The trouble is none of these people have a bit of influence over Republican political actors, particularly when they are heterodox. The real debate is between people like Reince Priebus and John Cornyn and people like Bob Vander Plaats and Ted Cruz. They are entitled to fight with each other all day long about how many zygotes could fit on the head of a pin, and how deeply the 47% have been corrupted into permanent serfdom. But the MSM really, really needs to show it understands this isn’t a fight about any kind of fundamentals.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, November 19, 2012
“Just Get Out Of The Way”: Obama’s Electoral Mandate And Where It Leaves Republicans
Sunday’s morning shows featured some astoundingly stupid comments from Republicans who claim to believe that on Election Day voters gave them a “mandate” to continue their attempts to obstruct President Obama’s agenda.
Apparently some Republican pundits are still living in the same parallel universe that allowed them to convince themselves that by now, President-elect Mitt Romney would be organizing his transition.
It really is mind-boggling. Notwithstanding all of the available evidence, they still believe that the American people want them to stand in the way of increases in taxes for the wealthiest 2 percent and to cut Medicare and Social Security benefits for future retirees.
Who got a mandate for his policies on Election Day?
The presidential campaign focused like a laser on the question of whether tax rates should be increased for the top 2 percent of Americans or whether we should adopt Romney’s proposal to lower tax rates for the wealthy by another $5 trillion, and inevitably increase taxes on the middle class.
The campaign centered on the Ryan-Romney budget that would have slashed spending on critical services for the poor and middle class, reduce funding for education, do away with Medicare and replace it with a voucher program that would increase out-of-pocket costs for seniors by $6,500 per year.
And it was clear throughout, that the Republicans continued to favor privatizing Social Security.
- The Republican presidential ticket lost by 332 electoral votes to 206 electoral votes.
- Obama got 50.6 percent of the popular vote and Romney got 47.6 percent of the popular vote.
- Democrats took two additional seats in the Senate and now hold a 55-45 edge.
- The Senate Democratic caucus now includes more Progressive members and fewer Conservative members.
- Democrats picked up at least 7 and probably 8 seats in the House, and nationwide got over a half a million more votes for their House candidates than did the Republicans — even though the Republicans continued to control the chamber.
And the verdict that was rendered at the ballot box could be seen in virtually every national opinion survey.
The election was a battle over the future of the middle class, and Obama won that battle.
A Greenberg-Quinlan Research poll found that by 51 to 42 percent the voters said Obama would do a better job restoring the middle class.
They found that by almost two-thirds, voters believed Social Security and Medicare should not be cut as part of a deficit reduction deal.
A November 15, 2012 Hart Research poll for Americans for Tax Fairness found that:
- By a strong 17-point margin, voters favor ending the Bush tax cuts on incomes over250,000 (56 percent) rather than extending the tax cuts for all taxpayers (39 percent).
- President Obama now holds a commanding position in the debate over tax policy. When voters hear President Obama’s position on the Bush tax cuts — that he will sign a bill continuing them for 98 percent of Americans but will veto a bill continuing them for incomes over 250,000 — fully 61 percent agree with this stance. By contrast, when voters are read congressional Republicans’ position — that they will pass a bill continuing the cuts for all income levels, but will block any bill ending the cuts for those making over 250,000 — only 42 percent agree while a 53 percent majority rejects its plan.
NBCNews.com’s First Read, November 15, 2012 — more autopsy 2012— additional analysis of exit polls in battleground states:
- Support for raising taxes for 250K+ earners or everyone — Nevada 64 percent, Wisconsin 64 percent, Virginia 63 percent, Iowa 63 percent, New Hampshire 61 percent, Ohio 57 percent, Florida 57 percent — national average 60 percent.
Greenberg-Quinlan found in a November poll that Americans reject austerity in favor of investment that creates jobs. They were asked to choose between two statements:
We should avoid immediate drastic cuts in spending, and instead, we need serious investments that create jobs and make us more prosperous in the long-term that will reduce our debt, too.
Or…
The only way to restore prosperity and market confidence is to dramatically reduce government spending and our long-term deficits.
The statement favoring investments was chosen by 51 percent compared to 42 percent for the statement favoring cuts.
In fact, there is little question that voters understand better than many commentators and pundits that the budget battle in Washington is not mainly about ratios of revenue to cuts, or “reining in entitlements” — it is about who pays.
Will the wealthy, who have siphoned off all of the economic growth of the last 15 years, be asked to pay to fix the deficit that resulted from the Bush Tax cuts, and two unpaid-for wars? Or will the middle class — whose income has been stagnant or declining — be asked once again to foot the bill?
Voters get it. Time for D.C. pundits to get it as well.
Voters did send a mandate to Republicans on November 6th — a mandate to wake up and smell the coffee.
Here are a few of the mandates the voters gave Republicans:
- Bad idea to be viewed as a party who mainly represents the interests of the 1 percent and has candidates that were born on third base and think they hit a triple.
- Bad idea to insult almost half of the voters with comments about the 47 percent who can’t be convinced to “take responsibility for their lives.”
- Bad idea to insult the fastest growing ethnic group in America with your plans for “self deportation” and vetoing the Dream Act.
- Bad idea to patronize American women — who incidentally represent about 52 percent of the electorate — by telling them that government must intervene in the reproductive choices that should be left entirely to them and their doctors.
- Bad idea to believe you can any longer win national races in America by insulting and alienating people of color.
- Bad idea to ignore the persistent march of demographic changes that are transforming the American electorate. In addition to the growing proportion of people of color, the millennial generation — the most consistently progressive generation in recent American history — is becoming a larger portion of the overall electorate with every passing day.
Finally, the voters sent a loud and clear message that it is a bad idea for the GOP to continue to be the party that opposes traditional progressive American values.
They voted to confirm their view that they want a society where we have each others’ backs — where we’re all in this together, not all in this alone. They voted for a society where everyone does his or her fair share, gets a fair shake and plays by the same rules. They want a society that is hopeful and vibrant and celebrates its diversity — a society where it doesn’t matter whether you are a man or woman, gay or straight — a society where it doesn’t matter where you were born, or how much money your parents had when you grew up.
In short the voters showed once again that they want the kind of a society that Barack Obama described in his first major national speech — to the Democratic Convention in 2004 — a society where there are no blue states or red states — just the United States.
Now it’s time for the Republicans to lead, follow or get out of the way.
By: Robert Creamer, The Huffington Post Blog, November 19, 2012
“A Stupid Poopy Head”: Is it Game Over For Grover Norquist?
Two meetings in Washington today tell the story of the decline of Grover Norquist, the conservative activist who is seeing his near-iron grip on GOP tax policy over the past two decades slipping. One is Norquist’s weekly “Wednesday Meeting,” a gathering of “more than 150 elected officials, political activists, and movement leaders” who plot strategy and coordinate messaging every week. After big losses at the polls in last week’s election and a fracturing conservative base just as Congress heads into its most important tax negotiations in years, it’s safe to assume that this morning’s meeting was tense.
There was a time when almost every single elected Republican in Washington and even state capitals would sign Norquist’s anti-tax pledge, which binds elected officials to a promise not to raise taxes under any circumstance. As recently as last year’s negotiations over the debt ceiling, Norquist had fealty from a majority in the House of Representatives, including Speaker John Boehner and the entire GOP leadership. “60 Minutes’” Steve Kroft labeled Norquist “the most powerful man in Washington.” Those who violate his pledge could long expect to face attack ads aimed at unseating them, bankrolled by Norquist’s massive war chest. Americans for Tax Reform spent almost $16 million on independent expenditure ads in 2012. Crossing the group has always increased the likelihood of a primary challenge.
But times are changing. Today’s second interesting meeting is taking place a few blocks away from Norquist’s downtown D.C. headquarters, at the White House, where President Obama is meeting with a dozen CEOs of the country’s biggest corporations. How did Norquist react to news of Obama reaching out to the business community, which he aims to represent in Washington? Not positively. Norquist told the Washington Post the CEOs were “acting like a group of trained seals” for Obama, posing for a “photo op” to give the president cover.
You’d think Norquist would be happy that Obama is giving an audience to the titans of the private sector, but no. That’s because the meeting, which gives the president a chance to win some business support for his agenda without any input from Norquist, represents a threat to his personal power. Is his petulant reaction — he invoked the term “poopy head” on national TV on Monday — a sign that he’s losing his once awesome power over the nation’s capital? Maybe.
Norquist faces an unprecedented rear-guard attack as the congressional GOP fractures on the tax issue. Last year, there were 238 members of the House and 41 members of the Senate who had signed Norquist’s pledge. This year, there are just 217 in the House — one shy from the 218 needed for a majority — and 39 in the Senate, an all-time low. As the Hill’s Russell Berman reports, while Norquist claims his army is 219 strong in the House, two of those members have since disavowed Norquist’s pledge.
Democrats are hoping to exploit GOP divisions to push for tax increases on the wealthy during the lame duck session of Congress. “More and more people on the hill are realizing that Norquist is a has-been, and the outcome of the fiscal cliff will probably consign him to the footnote status he’s always deserved,” a senior Democratic aide told Salon.
The true scale of the desertion from Norquist’s pledge is actually obscured by GOP losses in the House. At least a dozen of the House Republicans’ top recruits, touted as “Young Guns,” declined to sign the pledge this year. Norquist’s group spent hundreds of thousands of dollars on ads explicitly defending candidates like California Republican Ricky Gill and Georgia Republican Lee Anderson against flak they were taking for signing the pledge. Both lost.
And back in Washington, where signing the pledge was once de rigueur, Republicans have been increasingly bold in rebuking Norquist. Oklahoma Sen. Tom Coburn has long been a sharp critic of the pledge’s inflexibility — “Grover, you’re stupid,” is just a sample — but now he’s being joined by a growing roster of colleagues. “Grover Norquist has no credibility, so I don’t respond to him. He doesn’t deserve being responded to,” said Georgia Republican Sen. Saxby Chambliss. “Simply put, I believe Mr. Norquist is connected with and has profited from a number of unsavory people and groups out of the mainstream,” said longtime Virginia Republican Rep. Frank Wolf on the House floor.
Several members have even retreated from the pledge, such as Minnesota Rep. Chip Cravaack, who was elected in 2010 and had one of the nation’s highest profile races this year. “I have learned, never sign a damn pledge,” he said this spring when asked about Norquist’s pledge. Cravaack still lost. Indeed, the pledge came up in a number of races and there’s some evidence that it proved to be a political liability.
And it’s not just in rhetoric. Norquist faced one of the biggest legislative tests of his power when a subsidy for ethanol production came up for renewal last year. He staunchly opposed it, saying eliminating the tax subsidy would be a de facto tax increase and thus a violation of the pledge. Republicans joined Democrats to kill the subsidy anyway.
Norquist has also been rebuked on looming military cuts that will automatically take effect at the end of the year if Congress and the president fail to reach a budget deal. Republican hawks like Sen. Lindsey Graham of South Carolina have said they’re willing to raise taxes to preserve Pentagon funding. Asked about how this would conflict with the pledge this summer, Graham shrugged and said, “I’ve crossed the Rubicon on that.” Today, even Sen. John McCain said at the Washington Ideas Forum that “fewer and fewer people are signing this [Norquist] pledge.” He said this “somewhat triumphantly,” the Huffington Post’s Sam Stein noted.
Even former President George H.W. Bush and his son, former Florida Gov. Jeb Bush, an early 2016 favorite for the GOP nomination, have disowned Norquist publicly. “The rigidity of those pledges is something I don’t like. The circumstances change and you can’t be wedded to some formula by Grover Norquist. It’s — who the hell is Grover Norquist, anyway?” the senior Bush told Parade magazine in July. “The pledge was presented to me three times. I never signed the pledge,” the younger Bush testified to Congress in June. “I don’t believe you outsource your principles and convictions to people.”
Of course, the tide has been turning against Norquist for some time, and his demise has been predicted before. But this crisis moment in Washington looks a lot like a breaking point for the anti-tax agenda. Speaker Boehner has already indicated willingness to increase revenues and the consensus among Washington power brokers is that taxes on the wealthy will go up one way or the other, even if rates stay the same. Indeed, President Obama has vowed to veto anything that doesn’t. And the problem with a hard-line pledge like Norquist’s is that it intentionally leaves no room for flexibility. So once the dam cracks, it can break wide open.
By: Alex Seitx-Wald, Salon, November 14, 2012
“Big, Unpopular, Losing Ideas”: Paul Ryan’s Rapid Rewrite Of Election History
Paul Ryan, who famously suggested that the General Motors plant in his hometown closed because of Obama administration policies when it actually closed under President Bush, is now going for an even bigger rewrite of history.
He is claiming that his austerity agenda—at least the part that makes tax cuts for the rich the supreme imperative—remains popular. Indeed, to hear Ryan tell it, those ideas almost prevailed.
In an ABC News interview a week after the election, Ryan was asked whether President Obama has a mandate to call for raising taxes on the rich. “I don’t think so,” said Ryan, who argued that, “This is a very close election.”
Ryan rejects the notion that his ideas lost. Indeed, he still claims he’s promoting “popular ideas.” And he says of the Republican ticket: “It was a well-run campaign. We made this campaign about big ideas and big issues, which is the kind of campaign we wanted to run, so we ran the kind of campaign we wanted to run.”
But Barack Obama also ran on big ideas. On the morning before the election, Obama appeared just a few miles up the road from Ryan’s hometown of Janesville, Wisconsin.
“If we’re serious about the deficit, we can’t just cut our way to prosperity. We’ve also got to ask the wealthiest Americans to go back to the tax rates they paid when Bill Clinton was in office,” the Democratic president told a crowd that had just heard Bruce Springsteen sing and speak about the need to create a more equitable America. “And by the way, we can afford it. I haven’t talked to Bruce, but I know he can afford it. I can afford it. Mr. Romney can afford it.”
But Obama went further, in that speech in Madison, and in speeches in Columbus and Des Moines and communities across the country. He called, again and again, for raising taxes on the rich. “Because our budget reflects our values, it’s a reflection of our priorities, you know. And as long as I’m president, I’m not going to kick some poor kids off of Head Start to give me a tax cut,” said the president.
Ryan is claiming in his post-election interviews that: “I don’t think we lost it on those budget issues, especially on Medicare — we clearly didn’t lose it on those issues.”
Yes they did.
In his closing argument, Obama focused—as did other winning Democrats—on “those budget issues.” One of the president’s biggest applause lines was: “I’m not gonna turn Medicare into a voucher just to pay for another millionaire’s tax cut.”
Obama and Vice President Biden ran on big ideas, just as Romney and Ryan did.
Ryan and Romney lost Wisconsin and every swing state except North Carolina.
Ryan and Romney lost the Electoral College by an overwhelming 232-206 margin.
Ryan and Romney lost the popular vote by more than 3.4 million votes.
Obama and Biden won a mandate in a battle of ideas where the lines were clearly drawn.
Despite what Paul Ryan says, Obama won a mandate—a bigger mandate, in fact, than Presidents Kennedy in 1960, Nixon in 1968, Carter in 1976 or Bush in 2000 and 2004.
To say otherwise is to deny what just happened.
Paul Ryan can try if he wants.
But he should remember what happened when he tried to peddle a fantasy about the closing of that Janesville General Motors plant.
Well, Ryan lost his home precinct in Janesville—not just as a vice presidential candidate but as a candidate for reelection to his House seat.
Ryan lost Janesville, as a vice presidential candidate and a congressional candidate.
Ryan lost surrounding Rock County, as a vice presidential and a congressional candidate.
Ryan and Romney lost Wisconsin—by such a resounding margin that Saturday Night Live was mocking the result on the weekend after the election.
When the rejection is so glaring that it becomes a punchline, it’s a stretch to talk about a “close election.”
And it’s absurd to suggest that your ideas are popular.
By: John Nichols, The Nation, November 14, 2012
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