This is with The Matthew Filipowicz Show
There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?
Congress should just repeal the sequester – we don’t need it. We have 10 years to fix the long-term deficit situation. We should not be stampeded by deficit-scare propaganda and instead take the time to carefully consider the right approach. That way we won’t make the mistakes that Europe is making.
Here is a chart of the deficit as a percent of GDP: (Data sources below)
Koch-funded Florida Tea-Party Sen. Marco Rubio gave the “Republican Response” to the President’s State of the Union speech. Then Koch-funded Kentucky Tea-Party Sen. Rand Paul gave the “Koch-funded Tea-Party” Republican response. (Did the networks ever air a Progressive Caucus response to Bush’s SOTUs?) They scared people with wild stories of deficits, taxes, job losses and “big government.”
Before going over what they said let’s set the stage with a few items that explain reality (always a good idea before discussing things Republicans say):
It seemed as if the threats and hostage-taking going on in D.C. had taken a breather. After a couple of years of crisis-to-crisis hostage-taking Republicans backed off their latest “debt-ceiling” threat to ruin the country’s credit and destroy the economy. People relaxed. The stock market went way up.
Now they’re back with a new made-up crisis, and here we go again. Fortunately the Progressive Caucus in the Congress has a plan to save us.
The deficit problem is largely solved. Yet Republicans are still trying to cut us back into recession. Before the election they had an excuse: if they kept the economy down people might vote against Obama. But now? What is their game? Jobs fix deficits, and to fix jobs, fix trade and invest.
Proof In Pudding
We now have (even more) clear evidence of what we already knew for sure: cutting government cuts the economy. Along with every other country that has tried cutting their way to growth (now and in all of history, ever, anywhere), our economy was forced into decline last quarter and that decline was entirely caused by cuts in government.
Bob Borosage yesterday, quoted in the Huffington Post’s Jobs Deficit: Austerity Politics Threaten Obama’s Economy,
As Europe has shown and the IMF has warned, inflicting austerity on a weak economy is ruinous and is likely to drive us back into a recession. Those dismissing the downturn as due to an odd drop in government spending should consider that more of these are on the docket.
And Borosage again in Warning: Austerity Hysteria Endangers Your Job,
The U.S. economy shrank unexpectedly in the last three months of 2012, ending over 30 months of economic growth. Exports lagged, reflecting, in part, declining markets in Europe, now suffering a costly recession inflicted by misguided austerity policies. But the greatest cause of the decline was unexpectedly large cuts in government spending, particularly in the military.
Yes, Virginia, cutting government spending in a weak economy costs jobs.
A three-month downturn is a caution, not a catastrophe. But Washington seems too wrapped in its deficit delusions to pay attention to the flashing yellow lights.
Krugman today, in Looking for Mister Goodpain, points out that everywhere else this has been tried the result is higher unemployment and slower growth. After describing the search of an austerity success story Krugman concludes that we should start fixing unemployment,
So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will. It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.
Jobs Fix Deficits
The cutters have had their chance. We all understand that the deficit scare is not about deficits at all, it is really about cutting what they want to cut: the things We, the People do to make our lives better, because they want that money for the 1% who pay for their campaigns.
If you really want to worry about deficits the way to fix deficits is jobs. Invest in our economy and the things that make our lives better, and the growth will come. Because democracy is the best economic policy.
Invest in a modern, 21st-century infrastructure and the economy will grow, and deficits as a percent of that economy will become very small — just like what happened when we did that before. (Unless you think the interstate highway system and airports, etc. didn’t help the economy.)
Look to history, people, not to corporate/billionaire propaganda. Look at what has worked, and do that. Investing grows economies, cutting kills economies.
A Deficit To Worry About: Our Trade Deficit
The same crowd (billionaires and their giant, anti-competitive corporations) that promotes the budget deficit scare is benefitting from the trade deficit.
Since Reagan (coincidence?) we have been buying more than we sell and moving jobs and factories out of the country. This pits American workers against low-paid, exploited workers in countries that do not protect people or the environment. And it gets worse every year.
The result of Republican policies has been millions of people begging for work at any wage, and the middle class forced into ever-increasing debt. Meanwhile all the income and wealth accumulates at the very top. … It almost looks like that is the real Republican plan.
Me, October: Trade Deficit – One Root Of Many Problems.
Borosage, today: Why a Trade Strategy Should Be a State of the Union Priority
Before the election reporters and pundits were saying that not so many people would turn out this time, that it would be close at best. But on election day it turned out that it wasn’t even close. The people did turn out, some waiting in lines four, five, six hours to vote, many using provisional ballots because their states were trying to stop them. We, the People had a clear choice in front of us and We, the People made a clear choice.
Then, immediately after the election the “Very Serious People” tried to force through continued tax breaks for the wealthy paid for by cuts in the things the American people do to make each other’s lives better. People got involved and organized and it didn’t work out quite the way the one-percenters and their Very Serious spokespeople wanted it to work out.
For President Obama’s second inaugural the reporters were saying that not so many people would show up on the Mall this time. (“Assignment editor” Drudge had that up so that’s what much of the career media were repeating.) But from the inauguration stage at the Capitol Barack Obama looked out and saw as many as a million people on the National Mall cheering him on. People did show up.
Senators, before you vote today on the “make them talk” proposal, go ask members of the public what a filibuster is.
The public thinks a filibuster is senators talking all night. It is not a “nuclear option” to change the rules to what the public thinks the rules already are.
The purpose of the filibuster is to allow senators to hold up legislation that they think is just wrong. Standing in the senate chamber and talking lets senators make the case, and argue why they think the legislation violates the rights of a minority. This gives their supporters time to rally their forces. This dramatic act gets news, and alerts the public to pay attention. Then the public can contact their senators and let them know if they should go ahead or stop.
This is all these rule changes will do, bring back this system that protects the minority in a way that makes it a rare event. It is the rarity of the event that gives it its value.
Once again: The public thinks a filibuster is senators talking all night. It is not a “nuclear option” to change the rules to what the public thinks the rules already are.
People – call your senators now.
California’s deficits are gone, and Republicans are furious. The national deficit problem is largely solved, too, and Republicans just don’t know what to do! Of course what we need to do is invest in modernizing our infrastructure, which will put people back to work and we will end up with a … wait for it … modernized, energy-efficient, 21st century infrastructure that will boost our economy.
Learn From California
In California Republicans caused the deficit with tax cuts and restrictions on democracy that prevented citizens from fixing problems. They blocked every attempt to help the economy and the state budgets, demanding only cuts — and more tax cuts for billionaires and corporations. But California’s citizens finally got them out of the way, elected Jerry Brown (again), elected a supermajority of Democrats, passed tax increases, and the budget is balanced and will be in surplus soon. Republicans can’t stand it. They have no more excuse to scream “crisis!” and call for cuts in the things California’s citizens do for each other and the state’s economy. Now alifornia is moving forward, and even building a high-speed rail system.
If this sounds strangely familiar there’s a national lesson to learn here.
(Post title changed…)
Nate Silver has a much-discussed post today in the NY Times, What Is Driving Growth in Government Spending?. Silver goes over the numbers and writes,
To clarify: all of the major categories of government spending have been increasing relative to inflation. But essentially all of the increase in spending relative to economic growth, and the potential tax base, has come from entitlement programs, and about half of that has come from health care entitlements specifically.
The growth in health care expenditures, for better or worse, is not just a government problem: private spending on health care is increasing at broadly the same rates and is eating up a larger and larger share of economic activity. It’s an immensely complicated problem, but the arithmetic is simple: if we can’t slow the rate of growth in health care expenditures, we’ll either have to raise taxes, cut other government spending or continue to run huge deficits. Or we could hope to grow our way out of the problem, but health care expenditures may be impeding private-sector growth as well.
A nation whose constitution begins with the words “We, the People” should not be governed through threats and intimidation and lies. It is time to defuse the hostage-taking bomb. Do not negotiate with hostage-takers — and that includes shutdown threats. The “fiscal cliff’ was the result of the last debt-ceiling hostage-taking and threats and lies, which was enabled by earlier capitulation to hostage-taking and threats and lies, which was enabled by earlier capitulation to hostage-taking and threats and lies, which was enabled by earlier capitulation to hostage-taking and threats and lies…
Bloggers have learned some hard lessons about engaging with right-wing nutcases who leave nasty comments: “Don’t feed the trolls.” Starve them of the attention they seek. Ignore them and move on. This advice also applies to the right-wing nutcases threatening to bring down our economy by refusing to raise the debt-ceiling limit. They won’t get any traction on this unless Democrats engage with them. So ignore them, isolate them and scorn them but do not engage with them. Their billionaire & Wall Street funders will stop them and the pubic will see them for what they are, but only if we all just leave them alone. They aren’t really going to hold their breath until we all die.
And if they actually did take down the economy (they won’t), the country will be better off in the long run because it means the end of the radical right as a force in our politics.
So let them hold their breath until the country turns blue.
Before ‘W’ got in and made changes in taxes and military spending we were paying off the debt. Bush said the deficits that resulted from his changes were “extremely positive news.” (Yes, that is in quotes, click the link.) Before that Reagan also caused deficits on purpose. He called it “starve the beast” — as if democracy is a “beast” that needs to be killed. So don’t fall for all this deficit hysteria, let’s just fix what caused the deficits and move on.