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All-Out Obama & Media Blitz for $3 Trillion in Social Welfare Cuts

11:36 am in Uncategorized by fairleft

That 2008 ‘Hope’ now comes down to hoping for the failure – by some miracle or screw-up – of the media and Obama full-court press for $3 trillion in social welfare cuts (in order to ‘solve’ a fake crisis which the Republicans (through Mitch McConnell) have already capitulated on). But have we ever seen President Obama so ‘hard ball’ and animated as he is now, fighting to, for example, cut Social Security benefits that average only $13,000 a year? (Note that the lying way inflation is computed has already effectively cut Social Security benefits 7% since 1998.) So, hey, don’t get your hopes up, progressives: this is not the concede-before-bargaining inept Obama of every progressive fight of the last two-and-a-half years. No, he’s a man transformed, skilled, on a mission, pulling out all the stops, not for our team but he’s showing how it’s done when you really want it done.

On the other side, better than nothing but very little opposition by progressives, because most (Yeah, you, Bernie Sanders and Raul Grijalva, yah stupid suckers!) have signed onto the Herbert Hoover economics of “shared sacrifice,” promoted by the Congressional Progressive Caucus.

All the common-sense, Keynesian in the broad sense economists — Paul Krugman, Brad DeLongDean Baker, and James Galbraith, for example – must be in deep despair this weekend. They know this impending doom is entirely unnecessary. And I’m sure they too hope for, but are not gambling on, the failure of the very loud corporate media and uni-party crusade for an era (a decade of cuts is in the works) of utterly counterproductive and inhumane austerity.

As I’ve said, the left needs a powerful and attractive counter-narrative, led by the ‘meme’ “shared prosperity,” but, surprisingly, no one can hear me outside this blog. Till we turn the tables we’ll be abused by Obama-Sanders-Boehner-Hoover classical economics, a replay in the 2010s of the mass human tragedy of the 1930s. Here in the U.S. since 2008 we’ve only experienced a taste of that. I’m talking real, mass, and unrelenting austerity, Greece or Ireland, as long as we let the DemoRepublican uniparty, which the Congressional Progressive Caucus rhetorically supports, run the economy into the ground with ‘shared sacrifice’ or whatever their real slogan is (‘I got mine, Jack’).

Shared Prosperity NOT Shared Sacrifice!

James Galbraith for President

4:15 pm in Uncategorized by fairleft

After reading James Galbraith’s speech in Selise’s diary, my sense is that the U.S. needs as its President an articulate master of the Keynes economic tradition. Galbraith seems the best of these strategically (though there are quite a few other cool economists to choose from (despite their systematic ouster from a failed ‘mainstream’ economics)). Galbraith’s the second-best-known left economist in the U.S. after Paul Krugman (who surely would not give up his NYT job for a long-shot Presidential campaign), he ‘looks Presidential’ when he’s shorn of his beard, he’s a vice-president of an important and reassuringly traditional liberal organization, Americans for Democratic Action (ADA), he’s a good enough public speaker, and he might actually be pissed off enough to run. Also, he’s neither Ralph Nader nor Dennis Kucinich, one of whom is too old, the other untrustworthy and non-presidential, and both of whom (unfortunately) seem or would seem perennial candidate jokes to ‘bedrock America’.

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Yeah, I know, Galbraith seems very conventional and even a little boring and ‘not rad enough, dude!’, but here’s the deal: the only effective left attack in 2012 on a now right-wing Democratic Party — and one that is absolutely necessary to make — will be on its failed economic policy. Attacking the disastrously ineffective ‘market fundamentalist’ economics that nurses both parties is where a third, left alternative could find real resonance with however much of the American public we can get to hear it. (And, hell, if the Republicans win in 2012 and then their economic policies (of course) drastically fail, that leaves ‘us Galbraithians’ as the logical alternative, right?) So, I appreciate that Galbraith, through his leadership at ADA (see its policy positions here), indicates that he is a mainstream though dovish liberal on everything but economics. (Hey, correct me if I’m wrong…) That clean, boring, respectable vibe puts the focus where it needs to be, where it has to be: rescuing the economy from the vultures and the scammers, i.e., the rich and the corporations.

Dovish, though, because Galbraith is also Chair of Economists for Peace and Security. The group, by the way, has just pointed out that the premise for the bipartisan cut the deficit drive is false and the policy stupid and incredibly destructive. Specifically, its statement sez:

Deficit spending is normal for a great industrial nation with a managed currency, and it has been our normal economic condition throughout the past century. History proves, and sensible economic theory confirms, that in recessions, increased federal spending — not balancing the budget — is the tried and true way to return to a path of sustained growth and high employment.

More imporantly, as a practical “will he do it” matter, Galbraith appears to have given up hope on Barack Obama, so he might really want to challenge him next year:

President Obama has set his course. He has surrounded himself with the advisers of his choice and as he moves to replace [Larry] Summers we hear from the press that the priority is to “repair the rift with his investors on Wall Street.” What does that tell you? It tells me that he does not have President Clinton’s fighting and survival instincts. I’ve not heard one good reason all day to believe that we are going to see from this White House the fight that we want, … or any reason we should be backing him now.

The Democratic Party has become too associated with Wall Street. This is a fact. It is a structural problem. It seems to me that we as progressives need — this is my personal position — we need to draw a line and decide that we would be better off with an under-funded, fighting progressive minority party than a party marked by obvious duplicity and constant losses on every policy front as a result of the reversals in our own leadership.

Well then, let’s welcome Galbraith to lead one of those existing progressive minority parties, or ask him to be the man who Democratic primaries Obama, or let’s make a new party for him that he can lead into the November 2012 presidential election. Any of the above works for me. The stakes are high, a point which Galbraith makes very well (though I have deleted his unecessary and strategically boneheaded pessimism):

First, it seems to me that we as progressives need to make an honorable defense of the great legacies of the New Deal and Great Society — programs and institutions that brought America out of the Great Depression and brought us through the Second World War, brought us to our period of greatest prosperity, and the greatest advances in social justice. Social Security, Medicare, housing finance — the front-line right now is the foreclosure crisis, the crisis, I should say, of foreclosure fraud — the progressive tax code, anti-poverty policy, public investment, public safety, and human and civil rights. …

Beyond this, bold proposals are what we should be advancing now; even when they lose, they have their value. We can talk about job programs; we can talk about an infrastructure bank; we can talk about Juliet Schor’s idea of a four-day work week; we can talk about my idea of expanding Social Security and creating an early retirement option so that people who are older and unemployed or anxious to get out of the labor force can leave on comfortable terms, and so create job openings for younger people who, as we’ve heard today, are facing very long periods of extremely aggravating and frustrating unemployment; we can talk about establishing a systematic program of general revenue sharing to support state and local governments, we can talk about the financial restructuring we so desperately need and that we’ll have to have if we are going to have a country which has a viable private credit system and in which large financial power is not constantly dictating the terms of every political maneuver.

… And then, frankly, as was said … most elegantly by Jeff Madrick, in the long run we need to recognize that the fate of the entire country is at stake. Its governance can’t be entrusted indefinitely to incompetents, hacks, and lobbyists. Large countries can and do fail, they have done so in our own time. And the consequences are very grave: drastic declines in services, in living standards, in life expectancies, huge increases in social tension, in repression, and in violence. These are the consequences of following through with crackpot ideas such as those embodied in the Bowles-Simpson deficit commission, as Jeff Madrick again outlined, such notions as putting arbitrary limits on the scale of government, or arbitrary limits on the top tax rate affecting the wealthiest Americans.

You can’t fight the madness with Obama’s Clintonian triangulation. We know where that led and leads again, the dreaded ratchet effect. Anyway, I say JAMES GALBRAITH, COME ON DOWN! Any suggestions for further action much appreciated.

Obama vs. Social Security Trial Balloon up!

12:03 pm in Uncategorized by fairleft

According to a new Wall Street Journal/NBC poll, U.S. Voters Want to Soak the Rich in order to fight the deficit. Matthew Yglesias writes that the only measures a majority of voters supported were

lower Medicare benefits for the rich, higher Social Security taxes for the rich, higher income taxes for the rich, higher corporate income tax, and lower Medicare payment rates. That’s pretty much an aggressively leveling agenda.

(Like Yglesias I’ll note in passing that the WSJ headlined their ‘editorial pretending to be news’ on the poll "Voters Back Tough Steps to Reduce Budget Deficit.")

But, unfortunately for all but the ruling elite, for President Obama (through his appointed commission) the way to cut the deficit is to soak the old by cutting Social Security:

In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said.

On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission.

The next paragraph of the WSJ piece is the ‘get a clue’ one for those who still don’t ‘get’ Obama:

Even before the commission settles on a plan, many liberals are vowing to block any cut in retirement benefits. But the White House [that’s Obama] and the powerful senior group AARP appear open to a deal.

This simply reminds us of what we long should have known about Obama. Alan Nasser’s excellent "The Neoliberal Attack on Social Security" points out (emphasis added):

Reduced benefits and a shorter retirement are the favored starting points, in the name of reducing the deficit. But the Obama boys are too smart to talk about the coming blows to workers. Even as they are in the process of effecting the “reforms”, they’d have you worry about the Republicans. . . . Obama’s neoliberalism is his own, not a response to external pressure. He made it clear before his election that he holds the New Deal and the Great Society in derision, and regards Ronald Reagan as America’s most prophetic post-War president.

Yes, of course Obama is a ‘Social Security Crisis‘ neoliberal, as anyone who read "Obama’s 3 Right-Wing Economists" long ago should’ve realized. But, probably not a particularly entrenched one, as the second sentence below indicates:

It’s probably important to remember that Obama is both a member of the ruling elite and 100% a lawyer, and the basic approach in that industry is serving clients’ needs regardless of your own personal beliefs. I’m sure he has personal beliefs on [financial and health care reform], but they’re very general/flexible and not particularly important to his job. His job is to survive politically while serving his clients, a word he (like all mainstream politicians) interprets as meaning ‘campaign contribution heavy hitters’. And those clients’ fundamental demand is to write most of the specifics of laws, including ‘reforms’, directed at their industries.

To draw optimism from the above, "His job is to survive politically . . ." is the key. It’s fairly simple: Obama will do all he can for his clients but damn well wants 2010 not to be catastrophic and wants a second term in 2012. So there’s a way for the left, or just those that don’t want Social Security to be cut, to get to Obama. But the problem now is that the organized left utterly refuses to do so. We must threaten what Obama holds dear and now, when he is floating the cutbacks trial balloon in the WSJ, but the bureaucratic left continues to act as his mouthpiece on the issue. For example, writes Nasser, observe MoveOn, which

apparently wants you to know that there is a political movement among elites to assault Social Security, but you are to associate this threat with Republicans only. Not a word about alerting the electorate to Obama and his deficit reduction panel. No suggestion that the Democratic faithful announce that the president will lose their vote if he supports the recommendations of the panel.

And how will the Obama’s deficit commission’s new openness on planned Social Security cutbacks affect the Democratic Party? How should it affect the Democratic Party? Well, of course, Democratic Party Social Security mealy-mouthing and in fact anti-populism certainly right now is shedding voters. The people listen carefully, and do not hear "no cuts."

But client wants trump popular need if you can get away with it, and maybe Obama will. After all, there still is no alternative to the two-party monopoly, nor is there within the Democratic Party any insurgent anti-neoliberal movement to challenge Obama. This despite 10% plus real unemployment, flat-lined economy, a continued two-front war in the Middle East, capitulations to the health care and financial industries on ‘their’ legislation, failed labor law reform, and now open trial ballooning of ‘cut Social Security.’

Broadly, what we need to learn is that populist anger is the mark of a real left and an indication that politicians and activist bureaucrats (like those at MoveOn) are serious, or have been scared by voter anger into being serious, about this fundamental fight between big money and the rest of us. As I’ve said:

Solution: When the right does its fear thing, a real left should do its anger thing. Anger at the unfairness and the economic elites. This leads directly to appeals for populism, egalitarianism, and social democracy, which most people of the largest classes have a natural, reflexive attraction to. That the official left can’t even say, loudly, the words "populism, egalitarianism, and social democracy" tells you all you need to know: they’re really on the same side as the right, but want to carve out a space as the party of ‘slightly more charitable and empathetic rightists.’ Screw them and that.

Find the anger, be the anti-Obama anger, that protects and improves Social Security and the economic welfare of the rest of us.

P.S. — Look here for a group honestly trying to preserve and advance the best legacy of FDR rather than the immediate strategies of neoliberal Democrats. Listen to James Galbraith and NCPSSM’s Barbara Kennelly here on the recent Social Security facts and politics.

Germany to boost spending €10 billion yearly, 2011-2016

12:34 pm in Uncategorized by fairleft

(Wish it were so source.)

Monday, May 24, 2010 – 03:42
Germany to boost spending €10 billion yearly, 2011-2016

PARIS (MNI) – The German government will embark on a fiscal prosperity program, increasing the federal budget €10 billion a year from 2011 to 2016 (or the return of full employment), the Financial Times reported Monday, citing unnamed government officials.

The measures, which will include spending increases, increased subsidies to states, and lower taxes, are intended to comply with Germany’s new constitutional law requiring that annual public deficits be no less than 0.35% of GDP during recessions. It is also meant to serve as an example to other Eurozone countries that Germany has repeatedly exhorted to boost deficits in order to outpace the EU’s 3%-of-GDP deficit requirement during periods of high unemployment.

Germany expects to run a deficit exceeding 5% of GDP this year, and hopes to increase it steadily afterward. The country is expected this year to have a record-high net borrowing requirement of €80 billion, which it also wants to increase beginning next year, unless unemployment declines significantly.

The magnitude of Germany’s planned increases are likely to be greeted warmly by fellow EMU members, who hoped that Germany would stimulate demand to provide breathing room for countries mired in recessions much deeper than Germany’s that cannot undertake economic growth efforts as robust as Germany can.

The coalition government of Germany’s Chancellor Angela Merkel had promised tax cuts and now will keep that promise, and won’t alter any tax exemptions that the government believes will boost employment.

The markets expressed displeasure over the announcement. Unnamed government officials responded that markets had best put an end to “counterproductive whining” or regulatory authorities would outlaw activities that are the source of most financial sector profits and market instability.

This episode of ‘wish it were the news’ in honor of and inspired by James Galbraith‘s exchange with Ezra Klein:

Ezra Klein: That does it for my questions, I think.

James Galbraith: I have one more answer, though! Since the 1790s, how often has the federal government not run a deficit? Six short periods, all leading to recession. Why? Because the government needs to run a deficit, it’s the only way to inject financial resources into the economy. If you’re not running a deficit, it’s draining the pockets of the private sector. I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they’re exactly the same thing! A government deficit means more money in private pockets.

The way people suggest they can cut spending without cutting activity is completely fallacious. This is appalling in Europe right now. The Greeks are being asked to cut 10 percent from spending in a few years. And the assumption is that this won’t affect GDP. But of course it will! It will cut at least 10 percent! And so they won’t have the tax collections to fund the new lower level of spending. Spain was forced to make the same announcement yesterday. So the Eurozone is going down the tubes.

On the other hand, look at Japan. They’ve had enormous deficits ever since the crash in 1988. What’s been the interest rate on government bonds ever since? It’s zero! They’ve had no problem funding themselves. The best asset to own in Japan is cash, because the price level is falling. It gets you 4 percent return. . . .

It’s all sure to get much more painfully funny as the U.S. and the Eurozone march dutifully into economic hell.