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What Would You Have the President Do? Part II, Getting to Full Employment

4:09 pm in Uncategorized by letsgetitdone

Responding to a Post at Naked Capitalism by Michael Hudson with some additions by Yves Smith, a commenter, objecting to the criticism of the President’s Knox College speech, issued the challenge ”What would u have him do?” in connection with his promised effort to restore prosperity to the middle class and the poor. In this series I’m giving my answer to that question. In Part I, “Necessary First Moves,” I offered and described two of these. Ending the filibuster, and using High Value Platinum Coin Seigniorage (HVPCS) to fill the Treasury General Account (TGA) with $60 Trillion in reserves. Read the rest of this entry →

What Would You Have the President Do? Part I, Necessary First Moves

11:20 am in Uncategorized by letsgetitdone

There were varying reactions to the President’s recent speech at Knox College this week. My reaction was that the speech was deeply dishonest in light of the President’s previous policies, actions, and results, and I intended to do a critique, but Michael Hudson and Yves Smith beat me to it. In a fine post at Naked Capitalism, entitled “Michael Hudson Shreds Obama’s Orwellian Speech On Middle Class Prosperity,” Michael Hudson, with occasional added comments from Yves, deconstructs the speech paragraph by paragraph, and sometimes line-by-line, pointing out disingenuous assertions and outright dishonesty. In her introduction Yves remarks on the context:

The worst is that Obama apparently plans a series of Big Lie speeches on his “vision for rebuilding an economy that puts the middle class — and those fighting to join it – front and center.” That’s at best an afterthought, since he’s given the economy over to an at best indifferent and at worst predatory elite that have no interest in giving it back.

The reaction to the post was vigorous with most of the discussion supporting and amplifying the views presented. However, there was one comment which said:

Have you mentioned the fact that he’s right on every issue mentioned?

Would you rather have a FDR, or Truman or Johnson as our president? These men, while great, are not that much different from the current President.

What would u have him do? Enact single-payer health care, small class sizes and the best teachers imaginable, a minimum wage at $21.00 an hour and an average wage at $40 (where it should be), and a lower private debt burden across the board with a wave of one of his “Hope and Change” wands?

I am proud to have voted for this man. He can’t do it alone. And going after him while offering no positive alternatives yourself to me is the height of contemptibility.

Of course, that persistent rationalization offered by the world’s Obamabots is my cue. What I want him to do falls into two major categories. First, there are necessary first moves he can probably get done which will facilitate passing all the other policies I propose. Second, there are the policies that will restore prosperity to poor and middle class over time. In this post I’ll cover the necessary first moves. In Parts ll and III I’ll offer and briefly describe the substantive policies I want him to implement.

Get rid of the filibuster

He can start by convening Congressional Democrats: House and Senate, and telling them that the middle class and American Democracy are simultaneously threatened and that he can’t save the situation and ensure a Democratic victory in 2014, unless, as a first step, the Democrats in the Senate agree to get rid of the filibuster entirely, and immediately, and accept majority rule in the Senate on all matters not explicitly mentioned in the Constitution.

Of course, the House Democrats have nothing formally to say about what the Senate does. But their presence is important for impressing upon the Senators the importance to the national party of doing this, and then going on offense against the Republicans, so that the Democrats can retain control of the Senate and enable them to once again get something to run on, so they can get a majority in the House. In saying this, I’m not saying that returning Democrats to power will get us to Democracy. Far from it. But I do think that it will slow the evolution toward plutocratic fascism, and create opportunities for enacting new and helpful policies provided the right Democrats are elected. I know, I know. That’s an awfully big qualification. But people certainly can work for that result.

And naturally, it would be much better if we could have a Green Party majority in the House in 2014, or a Democratic/Green party majority coalition than just electing a Democratic majority. But getting that outcome would be an even taller order, and is more unlikely to happen if we see a Democratic Party turn toward a Green New Deal.

Use High Value Platinum Coin Seigniorage (HVPCS) to Change the Political Environment and Remove Any Possible Rationale for Federal Government Austerity

Next, I would have the President use HVPCS. Under authority provided by Congress in 1996, the Treasury can have the US Mint issue platinum coins with face values specified by the Secretary. So, for example, the Mint should issue a $60 Trillion coin; deposit it at the Fed, where the reserves credited to the Mint’s account for this legal tender would eventually wind up in the Treasury General Account (TGA).

The immediate promise of HVPCS for America, of course, is the end of austerity politics, periodic debt ceiling crises, fiscal cliffs, sequesters, and budget crises. HVPCS directly ends debt ceiling crises, because the debt is no longer relevant except as a constantly shrinking obligation that will be paid off as it falls due.

As for fiscal cliffs, sequesters, and budget crises, their justification is primarily in the false claim that the US is running out of money, and must slow the growth of the national debt enough to allow the debt-to-GDP ratio to shrink, so that we can’t afford to implement the deficit spending that may be necessary to create full employment, pass Medicare for All, and do other things that a majority of the population supports heavily, but does not insist upon in the face of supposed budget problems. But it’s hard to make a credible claim that “we’re running out of money” when we 1) have between $50 Trillion and $60 Trillion in the TGA, and 2) when the President has just demonstrated that the Federal Government can create reserves to fill the public purse at will.

I’ve discussed the technicalities, history, economic, legal, and political aspects of HVPCS, and the many objections to it, in my recent e-book, and will leave the details for you to read there. But it’s very important to emphasize the essential role of the President in getting over the initial hysterical reaction that would ensue if he uses HVPCS. After using it and getting immediate credit for the face value of the platinum coin from the Federal Reserve, he must then make a crisis speech informing the country about the action he’s taken to fill the public purse and why he found it necessary to do that and change the American of debt repayment and deficit spending.

Following that crisis speech he must go on tour, carrying his message to the people and emphasizing the new freedom of the Government to pay down and eventually pay off the public debt, while, at the same time being able to “pay for” any deficit spending Congress might choose to enact for a long time to come. He needs to explain that using HVPCS is fiscal responsibility since it ends the Government’s borrowing back its own currency and eliminates any possible justification for “austerity” as long as we have less than a full employment economy. He also needs to emphasize that HVPCS will not cause any more inflation than present policies and why he thinks that is true.

In conveying this message, repetition and mobilization of all Administration resources is essential. He must not give any ground to austerians and Republicans who, while constantly complaining about the public debt, will hate the HVPCS solution to the problem. In other words he must not compromise on this at all, but must implement HVPCS, make filling the public purse a fait accompli, and then go on with the more positive politics of using the policy space created by a full TGA to decrease inequality in the US and create the greater prosperity for the middle class and the poor that he says he wants.

Remember, there would be no fiscal cliffs, sequesters, or budget crises, without the claim that there is a Government Budget Constraint (GBC). Once we dispel that claim with HVPCS, these things will be gone with the wind, and the policy space will be there for the President and others in Congress to propose a range of policies to restore middle class prosperity without the inevitable objections that such policies will either increase the debt, or lead to higher taxes.

The House won’t want to pass these policies. But House members who want to vote against them won’t be able to plead Federal Government poverty, or “fiscal responsibility,” not with between $50 Trillion and $60 Trillion in the Treasury’s bank account at the time of the new policy proposals. So, when they employ obstructionism without any perceived good reason for it, they will open the way for Democrats to retain the Senate and regain the House, which, without the filibuster, will cut the legs off obstructionism, and make it possible to pass the policies I want the President to propose, anyway. Again, Parts II and III of this series will offer and briefly discuss each of my proposals.

(Cross-posted from New Economic Perspectives.)

Is It Really About “Dysfunctional” Partisanship?

5:09 pm in Uncategorized by letsgetitdone

The popular narrative in Washington, DC these days among the MSM pundits is that the Congress is “dysfunctional” in the sense that it is very difficult for it to pass a budget and rise above periodic “fiscal” “debt” and “deficit” crises. This difficulty is attributed to the failure of our representatives to rise above their party interests and to accept compromises proposed by “adults” such as the President, which would, it’s claimed, resolve our long term “fiscal sustainability”/”fiscal responsibility” problem through a “balanced” long-term $4 Trillion deficit reduction plan.

It’s also said that our representatives can’t rise above those party interests because of extreme partisanship exacerbated by gerrymandering of Congressional Districts so that most are now one party districts, in which only strong partisans embodying the extremes of each party can win primaries and then get elected. I think this story is wrong, or at least, very superficial. Here are some of the reasons why.

First, it’s clear that part of the reason for the dysfunction we see is the existence of the filibuster and various procedures related to it, that now prevent the Senate from passing legislation unless 60 Senators will support a cloture vote. In itself, the maintenance of this rule has nothing to do with partisan commitments and much more to do with the individual wish of every Senator to be able to block legislation they are opposed to.

The power to say no, is a very important one for each Senator, allowing them to get special concessions when their vote is needed to get legislation through. Senators fear being in the minority and not having the power to say no. When they are in the majority they worry that some day, perhaps soon, they will be in the minority, and will need that ability to say no to extract concessions. They also worry that removal of the filibuster, would give campaign contributors much less reason to donate to the campaigns of individual Senators and even more reason then they have now to focus donations on Congressional leaders.

This desire to protect their own privilege has trumped party interests in the Senate for a long time. The Senate’s inability to pass a large enough stimulus was due to the need for 60 votes to get a cloture vote on the legislation. The Administration believed that a stimulus bill of $1.2 to $1.8 Trillion just couldn’t be passed and that it needed one that was less than $1 Trillion in size. It had advice that the bill should be much larger from economists in the Administration and vocal and influential economists outside; but the perceived political imperative imposed by the 60 vote rule was to much to get by.

In health care reform, the situation was similar. The need for 60 votes required a health care bill that would be more solicitous of the health insurance industry. Republicans and some key Democrats were in the pocket of the industry. Their influence would have been much less if only 50 + 1 (the VP) votes were needed to pass a bill. But, as it was, Democrats like Ben Nelson, Joe Lieberman, Evan Bayh, and Max Baucus had an inordinate amount of influence on the legislation eventually passed.

In the House, there was no similar problem in getting legislation through. Nancy Pelosi would have been able to deliver Democratic votes for most anything the Administration decided to pursue, other than straight up coverage of abortion. And, on the stimulus front, a much larger one, much more heavily weighted toward spending, rather than tax cuts, could easily have been passed if the Administration had proposed one.

Second, another reason why Washington is so “dysfunctional” is because of the role of big money in campaign financing. Large corporate contributors, including banks, oil and energy companies, the pharmaceutical industry, the health insurance industry, wealthy individuals, some well-funded voluntary associations, like the Chamber of Commerce and the NRA want either to block legislation regulating their interests, or to write legislation giving them subsidies or tax cuts. So, they block or subvert public outcries for real reform to serve themselves. Because of their campaign contributions to key House Members and many, many, Senators and the opportunities the officeholders they’ve bought have to delay and block legislation in both Houses, but especially in the Senate, it is always difficult to get new legislation passed that hurts the these interests and benefits broader constituencies.

Third, partisanship isn’t by itself enough to create dysfunction. It’s also necessary to have different parties in control of each House of Congress. If the Democrats hadn’t lost the election of 2010 decisively across the country, at every level of government, due to unhappiness over the continuing recession, and the failure of the stimulus to end it, disapproval of the Affordable Care Act, and the sense of widespread injustice associated with bailing out the banks, but not the people, then both the House and the Senate would have been in control of the Democrats in 2011 and 2012. The gerrymandering we saw in 2011, which preserved the Republican majority in the House for the present term would not have occurred, and the deadlock in Congress with its “shock doctrine” applied to the budget process would never have occurred. Excessive partisanship didn’t cause the Democrats’ defeat in 2010. Rather it was their poor performance in 2009 and 2010 that made the voters want to either punish them or stay home that led to that defeat.

Which brings us to my fourth reason for doubting the view that extreme partisanship is in back of the “dysfunction” we are seeing. And that is that partisanship can sometimes create effective government, where lesser degrees of partisanship are ineffective. What are the elements of partisanship?

Well, ideology, is certainly one, and no doubt many of the Republicans are more strongly committed to a right-wing form of randian libertarianism, than any comparable proportion of Democrats are to any coherent ideology. Nearly all Republicans are really ideological on the issue of raising taxes, while the majority of Democrats resist the idea that entitlement spending ought to be cut.

But, it’s also true that many Republican officeholders are fairly non-ideological, as well. In addition, all Democrats and Republicans these days seem to adhere to an overall neoliberal philosophy with its faith in free markets, and commitment to limit regulation of markets. Democrats, of course, are less committed to these things. But looked at objectively, the differences are a matter of degree, and I doubt that they account for the deadlocks we are seeing.

Another element of partisanship is party discipline. Here Republicans seem to be more disciplined than Democrats in delivering votes for their leaders, though members of both parties seem more likely to line up behind leadership than they were, say, from the 1970s, until Newt Gingrich took over the House Republicans in the 1990s.

Now, however, we come to the third and really decisive element of partisanship. That element is the sheer desire of party members to do whatever is likely to win elections. If extreme partisanship, in the sense of wanting one’s party to win were really the explanation for dysfunction in the Government, then why don’t the party members in Congress unite behind actions that are sure to get them elected?

Look at the Republicans, they refuse to do things in Congress that would reduce the hold the Democrats have on hispanic voters. They do things all the time that are opposed to the interests of the seniors who now provide them with majority support in their demographic, and if they succeed in cutting Social Security and Medicare, why would their senior constituency vote for them again? Yes, I know they’ll try to blame the Democrats for such cuts, and perhaps they’ll partly succeed; but isn’t it easier for them, if they really want to win above all, to just not risk earning the enmity of their older constituents by striking at their vital interests?

And what about women? The Republicans seem to have a compulsion to propose and pass legislation that will clearly have the effect of hurting women. And they exercise that compulsion in most states where they have control of the legislature, and again and again in the US House. And members of their party continuously speak about women in clearly unacceptable ways, while stating their support for hostile legislation. It’s like a nervous tic with them. They can’t even speak respectfully while they’re moving to pass their negative legislation, but must offer offensive homilies while they’re passing ridiculously oppressive legislation.

And then there’s the African American vote. Across the country, Republicans are trying to disenfranchise blacks and hispanics. In addition to having policies opposed to the economic interests of many black voters; they’re trying to make second class citizens of them and other minorities. Are they trying to drive the Democrats percentage of the Black vote from between 90 to 95% to nearly 100%? Are they trying to drive the hispanic support of Democrats up to 85%? Is there a demographic group in the nation that the Republicans will avoid ticking off?

And what about their primary nominations. The Republicans are into nominating people for the Senate who can’t possibly win general elections. We’ve seen this pattern in both 2010 and 2012. They could have won the Senate in both elections if they’d nominated people who were remotely acceptable to anyone but Republicans. As for the House, they can win there now, but only because of the gerrymandering after the Democrats gave away the 2010 elections.

Which brings us back to the Democrats. Look at that vaunted “progressive” partisan politician Nancy Pelosi do in 2009 – 2010. She followed her leader, President Obama, down the line in whatever he wanted to do, and her troops followed her, regardless of the consequences for their party.

She must have known that the stimulus bill, the ACA, the Credit Card Reform Act, and the Finreg legislation (Dodd-Frank) were all dogs. So why support the compromises? Didn’t she know by the Summer of 2009 that her majority would be threatened by the ineffective stimulus and exceedingly complex and easily demonized ACA bills she had passed or was in the process of passing? Couldn’t she gauge the reactions of people across the country to “too big to fail”? Didn’t she see the outrage over the bonuses? If she really cared so much for the well-being of her party, then why didn’t she pass a second stimulus during the Summer of 2009 and challenge the President and the Senate to follow along? Why didn’t she pass the Conyers-Kucinich HR 676 Medicare for All Bill in early 2009 and then let the Senate and the Administration work on that? It wouldn’t have passed as is, but she would have headed off the tea party by doing that, and the final health care reform bill would have been a much better one than the ACA.

If partisanship is really the dominant factor in the dysfunctionality of Washington, then why hasn’t Harry Reid acted like the strong partisan he’s supposed to be by getting rid of the filibuster on the first day of the 2009, 2011, or 2013 Senate sessions or on any day in between or since? Had he done that, then the Democrats would have had their way with the Republicans for the last four years and for the present session as well. Instead, he makes informal deals with the Republicans which they instantly break, and still he hesitates to take the power which the majority is entitled to in the Senate. Some partisan he is! He’s the most non-partisan partisan in Senate history!

Finally, if partisanship is really such an important factor in dysfunction, then why is it that the Democrats are letting themselves get set up again for a stinging defeat in the 2014 election. At some level, everyone in Washington, including the Democrats knows at this point that cutting deficit spending will surely cost jobs and harm the economy. Nor can they easily predict the amount of harm that will result. The cuts being produced by the continuing budgetary crises are likely to kick the economy into another recession, absent another credit bubble, and this will be a disaster for Democrats.

President Obama is done with elections. If he gets his “grand bargain,” then he can and probably will crow about his legacy. But the Democrats in Congress will be left to pick up the pieces. They will, of course, blame the Republicans. But with Obama supporting the “Grand Bargain,” and the Democratic Leadership going along with their President because they’re “the adults” in Washington, Democratic candidates won’t be able to run against the recession and say the GB was a mistake. They will try to defend the GB, as will many Republicans. But that means that the voters, in their misery, will respond with “a plague on both your houses” and stay home.

But we know what happens when people stay home in mid-term elections after Democrats have gone against the perceived interests of their constituents. More Democrats lose their intensity and stay home than Republicans, and the result is Republican victory. The “Grand Bargain” (the Grand Betrayal, if you like) will result in Democratic defeat in the House in 2014, and probably a defeat for them in the Senate as well unless the Republicans throw victory away again, by nominating yet more ridiculous candidates to run against vulnerable Democrats. If that happens you will then see real dysfunction in Washington as the Republicans make an all out attempt to gut the social safety net, while the budget crisis politics intensifies in the lat two years of the President’s term in office.

So, I don’t agree that the problem in Washington is excessive partisanship and that what we need is some more “adults in the room.” I think the problem is too little party identification by Democrats, and too little willingness to insist on the priorities of Democratic voters. From a political point of view Democrats must not agree to any “compromise” that will cast them as being responsible for spending cuts to core Democratic programs. They must choose government shutdown before that. They must be seen as defending core programs of the people they represent; and they must wait for the Republicans to break under the pressure of being charged with shutting down the Government rather than getting new revenues from the wealthy to avoid cutting Medicare and Social Security.

For the Democrats, trading cuts in defense for entitlement cuts is a bad trade. They should never agree to that. If the Republicans want their defense spending, then they should be forced to agree to deficit spending, or to higher taxes on the wealthy.

From my point of view it’s better for the economy if the Republicans get off the deficit hawk kick and agree to fund defense spending through deficits. Then the Democrats should back off running on “fiscal responsibility” in 2014 and let the Republicans off the hook for their deficit spending on defense, while pushing for more deficit spending on jobs programs. Whatever Democrats do, however, if they want to win in 2014, they must not agree to any “Grand Betrayal” that is neither in the interest of their party; nor most of the country.

Here are the realistic choices coming up, absent a “big move” by the President to change the political backdrop of fiscal policy.

– The Government could be shut down awaiting the Republicans to back off their spending cut stance;
– The Republicans and Democrats could agree on some compromise involving increased revenue and decreased Government spending including entitlement spending, using a 3 – 1 ratio;
– Both parties could back off the sequester cuts, and the Republicans could back off the upcoming continuing resolution and debt ceiling crises.

The third of these choices is the best of the three for the economy, the country and the Democratic Party. To get there however, the Democrats in the Senate will have to refuse to agree to the Grand Betrayal, and no doubt will have to endure a Government shutdown over the debt ceiling. Unless they do that, the election of 2014 will be a Republican victory.

Just above, I mentioned a “big move” by the President. That move, of course, is using High Value Platinum Coin Seigniorage (HVPCS), to provide enough reserves in the Treasury’s spending account to pay off “the national debt” as it falls due, and to avoid issuing new debt for at least 15 – 25 years. The President has so far resisted doing that. But if he were to use HVPCS, he could take future debt ceiling crises off the table, and also remove any plausible rationale based on deficits/debts for any further spending cuts at this time. The normal rationale for tax increases, that “the Government needs the money” would also be gone.

So, politics in Washington would shift away from discussion of deficit spending and debts and towards the kinds of policies that would be good for America in both the short and long runs. That kind of change would increase the chances for Democratic Party victory in 2010, and would also be the beginning of a decent legacy for the President. It would also be far better for the United States than austerity politics has been. So, in this case, partisanship, in the form of a change in the fiscal foundations of the United States, which surely favors the Democrats, would also be what is best for the country. So much for the dysfunction of “partisanship”!

(Cross-posted from New Economic Perspectives.)

The Fear Card and the Guilt Card

8:34 pm in Uncategorized by letsgetitdone

A little while ago I did a piece on tweeting the fear card, and the attempts of certain supporters of the Democrats in this year’s elections to persuade dissatisfied and angry progressives that severe damage will be done to the country if the Republicans take over the House, the implication being that severe damage will not also be done if the Democrats retain control of the House. As the election has approached the fear card is being supplemented by the guilt card.

The guilt card asks whether angry progressives won’t feel guilty If Republican neanderthals like Bachmann, O’Donnell, Angle, Paul, Joe Miller, Johnson, Webster, etc. beat fine Democrats like Russ Feingold and others. And then it suggests that if you don’t want to feel guilty you have to get out there and work for the Democrats, so that the great evil of a Republican victory will be averted and we can have two more wonderful years of Democratic rule.

I really have the same answer to both the fear card and the guilt card, and they are my own fear and guilt cards for Democratic Congresscritters and a Democratic President. First, aren’t you afraid of turning the country over to the neanderthals again and going back to the Bush policies? Won’t you feel guilty if you lose to the knuckle-draggers, and completely blow the golden opportunity for change the American people gave you in 2008?

If you are afraid, and you do will feel guilty, then don’t berate me or other angry progressives for whining. Just stop whining yourself and do what it takes to get our votes. It’s easy.

First, in the Senate, get your lazy butts in gear and use the nuclear option to get rid of the filibuster. Second, pass the economic program I’ve written about here. Third, pass a bill defining legal persons incorporated by States and operating in Interstate commerce in such a way that they cannot fund political messaging. Fourth, pass HR 676 Medicare for All. Fifth, pass EFCA. Sixth, dissolve the Catfood Commission. There is no long-term deficit problem. It’s a myth. Forget about it!

Next, for us angry progressives let’s keep two things in mind. First, hctomorrow’s post of September 14th. He places our voting decision in the November elections in the context of experimental research on Game Theory, and likens our situation to an iterated prisoner’s dilemma game in which the best immediate tactic is to defect against a cooperating partner. He points out that the Democratic Party’s game against us progressives is to ask us to cooperate, indeed to use any sort of appeal to get us to support them, while they defect from any promises they make to us and act to please the interests that fund their campaigns. He also points out that in an iterated prisoner dilemma situation, such as the one we find ourselves in, it is self-defeating for us to continue to support the Democrats, however persuasive their fear and guilt cards may be.

Continued cooperation with them by us will not secure cooperative behavior on their part, but according to a vast amount of experimental evidence will only result in further defections of Democrats from our interests. To get their cooperation we have to engage in defecting behavior too. That is we have to stay home, or vote for third parties, or even vote Republican, because only then is it possible for them to learn that their strategy of continuous defection won’t work. Prisoners Dilemma research has shown that defection will bring occasional cooperative behavior on the Democrats’ part. When that occurs the indicated response by us should be cooperation. But not until then.

To these notions, I want to add my own view that if we accept that we need to defect from the Democrats to show that if they don’t cooperate, we won’t either, then this election is a better time to do it than in the election of 2012. Then, both the Presidency and the Congress will be up for grabs. In 2010 however, the most likely result of elections where we defect is that the Democrats will lose only the House.

Today, Jim Moss makes the case that the 2010 elections won’t give the Republicans so much power that they can repeal anything they want too, and also that control of the House doesn’t mean very much, since with the filibuster still intact in the Senate, most legislation gets blocked or watered down anyway. He’s right! This is not that critical an election. If we defect from the Democrats now, we can see how they behave over the next two years, do our best to develop the framework of a real third party, then, If they continue to defect, we can decide whether to go back to them again or pull the trigger, and end the Democratic Party, as we know it, for good.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Tenth Thing to Do – Not!!!

8:02 pm in Uncategorized by letsgetitdone

[Ed. note: What do you think? Is the national debt really one of the most urgent things on the To-Do List?]

Earlier this month, Thomas Geoghegan wrote a piece for The Nation telling the Democrats the ten things they could do to really get the base excited, and at the same time do good things for the country. Here’s his list.

1. Raise Social Security to 50 percent of working income.

2. Let’s extend Medicare to people 55 to 65.

3. Make it a civil right to join, or not to join, a labor union.

4. Put in a usury cap of 16 percent.

5. Set up small government banks like the German Sparkasse.

6. Give everyone the right to six days of vacation — six consecutive paid working days.

7. Let employees sue corporate officers for breach of fiduciary duty to the corporation.

8. Pass a College Bill of Rights.

9. End the filibuster.

10. Get the country out of debt.

Well, I might disagree with one or two of the first nine items. For example, I’d go for Medicare for All, and I’d also put in a usury cap of 6 points over prime, since a cap of 16 percent would still leave the banks with enormous profits on credit costs of near zero for them right now. But where I think Geoghegan is way off base is on getting the country out of debt. I’d like to keep this post as short as possible, so I’ll focus on just a few of his views. He says::

Finally, we have to take back the GOP’s big issue, the federal debt. Indeed, for every kind of debt — government, consumer, trade — the Democrats have to be the party that gets the country out of debt. That’s the only way to bring back a fair and just economy that lifts the middle class. As debt piles up, even our base is freaking out. Deep down, people grasp that America got into this mess with too much private debt. "Hey, if we’re all trying to get our own debt down, how does it make sense for the government to run it up?"

This statement conflates a number of different problems under the same heading — “debt.” But these “debts” are very different, and Geoghegan doesn’t explain either their differences or their relationships. He only assumes that “debt” is a bad thing, and that we have to get rid of it to please the base. But what are the three kinds of “debt” and how do they differ? Well, first, Federal debt is that part of the deficit (the difference between tax and other revenues of the Government, and Federal spending) that the Federal Government has matched with the sum of its outstanding debt instruments. Second, non-Federal debt is the sum of loans outstanding incurred by other Government entities in the United States, and by private sector entities: individuals, corporations, and other organizational entities. . . .

Read the rest of this entry →

Past Time To Get Serious

11:07 pm in Uncategorized by letsgetitdone

These last couple of days, I happened to see a couple of pieces by Robert Borosage. The first of these called “Kick the Old and Disabled to Show We’re Serious About Deficits,” is about organizing and fighting back against the deficit terrorist movement to cut Social Security, and reported that Borosage’s organization, the Campaign for America’s Future, “has joined with 50 other organizations (and growing) representing 35 million Americans to form a coalition”, called “Strengthen Social Security.” He also refers to a panel on Social Security at Netroots Nation that will be “inviting the bloggers across the country to help fend off the assault on Social Security, and join the debate about priorities over the next years.” Then he ends with this:

”This country has big decisions to make in the months and years ahead. We’ve still got a long way to go to get people back to work and to get this economy going. We’ve got to build a strong foundation for a new economy that will provide shared prosperity and rebuild a broad middle class. We need to address global warming — and capture a leading role in the green industrial revolution that will transform our lives. Fix our broken health care system whose soaring costs will be unaffordable for businesses, families or government and get our budgets back in order. Redress our growing domestic public investment deficit — in basic infrastructure like sewers, roads, an efficient electric grid, in education and training, in research and development. Balance our trade, and revive manufacturing in America. End two wars and stop spending as much as the rest of the world combined on our military budget. Clean up our politics, curb the influence of money, and reform the dysfunctional Senate. Empower workers and fix our broken immigration system. The daunting check list can go on.

”But one thing we don’t need. We don’t need politicians demonstrating their "credibility" by kicking the elderly and the disabled. We don’t need to fix a Social Security program that isn’t broken. The best "fix" for Social Security is simply to tell the truth about it.”

The second piece, “How Obama and the Dems Can Get Us Out of the Huge Economic Hole We’re in,” is a strategy piece for Democrats. It 1) outlines all the bad things out there that are putting the public in a sour mood approaching the mid-term elections, 2) describes the gloomy (for Dems) recent poll results, 3) covers the Dem attempts to frame the election as a contest between “the policies that led us into this mess and the policies that are leading us out of this mess,” as well as their attempts to sell the idea that they should be credited with the most dramatic and consequential set of reforms passed ind decades, 4) highlights the Republicans’ obstructionism and framing the contest as being about voting against the Dems’ lack of good results, 5) emphasizes the fact that the economy doesn’t look like it’s out of the woods yet and will give the Dems something to run on, and 6) points out the Dems’ intention to continue to push a “multi-faceted reform agenda.” He then gets to his point which is:

”. . . the White House would be better advised to focus as much as possible on jobs, even at the risk of aggravating liberals and constituency groups. The president needs to speak directly and repeatedly on where we are, explaining the reality that while the recovery act did stop the freefall and generated millions of jobs, the crisis was far worse than predicted. He should be calling for more action to create jobs. Raise the ante with a bold package of measures — including direct public hiring, aid to states and localities, use the money paid back by the banks to give small business access to lower interest loans, call for an infrastructure bank to mobilize private capital to rebuild America. Shelve the free trade agreements and challenge China and Germany, stating flatly that the US will not allow a return to the old global imbalances. Call on states and localities to pass and enforce domestic content legislation to ensure that taxpayers dollars create jobs here rather than abroad. Push the elements in the energy bill that generate jobs — from retrofitting public buildings to permanent tax credits for renewable energy sources. Push passage of jobs creating transport and infrastructure appropriations.

”The conservative noise machine already argues that the president, having run up record deficits with a failed stimulus program, now wants more of the same. Virtually all of these measures will be opposed — as everything else has been — by Republicans. Little of it will survive the inevitable Republican filibuster in the Senate.

”Why propose what is unlikely to pass? Because these measures are needed, and at least will clearly define the choice for this fall. Why propose measures that will increase the deficit that people are said to be freaked out about? Because the majority of Americans, if forced to choose, make the right choice – for focus on jobs over deficits. So pose the choice between a White House and Democratic Congress still pushing for action on jobs, and an opposition focused on deficits and wedded to the policies that drove us off of the cliff.”

So, let’s imagine that we all lined up behind Borosage’s calls for support. What would that get us if we were completely successful? First, we’d get no changes to Social Security, except perhaps a rise in the FICA wage cap. The Administration would abandon plans to “reform” SS further for the time being, or until the next time they want to get the “left” jacked up about something. However, the “Catfood Commission” would still be coming out with recommendations the Administration might try to get through the lame duck Congress so it could persuade the bond markets that the US is fiscally responsible. If SS were off the table, then what would be left for the Commission and the Administration to propose?

Well, based on the AmericaSpeaks worksheet on budgetary options, the Commission might still recommend changes like the following. A series of incremental gradually increasing across the board cuts in the following categories so that by 2025 the following spending cuts would have been achieved: 1) $300B in health care cuts; 2) $204 Billion in non-Defense Expenditure cuts; 3) $132 Billion in Defense Expenditure cuts. In addition, they might recommend 4) a range of tax increases designed to “share the pain” across all tax payers and to raise $250 Billion in 2025, 5) a value-added tax providing $400 Billion in revenue in 2025, and 6) “tax reform” that would eliminate most deductions lower rates, and also raise some $642 Billion in additional tax revenue in 2025. The Commission would of course emphasize that with Social Security off the table, it will be even more important to pass a framework leading us to make spending cuts and tax increases of this kind so that our projected deficits in the period 2020 – 2025 are much more manageable. And they would probably suggest that the cut in the projected deficit we should aim for should be $1.2 to $1.8 Trillion, given a deficit projection for 2025 of $2.46 Trillion.

Now suppose that comes to pass. What will Borosage and his progressive coalition do then? Will they just accede to the deficit hawks wishes because SS was spared? How will they mobilize opposition to some of these cuts and new taxes in just the few short weeks of the lame duck session? What will they do if the proposed reductions cut deeply, as they almost certainly will do, into our efforts to solve all the other problems Borosage calls out?

In other words, is Borosage’s focus on opposition to SS cuts, rather than on opposition to the whole idea of a plan for implementing spending cuts and tax increases in order to hit a target 15 years from now that is based on projections about the economy and the Government’s financial state that is almost certainly way off the mark, the wrong focus? Shouldn’t a coalition of progressive organizations instead be focused on opposition to deficit terrorism itself, on the very idea of the fiscal commission, and on the Administration’s support for this idea? Isn’t it, after all, the ideology of deficit terrorism, and its Hooverite associated policies, that are the main barriers standing in the way of our beginning to meet all the challenges in Borosage’s check list? If so, then why isn’t Borosage organizing a coalition to go after that? Why is he organizing in a way that at best will save Social Security, but will cost us all kinds of other things we are loathe to sacrifice?

Which brings us to Borosage’s strategy piece. Here he recommends all kinds of good things for the Democrats to do that may be both effective and popular, but acknowledges that: “Virtually all of these measures will be opposed — as everything else has been — by Republicans. Little of it will survive the inevitable Republican filibuster in the Senate.” And then he says:

”Why propose what is unlikely to pass? Because these measures are needed, and at least will clearly define the choice for this fall. . . .”

So, this is not about getting anything done. It’s about politics. If we have success and the Democrats advocate for the things Borosage calls out, then where are we? Well, the campaign messaging will indicate a clear choice between the two parties, and the Democrats may win the mid-term election, or at least hold down their losses, so that they still retain effective control of both Houses of Congress. But, so what? What does that get progressives?

Well, at least the Republicans won’t be in nominal control of Congress, and they won’t be totally neutering Obama with investigations. That’s certainly something. But, maybe not much for all the millions of Americans suffering because this Administration hasn’t actually solved a single problem. The really important question is: what reason do we have to believe that the Administration will pass any of the measures Borosage lists even if there is a nominally Democratic Congress? After all, it has such a Congress now, and what has it passed that is truly worthwhile. I won’t go through the usual litany of progressive disappointments with this Administration. We all know what they are. The point is that I don’t trust this Administration a bit to either tell the truth, keep its promises, or represent anyone but a small minority of the population. And I’m sure many other progressives feel as I do.

If the Democrats do win, what’s to prevent them from giving us a lot more kabuki, and then blaming the Republicans, and the filibuster, for their failure once again? What’s to prevent them from coming back right after the election, and passing a good many of the recommendations of the Catfood Commission, even if they’ve promised during the campaign to return to their populist roots? I think the answer is nothing. And the question I have is why Borosage isn’t telling the Administration and the Democratic Party in Congress that what they need to do is to immediately prove to working people that they will represent them by passing the list of things he has called for.

I know, I know; there’s no time left for that before the election, especially since the Republicans will filibuster everything the Democrats try to pass. Well, guess what? There is plenty of time to pass these measures if the Democrats get rid of the filibuster first by using “the nuclear option.” And they can follow that with all the legislation Borosage has proposed. So why aren’t he and other progressives calling for that? Why aren’t they calling for Democrats to prove that they can really be trusted to be Democrats rather than corporate shills, before the election.

As far as I’m concerned, they’ve already gotten our votes and our support, and they’ve failed to prove they deserved either. In my view, it’s time for them to put up or shut up. Only performance will now suffice to persuade those among the progressive base who think we’ve been screwed, that this group of Democrats is worth trusting again, or that they can be believed when they make campaign promises.

So, my question is, why hasn’t Borosage advised the Democrats to perform, to pass the measures he suggests and in that way to show the public that there is a clear choice between Democrats and Republicans? Why is asking them for promises they are unlikely to keep, if elected, enough for him, and other Washington progressives?

That is, and with respect to both the columns I reviewed, Why doesn’t Borosage propose actions that, if successful, will really mean a victory for progressives, and not just a result that still leaves them in a defensive crouch, thinking that things could be even worse than they are, and hoping for changes that will never take place? Why is it that Washington-based progressives always seem to ask for less than what is necessary to get a concrete result that solves a problem? Why is it that they stop short of actually proposing solutions to the problem of the Catfood Commission and propose instead a solution for its attempts to cut Social Security alone? Why is it that they propose a solution to the problem of seeing to it that Democrats have a better chance to win in the Fall; but no solution to the problem of how the Democrats can get the legislation they need passed so that they can actually win in the Fall?

Could it be that the various progressive interest groups based in Washington to defend progressive interests have learned the wrong lessons too well? Could it be that they have learned how to mingle with other Washington elites and also learned the limits of "acceptable behavior" in order to keep a place at the table? Could it be that it is acceptable to try to protect Social Security, but not acceptable to try to force the President to give up his Catfood Commission and his foolish ideas about what constitutes fiscal responsibility and sustainability? Could it be that it is acceptable to advise the Democrats about what to do about their messaging, but not to say to them that if they don’t actually do what is necessary to make that messaging believable, then the progressive coalition will see to it that they sustain a big electoral defeat in 2010, and, if necessary, split the Party in 2012, to ensure that there is a nominee running for President in 2012 who is likely to represent the interests of the people?

Democrats cannot serve two masters. They cannot serve both corporate interests and the people. They cannot serve Wall Street and Main Street. They cannot serve the haves and the have-nots. What Borosage should be organizing is a coalition of progressive organizations spanning the range of all interests threatened by the Catfood Commission, and this coalition should be asking the President and the Congress to immediately disband the Commission, and to abandon plans to manage Government spending using deficits, the debt, and the debt-to-GDP ratio. Government spending should be evaluated only in terms of its likely real effects on American society and the economy at any point in time. It should be evaluated only relative to its public purposes, and to the impact it has on Borosage’s list of challenges and additional challenges he doesn’t mention. That is true fiscal responsibility.

Those challenges are the real problems, not some entirely unreliable projections about what the future state of the deficit may be that is very unlikely to come to pass. A progressive coalition of interest groups should make it clear that its support for the Democratic Party in the coming election is conditional on concrete action and results before the election; that pie-in-the-sky promises won’t do. Immediate action getting legislation passed is necessary. The coalition should also make it clear that its support also requires the Democratic Senate to immediately end the filibuster forever, and pass the measures advocated by Borosage before the election, and before October 1st, so that there is time to campaign on these legislative achievements. And if they won’t act before the election, then let’s see ‘em win it without us.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

How Can You Get ‘Em Fired Up Once They’ve Seen Perfidy?

10:42 am in Uncategorized by letsgetitdone

These days the chattering classes often converse about how the Democrats can get their base charged up and working for the fall elections. For example, Greg Sargent at the Plum Line blog says:

”As you know, over the weekend Robert Gibbs dropped a political bomb, saying that Republicans just may take back the House. His comments are being widely interpreted as an urgent warning designed to get rank and file Dems to grasp the stakes of the midterms once and for all.

”But here’s the question: Will rank and file Democrats care? The thinking among Dem strategists appears to be that once Dems realize the midterms are a "choice" election, rather than merely a referendum on Dems, they’ll go out and vote. But what if Dems do see this as a referendum on their party’s rule, and base their enthusiasm solely on whether they are energized by the Dem performance?”

And also:

”. . . What if the only way to boost Dem enthusiasm isn’t to reveal how successful those awful Republicans were in rendering the Dems quasi-powerless, but to succeed in spite of this problem and do more to mitigate the crisis and the pain it’s caused?”

And then after saying that this is “a tall order,” and indicating what others think on both sides of the question of whether it’s too late to do anything he finishes with:

”How do you make rank and file Dems care about the midterms? It’s unclear that yelling about how mean and nasty Republicans are is going to cut it.”

No, it’s not unclear. Fear of the Republicans just won’t cut it, because the Democrats have been doing the very same things the Republicans used to do, or close enough that what they’re doing will make little difference in improving lives any time soon. Yes, the only way the Democrats in Government can get the Democrats out of Government fired up is for the Democrats in Government to do some important things for their base that it recognizes is for them. Some things whose value is obvious, and doesn’t need to be explained to them. Some things that would make the base care before the election whether or not the Democrats lost, and very, very sorry after it if they did. Some things that would make the base proud to be Democrats again. Some things that would make the base not wish that enough Democrats lost in the 2010 election that the whole Party ceased to exist, and opened up the way for a new party that would really represent working people again for the first time since the 1970s. What could those things be? Well, here are four things that could be done. But the last three things can’t be done unless the very first thing is done, because there just isn’t enough “Congress time” in an election year to do them the normal way.

– Use “the nuclear option” to get rid of the filibuster, and restore majority rule to the Senate. If this is not done, they won’t be able to get legislation through that can bring the base back by November. Harry Reid needs to come back to DC and get that done. If he doesn’t, then the only election recourse for the Democrats is fear-mongering and an implicit admission of impotence against Republican obstructionism, and that’s not going to either save the House, or leave them with enough votes in the Senate after the 2010 election, even if they do retain a majority, to be able to pass anything else that will please the base before the election of 2012. In short, if Reid doesn’t do the “nuclear option” thing, the Democratic Party’s goose is cooked. Maybe for good, because many elements in the base will do all they can to destroy this corporatist class war-enabling party before the election of 2012, so "we" can offer someone then who will work in our interest and not Wall Street’s, the Drug Companies’, the Health Insurers’ and every other vested interest that is willing to contribute to the coffers of this thoroughly corrupt political party. The Democrats are lucky that a Party organized around the Green New Deal Coalition isn’t already in existence, because if it were, all the real Democrats like me would vote for it without a second thought and leave the Democratic Party far behind.

If and when the filibuster is done, the Dems should be able to muster a majority to pass the following three measures comprising the Mosler Economic Restoration Plan:

”– Declare an Immediate ‘Payroll Tax Holiday’ — The U.S. Treasury will no longer deduct FICA, Medicare and other Federal payroll tax deductions from your paychecks, resulting in an immediate increase in take-home pay of roughly $650 per month for a couple with a combined income of $100,000 per year. That’s big money, and the extra cash will help you pay your mortgage and car payments, which helps the banks the right way, from the bottom up, and not through the top down bailouts of the recent past.
“– Give U.S. States Revenue Share Money Based on Population — Provide each State government with an immediate, unrestricted $500 per capita of revenue to spend where they decide they need it most. This will amount to approximately $1.75 billion for Connecticut to help fill the holes created by the recession.
“– Fund an $8/Hour National Service Job for Anyone Willing and Able to Work — This will provide transitional employment for the unemployed, preparing them to find new private-sector employment as businesses look to add millions of new jobs to meet the demand coming from a rise in spending due to the increased take-home pay from my first proposal.”

The Mosler plan, which also includes health insurance, holiday and vacation benefits for people in the National Service Job program, will deliver an immediate shock to the economy in the form of a continuous boost in purchasing power, and spending from State employees who have probably been reluctant to spend out of fear of pending layoffs. People will also see other people going back to work either in the private or the public sector, and they will see this happen by the Fall.

Warren Mosler thinks this program will work in 90 days. I’m not so sure about that, because I don’t know how fast the Government will be able to move in getting people onto the program and into jobs. It seems like a bureaucracy without computers and much smaller in size in the 1930s under FDR moved a lot faster than ours does today. But if he’s right, and Congress could pass it by the middle of August, it would certainly clarify the current clouded picture for incumbents in the coming Congressional elections, and probably could get us out of the recession in 12 months or maybe a little less. (My own Wild Ass Guess)

I’ve discussed Warren’s program in a bit more detail here, and suggest some modifications to the National Service Job (NSJ) program, including cost of living wage adjustments by county. But with or without these modifications, I think this simple four-part program is the plan that can get the US out of part of the fix we’re in, and get the Dems some votes in November.

But to be perfectly candid about it, I don’t think the Democratic Party has the will and courage to save itself. It won’t do anything like what I’ve suggested. It will, instead, choose to believe that it can pass some more 2000-odd page legislative half-measures, shot through with lobbyist loopholes, like the new FinReg bill, leave town to campaign, and then combine fear-mongering with happy dances about all the unprecedented legislation it has passed that no one in the base cares about except to sneer at. It will then try to excuse its defeat by saying that it was “Republican Obstructionism,” combined with the normal off-year losses to be expected by the Party in office which explains its defeat. And it will completely ignore explanations that say it lost because it passed an inadequate stimulus bill that failed to produce enough jobs for people, or help for the States, a lousy credit card reform that has no limits on the interest rates charged, a terrible health care reform that did very little to stem the flow of deaths, bankruptcies and foreclosures due to lack of health insurance, an inadequate program to help people whose mortgage loans were underwater, an inadequate FinReg bill; and in addition failed to noticeably improve the situation with respect to the two wars, torture accountability, protection of American civil liberties, pass meaningful energy legislation, pass EFCA, pass educational reform, do anything about the outrageous Citizens United decision, and undertake significant efforts to meet our growing infrastructure crisis. Too bad. It was a great Party once. Now it’s an instrument that has outlived its usefulness to the working people it claims to represent.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

Powwow About the Filibuster

12:27 pm in Uncategorized by letsgetitdone

For some time now discussions have been going on in the blogosphere about the filibuster and whether or not to get rid of it. Nowhere have these discussions been more frequent or intense than at Firedog Lake, where you’ll find them here, here, here, here, and here. Over time, two positions on what to do about the filibuster have developed. One held by many at FDL, including myself, is that the practice of the filibuster in any form should ended. The second is that the present filibuster procedures should be ended, but that the classical filibuster should be restored because it really would not introduce intolerable delays into the legislative process, and it also would provide a needed focus for open debate in a Congress currently dominated by “ruthless” “top-down” party perspectives. Read the rest of this entry →

Give The People What They’ll Like, Already: Not “Stupid Hooverism”

10:31 pm in Uncategorized by letsgetitdone

For the Democrats in Congress, winning in November isn’t rocket science; it’s about having the will to pursue survival ruthlessly. The key to winning is giving the American people what they’ll like, and not allowing any of the normal Washington obstacles to stand in the way. But, for Dems to act that way depends on them changing both their beliefs and their behavior. Let’s start with the beliefs.

The first belief that has to change is the idea that deficits are a problem for the Federal Government, that Democrats have to minimize to show that they are responsible. This is a myth, a lie, a scare, or a fraud. Deficits are only a problem when inflation begins to appear. If there is no inflation, Democrats should not even give lip service to the idea that deficits are important. Read the rest of this entry →

What Now for HCR: Sidecar Reconciliation and Trusting the Leadership?

12:19 am in Elections, Republican Party by letsgetitdone

Well, it’s official, or pretty official anyway. Scott Brown has been elected to Teddy Kennedy’s old seat and Martha Coakley has conceded. Some Democrats are blaming Coakley for running an inept campaign, and this may well have accounted for Brown’s margin of victory. But the real question is what allowed him to get close at all. The theory I subscribe to says that the Massachusetts special election for the Senate became nationalized around the pending health care reform bill. Brown dubbed himself the 41st vote against it, and Coakley obliged by calling herself the 60th vote for it, and also, in doing that, reneged on her strong pro-choice position taken in the primary, and then reinforced the narrative that she was part of the industry bailout team by interrupting her campaign to go to a fund raiser in which health care and Pharma industry lobbyists and contributors were prominent. Coakley was clueless about the strength of the anti-Wall Street feeling out there, just as her leader Barack Obama has been. Hopefully, the White House bubble has now been pierced and the President recognizes that an electoral disaster is pending unless the Administration can align against Wall Street and for Main Street. But whether he has or not recognized this, he now surely knows that the 60 votes in the Senate to pass critical legislation he favors, including health care reform, are not likely to be there on Party line votes. So, either he must work on a bi-partisan basis, not a good prospect with this band of Republicans, or he, along with the Senate leadership, must find a way around the 60 vote requirement in the Senate. Read the rest of this entry →