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.)