I caught the last half of Indiana Governor Mitch Daniels explaining his new budget math to CNN’s Candy Crowley. Daniels is trying to pitch himself and his book with the idea that the federal deficits and long-run debt pose an existential threat to the Republic. It’s just arithmetic, he says. But which numbers matter?
Math can be hard, but it’s impossible for those who ignore the relevant numbers. The essential numbers (among dozens we could cite) are these:
First: The US Government can currently borrow money for 10 years at about 1.8 percent, which adjusted for inflation means that the real cost of borrowing money long term is essentially zero. The market is screaming at us that money is free if we want to borrow more to put people back to work doing stuff that needs to be done.
Second, with unemployment at 9 to 17 percent, depending on what you measure, there are about 25 million people who need jobs or more hours in the jobs they have. Smart economists told us early on, and more are telling us now that this condition could last for several more years. And that’s assuming we don’t slip into a worse depression, which we might because Europe is led by people as dumb as Mitch Daniels. So even the “better” proposals to spend a little more now and postpone austerity measures until 2013 are misguided.
Third, the deteriorating infrastructure in the United States needs over $2 trillion in investments over the next decade, starting yesterday. Again, it costs us essentially nothing to borrow the money to do this.
Fourth, US poverty rates are at record levels. There are about 50 million people without health insurance. The number of children in the US who rely on food stamps is shameful and scandalous.
Fifth, the richest 1 percent in America continue to capture a grossly disproportionate share of the nation’s income and wealth, and that trend is continuing. But their effective tax rates haven’t been lower in decades.
Sixth, we’re laying off tens of thousands of teachers. It is because we have too many teachers? Too many over-educated children? No, we need more and we need to pay our teachers better. Our schools are failing, our kids are falling behind those of other nations and we’re losing out in the competition for what we need the next generation to know. That’s called losing the future.
And on and on. But Mitch Daniels didn’t bother to repeat any of those numbers. Instead, he claimed that just the interest payments on debt alone would force us to stop educating our children, which is patently absurd. He then claimed that historically, when countries reach a certain threshold of debt, they fail. But he didn’t say what that threshold is or cite any examples from history — he’s probably just misreading Reinhardt, as the GOP tends to do — nor explain why he believes the US is even remotely close to such a threshold when it’s clearly not. Once again, the government’s 10 year interest rate is around 1.8 percent . . .
Daniels is the “moderate” Republican that gets people like George Will all excited, because, I assume, he thinks Daniels at least has some tenuous grasp of reality while most of the presidential wanna bees don’t. Nope. Stick to baseball, George, where the statistics are there for all to see.



25 Comments

I forgot to mention that Daniels went out of his way to praise Sen. Mark Warner, who appeared with Sen. Lamar Alexander just before Daniels went on. Daniels liked their deficit hysteria talk, and said he wished Warner were President. Then we could have had a President who spent the last 18 months telling us how important for the economy it was to be getting our fiscal house in order, tightening our belts just like familes, and reducing business uncertainty by reducing spending. . . oh, wait . . .
I think that in any article concerning Mitch Daniels it is appropriate to mention that he was George W. Bush’s budget director and that did not turn out so well. Also, I like baseball. Please send George Will somewhere else
Correct about Bush’s number man. Disagree about Will. I love baseball, but if we could confine George Will to baseball, it would help the nation. Baseball will survive.
btw, I saw MoneyBall yesterday. Great fun. Recommended.
What mean it didn’t work out so well, hell it crushed those peons. Oh that’s me, I’ll get back to you on that;)
This is a different Mitch Daniels than the one who appeared on the Daily Show. He was almost moderate and agreed with Jon Stewart that Republican rhetoric was extreme and Republican efforts to reduce “entitlements”, cut taxes, coddle the rich were not the answer. When pressed by Stewart, he was almost apologetic about his choice of words. Stewart was a bit more forceful than usual, and it seemed to get results. We’ve seen the two faces of republicans before, and Mitch is just as adept and just as wrong. Whole interview can be seen on Daily Show site.
That darned Overton window. We can’t talk about the real problems.
Government is too small.
Business is too unregulated.
Taxes (on big business and the wealthy) are too low.
Free trade is for suckers.
The experiment in American Empire is a failure – it doesn’t show a profit.
Climate change isn’t going to wait for “pragmatic incrementalism”, or “let’s fix the economy first”, or “we can’t let anything happen unless someone can get rich”.
This country has plenty of money to meet its needs, but it doesn’t have enough money to support a wealthy class living like pharaohs who’s greatest fear is that they won’t have enough slaves to row their barges at water-skiing speed. Or that they might have to pay for their health care.
talking about government deficits out of context is worse than meaningless
every discussion of macro-economics must be grounded in the public good
all economic systems are desigend to serve the society that utlizes them
we have perverted the relationship and now the people serve the economy
that’s what happens when one uses the accumulation of wealth as a substitute for the meaning of life
corporations become people, people become slaves and neofeudalism arises, thereby returning democracy full-circle to its predecessor society of royalty and commoners
Mitch Daniels is a poster boy for the two-tier system we have in this country for drug offenses. Rich boys don’t do jail time.
I’ll start listening to Daniels when he apologizes to all 20 years olds who have been sentenced to prison for what he did in college.
the only time you can be sure that Daniels is not lying is when his mouth is closed.
Just another point man, along with Warner, and most of DC, Obama included, for the final push of the great austerity scam.
Austerity is needed to transfer the last remnants of middle class “wealth” to the elites. They have already transferred our home equity wealth, our 401k savings wealth, and any wealth derived by labor to the top 1 percent. They did this by the housing and stock market engineered bubbles (still on going) and the sending of our jobs overseas. All that is left of any value for the middle class is the social safety net, namely our earned SS benefits and paid for Medicare benefits, and that wealth is being transferred to the top with the national emergency called “austerity.”
Yes, we can borrow money for thirty years for free after inflation, see the rate on 30 year treasuries. Sounds like the perfect time to finance the rebuilding of America; transportation, high speed rail, energy independence, education, etc.
bulls-eye!
well said
I agree. Baseball will survive. I have been looking forward to Moneyball. Happy to hear that it is worth seeing. I really liked the book
daniels is hardly a ‘moderate’ he just looks that way.
Here is his dissembly by Jon Stewart. Who gave daniels his most agressive interview. It wasn’t as vicious as Stewart’s take down of tweety or cramer, but it was enough for tewart to close the interview with a polite apology, but in the end daniels had it coming.
http://www.thedailyshow.com/extended-interviews/397670/playlist_tds_extended_mitch_daniels/397636
Mitch Daniels is to budgetary policy as S&P is to credit ratings–both get big “FAIL’s” . . . yet never pay any consequences for being SO-O-O-O wrong! That we could all have jobs like this–failure secures your position, and elevates the worthiness of your opinion and standing. Gah! What’s wrong with this picture????
And yes, jo6pac–you’re right, it’s all a matter of perspective, isn’t it!
So let’s take a couple of steps back from the same old talking points rhetoric we keep hearing out of that cluster-fox based machine that likes to think they have generated a meme for Daniels as ‘different’, and look at Daniels…
1) He is one of the biggest reasons Chimpy and his magic budget rangers got us INTO this financial quagmire we’re in right now as head of chimpy’s budget office…
2) If you happen to see him on with Jon Daily earlier in this week even Stewart, who is notorious for being willing to cut thru the bone when required, but will also show ALL of someone’s view point – he did try with Daniels until he started spewing right-wing nut-job rhetoric and ended up cutting 14-15 minutes from Daniels droning on, because it’s the same thing we here everyday from Cluster-Fox, the mass media and most written journalist, just re-arranged a different way..
3) Daniels STILL believes that his inherited ‘trickle-down’ road to prosperity which has been proven over and over to be a sham, still works and everything he does is based on that – he’s a blatant failure.
4) Not to go real negative here, but the story of Daniels and his family isn’t the pillar of stability one wishes to see in ANY HUMAN but there are always two sides to that story and since we haven’t really gone there – let’s not start..
Daniels is just another polished lump out of the heap of steaming horse-manure we see everyday described as the republican party – just has bows in different places than most. The media try to dress him up as a quiet, deep thinker.. I think not.. Maybe a quite, talking point reader and they try to make that look like something it’s not… so, if you look a bit past the different layer of spin, he’s still a rethuglicon, cluster-fox ranger ready to meet his financial (Koch brothers) maker…
All fake.
“…that money is free..”
Where I can get some of that free money? I’m going to have a big furnace repair bill, probably, this fall.
“..the real cost of borrowing money long term is essential zero.”
I went to the bank the other day and a guy told me that wasn’t true at all. In fact, I would have to pony up the “equity” in my house to get a loan to fix my furnace and it would cost me considerable interest over the life of the loan. Are you sure about this free money? Why haven’t I heard of this before?
“Again, it costs us essentially nothing to borrow the money to do this.”
Does “us” include me? Are you sure it won’t cost somebody something to borrow money? I asked my brother-in-law to cosign and he said he would not pay any on the loan if I lost my job or something. I told him I read about all this on this blog thing where smart people talk to each other all the time. He laughed in my face. He’s pretty stupid, anyway. That free money sure sounds like a good idea to me. How does it work?
The Hoosier taxpayer part of me would be very happy to see Daniels move out of the Governors seat in Indianapolis. However, I love my country too much to wish him any sort of accommodation in DC. Please let this medium sized frog fade into obscurity.
The problem is everyone is talking, but no one is getting on the “SAME STAGE” debating their view.
Gov. Mitch Daniels states his view to ‘his audience’ and this paper states it’s criticism but no one is standing in the same place like “Lincoln & Douglas” debating the merits OR math!
So one group agrees with his premise while another group argues to it’s constituents his potential misguided premise.
So in the end “POLARIZATION” stays continually active.
Ten years ten trillion dollars on Infrastructure. The 2.2 trillion quoted from the NYT in the article raises our infrastructure from shitty to passable. Why not raise it from shitty to serving our current and FUTURE needs?
a relative of mine worked with Daniels at Eli Lilly, before he joined up with Chimpy. He described Daniels as empty-headed, who was a MARKETING guy, not a budget guy. Daniels job was to take and run with any goofy medicine the lab rats came up with, and promote the hell out of the mystery cure, factual information be damned. Basically what he did for Chimpy.
BTW, well written post Winski
Sorry to be snarky, but if I don’t do it my head will explode.
Daniels: CONservative on Koch.
Ok. Feeling better.
Winski, great comments. How do we get them on “The Daily Show”?
Unfortunately, I don’t think that Daniels and his American and European counterparts are just being dumb. Their objectives may be short-sighted and even self-destructive in the long-term sense. Their arguments are certainly moronic. But, in a near-term, tactical sense, these people are, I fear, entirely rational and, if not exactly intelligent, then at least ruthless and cunning.
The right-wing stupidity hypothesis rests on the assumption that the health of the economy is the objective of America’s new plutocrats but that, en masse, they remain stubbornly blind to the disaster that has resulted from their policies. At this point, I find it hard to believe that more than a few of the most inbred cretins in our wealthy classes could actually be so foolish.
On the other hand, if economic disaster IS the objective of the world’s Danielses, then everything is much easier to explain: we are witnessing a reactionary coup d’etat with economics as the weapon.
There is only one rational motive for piling up wealth in ways that strangle the economy that built that wealth: non-economic, political power. When wages closely track rising productivity and consumption/demand follows closely behind, as they did in this nation’s heyday, wealth is widely and democratically distributed. Even when the rich are fabulously wealth, the gap between rich and poor remains narrow enough that the will of the prosperous many offsets the whims of the somewhat more wealthy. When all are prosperous, none are powerful. Wealth only becomes power when there is a large enough differential, when general scarcity makes the man of property lord the little he surveys.
In Haiti, for example, a fortune that would, in the US or France, insure an at most upper middle class life–and exactly one vote on election day–buys all the trappings of membership in an Ancien-Régime aristocracy: servants, a walled compound on a hill, private soldiers, outsized influence on public policy, trade monopolies, the implicit right to rape and enslave poorer neighbors, and general impunity under the law. The Haitian grandee is objectively poorer than many of his European or American counterparts, and his backward economic policies insure that he always will be. But those same policies insure that he will always wield more power over his neighbors than either of them.
Seen in this light, a poorer, economically crippled America is not the disaster for the One Percenters that it is for the rest of us. The rich get a little poorer than they might otherwise be, without affecting their lifestyles. But everyone else gets much poorer. The political influence of the rich increases exponentially. Everyone else’s dwindles. So, on the whole, the rich trade wealth that could not otherwise spend for power that they could not otherwise have.
The above calculus–the convertibility of economic strength and political power–was arguably the key insight of the European Enlightenment. It produced the era of revolutions that began with our own. It produced capitalism. Political Economy, to use the latter’s given name, sought to drown the old aristocracy in a rising tide of efficient production and ever increasing general prosperity. The grandees would themselves be caught up in the self-interested pursuit of prosperity and would barely notice or regret the passing of their autocratic powers.
Unfortunately, the Enlightenment’s faith in enlightened self interest appears to have underestimated the would-be aristocrat’s enduring lust for power and domination. The current rightwing/corporate/One-Percenter agenda seems less an exercise in mass stupidity than a conscious attempt at reversing 250 years of economic progress and growing political equality. We are not just looking at a depression. We are looking at an American Counter-Revolution. Realizing–and articulating–this is our only hope of saving the Republic and republicanism in general.
very intriguing analysis
i hope you publish it as a diary for others to comment
Obviously, I’m referring to the interest rates for 10 year Treasuries — see the links. A government sovereign in its own currency is not the same as a family.
Brilliant work laying out the relevant math!
Oh, and I did the math:
~Those 25 million people without jobs that you just mentioned?
~With Obama’s $457 billion jobs expenditure proposal…
~Each of those 25mil gets a Government job making $18,800 a year…
~Voila! We’re out of the Depression.
Of course, since Bush’s final year in office, it has looked like the Federal Government, the Banking Industry, stock brokers and hedge funds are playing us for fools, trying to drive our economy off the bridge.
(Even though the Economy has already collapsed, ‘off the bridge’ is gonna hurt.)
I think it’s contrived, an economic hit.