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President Barack Herbert Hoover Obama Explains How to Avoid a Depression

9:34 am in Uncategorized by Scarecrow

On several occasions after the Great Depression began, President Hoover admonished the public and those demanding the government provide economic relief that the nation had run out of money and that it would be irresponsible to borrow and engage in profligate spending. Over 80 years later, we are hearing virtually the same economic gibberish from President Obama.

From the President’s weekly address:

For years, the government has spent more money than it takes in.  The result is a lot of debt on our nation’s credit card – debt that unless we act will weaken our economy, cause higher interest rates for families, and force us to scale back things like education and Medicare.

Now, folks in Washington like to blame one another for this problem.  But the truth is, neither party is blameless.  And both parties have a responsibility to do something about it.  Every day, families are figuring out how stretch their paychecks – struggling to cut what they can’t afford so they can pay for what’s really important.  It’s time for Washington to do the same thing.  But for that to happen, it means that Democrats and Republicans have to work together.  It means we need to put aside our differences to do what’s right for the country.  Everyone is going to have to be willing to compromise.  Otherwise, we’ll never get anything done.

That’s why we need a balanced approach to cutting the deficit.  We need an approach that goes after waste in the budget and gets rid of pet projects that cost billions of dollars.  We need an approach that makes some serious cuts to worthy programs – cuts I wouldn’t make under normal circumstances.  And we need an approach that asks everybody to do their part.

And via Brad DeLong, here is President Hoover in 1932: Read the rest of this entry →

Move Over Doug Feith: Lawrence O’Donnell Has a Friend

7:10 am in Economy, Politics, Uncategorized by Scarecrow

There’s a fascinating, or should I say, depressing, debate occurring in Washington over how much federal spending should be cut as a condition for raising the debt ceiling, which everyone except the Tea-GOP crazies understands must be raised. There is a somewhat less important debate about the President’s strategy in getting to an answer.

Over several nights, MSNBC’s Lawrence O’Donnell (Last Word) has argued that Mr. Obama has pursued a brilliant strategy that has not only split the Republicans over their unwillingness to accept any tax increases but also put him in an advantageous position for getting a “clean” debt limit bill without egregious cuts, as well as gaining political traction as the only responsible adult in the room.

I’ve noted that this theory, while implying Mr. Obama is lying, conveniently ignores important facts and consequences about Mr Obama’s assumed strategy.

Never mind that with Mr. Obama’s consent/direction, Harry Reid is trying to make the “clean” bill as dirty as he can so that a least a few Tea-GOPs can vote for it and not force cowardly Democratic Blue Dogs to vote as though the country was more important than their reelection. I’ll only add that in yesterday’s press conference, the President reinforced points that increase my concerns about the economic message he keeps sending.

The President has again told voters that dramatically reducing our debt has to be the nation’s priority; we can’t fix the economy nor adequately relieve the real unemployment crisis unless we first solve the faux debt problem. So if we only raise the debt limit (McConnell’s original “clean” bill that Mr. O’Donnell thinks is Obama’s clever goal) without a major “down payment” on debt reduction, Washington and voters will continue to be preoccupied by the debt.

Well, as long as the President and the Tea-GOP both insist that we can’t fix the economy or create enough jobs unless we dramatically reduce the debt, then there’s no reason to expect this President or this Congress to fix the economy or create enough jobs.

That’s a very clever argument for not fixing the economy or creating jobs, or being blamed for it, but apparently, the perversity of relentlessly promoting that false belief has escaped Mr. Obama’s supporters, who seem to pay no heed to the dozens of economists telling us our leaders have their priorities backwards.

Pointing out this perversity is causing severe angst among Obama fans, who have now latched onto Lawrence O’Donnell’s lecturing progressives for their thoughtless criticism of Mr. Obama’s brilliant strategy.

In this wondrous article, progressives are accused of being naive, ignorant of American history, hypocrites in complaining about raising retirement ages now but ignoring that already happened, and best of all, simply too young and immature to know much, compared to O’Donnell who knows how to use a computer to edit the number in the debt limit statute. Read it all; it’s a treasure.

So what evidence is there of these crimes, and particularly the crime that hypocritical progressives are indifferent to the current eligibility ages in Medicare and Social Security?

I guess that when most progressives were proposing, in the health care debate, that Medicare be extended to everyone, or failing that, at least extending it down to 55, and failing that, at least let people buy into Medicare as an option on the Exchanges, and failing that, at least offer a public option linked to Medicare rates on the exchange that might one day become the equivalent of Medicare, that must have meant that none of us ever had a problem with raising the eligibility age of Medicare.

And when progressives argued for temporarily lowering the age for Social Security to help relieve the jobless crisis, and when Jane Hamsher this week front paged an article by James K. Galbraith in which, among other things, Professor Galbraith recommends, as he did in 2009, that we lower the eligibility age for Social Security at least temporarily as a jobs recovery measure, and when Jon Walker and I (and probably many others) endorsed that idea during the stimulus debates and again when they first started talking about “reforming” Social Security, and when we noted during the Cat Food deliberations that it was looney to consider raising the eligibility age further when millions of newly jobless were already being pushed prematurely onto lower benefit levels of Social Security and Medicare, that that obviously meant progressives were just fine with the fact the eligibility age for full benefits had been raised already.

It’s only slightly annoying that, without having any facts, Mr. O’Donnell’s friend assumes that those of us criticizing Mr. Obama’s economic views and who oppose putting Medicare and Social Security benefit cuts on the table must be too young and immature to remember much history. Ignoring the gratuitous insult to younger people, many of us are retirement age or older, and some of us recall being drafted to help kill little brown people in Vietnam. I guess none of us was wise enough to learn anything about politicians claiming to be against things like needless war and torture and indefinite detention but then engaging in or covering for them.

It is no revelation that Mr. Obama may think he can benefit with independents by insulting progressives. And it’s possible that when progressives push back, that helps him in some perverse way disconnected from the public interest. He and his brilliant political team now have the economy languishing, unemployment at 9.2 to 17 percent and the Tea-GOP holding US credit and the economy hostage. They’ve got him running several points behind the generic representative of one of the stupidest, most destructive political parties in American history. But O’Donnell’s friend concludes that every time progressives push back against Mr. Obama’s flawed policies, they’re helping Mr. Obama.

By that logic, the way for progressives to pressure the Administration to adopt policies in line with progressive values is to stand on a chair and clap as hard as they can every time the President reenforces Tea-GOP talking points, publicly criticizes liberals or undermines the progressive elements of the New Deal that produced a 50 year run of rising incomes, expanding middle class, and success for the country, never mind the Democratic Party. Of course, that would only confuse the independents, wouldn’t it?

Step down, Doug Feith; you’ve lost the title.

Related Updates from Americablog: Larry Summers on Obama’s 2009 plan to “reform” Social Security and Medicare.

From DeLong, citing David Dayen: No, no, no; first loot, then burn

Why Is Larry O’Donnell Implying Obama Lied to the Country and the Tea-GOP?

6:04 pm in Economy, Politics by Scarecrow

MSNBC’s Lawrence O’Donnell can barely contain his self-adulatory glee in coming up with the theory that President Obama has outfoxed the Tea-GOP in the debt limit negotiations. But the question is, why should the country be happy about what his argument implies for the President’s principles and veracity?

It’s clear that the Tea-GOP are now seriously split — between the crazies and the predators — over what to do about Mr. Obama’s insistence on more tax revenues as a condition for significant spending cuts. Since the holy Tea-GOP mantra is that any (net) tax increase is comparable to original sin and will get you expelled from Grover Norquist’s grace, the faithful don’t know whether to follow Mitch McConnell’s exit strategy, which at least keeps them in grace for now, or Eric Cantor’s no-exit strategy which . . . well, it’s not clear what would happen, but it’s got the Business Roundtable, the Chamber of Commerce, the Federal Reserve, IMF and Wall Street freaking out.

O’Donnell’s theory, however, holds that President Obama essentially lied to John Boehner and Mitch McConnell. He lied by falsely telling them — and telling the public in his press conferences — that he’d accept dramatically reduced domestic spending, including significant reductions in Social Security and Medicare benefits, if only the Tea-GOP would accept net tax/revenue increases on a 3:1 ratio. And that’s okay, because he never really agreed to such cuts but knew the Tea-GOP would reject the offer, so he wouldn’t have to agree.

O’Donnell insists this was a clever lie, and those stupid Republicans and (O’Donnell loves this part) those mean progressive bloggers (I guess that includes me!) naively took Obama at his word. What fools! Since all the fools were duped, time has now run out on the debt limit, the financial elites will rein in the crazies, Obama will get a “clean” bill, and the Republican leaders will be seen by their base as unprincipled fools. So was Jay Carney lying today when he downplayed Mitch McConnell’s exit plan?

“This is not a preferred option,” White House Press Secretary Jay Carney said of McConnell’s proposal in his daily briefing. . . .

“The president is firmly committed to significant cuts in spending and to dealing with our deficit and debt problems in a balanced way,” he said. “Bigger is better. … It’s an opportunity for a game-changer, to put the United States on much firmer ground as we really get into the 21st century and the economic competition that confronts us.”

A plausible theory needs to accommodate and explain virtually all of the facts and observations relevant to it; otherwise it’s not credible. And Mr. O’Donnell has conveniently left out some important facts.

The President and his advisers have repeatedly told the American people that the nation needs to “tighten its belt” and get its “fiscal house in order.” He’s said repeatedly that the deficits and debt are contributing to business uncertainty, and this uncertainty is preventing the economy from recovering broadly enough to solve the very serious unemployment problem. He’s said we can’t even have a useful conversation about jobs until this debt problem is solved. He’s promoted the priority of debt reduction through White House appointments and Alan Simpson’s Catfood Commission, choosing individuals who claim deficits and the debt constitute a “crisis.”

Mr. Obama has also argued in public that the debt limit talks are an opportune moment to resolve these issues, and because they are so important, the talks should include massive spending reductions, a Grand Bargain. We need to think big, he’s said, and “if not now, then when?”

Now I agree with economists who think Obama’s economic assessments are not merely a misunderstanding of our economic situation, but unsupported, dangerous gibberish. But put that aside. O’Donnell’s theory implies that the President was either lying when he said those things, or he’s just lied to the Tea-GOP in a way that may tank the opportunity Mr. Obama claims we need to accomplish what he told us was a prerequisite to economic recovery.

So where’s the truth? Does the President actually believe the things he said in public? If so, hasn’t he just made it less likely he’ll achieve his goals, because he’s misled the Republicans (and the country) and humiliated their leaders whose agreement he needs? Or was he lying when he made all those arguments about the connection between deficit/debt reductions and fixing the economy? If so, then where’s his jobs program and why has he been embracing talking points that make such a program harder to achieve?

What should voters, particularly those who care about Social Security and Medicare, think? Should they assume that Mr. Obama really would accept significantly lower benefits for those on Social Security and Medicare in exchange for higher taxes on carried interest and changing deductions for corporate jets? Where does that leave the Democratic Party? Or should voters assume Mr. Obama was lying about all that and would never accept the deal he said he’d make?

It would be tragic if Mr. Obama achieved what he claimed to be pursuing, whether or not it embarrassed Tea-GOP leaders. But even if all that has happened is that Obama has split and humiliated those leaders, we’re still stuck with a President who claims to believe economic notions that would harm millions of people. Unless he was lying. Next theory?