November 24th, 2010 · Comments Off on The Threat to Open Society and the Interactive Voter Choice System
The biggest problem for Americans in our time is the increasingly dangerous threat to open society posed by the trend toward plutocracy and its effects on the political system. George Soros described the antecedents of these threats in The Age of Fallibility (pp. 100-101):
“Gradually, the methods developed for commercial purposes found a market in politics. This changed the character of politics. The original idea of elections was that candidates would come forward and announce what they stood for; and the electorate would decide whom they liked best. The supply of candidates and the preferences of the electorate were supposed to be independently given, just as in the theory of perfect competition. But the process was corrupted by the methods adopted from commercial life: focus groups and framing the messages. Politicians learned to cater to the desires of the electorate instead of propounding policies they believed in. The electorate did not remain unaffected. They chose the candidate who told them what they wanted to hear, but at the same time they could not avoid noticing that they were being manipulated; they were not surprised when their elected leaders deceived them. But there was no escape. The increasing sophistication of communication methods was built into the system. That is how America became a feel-good society. It was fostered by politicians seeking to be elected.”
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November 24th, 2010 · Comments Off on Who’s Going Rogue?
I laughed when I saw the title of Sam Stein’s piece about Democratic donors “going
rogue” on the President.
Seems to me the President’s the one who’s been “going rogue” on us since he got into office.
(Cross-posted at FireDogLake and Correntewire).
November 24th, 2010 · Comments Off on The Real Solution to the “Fiscal Sustainability Problem”
As I’ve blogged many times before, I don’t think there is a “fiscal sustainability problem” as the people who are presently deluging us with exhortations to bring the national debt and the debt-to-GDP ratio define it. That’s because I define “fiscal sustainability” in a different way than they do, as I’ve explained in another post. In this one, however, for the sake of argument, I’ll accept the deficit hawk/dove notion of “fiscal sustainability” and offer a different and, I think, much better solution to that problem than any of the deficit-reduction Commissions, groups, and individual members of these bodies are proposing to us now.
Fiscal Sustainability according to the deficit hawk/doves refers to: the annual Federal Deficit (the gap between Federal Spending and Federal Tax Revenues), the public National Debt (the accumulated inflation adjusted sum of deficits and surpluses since the inception of the Republic), and the debt held by the public to GDP ratio. People who write about this see things this way: continuing and growing deficits are a sign that fiscal sustainability is going down; continuing and growing increases in the national debt are a sign that fiscal sustainability is going down; an increasing debt-to-GDP ratio is a sign that fiscal sustainability is going down, and the problem of fiscal sustainability must be solved by at least stabilizing, and eventually, decreasing the debt-to-GDP ratio over time. [Read more →]
November 24th, 2010 · Comments Off on Co-ordinated Around the Wrong Thing
Yesterday, R. J. Eskow remarked:
We expected to see an all-out assault on Social Security and progressive taxation in November, and we expected it to come under the banner of “deficit reduction.” That was always the plan: Wait until after the election, when a lame-duck Congress could pass the preferred policies with the least political blowback. Then release a flurry of like-minded proposals and supportive editorials to create the illusion of consensus, capped by a coordinated media blitz to pressure the President and Congress into accepting them.
But even we, battle-hardened as we like to think we are, didn’t expect the assault to be so coordinated, so widespread, or so aggressive. The number of like-minded reports released this month is greater than we expected, the ad buys are larger, and the range of ideas is narrower. And more journalists are carrying water for this campaign than we expected. All of this is being done to serve an anti-government, anti-Social Security, anti-tax agenda whose ideas are both unpopular and impractical. Nevertheless, the media’s greeted then with a tidal wave of nearly-unanimous praise (some of of which can even be found on the editorial page.)
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November 24th, 2010 · Comments Off on The Very Idea of A Long-term Deficit Reduction Plan
This week and last we’ve seen the appearance of four plans for “deficit and debt reduction.” Erskine Bowles and Alan Simpson started things off by releasing their Co-Chair’s plan. At about the same time, the Peterson-Pew Commission on Budget Reform issued a plan on reform of the budgetary process designed to ensure that fiscal rules organized around specific debt-to-GDP ratio targets would be implemented. These plans were quickly followed by releases from Jan Schakowsky, and Alice Rivlin and Pete Domenici, on behalf of the Bipartisan Policy Center’s Debt Reduction Task Force.
The Peterson-Pew Commission Report is distinct from the other three in the sense that it lays out debt-to-GDP ratio targets and procedures for meeting these targets regardless of economic conditions. It’s about constructing a disciplinary framework for budgeting and expenditures that would bind Federal spending come what may. It’s neutral about where cuts would come from however, preferring to advocate an institutional framework for discipline rather than substantive spending reductions in particular areas. [Read more →]
November 24th, 2010 · Comments Off on Stephanie Kelton and the Catfood Commission: “I know which scenario benefits me. Do you?”
In a beautifully simple post that should crystallize everything for you, Professor Stephanie Kelton of the University of Missouri at Kansas City crystallizes the logic of the Sectoral Financial Balance Model for President, Obama, the Catfood Commission, the deficit hawks and doves and you and me. She says:
In a ‘closed economy’ (one without foreign trade), the government’s budget position is, by accounting logic — the negative of the private sector’s (firms and households combined) position. Thus, a public sector DEFICIT is equal to the private sector’s SURPLUS. To the penny.
So, in a closed economy, a Federal Government budget deficit adds to private sector financial assets, while a Government surplus represents a leakage and subtracts financial assets from the private sector. Or more briefly, Government deficits make private individuals richer; Government surpluses make private individuals poorer. [Read more →]
November 24th, 2010 · Comments Off on The Catfood Counter-narrative: The Fiscal Sustainability Teach-In Program
Pretty soon I plan to start blogging about the presentations and discussions emerging from the Fiscal Sustainability Teach-In Counter-Conference. But, first, I want to discuss the program design and its logic.
That design was basically a reaction to the framing of the deficit hawk messaging developed from the beginning of the Obama Administration. The Peterson Foundation and its allies, the President himself and some in his Administration, various Republican and Blue Dog Senators and Congresspersons, and the appointees to what has become known as the Catfood Commission, all assume that fiscal sustainability is about the national debt, the budget deficit, and the public-debt-to-GDP ratio. They also assume that too high levels of these can trigger a sudden move towards insolvency due to rapid rises in the interest rates at which Treasury bonds can be sold. Of course, they also assume that the Federal Government could reach a state where it literally runs out of money due to an incapacity to acquire it, rather than to incompetent human decisions by the Congress or the Executive refusing to create it.
Other assumptions often made by deficit hawks include: the claim that the Government can only acquire money by taxing or borrowing, so that like any household, it must “fund” its spending; the claim that the Government must “stabilize” its debt, by stabilizing the size of the public debt-to-GDP ratio; the claim that the Federal Government is like any household it governs and is subject to similar rules of budgeting; the claim that if we leave “heavy” public debts to our children and grandchildren, it will hamstring their ability to produce and/or consume and will harm their opportunity for a good life; the claim that the US can run out of money to pay our entitlement obligations; and the claim that “excessive” deficit spending can cause demand-pull inflation before the productive capacity of the economy has reached its limits. [Read more →]
November 24th, 2010 · Comments Off on The Counter-narrative To the Catfood Commisson: More on “Our Guiding Principles and Values”
A few days ago I began a critique of the Catfood Commission Co-Chair Proposals draft, by focusing on a single slide of their presentation stating “our guiding principles and values.” There was enough objectionable material on that slide to justify a post. But there’s much more worth commenting on in the succeeding slides on the same subject. Slide 2 says:
2. The Problem Is Real –the Solution Is Painful –There’s No Easy Way Out –Everything Must Be On the Table –and Washington Must Lead
- We must stabilize then reduce the national debt, or we could spend $1 trillion a year in interest alone by 2020.
- A sensible, real plan requires shared sacrifice –and Washington should lead the way and tighten its belt.
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November 24th, 2010 · Comments Off on Fiscal Sustainability Conference Videos and Transcripts Now Available
On April 28, 2010, The Fiscal Sustainability Teach-In Counter-Conference was held at The Marvin Center of The George Washington University In Washington, DC. The Conference was first proposed in a post I blogged on April 7th at a number of sites including this one. A group of bloggers responded and collectively, using primarily the Correntewire.com and fiscalsustainability.org sites, we built a team that, with the support of our fine speakers, Professors Bill Mitchell, Stephanie Kelton, Pavlina Tcherneva, and L. Randall Wray, and international financial consultants Warren Mosler and Marshall Auerback, and fund raising through Howie Klein, the whole Blue America team, and many small contributors successfully organized the Conference in a little more than three weeks time, so that we could hold it on the same day as the extremely well-funded, Peterson Foundation-supported Fiscal Summit, which delivered the deficit hawk narrative on fiscal sustainability and fiscal responsibility. The purpose of our Conference was to provide an explicit counter-narrative to the Fiscal Summit “story” of long-term deficit problems that the United States must act to counter; and also to the narrative of the National Commission On Fiscal Responsibility and Reform (the “Catfood Commission”) which had held one of its early meetings the day before. [Read more →]
November 23rd, 2010 · Comments Off on Bill Mitchell on the Co-Chairs’ Proposal
I blogged on the opening slide of the Catfood Commission Co-Chairs’ Proposal just a couple of days ago, so when I checked out BillyBlog, as I do almost everyday, last night, I was particularly pleased that a part of his great post was devoted to the same slide I commented on. I’d like to dialogue with Bill’s treatment now, both for fun and also to introduce my readers to not just the substance, but the flavor of Bill’s views on austerianism, the increasingly serious threat to the well-being of both working Americans and the world’s working people.
In my estimation, Bill is one of the world’s leading economists practicing right now. And with Warren Mosler and L. Randall Wray he forms what I think of as the big three of the Modern Monetary Theory (MMT) movement in economics. In these times when so-called “progressives” talk about the “Catfood Commission” in grave tones, as if it is trying to deal with a serious and intractable problem employing great intellectual and moral courage, when what it is really doing is addressing a manufactured issue, employing old economic theories that were discredited in the 1930s, with monumental stupidity to boot, it’s very important to have a real humanist like Bill on the side of working people everywhere. [Read more →]