All Life Is Problem Solving

Today, Dean Baker questioned the sanity of The Washington Post, after its editorial staff once again came out for cuts in Social Security to avert a crisis which will not be manifest until 2037. In reply to the Post’s observation that this year is the first in which the Social Security program will pay out more than it takes in, and that this is a warning sign, Dean points out that it:

. . . certainly is a warning sign. The falloff in Social Security tax revenue is a warning that the economy is seriously depressed due to the collapse of the housing bubble. Double digit unemployment leads to all sorts of problems, including the strains that it places on pension funds like Social Security.

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Dean Baker had an interesting post in HuffPo on August 2nd on the Alan Blinder/Mark Zandi study. It’s the best take on it I’ve seen thus far. He says:

“. . . A new study by Princeton University Professor Alan Blinder and Mark Zandi, the chief economist at Moody’s Analytics, examined the impact of the TARP and the related Fed and FDIC bailout programs. The study found that without the bailout, GDP would have declined by another 6.5 percent and the economy would have lost another 8.5 million jobs. In other words, things might be bad now, but if we didn’t shovel trillions in loans and loan guarantees to Goldman Sachs and the rest of the Wall Street gang, they would be even worse.

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Every once in a while, Richard Kirsch, does a “happy dance” article celebrating his own Health Care for America Now campaign for health care reform, whose outcome of course was the wonderful bill legislated by the Congress last Spring. Kirsch, who is now a Senior Fellow at The Roosevelt Institute, posted his latest happy dance at The Nation, whose “liberal media bias” was nowhere in evidence near his article.

I have only a few comments to make on his description of the process of bringing this “progressive victory” to us all, since, no doubt, Kirsch is the leading expert on this process. However, I will say something about an aspect of the process which he’s neglected to describe and then go on to talk about the results of his noble efforts.

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Heather Boushey, Chief Economist at the Center for American Progress Action Fund, writes about the economy failing to go over the cliff and the deficit. She says:

In their report, How We Ended the Great Recession, Economists Alan Blinder and Mark Zandi estimates the effects of the financial and fiscal policies enacted since the crisis began in 2008 on the economy. Their conclusion is that had the combined financial and fiscal policies not been enacted, “GDP in 2010 would be about 6.5 percent lower, payroll employment would be less by some 8.5 million jobs, and the nation would be experiencing deflation.”

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Paul Krugman got a lot of attention among leftward tweeters today for following Glenn Greenwald down the road of writing about the de-evolution of the United States into a de-developed nation, because of the irresponsible preference of its ruling elite for lower taxes rather than infrastructure and essential services, and also because of impact of a generation of fantasy anti-government rhetoric on American minds. Again, I was happy to see Paul take this issue up, but would have been much happier if he done so with, perhaps, a little more fire, and a little more insistence on what the Government ought to be doing, and why we need not, ever, worry about deficits in the abstract.

In particular, I wanted Paul to talk about not just the specific problems of infrastructure and services, but more generally about the problems of Hooverism and deficit hawkism, and how they prevent us from meeting any of our challenges. However, he did raise that issue and did not pursue the matter of deficits and why we don’t have to worry about them for the foreseeable future. Paul did say:

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On Friday, Glenn Greenwald did a piece called “What Collapsing Empire Looks Like,” in which he contrasted the cutbacks in essential domestic spending throughout the country with the “no problem” funding of Homeland Security and our two wars. Among other things, he said:

Does anyone doubt that once a society ceases to be able to afford schools, public transit, paved roads, libraries and street lights — or once it chooses not to be able to afford those things in pursuit of imperial priorities and the maintenance of a vast Surveillance and National Security State — that a very serious problem has arisen, that things have gone seriously awry, that imperial collapse, by definition, is an imminent inevitability? Anyway, I just wanted to leave everyone with some light and cheerful thoughts as we head into the weekend.

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The Washington Post editorial page has been one of the primary MSM outlets for aggressive deficit terrorism. There is an axis of deficit terrorism in Washington DC today. It runs from Hooverite Republicans such as Judd Gregg and Mike Spence, to Blue Dog Democrats like Evan Bayh and Kent Conrad, to media organizations like CNN, WaPo, and the Peter G. Peterson funded The Fiscal Times, to foundations like The Peter G. Peterson Foundation, and Peterson-funded think tanks like AmericaSpeaks, to the Congressional Budget Office (CBO), to high-level Administration people like OMB Director designate Jack Lew, and judging by his speech and actions, to Barack Obama himself. This axis has been laying down a carpet of continuous propaganda for many months now distracting attention from the immediate problem of getting people back to work, and toward doing something about an assumed long-term problem, that some argue is fictional, and that many others think may, but, will most probably not, occur

Last Saturday, the WaPo added to its place in progressive infamy with an editorial that managed, in a few short paragraphs, to repeat many of the false arguments the deficit terrorists use to scare Americans into thinking that we really have to cut Government spending as soon as we can or we will be facing unbearable suffering in future years. This post will review that editorial in detail. It begins: [Read more →]

Bob Herbert, in his column on June 7th said:

There is no plan that I can see to get us out of this fix. Drastic cuts in government spending would only compound the crisis. State and local governments, for example, are shedding workers as we speak.

And by July 26th he still hadn’t come up with a solution and began his column with:

The pain coursing through American families is all too real and no one seems to know what to do about it.

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After reviewing the terrible state of our economy and the need to reconstruct it so that people can find work and a vibrant middle class can be rebuilt, Bob Borosage suggests that Congress go back to first principles. he briefly reviews the post- WWII history of employment legislation and says:

That debate was revisited in the 1978 Humphrey Hawkins Full Employment Act, which initially sought to revive the mandate to full employment, and the right to a job. In the end, it too was diluted, offering five ultimate goals: full employment, growth in production, price stability, balance of trade and balanced budgets. It was this act that gave the Federal Reserve the dual mandate of pursing both full employment and price stability. Needless to say, over the last decade, the goals were distorted in practice, with price stability becoming primary, while trade deficits soared, manufacturing was shipped overseas, and budget deficits rose — before the collapse.

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Jason Rosenbaum, who runs the Seminal Blog at FireDogLake gives us an object lesson in what passes for “pragmatism” in Washington today. It is a pragmatism without a sense of limits. And we have seen it from the President, his closest advisers, and the “official” progressives resident in Washington and New York “think tanks” and institutes, in the media and in the “access blogosphere.” He says:

“While I’m very sympathetic to the arguments of letsgetitdone and others that the deficit simply isn’t a problem our government should be concerned with right now, political realities dictate different behavior from our politicians. People still list the national debt as a concern unprompted due to decades of brainwashing by the business-friendly right wing in this country. This leads less brave or creative politicians to disastrous ideas like the cat food commission.”

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