The Debt and Deficit Are Way Too Fucking SMALL

So here's my plan: borrow $10 trillion from the countries begging us to borrow money from them at negative interest rates, then create 10 million jobs paying $50,000 per year plus full benefits.  What jobs, you say?

Government jobs.  The ones the anti-government freaks and austerity hysterics have been eliminating for the last 40 years. The basic, important ones that create a civilized nation.

Jobs and training for people with no college education: nurse aides and orderlies in hospitals and nursing homes; maintenance workers in public buildings and parks and recreation centers; child care workers, teacher aides, home health care workers.

Jobs for people with college education: teachers, social workers, mental health counselors, substance abuse counselors, health and safety inspectors, IRS tax reviewers, nurses and public defenders.

All jobs that can't be outsourced and can't be done by robots. Jobs that will pour trillions into the economy and take a huge step toward eliminating poverty.

Digby:

Take a look at this atrocity (and I don't men the zombie in the suit) 

Think Progress has the definitive takedown:

This is false. The world’s investors continue to give us their money for historically low prices. The national debt never has to be repaid in the credit card-style manner the cover implies. And trying to do so would be economically disastrous for the entire world’s population, both the tiny fraction who are rich and the many billions who are clawing for a dignified life. 

Putting that cover on newsstands in 2016 is the journalism equivalent of Ted Cruz’s campaign dressing up its fundraising emails as formal past-due notices. It’s a simple con: Alarm the eye, shock the brain, and collect a few nickels from the stunned rube who falls for it.

And if you need a re-cap of just how disastrous this obsession with the debt has been in very recent history:

Panic about the size of the national debt has undermined the country throughout the entire Obama presidency. After a cataclysmic financial industry collapse caused by very rich people in very expensive suits, a new round of well-heeled liars conspired to ensure that the nation’s economic recovery would be devastatingly slow and feeble.
In late 2008 and early 2009, it was obvious that the government needed to spend like hell to save the country from an outright depression. Official government forecasts showed a looming economic output loss of more than $2 trillion, and independent analysis suggested the problem was even larger. 

But rather than enacting a $2 trillion injection of public stimulus, debt hawks insisted on something much more modest. The White House obliged, proposing less than half of what official forecasts would have required. White House economist Christina Romer fought for a much more ambitious package, lost, and quit the administration a little over a year later. 

The debt panickers had won. With that victory under their belt, they got bolder – and Democrats got craven. 

CNBC talking head Rick Santelli’s live-tv rant in 2010 that’s often credited with launching the Tea Party? At the surface he railed about specific spending policies and banker-friendly notions of fairness. But like the movement it sparked, it was fundamentally animated by debt panic. 

The debt-whiner Gadsden flag crowd delivered the 2010 election wave that gave John Boehner the Speaker’s gavel, ensuring the legislative death of every Obama priority that hadn’t been finished yet. The media’s tendency to chase whatever is shiniest ensured that the Tea Party phenomenon dominated political conversations that spring and summer. 

Democrats up for re-election that year decided they couldn’t push back against the fundamental economic errors underlying the debt fervor. Instead, they ran away from anything that even smelled like a spending bill. 

Almost all of them tried to downplay their votes for the stimulus package, quietly validating the incorrect notion that the bill had been too big. That of course did nothing to stop the hundreds of thousands of attack ads that smeared the Recovery Act as a debt-laden boondoggle. 

President Obama signed the American Recovery and Reinvestment Act in February 2009. Republicans channeled a dishonest debt panic to ensure it would be the last ambitious investment in America's economy he got to make.President Obama signed the American Recovery and Reinvestment Act in February 2009. Republicans channeled a dishonest debt panic to ensure it would be the last ambitious investment in America’s economy he got to make. 

Many Democrats even asked President Obama to stay away from their districts – even though the new president’s personal popularity among Democrats likely would have helped many of those defeated House members to keep their seats. 

After the 2010 “shellacking,” the White House itself made a similar strategic error by entertaining the debt panic that had empowered the same Republicans who began sabotaging the economic recovery starting at the very outset of Obama’s tenure. Obama appointed a bipartisan commission to gin up ideas for reining in a supposedly-runaway national debt. It didn’t matter that the commission’s most damaging ideas never became law. The signal was clear: No blue states, no red states, just purple states where everyone agrees that The Debt Is A Problem That Must Be Solved. 

With Boehner installed as Speaker on the crest of a debt-panic wave, a fiscal game of chicken became almost inevitable. To resolve it, the White House ended up agreeing to the disaster known as sequestration.
The entire point of that exotic policy mechanic was to force hardline Republicans to back off of their budget-cutting obsession. It only sort of worked politically and didn’t really work on a policy level. It did not prevent Boehner from triggering a disastrous government shutdown.
Sequestration cuts hampered all manner of material public services: Job training programs, domestic violence shelters, housing support systems, health services for American Indians, food programs for seniors, and the system that keeps poor people from freezing to death in the winter all felt the squeeze, as did longer-term investments in things like scientific research and pre-school programs. 

The debt panic didn’t just install Republican majorities. It caused substantive harm to millions of Americans who already live in precarious economic situations even when government programs are fully funded. It kept unemployment higher for longer than was necessary, prolonging the recession – and arguably causing thousands of premature deaths.

There's a reason the deficit hawks are getting the band back together. It looks as if the Democrats might get a mandate to do things for the American people and we cannot have that. It's vitally necessary to nip that idea in the bud right now.
Just keep in mind that this nonsense is designed for the purpose of keeping all Republicans and as many Democrats as they can muster in line to block any spending a Democratic president might propose. And they are very, very good at it. Don't underestimate their ability to manipulate the media and the public with this nonsense. They've been successfully doing it for decades.

The good news is that if Trump wins he says he'll retire the entire national debt within 8 years. With renegotiated trade deals. Or something. So there's that.

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Yet More Proof Austerity Kills, But That Won 't Stop the Repugs

Facts and reality have never stopped them from pushing their kill-the-poor agenda before; why should they change now?

Seth D. Michaels at TPM:

Unfortunately for them, all of the arguments they like to deploy in favor of safety-net cuts are collapsing.

The CBO announced today that the federal budget deficit has fallen to a five-year low:

It's the smallest deficit recorded since 2008. FY2014 was the fifth consecutive year the deficit declined as a percentage of GDP. It is now an estimated 2.8% of GDP, a percentage that puts it below the average of the past 40 years.

There are many reasons for this, both good and bad - but the biggest takeaway is that deficit reduction is a consequence of economic growth, rather than a prerequisite for growth, as politicians of both parties have spent so much time arguing.

One result is that politicians are spending less time talking about the deficit, which in itself is a positive outcome, because it knocks away one of the first arguments for pointlessly cruel safety-net cuts.

Indeed, the “pivot to deficits” that happened before economic recovery was even underway has hurt the economy more in the long term. The last few years of showdowns, shutdowns and compromise cuts have been a huge wasted opportunity:

Austerity has also hurt more than we thought — so much so that it might even be self-defeating. That's right: cutting spending in a slump might actually make debt problems worse.

The rush to trim deficits led to lost jobs, cuts to food stamps, and the end of extended unemployment benefits, long before the recovery

So you’ll be less likely to hear arguments about a future debt crisis that needs to be imminently solved with cuts to the major social safety net programs; instead, you’re more likely to hear what I’ll call the “unleash” argument: the notion that we need overall cuts to the size and role of government in order to jump-start our economy.

No, you won't. You'll hear them even more loudly and effectively.  The austerity hysterics never quit.

$1.18 Trillion in Stolen Tax Dollars Found

Now we just have to take it back.

Firedoglake:

- A new report found tax breaks to major corporations equal to amount of discretionary budget for the current fiscal year (and larger than the budget deficit.)

The Deficit is Shameful, Alright: Shamefully Small

So, the national deficit is at its lowest point in six years - down nearly half a Billion dollars - and at the same time millions of people out of work for more than a year are living on literally nothing.

This is not a coincidence.

Because when federal budget decisions are being made by vicious morons and plutocratic cock-suckers, you get a response to economic crisis that is exactly the opposite of what is needed.

The despicable "family budget" lie promulgated by the austerity hysterics is too stupid to address - the federal government's fiscal responsibilities are nothing like a family's - but if you insist on a kindergarten-level analogy, here it is:

You're going broke because you are paying far more in rent than you can afford. But if you bought a house even with nothing down, your monthly payments would be far less than your current rent, and you'd be building up equity instead of throwing money away on rent.

But because of that rent eating up your income, you don't have the cash to buy a house outright. You have to borrow the money. 

You borrowing to buy a house puts you in long-term debt, sure, but it gives you two big immediate financial boosts: your monthly housing costs drop substantially, and you now have an investment that grows in value with every mortgage payment. Borrowing money is thus the responsible thing to do.

Just as the federal government borrowing money and adding to the deficit in order to hire millions of unemployed people and pour trillions of dollars into a moribund economy is the responsible thing to do.

Lowering the deficit by cutting spending while 12 million people are out of work is not just grossly irresponsible, it is catastrophically fatal to economic growth.

And lowering the deficit by cutting spending on the very social safety net programs - unemployment insurance and food stamps - that are the only thing keeping unemployed people and their families alive  is a crime against humanity.

While President Obama's new budget proposal refrains from yet more snatching the food from the mouths of poor children, the elderly and the disabled, and actually proposes increased spending on infrastructure, it falls far short of the $10 Trillion in borrowing - at current negative interest rates - needed to reverse the effects of the last six years of economic depression.

And what would we spend $10 trillion dollars on?  Here's an idea:

Ryan Cooper begins his piece in the new Washington Monthly magazine with a straightforward pitch:

How would you like to get $2,000 in free money today, fresh off the government printing presses? And what if I told you it wouldn’t just be a nice windfall for you and your friends and family, but that we’d do it for all Americans on an ongoing basis, and that doing so would solve our crippling problem of mass unemployment?

Because what matters in an economy is that money gets spent. Who spends it and what they spend it on may matter politically, but from a purely economic perspective, spending money is what grows an economy in recession. Saving and hoarding money is what kills an economy in recession.

(Government spending causes inflation only in expanding economies - you know, the ones with lots of jobs and very few unemployed people.  Remember those?) 

Right now, austerity and Wall Street worship are funneling trillions of dollars to the obscenely wealthy, who ship it to overseas tax havens where it does the American economy active harm by not being in circulation.

The just solution is to take those stolen trillions away from the obscenely wealthy and give it back to the workers from whom it was stolen.

Short of that, however, the solution is to add $10 trillion (interest-free!) to the deficit and boost the economy by giving the money to people who will spend it right away, right here at home.

As Ed Kilgore wrote:

... since the current budget is a political document more than it is a fiscal blueprint, it would be nice if the administration stopped bragging about its budget-battle defeats and just made the case for appropriately robust investments. Someday, it might help Democrats win a few more (elections.)

Falling Deficit Harming the Economy

Budget cuts are making this recession worse. What we need is trillion-dollar investment in 10 million new jobs. we should get that money back from the rich motherfuckers who stole it, but we should borrow it if we have to.  Because falling deficits kill economic growth.

Steve Benen at Maddowblog:

 

House Majority Leader Eric Cantor (R-Va.) recently appeared on Fox News and when the discussion turned to the budget, the Virginia Republican said lawmakers should be “focused on trying to deal with the ultimate problem, which is this growing deficit.”

 

In reality, the deficit is not growing; it’s shrinking. The AP reported this afternoon:

For the first time in five years, the U.S. government has run a budget deficit below $1 trillion.

 

The government says the deficit for the 2013 budget year totaled $680.3 billion, down from $1.09 trillion in 2012. That’s the smallest imbalance since 2008, when the government ran a $458.6 billion deficit.

This isn’t a surprising, at least not to the policy mainstream. Many congressional Republicans predicted tax increases on the wealthy that began in January would fail to lower the deficit, but as is usually the case, the opposite happened. The combination of new tax revenue and reduced spending did what exactly what was expected – it reduced the nation’s budget shortfall.

 

While this shouldn’t surprise anyone, the trend is a well-kept secret – national polling last year found that only 6% of Americans realize that the deficit is shrinking in the Obama era. Whether the public realizes it or not, the facts are not in dispute – the deficit is now down $400 billion from last year, and down nearly $800 billion from when President Obama took office.

 

This is the fastest deficit reduction seen in the United States since the end of World War II.

 

Just so we’re clear, I don’t consider this good news. On the contrary, I strongly believe the nation should be borrowing more, not less, taking advantage of low interest rates, investing heavily in infrastructure, creating millions of jobs, and leaving deficit reduction for another day.

 

That said, if we’re going to have a fiscal debate, it should be rooted in reality, not silly misconceptions. And the reality is, we’re witnessing deficit reduction at a remarkable clip.

From Digby, where the deficit "savings" really come from:

The Deficit Fetishists, Austerians and Pain Caucus Are All About Punishing Poor People, Period

Remember these three:

1) The deficit is too low, and that's why we're still in a recession.

2) Budget cuts kill jobs, and that's why 10 million people are still unemployed.

3) The filthy rich stole all the money from the working class, and we won't have economic growth until they give it all back.

David Atkiins at Hullabaloo:

Why do all these "deficit hawk" conservatives hate Obamacare, again?

The Affordable Care Act is already working: Intense price competition among health plans in the marketplaces for individuals has lowered premiums below projected levels. As a result of these lower premiums, the federal government will save about $190 billion over the next 10 years, according to our estimates. These savings will boost the health law’s amount of deficit reduction by 174 percent and represent about 40 percent of the health care savings proposed by the National Commission on Fiscal Responsibility and Reform—commonly known as the Simpson-Bowles commission—in 2010.

Moreover, we estimate that lower premiums will lower the number of uninsured even further, by an additional 700,000 people, even as the number of individuals who receive tax credits will decline because insurance is more affordable.

In short, the Affordable Care Act is working even better than expected, producing more coverage for much less money.

It's arguable, of course, whether we should even be worrying about the deficit right now. Some of us don't think it's even close to our biggest concern compared to people actually being able to get healthcare, so the fact that Obamacare is also saving money not just for real citizens but also the federal government itself is just icing on the cake.

But there is an entire political party and pundit class out there that professes to believe that deficits are the scariest thing ever, and we need to do something about them right now. They also happen to be the same people who are the most opposed to the Affordable Care Act. How does that work, exactly?

It works because most of the deficit fetishists never actually cared about the deficit, per se. The deficit is just a symbol to them of a moral laxitude about a culture of dependency that can only be fixed by slashing social spending and forcing people to pull themselves up by the bootstraps. It's a social, moralistic fetish, not a regretted position based on actuarial review.

Obamacare makes real people's lives a little easier, and makes insurance company CEO's lives a little bit harder. The deficit fetishists don't actually care whether it saves the country money. Morally, it feels wrong to them that the poor aren't suffering more. It never was about the deficit in the first place.

If the Rich Were Paying Their Share, We'd Have All the Money We Need

President Obama has cut the deficit from $1.4 trillion in 2009 to $650 billion this year.  Unfortunately, he's done it by caving to repug demands for austerity - domestic spending cuts that have kept 12 million people unemployed and shredded the social safety net.

And all the while maintaining the inexcusable Bush tax cuts that have allowed the obscenely wealthy to steal $1 trillion per year away from the rest of us.

Digby:

Before we get back into the exciting world of budget negotiations, "skin in the game" and
what DC likes to call "reform", we should take a look at this friendly reminder via Wonkblog about what's causing the national debt.

The best chart on this is the so-called "parfait chart" by the Center on Budget and Policy Priorities (CBPP), which breaks down what specific policies caused the big increase in the U.S. federal debt in the 2000s. Strikingly, the current debt was almost entirely caused by events in the past 13 years.

The most important factor was the Bush tax cuts of 2001 and 2003, which greatly reduced federal revenues and put the federal government into deficit after the surpluses of the late '90s and early '00s, but the economic downturn, the stimulus and other recovery measures, and the wars in Iraq and Afghanistan all played important roles too.

Without those four things, we'd have a debt burden around 20 percent of GDP — far too small to even start to worry about, and smaller than every developed country other than Luxembourg.

The Republicans like to say "we don't have a revenue problem,we have a spending problem" But as with virtually everything they say and do, in reality, it's the opposite. If you look at that chart you can see that the problem isn't spending.  It's the shortfall of revenue caused by the Bush tax cuts which build on themselves over time.

But we knew that.  It's just that reality is irrelevant to this discussion because everyone in Washington has obsessed over deficits and taxes for so long that they have no language left to communicate the problem. The president seems to think the deficit reduction that's been done on his watch is a fantastic achievement. (In fairness, Bill Clinton did too, but at least his was brought about during a great economic boom rather than by brutally cutting government programs during an epic economic slump.) So unfortunately, there's nobody to champion the idea that we could be creating a better society for ourselves and our children if we'd just be willing to tax the rich at a fair rate and be willing to put up a little bit more ourselves when we can spare it. Instead we're stuck spending every bit of energy we have to keep them from cutting Social Security or raising the Medicare age. What a shame.

"This is a time to get really, really angry" - and not about the NSA

It's that congressional representatives of both parties think the appropriate response to the worst long-term unemployment, income inequality and widespread poverty since the Great Depression is to ... wait for it ... slash funding for food stamps.

The Nation:

Monday night, the Senate passed a five-year farm bill that contained $4.1 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over ten years. This ensures that the only debate now will be about how much to cut—and it’s likely to result in cuts much deeper than $4.1 billion.

The House Agriculture Committee passed a farm bill last month that cut $20.5 billion from SNAP by removing “categorical eligibility” (more on that here), which would take food stamps away from two million Americans and hundreds of thousands of children.

SNIP

 Aside from being, well, cruel, the food stamp cuts in the Senate bill are also damaging to the economy. The Center for American Progress, in a study released in March, found that for every $1 billion cut from SNAP, 13,718 jobs are lost:

Kevin Drum can't take it any more:

Mark Bittman is appalled at the farm bill currently wending its way through Congress:

The current versions of the Farm Bill [] could hardly be more frustrating. The House is proposing $20 billion in cuts to SNAP — equivalent, says Beckmann, to “almost half of all the charitable food assistance that food banks and food charities provide to people in need.”
Deficit reduction is the sacred excuse for such cruelty, but the first could be achieved without the second. Two of the most expensive programs are food stamps, the cost of which has justifiably soared since the beginning of the Great Recession, and direct subsidy payments.
This pits the ability of poor people to eat — not well, but sort of enough — against the production of agricultural commodities. That would be a difficult choice if the subsidies were going to farmers who could be crushed by failure, but in reality most direct payments go to those who need them least.

I'm starting to lose my ability to write rationally about this stuff. I just don't know any longer what I'm supposed to think about a political movement whose primary raison d'être, one they no longer even bother to conceal, is an almost gleeful immiseration of the poor for the benefit of the rich. How is it that the wealthiest country on earth has come to this?

This would all be cruel enough even if the economy were good and you thought that folks on food stamps needed some motivation to get themselves off assistance and into jobs. Cruel but—arguably, anyway—perhaps best in the long run. But now? When the current level of SNAP spending is entirely due to the swollen ranks of the unemployed and underemployed, which makes it all but impossible for most recipients to entertain even a faint hope of either finding work or, for those lucky enough to have jobs, increase their incomes enough to escape poverty? Is there even a pretense of a reason for these cuts, aside from a desire not to reduce subsidies to agribusiness and not to raise taxes on the best off? Help me out. What is it?

Paul Krugman on how cutting food stamps does not just starve the poor, but takes food out of the mouths - and money out of the pockets - of you and me.

Food stamps have played an especially useful — indeed, almost heroic — role in recent years. In fact, they have done triple duty.

First, as millions of workers lost their jobs through no fault of their own, many families turned to food stamps to help them get by — and while food aid is no substitute for a good job, it did significantly mitigate their misery. Food stamps were especially helpful to children who would otherwise be living in extreme poverty, defined as an income less than half the official poverty line.

But there’s more. Why is our economy depressed? Because many players in the economy slashed spending at the same time, while relatively few players were willing to spend more. And because the economy is not like an individual household — your spending is my income, my spending is your income — the result was a general fall in incomes and plunge in employment.

We desperately needed (and still need) public policies to promote higher spending on a temporary basis — and the expansion of food stamps, which helps families living on the edge and let them spend more on other necessities, is just such a policy.

Indeed, estimates from the consulting firm Moody’s Analytics suggest that each dollar spent on food stamps in a depressed economy raises G.D.P. by about $1.70 — which means, by the way, that much of the money laid out to help families in need actually comes right back to the government in the form of higher revenue.

Wait, we’re not done yet. Food stamps greatly reduce food insecurity among low-income children, which, in turn, greatly enhances their chances of doing well in school and growing up to be successful, productive adults. So food stamps are in a very real sense an investment in the nation’s future — an investment that in the long run almost surely reduces the budget deficit, because tomorrow’s adults will also be tomorrow’s taxpayers.

So what do Republicans want to do with this paragon of programs? First, shrink it; then, effectively kill it.

SNIP

Look, I understand the supposed rationale: We’re becoming a nation of takers, and doing stuff like feeding poor children and giving them adequate health care are just creating a culture of dependency — and that culture of dependency, not runaway bankers, somehow caused our economic crisis.

But I wonder whether even Republicans really believe that story — or at least are confident enough in their diagnosis to justify policies that more or less literally take food from the mouths of hungry children. As I said, there are times when cynicism just doesn’t cut it; this is a time to get really, really angry. 

Rand Paul Is a Lying Moron

First, government debt and deficit is only a problem when we have inflation. Remember inflation? Way back in 1980? Hello?  Bueller?

Second, thanks to the sequestration austerity that is literally taking food out of the mouths of starving children and denying chemotherapy to cancer patients, the deficit is falling faster than it has in two decades.

Third, the Tribble-Toupeed One doesn't give a flying fuck about facts or truth or the deficit; all he cares about is spreading bullshit that will make the paultards faint from ecstasy.

Steve Benen at Maddowblog:

Alas, some folks stick to their old talking points, even when they're now wrong.

Now, this is ordinarily the point at which I note that China owns only a small portion of U.S. debt; large deficits are wise under the economic circumstances; and if Sen. Paul is really eager to reduce the deficit, he should endorse some tax increases.

But putting all of this aside, Rand Paul is using out-of-date math. "We are borrowing $4 billion a day"? Let's see -- there are 365 days in a year ... multiplied by 4 billion ... carry the one ... that means we'll have annual federal budget deficit of over $1.4 trillion.

Except, we won't. The latest CBO estimate says this year's deficit will be $642 billion, down $400 billion from last year, and nearly $800 billion from when President Obama took office. Paul's argument, in other words, isn't even close to being accurate -- we're not borrowing $4 billion a day; we're borrowing less than $2 billion a day.

If the right wants to argue that's still too much, fine. I disagree, but we can at least have a debate. But to use talking points from 2009, as if we have haven't already seen the fastest deficit reduction in modern U.S. history, is absurd. What Rand Paul is telling his followers is simply and demonstrably wrong.

Updating talking points may be annoying, but when the facts change, politicians' rhetoric needs to change with them.

"We Need to Make Smarter Choices"

If you create jobs, Mr. President, you don't have to cut the deficit; revenues from workers paying taxes will eliminate the deficit all by themselves.  But you know that already.



Full transcript here:

Give "Fix the Debt" What-For

Yes, they do think you're stupid. Show them you're not.

Samuel Knight at Political Animal:

“Fix The Debt” - the astroturf, defense contractor-linked lobbying group seizing upon the manufactured debt crisis to ram through a corporate agenda at the expense of everyone else - is asking Americans to share stories about how the national debt is affecting them.

No, really:

Why is it so important that we Fix the Debt? Why does it matter to your family? To your business? To our country? to YOU?

Our leaders in Washington need to hear from each of us. We need them to know that inaction is NOT an option. We must Fix the Debt.

You couldn’t make it up.

It’s likely that the majority of responses they are receiving are either full of: A) false generalizations about a “spending problem”; B) speculation about the future of Medicare and Social Security under the assumption that rich tax-dodgers can’t do any more or that the government shouldn’t negotiate with drug companies ripping it off; or C) good old incoherent right wing rambling.

American families aren’t feeling that “We must Fix the Debt” through the only way that government borrowing would affect them - higher real interest rates.

So why not send “Fix the Debt” stories about how influential right wing oligarchs pressuring Congress into “Fixing the Debt” is affecting American families? Tell them stories about layoffs and the misery sequestration has wrought. Tell them how you’re worried that Congress’ refusal to raise taxes on those that can afford it is bankrupting American society. Feel free to bombard them with messages. Email me or post what you had to say to them in the comments section, and I’ll publish the best examples of how “Fixing the Debt” has affected you.

Here’s what I sent them:

Please stop your vapid campaign. Obviously your corporate donors can afford to pay more taxes if they can afford this astroturf nonsense. You want to know how the debt is affecting me? Through your selfish, greedy, parasitic efforts to “Fix” it. Just pay for a society that has allowed you to flourish. I know people in academia who have been told that federal grants for their rather important research has been cut off thanks to your right-wing subterfuge. That’s how it’s affecting me. People around me losing their funding so rent-seekers can continue to pay low rates on their unearned investment income. What you’re doing is essentially preventing us from investing in our future. Stop pretending like there’s a debt crisis to ram your libertarian agenda through Washington by threatening to primary Republican Congressman corrupt enough to push your snake oil. Enough.

Have fun.

Enough With the Deficit Hysteria

Like I keep sayin', the only thing wrong with the deficit is that it's too small.  We're still in a recession, which requires large spending by government to boost demand and thus grow the economy.  That might be of slight concern if interest rates were high, but they're not; they're so low investors are actually paying us to take their money.

But the deficit hysterics never let facts and reality stand in the way of fear-mongering.

Kevin Drum at Mother Jones:

Republicans have been demanding action on the deficit practically from the minute Barack Obama was inaugurated. Over the past couple of years they've finally gotten it. Spending has been slashed, the federal deficit is declining steeply, and the 10-year deficit projection has been reduced by $4 trillion. So now, having gotten so much of what they wanted, does this mean Republicans are ready to soften up a bit on their deficit mania? You jest, of course. Jon Cohn rounds up the latest news:

Paul Ryan is about to unveil a new proposal for how the government should spend its money. According to multiple media accounts, it will look a lot like the budget plans he's produced before, the ones that famously called for radically downsizing the government. The main difference? The cuts in this proposal will be even bigger.

....With this new budget, Ryan doesn't appear to be offering new concessions. On the contrary, it looks like he's making new demands. And plenty of Republicans seem to think this is the right thing to do. That's perfectly within their rights: They believe it's best for the country. But it's a reminder that Republicans aren't sincerely interested in compromise for its own sake—or in taking more moderate positions on the issues. Yes, the voters delivered a pretty devastating verdict about this agenda just a few months ago. But if the number two guy on the ticket doesn't seem to care, why should the rest of them?

This comes as no surprise. When Ruth Marcus asked Ryan a few days ago if Republicans were planning to give us all a breather and avoid a showdown over the upcoming debt ceiling cliffhanger in April, he was unmoved: "Not this time," he said, "We're not leaving this session of Congress until we have a down payment on the problem."

So apparently conservatives are right: appeasing fanatics doesn't work. It just makes them determined to demand even more. Perhaps it's time to listen to them and adopt a new strategy.

Digby:

Jared Bernstein has posted some very important information that one can only hope both the White House and the Democrats are aware of and prepared to change direction because of.  It shows that our runaway medical costs are actually slowing down and he posits that there's good reason to believe that it's permanent rather than transitory:

My colleague Paul Van de Water recently noted that CBO’s 10-year forecasts for the growth of Medicare and Medicaid have come down by $500 billion relative to those from a few years ago. We don’t yet know whether any of this will last—whether we’re looking at another “whoops” moment. But because the initiatives ticked off above are targeted at changing highly inefficient incentives embedded in the delivery system, using technology to improve productivity (which typically lowers costs), and providing better oversight, they certainly have the potential to be lasting. And remember, while the recession is surely playing some role in recent cost savings, that role is surely less pronounced in Medicare and hospital readmissions.

So my guess is there’s something lasting going on here, and that means the doctor has just prescribed a very large chill pill for those who want to whack away at Medicare and Medicaid and CHIP because “they’re going bankrupt…bankrupt I tell you!” They’re not, and our energies would be much better spent on careful research on the factors behind these recent cost trends and how we can build on them. The goal is not to diminish these extremely valuable programs. It’s to ehhance their efficiency so as to ensure that they remain a solid part of American social policy.

Read the whole thing for the details. But the upshot is that we have just enacted a bunch of reforms to the system that are having an impact. Who knows if it will work over the long term, but the idea that we need to slash the hell out of our "entitlements" before all the data is in, is just daft. In fact, this whole discussion has been daft from the beginning. From the idea that austerity was a good idea in a downturn to the idea that we would make major changes to our health care system and then fail to see how they work before deciding that costs are too high, this rush to deficit cutting has been a disaster.

As Bernstein says, our leaders need to take a chill pill. We need to take a break from all the unnecessary Grand Bargaining and all the politicians need get out of this rut of thinking the world will end if they don't cut spending. Obama's legacy is going to be Obamacare. He doesn't need the grand bargain, it was always stupid. And if Obamacare succeeds in reducing the deficit as Bernstein's chart indicates may be happening, he can take credit for that too. That's a lot. It's enough.

 As Charlie Pierce always writes:  Fuck the Deficit. People Got No Jobs.  People Got No Money.

The Back to Work Budget

Funny how the MSM budget coverage never even mentions the plans that reflect actual economic reality and the preferences of the American people.

Because there is one that does, and of course it's from the Congressional Progressive Caucus.

Digby:

Hey guess what? It's possible to cut the deficit without making the poor and middle class suffer. Plus jobs!

Personally, I don't think worrying about deficits at the moment makes any sense at all, but if we are going to worry about it at least it would be nice if some alternatives to cutting the daylights out of everything people need were on the table. It could be done. Unfortunately average people won't be suffering for the sins of their betters so I suppose that's out of the question.

Anyway, here's the summary of the CPC's new Back to Work budget which does just that:

We’re in a jobs crisis that isn’t going away. Millions of hard-working American families are falling behind, and the richest 1 percent is taking home a bigger chunk of our nation’s gains every year. Americans face a choice: we can either cut Medicare benefits to pay for more tax breaks for millionaires and billionaires, or we can close these tax loopholes to invest in jobs.

We choose investment. The Back to Work Budget invests in America’s future because the best way to reduce our long-term deficit is to put America back to work. In the first year alone, we create nearly 7 million American jobs and increase GDP by 5.7%. We reduce unemployment to near 5% in three years with a jobs plan that includes repairing our nation’s roads and bridges, and putting the teachers, cops and firefighters who have borne the brunt of our economic downturn back to work. We reduce the deficit by $4.4 trillion by closing tax loopholes and asking the wealthy to pay a fair share. We repeal the arbitrary sequester and the Budget Control Act that are damaging the economy, and strengthen Medicare and Medicaid, which provide high quality, low-cost medical coverage to millions of Americans when they need it most.

This is what the country voted for in November. It’s time we side with America’s middle class and invest in their future
Job Creation
• Infrastructure – substantially increases infrastructure investment to the level the American Society of Civil Engineers says is necessary to close our infrastructure needs gap
• Education – funds school modernizations and rehiring laid-off teachers
• Aid to States – closes the recession-caused gap in state budgets for two years, allowing the rehiring of cops, firefighters, and other public employees
• Making Work Pay – boosts consumer demand by reinstating an expanded tax credit for three years
• Emergency Unemployment Compensation – allows beneficiaries to claim up to 99 weeks of unemployment benefits in high-unemployment states for two years
• Public Works Job Programs and Aid to Distressed Communities – includes job programs such as a Park Improvement Corps, Student Jobs Corps, and Child Care Corp
Fair Individual Tax
• Immediately allows Bush tax cuts to expire for families earning over $250K
• Higher tax rates for millionaires and billionaires (from 45% to 49%)
• Taxes income from investments the same as income from wages
Fair Corporate Tax
• Ends corporate tax bias toward moving jobs and profits overseas
• Enacts a financial transactions tax
• Reduces deductions for corporate jets, meals, and entertainment
Defense
• Returns Pentagon spending to 2006 levels, focusing on modern security needs
Health Care
• No benefit cuts to Medicare, Medicaid, or Social Security
• Reduces health care costs by adopting a public option, negotiating drug prices, and reducing fraud
Environment
• Prices carbon pollution with a rebate to hold low income households harmless
• Eliminates corporate tax subsidies for oil, gas, and coal companies

It would be really neat if the press could pay as much attention to this as they do every one of Paul Ryan's dystopian nightmare plans. I suppose it would be silly to hold my breath.

The Debt Scam Con Artists

Austerity hysteria, entitlement "fixes," debt fearmongering: you'll be stunned to learn they all derive from the same source of lies.

Digby:

His most recent creation, Fix the Debt, is a scam. And the Center for Media and Democracy have done what the Village media should have done a long time ago if they wren't so in thrall to Peterson and his plans for ritual human sacrifice: put together a dossier on the man:

Today, CMD is pleased to unveil -- in partnership with The Nation -- a new resource on the Campaign to Fix the Debt for the public and the media, that exposes the leaders, the Peterson-funded partners, the phony state chapters, the lobbyists and the stunt men (who convinced Alan Simpson to dance Gangnam Style) behind this massive PR effort.

This package includes:

Lisa Graves, Pete Peterson's Long History of Deficit Scaremongering, The Nation.

John Nichols, The Austerity Agenda: An Electoral Loser, The Nation.

Dean Baker, Fix the Debt's Fuzzy Math, The Nation.

Mary Bottari, Pete Peterson's Puppet Populists, The Nation.

Fix the Debt Astroturf Supergroup Portal Page

Fix the Debt's Leadership

Fix the Debt Leaders' Conflicts of Interest

More here.

This is a great resource.  I urge you to use it by sending the link and some notes to every media parrot who screeches that the sky is falling if we don't "deal with the deficit" immediately. We've got almost 8% unemployment in this country and it's not getting any better. And our grandchildren really are under a looming threat that none of these people could give a damn about --- climate change. This entire conversation is an absurd misdirection by disaster capitalists who are determined to re-order our society to their advantage --- and the wealthy elites who want so badly to believe them.

In a recession, the only debt problem is not having enough. In a recession, the only spending problem is not spending enough. In a recession, the place to look for the nation's wealth is in the offshore accounts of the obscenely rich people who stole it from the rest of us.

Our Only Deficit Problem Is That It's Too Small

Every time President Obama mentions cutting the deficit in tonight's SOTU, just eat rat poison. Because it means we're fucked.

Brian Buetler at TPM:

Here’s the buried lede from the Congressional Budget Office, which on Tuesday released its Budget and Economic Outlook for the coming decade: D.C.’s deficit obsession has been quite effective at cutting deficits at the expense of the still-struggling economy.

“[E]conomic activity will expand slowly this year, with real GDP growing by just 1.4 percent,” according to CBO’s projections. “That slow growth reflects a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun or is scheduled to occur-including the expiration of a 2 percentage-point cut in the Social Security payroll tax, an increase in tax rates on income above certain thresholds, and scheduled automatic reductions in federal spending. That subdued economic growth will limit businesses’ need to hire additional workers, thereby causing the unemployment rate to stay near 8 percent this year, CBO projects.”

In other words, intentional efforts to reduce annual deficits and stabilize the debt are working. But if you retrain your gaze from the government’s balance sheet to the real economy, you’ll see the impact of that austerity is fewer people working and slower growth. According to CBO, the recovery won’t really pick up steam until next year, and the economy won’t have recovered until the end of 2017, when it will reach its output potential, and unemployment will fall to 5.5 percent.

Digby:

Oh fergawdsakes:

President Obama’s debt reduction goals are at least $1 trillion too modest, according to the Democrat who chaired the Senate Budget Committee until the end of last year.

SNIP

Over the last few years, Democrats and Republicans have come together and cut our deficit by more than $2.5 trillion through a balanced mix of spending cuts and higher tax rates for the wealthiest Americans.

Really? Does this look balanced to you?




That's what passes for balance in Kent Conrad's mind. I'm going to guess that he'd consider another trillion in spending cuts and slashing Social Security to add up to a 50/50 split. (Let's not even talk about the fact that austerity is the worst thing to be doing right now.

"A balanced, comprehensive way"

It's not "balance," Mr. President, when the repugs refuse to budge but you just keep sliding toward them. And the worst possible thing you can do in a recession is cut government spending. The word you're looking for is "surrender." "Catastrophic surrender."



Full transcript here.

No, We Don't Have a Spending Problem

We've got a motherfucking-liars-are-lying-about-fucking-their-mothers problem.

 

Samuel Knight at the Washington Monthly:

Alan Simpson and Erskine Bowles - co-founders of the corporate lobby Campaign to Fix the Debt - were on Meet the Press (last week). I couldn’t drag myself to watch it because I am sick and tired of hearing every oligarch’s favorite lackeys argue that the national debt is a reason to gut the welfare state. Which is exactly what they were doing this morning:

“Yes, the president has taken some steps forward on the entitlement programs, but has he done enough? Absolutely not,” Bowles said.

But they and their disciples couldn’t be more wrong. The U.S. government has no “spending problem” from a macroeconomist’s point of view. Of course, the country can’t indefinitely continue to borrow more than it earns, but the idea that we must somehow tackle debt by cutting spending — and do it right now — is voodoo economics of the highest order.

For spending to be an immediate problem, it would have to be problematic. And the primary reason that government spending is problematic is due to “the crowding out effect.”
I could find some haughty economist to quote on the issue, but for simplicity’s sake here’s Wikipedia:

“…crowding out is a phenomenon occurring when expansionary fiscal policy causes interest rates to rise, thereby reducing investment spending.”

Yet interest rates are rock bottom and aren’t expected to rise anytime soon, and demand for U.S. Treasury bonds remains high.
 
Thus, government spending appears to be having no averse effect on financial markets, which, according to Treasury yields, actually seem to think that lending the U.S. government money is a wise idea. The debt “crisis” is only caused by a “spending problem” when one considers government spending to be an issue from an ideological standpoint.

If Simpson and Bowles were serious about tackling the debt without completely undermining the economy, they’d advocate higher taxes on those that can afford to pay more. Corporations are awash with cash, and capital is taking a larger slice of the pie than ever. But aggregate demand is lagging, and to undermine social safety nets would further weaken it. Sound economic policy would, therefore, have the rich finance deficit reduction — if it must be done in this fragile economy.

Actually, we do have a spending problem: we're not spending enough to create jobs, rebuild infrastructure, restore public employment and lift people out of poverty.  That's the only way out of this depression.

"We still need to do more to put Americans back to work"

But "putting Americans back to work" means the opposite of the spending cuts and deficit reduction you are cutting deals to get. You want people back to work and paying taxes that will eliminate the deficit? Then borrow trillions now while interest rates are negative, pour billions into rebuilding the nation's infrastructure and create millions of jobs.



Full transcript here.

Jobs vs. Austerity: Another Front in the Class War

From Firedoglake:

A new Government Accountability Office dispels major myths:   “spending is not out of control.  . . Social Security and Medicare are rising gently . . . All other spending . . . falls–with the notable exception of interest on the debt.” Not only that, but the GAO “assumed that revenue will not be permitted to rise above its historical average–as Republicans continually insist.”

Down with Tyranny:

Despite the announcement (last week) that unemployment had ticked down to 7.7%, as Krugman pointed out in his Times column, the crisis that this country is facing now is not a ginned up "Fiscal Cliff" but a real live jobs crisis that is gnawing away at our economy from the inside.

[W]e may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff. ... [T]here is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now-- except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now-- namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.

When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.

There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.

Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.

SNIP

"So why," asked Krugman, "aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position. Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs-- and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.

No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds-- and, of course, the unemployed don’t hire lobbyists or make big campaign contributions. So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy-- and it’s also an outrage."

As Charlie Pierce puts it so pithily:  Fuck the Deficit. People Got No Money. People Got No Jobs.

No, There's No Debt Crisis, Either

Again, all this hysteria over the deficit and the debt is ginned up to force massive cuts in Social Security and Medicare as a huge step toward eliminating the Great Society and New Deal, thus throwing Americans fully on the mercy of the Wall Street sharks.  Just like we were in 1929.

Don't fall for it.

Digby

You know that deficit that's killing us? The one we're going to fix by "asking the rich to pay a little bit more" and cutting benefits for everyone else? What if the scam is even worse than we thought?

Dean Baker spills some very inconvenient beans:

[T]he big stick for the deficit hawks was their story of huge deficits in the longer term. They attributed these to the rising cost of “entitlements,” which are known to the rest of us as Social Security, Medicare, and Medicaid.

While they like to push the notion that the aging of the population threatened to impose an unbearable burden on future generations, the reality is that most of the horror story of huge deficits was driven by projections of exploding private sector health care costs. Since Medicare and Medicaid mostly pay for private sector health care, an explosion in private sector health care costs would eventually make these programs unaffordable.

SNIP

In fact, in the last year nominal spending on health care services, the sector that comprises almost two-thirds of health care costs, rose by just 1.7 percent. This is far below the rate of nominal GDP growth over this period, which was more than 4.0 percent. While at least some of this slowing in health care costs is undoubtedly due to the downturn, it is hard to believe that it is not at least partially attributable to a slower underlying rate of health care cost growth.

CBO and other budget forecasters can ignore economic reality for a period of time (they ignored the housing bubble until after its collapse wrecked the economy), but if it continues, at some point they will have to incorporate the trend of slower health care cost growth into their projections. When this happens, the really scary long-term deficit numbers will disappear.

A projection that assumes that health care costs will only rise as a result of the aging of the population, and otherwise move in step with per capita income, will lop tens of trillions of dollars off the most commonly cited long-term deficit projections. It would cost some deficit hawks, like National Public Radio, more than $100 trillion of their long-term deficit story. This would be a real disaster for the deficit hawk industry.

This is why the Campaign to Fix the Debt and the rest of the deficit hawk industry will be operating at full speed at least until a budget deal is reached over the current impasse. If CBO adjusts its long-term health care cost projections downward then their whole rationale for gutting Social Security and Medicare will disappear. Now that is really a crisis.

I've been cynical about this whole exercise and don't believe we should do much of anything other than stimulate the economy for the time being. I know that this sense of panic over the the whole thing is a contrivance to force unpopular action. But I have to admit I didn't realize that we had evidence emerging that the deficit projections were already falling short and that there's good reason to suspect that they will be far short of what these fearmongers are selling.

But solving non-existent problems while avoiding real ones seems to be the new American way.

Has anyone even mentioned the fact that we still have 7.9% unemployment? Is that the new normal?

David Atkins:

The fact that everyone in the Village Media has bought into the deficit obsession as it were a real thing rather than simply the latest iteration of a decades-long tactic designed to further enrich the wealthy shows not just herd mentality and willful blindness. It shows a craven willingness to go along with direct economic sabotage and shameless lying in the guise of politics as usual.

It's moral tragedy on a grand scale.

The whole world is begging us to take their money at negative interest rates.  That's $10 trillion dollars basically for free.  Let's grab it and use it to create 10 million jobs to rebuild our infrastructure. Do it now.

As Charlie Piece never tires of repeating, because it cannot be said often enough:

Fuck the deficit. People got no money. People got no jobs.