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All together now: There Is No Deficit/Debt Problem!

letsgetitdone's picture
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In a little more than a month, the President will give his State of the Union speech. There's every reason to believe that, in it, he will state that, in all sincerity, he believes that the United States Government has a deficit problem and a national debt problem that must be brought under control.

He will tell us that the Government is running out of money. He will also tell us that we need to raise money by either taxing or borrowing to get more, or that we need to make do with no more money by cutting government spending, and he may also tell us that we cannot borrow too much more without the bond markets raising our interest rates, imposing even more of a deficit/debt burden on us that our grandchildren will have to repay.

Or even worse, if we continue to issue more debt, our main creditors: the Chinese, the Japanese, and our oil suppliers, may cease to buy our debt making it impossible for us to raise money through borrowing which, in turn, would force us into radical austerity, or perhaps even into insolvency, which would then be followed by radical austerity and repudiation of our national obligations.

If we want to avoid all this, then, the President will say, we must decide upon, and implement a middle and long term deficit reduction plan that will stabilize our public debt-to-GDP ratio at a moderate (but unspecified) level that will not breach the confidence of the bond markets. Since we now have two party rule of Congress, we must do this through a bipartisan agreement with the Republicans he will say, and then he will talk about negotiating another deal with them formulating a deficit reduction plan with a schedule for implementing it that will not impede the recovery from the Crash of 2008.

He may also point out that he needs both Republican and Democratic support to get an omnibus spending bill passed, and to extend the debt limit by March 2011, so that he can avoid a Government shutdown, and that his deal with them must therefore include an agreement on extending that debt limit.

President Obama's perceived need for Republican support will then condition his approach to negotiating a bipartisan deal. The Republicans, of course, will be very much opposed to any deficit reduction plan that provides for increased revenue by letting tax cuts for the wealthy expire. They will also be opposed to raising the salary cap on FICA higher than it is now. Instead, they will want to save money through entitlement cuts focused on Social Security and Medicare, and also in “discretionary spending” of all kinds, but will resist cuts in military spending for defense.

Obama will reply by urging everyone in Congress and among the public to be an “adult” in their approach to the universally recognized deficit problem, and to realize that all sides will need to give something they want up and he will urge “sacrifice” and “shared pain,” on all, while supporting a compromise that involves little pain for the wealthiest 2% of the population and the banksters and the big multinational corporations, but much pain for the remainder of the population in the coming years through substantial cuts in the social safety net, and in other Government spending on infrastructure, education, new energy foundations for the economy, environmental protections and other spending America sorely needs.

In the end, the President will tell us all that he had no choice but to compromise on an agreement that will shred the social safety net, but he will hail the deal he makes as a great accomplishment assuring the financial solvency of the United States and solving the middle- and long-term deficit problems. Then he will try to run on that compromise, and he will hope that increased Wall Street and business confidence in his fiscal leadership will persuade business to stop sitting on all their cash assets and start investing them in new American jobs that, at least, he perhaps thinks, will lower the unemployment below 8% by the time the presidential campaign is in full swing, in the Fall of 2012.

There is only one major problem with this scenario Obama and his supporters seem to be planning. And that is that the deficit/debt problem is a fiction and a fairy tale. Such a problem doesn't exist except in the minds of people, evidently, like the President, who believe that the Government is subject to the same kind of spending constraint, in this case called a Governmental Budget Constraint (GBC) that private economic units such as Households and Corporations are subject to.

There are some Governments that are subject to a GBC. They include Governments of the Eurozone, all of whom have given up their sovereign currency-issuing power to the European Central Bank (ECB). These Governments, from a currency issuing point of view are like American States. In addition, there are other Governments that have established a fixed exchange rate for their currency, very often relative to the dollar, and still others that owe debts in foreign currencies, frequently the dollar. All of these Governments have budgetary constraints because they have either given up their power to create currency or the value of the currency they create is determined by the value of another currency they do not control.

There are other nations however, including the United States, Australia, Canada, New Zealand, Japan, the UK, Argentina, Brazil, and many others that issue their own currencies, owe no debt in anyone else's currency, do not peg the value of their currency to any commodity such as gold or silver, and allow their currency's value to float freely in the International currency markets. Those nations are sovereign in their own currency, and they have no GBC because they have the constitutional authority to create the currency that is the basis for all financial resources in the non-Government Sectors of their economies.

The US, as one of these nations, has an unlimited constitutional authority to spend, and in the process of spending to create new financial resources. It does not matter if the US owes $13 Trillion in previous debt, or $26 Trillion in such debt. It does not matter if its debt-to-GDP ratio is 60% or 200%. As long as the US retains its currency sovereignty, it has no GBC that is not self-imposed by Congress. It therefore cannot be forced to become insolvent. It cannot run out of money, unless Congress forces it to do so.

The US doesn't have to tax, or borrow to “fund” its spending, as the President seems to think. Unlike Households or corporations that cannot create money, the US always has the constitutional authority to spend by simply marking up the USD in private sector accounts within the banking system. It also has other money making powers. But the main point here is that it raises money through taxing and borrowing not to "fund" spending, but only because Congress has chosen to forbid the Executive from using its constitutional power to spend beyond what it has raised in taxes or from borrowing.

The Congress prevents the Treasury from running a negative balance in its Federal Reserve accounts as a result of its spending. The Congress also mandates that the Treasury issue debt to prevent such negative balances. It also imposes a debt limit on the amount of debt that can be issued at any time.

So, the GBC President Obama will tell us about in February is a GBC which exists at the option of the Congress. There is no constitutional reason why the US Government should ever become insolvent. Continued solvency is always at the option of Congress, which can remove the mandate for the Treasury to issue debt, remove the requirement that the Treasury not run a negative balance at the Federal Reserve, or remove or increase the debt limit.

However, even though Congress may think that it is the sole authority that ought to determine whether the US continues to gives up its solvency, what Congress can legally do is limited by the 14th Amendment to the constitution, which as Tom Hickey points out, says in part:

“Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. . . . ”

So, it is not within the constitutional authority of the Congress to allow or cause the United States Government to become insolvent no matter the level of its deficits, debts, or debt-to-GDP ratio. Congress is mandated by the 14th Amendment to remove the mandate for the Treasury to issue debt, or to remove the requirement that the Treasury not run a negative balance at the Federal Reserve, or to remove or increase the debt limit. But it cannot do nothing and allow the validity of the public debt to be questioned, and still act constitutionally, just because it wants to force the President to accept its views on what public spending should be.

There is a constitutional way for Congress to impose its spending priorities on the President, of course, consistent with Congress's power of the purse. The Republican House can use the appropriation process to pass the spending and taxing bills it wants to, and then can see whether it can get these through the Senate and through Presidential vetoes. It can go on record, as passing further tax cuts for the rich, and cutting all social safety net expenditures, if it wants to, but it cannot hold the people hostage by allowing the Government to be shut down, because if it does so it will fall afoul of the constitutional prohibition against allowing the validity of the public debt to be questioned.

Currently, there is a news blackout in much of the blogosphere, including its “progressive” wing, in the cable new networks, and in the MSM media on the question of whether or not there is a deficit problem. Most of the progressive blogs won't carry the view that the deficit problem is a fantasy, or the reasoning or argument that makes that conclusion inescapable. In that way, the current situation is like the one we saw at the beginning of the current Iraq War, or the situation during the health care debate where most of the Press blacked out discussion of Medicare for All in favor of the very nebulous public option.

There is consensus now in most of the media, on a false neo-liberal paradigm that gives rise to the view that we have a deficit problem. This paradigm ignores the sovereignty of Government in its own currency, and vests the international bond markets with legitimacy and power these markets do not deserve and only have because the United States refuses to bend them to our currency sovereignty and to the national interest of the United States.

This paradigm causes the United States to pay “welfare” in the form of interest in the hundreds of billions of dollars annually to other nations and mostly wealthy investors, because Congress insists that we borrow US currency from others when our Government has an unlimited constitutional power to make whatever currency it needs to make in the very process of spending for goods and services. This paradigm is like the “flat-earth” consensus. It is preventing us from discovering the real America of hope and a magnificent future for all Americans.

Acceptance of this paradigm is ruining our country, because it is causing us to voluntarily impose a GBC that does not exist in the Constitution, and that is preventing us from meeting most of the urgent problems we face. We must end this overweaning concern about the non-existent meta-problem of the deficit and the debt. This meta-problem is a distraction from reality we cannot afford.

We must force a great debate over the next couple of months and beyond, about whether this self-imposed GBC is good policy or not. And we must make clear that the very belief that there is a real deficit problem that we need to do something about either by taxing more, or borrowing more, or cutting Government spending, is conditional on the belief that this self-imposed GBC limiting the constitutional powers of the Government is proper policy.

Once we make that clear we can then ask the question:

Is it best for the Congress to continue to impose this GBC, and as a consequence of that also impose austerity, high unemployment, and a shredded social safety net on the citizens of the United States, or is it best for Congress to restore the original state of the Constitution in which there is no GBC, no solvency risk, and therefore no monetary reason for not extending unemployment, creating a Federal Job Guarantee Program to end unemployment, having a revenue-sharing program to stop lay-offs of Government workers in our hard-pressed States, strengthening rather than weakening our social safety net programs, and doing all the other things we need to do to restore prosperity and social and economic justice to the United States?

And once we've succeeded in getting people to look at the coming decision about austerity this way, then let Congress and the President legislate austerity if they dare.

I'll end this post with a plea. Over the next months, I ask as many of us as possible who believe that there is no GBC except the one Congress has voluntarily imposed, to blog, comment, and take all legal political action possible, around the point that there is no deficit/debt crisis and therefore there is no need to plan deficit reduction or austerity programs. Instead, we should try to force Congress to remove its constraints on the Government, which create a GBC that isn't in the Constitution.

We need to criticize Congress on the grounds that any upcoming fiscal crisis is its fault and is due to the combination of the three constraints it places upon the Treasury I outlined earlier. It is even relevant to point out that even though the amount of the national debt is of no concern for US solvency, the very existence of that debt is the fault of Congress and must not be used to claim that a false fiscal crisis justifying an austerity program actually exists, since all of the debt can be liquidated just by removing the debt issuance mandate and letting treasury spend without issuing debt.

If we can get enough bloggers, commenters, and activists to unite around this point of view and flood the left blogosphere, we may be able to begin cracking the MSM and left blogosphere consensus that there is a deficit problem, or failing that at least get people to engage in debate on the point that the problem is a fantasy. We've got to do all we can to get the best of us on cable shows to represent our point of view that there is no deficit/debt problem. We need videos that go viral! And we need our breakthrough to get at least some discussion in the MSM by the time the President gives his State of the Union speech, which I'm sure will be a terrific sales job for austerity. We need to try to inoculate people against this sales job before it happens.

What we should not do is to directly defend specific social safety net programs such as Social Security and Medicare against cuts in these programs. The effect of even a successful defense of these programs without first destroying the idea that deficit reduction is needed will be to cause even heavier cuts and burdens in other areas that we have not chosen to defend.

Whether or not Social Security gets cut, austerity will be a disaster for the economy. It will drive us into another recession and perhaps now a depression if we fall for it. Government austerity means a decline in private net financial assets. Right now the private sector is trying its best to restore its savings and erase the effects of the great loss of wealth in the crash. Government austerity, will not make the Government anymore solvent. But it will decrease the solvency of the private sector. And that is the last thing we should be trying to do with a stagnating economy.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

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Submitted by hipparchia on

that's the headline of this op-ed in today's boston globe, and i clicked on it, eagerly, thinking: at last, somebody in the msm gets it!

turns out it's john sununu the younger, republican, praising alice rivlin and erskine bowles for ' thinking outside the narrow politics of their liberal constituencies.' gah. they really are stealing all the words.

Submitted by Sufferin Succotash on

The thing to do is to steal them back, arguing that talk of austerity is an adolescent approach to the problem and that real grownups go well beyond that.

letsgetitdone's picture
Submitted by letsgetitdone on

are the people who look at the facts of actual monetary operations and who recognize that we have a national debt today only because of Congress's continual adherence to a practice that was necessary in gold standard days, but that has been obsolete since 1971.

It is Congress's fault that we have a national debt right now, and that's not because they've spent two much money.

Submitted by hipparchia on

i wouldn't mind at all stealing it back from sununu [or from the globe editor who made up the headline, whichever of them it was]

Submitted by hipparchia on

We've got to do all we can to get the best of us on cable shows to represent our point of view that there is no deficit/debt problem.

i'll buy that. name names -- who do you consider to be 'the best of us' for this particular task?

Submitted by lambert on

... with a non-austerian program based on analysis of the real economy.

When you've got career "progressives" and "liberals" "fighting" austerity on the grounds that "yes, yes, the deficit is important* but not now" you've really conceded before you've begun. Shocking, I know. But that's the only side of the bread that gets the butter.

NOTE * Or some other arbitrary financial ratio.

letsgetitdone's picture
Submitted by letsgetitdone on

we've got to bust over the next two months. We need to push the model of "the deficit owl," who knows that there is no deficit problem.

Btw, what about a video with dialogue among a deficit hawk, a deficit dove, and a deficit owl?

letsgetitdone's picture
Submitted by letsgetitdone on

are fine.

Submitted by jm on

This is critically important. At this point the voices of fiscal sanity lack amplification, so to be more effective we should all be whispering into the same ear(s). Also, the target should be economically sophisticated enough so that there's a very good chance that the MMT view on government debt will be given an honest and objective airing. It would be a major setback if a liberal talking head tried to debunk MMT in order to prove his/her "seriousness" on economic matters.

Along this line, I've been emailing NPR News every time they parrot a story that conflates deficit spending and the national debt. I'm thinking that if the "government debt is unnecessary" meme eventually is going to break through the media blackout it will need a receptive, or at least a more open minded, audience if there is to be any real impact. In particular, I've been focusing on the Planet Money team. Their initial reporting on the financial crisis was really good. Unfortunately, the success seems to have gone to their heads. Lately, they've been advancing the austerity meme on a consistent basis. I'm still holding out hope that some of them will eventually see the light.

Also, message discipline is critically important. Everyone has to be on the same page echoing the same argument. I think a really good place to start would be to distill letsgetitdone's argument into, say, one paragraph. The take away should be something short and sweet like: Government debt is unnecessary. There is another option.

(While it's true that it's also Congress' fault, laying blame on Congress is open to misinterpretation. I can easily see the dominant response being, "of course it's Congress' fault, the bastards spend too much money!")

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Submitted by letsgetitdone on

But I also think that we can reformulate the meme thus:

"The National Debt Is Congress's Fault -- But Not Because They Spend Too Much Money"

"Government debt is unnecessary. There is another good option, and it's NOT Fiscal Austerity."

On who to focus on to crack the MSM, I think that's Rachel Maddow. I think she likes the idea of breaking stories no one else has broken. She's smart enough to understand MMT arguments, and I don't detect in her a really strong neo-liberal bias towards markets and against Government activism. I agree with people who think she's been too sycophantic to the Administration lately. Her analysis of the accomplishments of the lame duck session was ridiculous.

Nevertheless, if we could get her to put her oar in the water on this before the President has stated a position in the State of the Union speech, it could do a lot of good in spreading this around.

What we really need to support this effort is a viral video or two. I think Lambert's idea about adapting the video he posted above, or an earlier idea about using the bears for a dialogue are both very good ones.

A big thing here is transcending the "veal pen" Roger Hickey/CAF/Nancy Altman approach of endlessly pointing out that SS isn't responsible for any of our troubles and therefore it should not be cut. The notion of we should only cut people and programs who were responsible for our problems has some power, but it implicitly grants that there is a problem and it's easily undercut by short-run pragmatic arguments of the kind the deficit hawks will make. The people we're fighting don't care about justice and fairness. They'll argue all day long from the point of view that there is problem that must be solved and that a political solution requires pain from everyone, and then they'll let political power in the present frame decide who will bear the most pain.

We know how that's going to come out, so we've got to bust the falsehood that there is a problem requiring pain from all.

letsgetitdone's picture
Submitted by letsgetitdone on

From what I've seen the person who's consistently best on the money from the point of view of just talking a common sense approach and most likely to get on cable shows is Warren Mosler. Warren's also written 7 Deadly Innocent Frauds, which is a great short read to be referring people to.

For writing, I think Randy Wray is often eloquent in many of his short posts. I also like Stephanie Kelton's short posts. Sometimes they are just a model of clarity.

Jamie Galbraith has given eloquent talks which reflect the MMT point of view, has also written some great short pieces and has some testimony that is really terrific. But he doesn't seem to have focused on the question of whether there's a deficit problem, and explained why there's not as much as the others.

To come back to Warren, he's really got a great low key conversational approach to the idea that there's no deficit/debt problem. I think it fits getting the message through to the cable networks very well.

Another very active MMT person, who's short writings are very effective is Marshall Auerback. They often include a historical perspective going back to the New deal you won't find in other people's posts. Marshall's pretty effective in interviews too, but I find him a little more scattered and more harried in these appearances than Warren. Warren's got that poise thing, really down. It's hard to rattle him or get him angry.

Submitted by hipparchia on

that's the kind of thing i was thinking of... who could go on npr, morning joe, hardball, colbert and so forth, having all the necessary knowledge right at their fingertips, the unflappable demeanor, the ability to talk to ordinary mortal non-wonks in plain english.

among the people you name [and among any others you haven't named], would any of them be willing to go on these shows [maybe they already have, i have no tv so i wouldn't know]? it would be a shame to organize a campaign to hound, say joe scarborough, into having one of them on his show only to find out that nobody is willing to put up with him long enough to share airtime and physical space with him [not that i would blame anybody for that :) ]

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Submitted by letsgetitdone on

to represent on any of these shows and also perfect for the job in my view.

Submitted by lambert on

... is put the transcripts up at Corrente. Let's not worry about the vids for now, and we can't cite to the vids anyhow. But those transcripts are surely a gold mine of talking points. I mean, when I was doing the live blog, it was like watching a great band at the top of their game.

Submitted by lambert on

I just wanted to make sure people thought it was a good idea.

Submitted by hipparchia on

the versions i've got could use some final polishing though, before you post them.

Submitted by lambert on

.... why not just get them up, and then we can polish as if they were posts?

Also, I could put up the hall of ponies.

Submitted by hipparchia on

do you want them put up one at a time, or all of them at once?

i envision making each session its own post [so, 5 posts total] but i'm open to suggestions...

letsgetitdone's picture
Submitted by letsgetitdone on

one at a time.

Submitted by lambert on

So what I would do is put them all out at once, with a systematic naming convention for the titles that keys them so sessions (probably speaker name, for SEO).

Then I can turn them into a book.

Then we can put the book, as a resource, on the sidebar.

Then we can start pulling out talking points appropriate to the news of the day, of which I am sure there are many, always linking back to the transcripts.

That's why I would do, anyhow, were I doing it...

And if you want to do edits, just put an UPDATE at the end, explaining what you did.

UPDATE Meaning, not that you can't or shouldn't, but you already have a lot to do....

Submitted by hipparchia on

but imho they do all need some more editing to make them more presentable before people start quoting and referencing them widely.

i like the idea of putting them all up at once and letting you make them into a book with a link in the sidebar.

Submitted by hipparchia on

"The errors are signs of authenticity, like scars in fine leather."

nice metaphor. thanks.

as for format or content, it's some of each. the formatting doesn't bother me, but the content has some [inaudible], [crosstalk], [who is this speaker?], [what is this word], etc that really should be cleaned up; most of this is in the q$a/discussions after each talk.

the transcripts of the main talks are all in pretty good shape. i'll go ahead and post those right now [or in a couple of hours, actually, since i have some rl stuff i gotta take care of first].

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Submitted by letsgetitdone on

You've got all the support you need.

Submitted by lambert on

The austerity song!

NOTE Actually, the song as such, and especially the title, aren't a bad left anthem, if such were needed, especially from a moral standpoint. I mean, "all together now" really is the point, isn't it?

letsgetitdone's picture
Submitted by letsgetitdone on

And then adapt it to get "there is no deficit or national debt problem" right in the middle, all through it. That should get more people reading the post.

Submitted by lambert on

Not "no austerity," but prosperity.

And cf. Jeremiah 12:1. It's pretty hard to argue that usury was a positive moral dimension.

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Submitted by letsgetitdone on

Hey Lloyd Blankfein, Usury is not an American moral value. Time for the orange jump suits.

DCblogger's picture
Submitted by DCblogger on

We need Mosler on TV. On cable, sunday morning, evening news, and the op ed pages.

letsgetitdone's picture
Submitted by letsgetitdone on

So how are we going to get him there? When we blog MMT, we need to blog about Warren too.

letsgetitdone's picture
Submitted by letsgetitdone on

But it can't be done without a new constitutional convention. It's hard to get that going since you need support of many of the States that benefit from every State having an equal number of Senators. In addition, there's the risk that a new constitutional convention might run amok and repeal the Bill of Rights or at least those portions of it the rightists don't like. In addition, such a convention might repeal the 14th Amendment which is the basis for extending many of the protections of the Federal Constitution to the States.

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Submitted by warren mosler on

At your service, thanks!

I stopped watching msnbc after watching rachel maddow ridicule the republicans for running up the deficit with their tax cut for the rich. All I watch now is CNN and even then I just read the scrolling news without the sound.

I also think we need to be careful the progressive agenda is not conflated with the 'bleeding heart' agenda.

So yes, unemployment comp needs to be extended, but at the same time we need immediate measures to increase demand so there are jobs for the unemployed with a clear goal of full employment in the immediate future.

In other words, useful paid work is the right way to cut unemployment benefits.

And yes we need an enormous amount of public infrastructure, but not as a jobs program.
The goal is the public infrastructure, not the jobs. In fact, it should be done with the fewest jobs possible.

We need to recognize that in a good economy human labor is a scarce resource. The reality is that at all times there is more to be done than people to do it. Every day begins with a natural labor shortage. The political question is how much to allocate to the public sector, with the rest going to the private sector. And the wiser and more efficient the public sector the better off we all are.

And we need to stop blocking the employment of 30 million americans who would take a reasonable paying job if it were offered to them. This can be done immediately with a full FICA tax suspension which would immediately add about $1 trillion in annual deficit spending (income and savings for all of us), and maybe $150 billion in federal funds for the states on a per capita basis to make it fair. And then add to that the needed public infrastructure, social security payments that provide our seniors a standard of living that makes us proud to be americans, and the trimming of the waste while we're at it.

It's a lot easier to trim and make efficient if there are employers begging for the people you let go.

And yes, we need the federal govt to offer a job (I start with $8/hr to not be immediately disruptive to the private sector) to facilitate the transition from unemployment to private sector employment.

And don't get me started on health care. Tell me if I'm wrong, but didn't we start with single payer that lasted maybe 30 seconds, then a public option that lasted a couple of months, finally settling on taking 500 billion out of the future medicare budget to turn over to the insurance companies??? How progressive was that??? (see my health care proposals at www.moslereconomics.com under 'proposals')

And even more fundamentally, I see the problem as the majority of the institutional structure being highly regressive, from FICA taxes and sales taxes to feeding wall st. with tsy secs to trade that don't need to exist, and laws that needlessly create our huge pools of pension dollars that wall st feeds off of as well. So instead of going off the root causes for all that's regressive, we try to get through some progressive band aids like a progressive income tax to try to make it all less regressive. The right way to do it is to not have the income skew to begin with. It's not the natural order of things to have the distribution of income we have, it's the direct result of the regressive institutional structure. But how many progressives have you ever heard getting that part right? Less than 5 for sure. The house is on fire and we're trying to cool it down with an expensive air conditioner, when we need to put out the fire.

Just one more thing and this rant is over for now.

We've all the headline progressives against cutting fica- the most regressive punishing tax on the books- because they think we need the $ for social security. And the opposition will probably succeed on cutting social security for exactly that reason. remember, they are all sworn to grover norquist to never raise taxes, in writing.

the problem, of course, is the headline progressives don't understand (or won't argue, which is probably worse) that taxes function to regulate aggregate demand, and not to raise revenue per se.

So until they get that straight, they remain part of the problem, and not part of the answer.

Or even all of the problem.

Happy Holidays!

Warren

letsgetitdone's picture
Submitted by letsgetitdone on

That's a great rant. We need a lot more than that. I've got a discussion going at FDL too on this same post. Maybe you'd like to jump in on that one too. It's at: http://my.firedoglake.com/letsgetitdone/... And there are 62 comments on it, a fair amount for FDL.

Eureka Springs's picture
Submitted by Eureka Springs on

After reading this yesterday and thinking about it overnight... I'm back to read it again. I think I need to understand certain parts more before being able to suggest talking points... which I love to help do.

That said... one thing continuously nagged at me overnight. Mr Mosler needs to seriously reconsider his advocacy of 8.00 an hour jobs. Unless he intended to say 18.00 plus! Hell,... people should just stay on unemployment rather than work for sub poverty wages. At least they won't be wasting a lot of energy/resources in transport / working for no hope/help at all. Might as well just promote volunteer workforce rather than insult so many with advocacy of 8.00.

letsgetitdone's picture
Submitted by letsgetitdone on

I think Warren suggested $8.00 an hour because what he has in mind for the FJG is Government work which doesn't compete with private sector jobs, and which provides the economy with an employment buffer stock, rather than an unemployment buffer stock which is what we have now.

The nice thing about the FJG is that its cost expands when private sector spending on employment declines and declines when as private sector spending expands. Also, since it doesn't compete with the private sector for employees, charges that it will be inflationary are not credible. Also, the FJG is not intended to provide dead end jobs, but to provide a stock of people who have been doing useful work and gaining certain skills so that they will be desired by the private sector when it chooses to expand.

Another key aspect of the FJG in Warren's formulation, is that it would include full fringe benefits. medical insurance would be provided at no cost by Medicare. There would be holiday and vacation pay as well. So, the FJG would not only provide a floor for hourly employment, but also immediately add 30 million people or so to public health care rolls while providing the private sector with a powerful incentive to provide good fringe benefits for the people they are trying to hire away from the FJG.

Having said all this, I agree with you Eureka Springs that Warren's FJG wage is too low. I favor Warren's economic program, but would add a $10 per hour FJG and a 35 hour standard work week. I'd also use cost of living variations in the FJG wage pegged to housing prices. Areas with average housing prices would have $10.00 per hour FJGs. The FJG wage would be indexed accordingly in different areas.

Eureka Springs's picture
Submitted by Eureka Springs on

If minimum wage rose with inflation since early to mid 70's... it would be over 20.00 per hour now.

In early 80's I left home while earniong minimum wage... my rent was less then a 100.00 per month... an onion in the store was rarely .10 in the same town and stores I live and buy groceries today. Now kids make twice the minimum wage.. and are lucky if rent is only up 500%... and lucky if an onion is up 800%.

We must do / advocate for working poor much better than we have been. It's the only way we will actually help... and if we suggest something good enough they might actually stand up and rally with us on so many important issues. A quarter or dollar here and there.... just wont help.. we are too far down the rabbit hole.

letsgetitdone's picture
Submitted by letsgetitdone on

and I agree that the miniwage should be $20 per hour now. But since it's an $7.25, I think we need to make adjustments gradually because many businesses couldn't survive the shock of paying $20 per hour while waiting for additional business to come their way from increased demand.

Also, if the miniwage goes up to fast, too much of the new demand would be directed at imports and it would not have the expansionary effect here that we need. So I think if we wanted to raise it very fast we would also need a program restricting imports to prevent very great demand leakage, causing US companies to go out of business.

Having said that, I'd be for putting in place a program raising the miniwage to 1970 levels in annual increments over 10 years.

letsgetitdone's picture
Submitted by letsgetitdone on

Early this morning I posted this at CAF where I am trying to get through to the "establishment" progressives. I need as many people as possible to go there, hit the facebook like button and rate the post with a plus at the bottom of it. Commenting would be helpful too. Here's the link.

If we get enough positive ratings, I think the number is 10. I get this listed as aa recommended or front paged or whatever they call it there post. They need to see this because it's low key critical of their own strategy. Also, I think some of the MSNBC people may read this blog to find out what progressives are thinking. So, if they see some thing like this maybe they'll look into it further.

Anyway, any help would be greatly appreciated.

Submitted by hipparchia on

or is it that you have to be logged in to even SEE comments and ratings? i'm seeing zero comments and zero ratings [i don't have an account there, so i'm not logged in to anything. yet.].

letsgetitdone's picture
Submitted by letsgetitdone on

I'm logged in, but I don't see any comments or ratings. I do see 6 thumbs ups at the top of the blog. Do you see that?

Submitted by hipparchia on

i see 6 facebook likes and 2 retweets at the top right. i don't have a facebook account, and i can't remember the password for my twitter account, so for the nonce i'm useless on those 2 fronts too.

letsgetitdone's picture
Submitted by letsgetitdone on

giving it a go anyway.