The Peter G. Peterson Foundation (PGPF) and its allied army of associated deficit hawks want the Congressional Budget Office (CBO), the General Accountability Office (GAO), and the Office of Management and Budget (OMB) to do fiscal gap accounting and generational accounting on an annual basis and, upon request by Congress, to use these accounting methods to evaluate major proposed changes in fiscal legislation. Generational Accounting is an invalid long-range projection method that doesn't take into account inflation, the projected value of the Government's capability to issue fiat currency and reserves in the amounts needed to fulfill Congressional appropriations, and re-pay its debts, the projected non-Government assets corresponding to government liabilities, the likely economic impacts of Government spending, surpluses, and deficits, the impact of accumulating errors on projections, and the biases inherent in pessimistic AND contradictory assumptions. It is a green eye shade method that ignores both economic and political reality.
If you want America to end deficit terrorism and austerity, and to have the fiscal policy space it needs to begin to restore the American Dream, then you need to defeat proposed policies or legislation which puts building blocks in place to bias fiscal policy towards austerity and the economic decline it will surely produce for ourselves, our children, and for their children. Proposed policies and legislation of this kind must be defeated for the following seven reasons. Read more about Beware of Policies and Legislation Based on the Generational Accounting Scam
The deficit is now down to under 3% of GDP, and in contemplating that fact, Paul Krugman asks why the deficit hawks aren't celebrating the precipitous fall from nearly 10% of GDP a few years ago. He then explains that:
Far from celebrating the deficit’s decline, the usual suspects — fiscal-scold think tanks, inside-the-Beltway pundits — seem annoyed by the news. It’s a “false victory,” they declare. “Trillion dollar deficits are coming back,” they warn. And they’re furious with President Obama for saying that it’s time to get past “mindless austerity” and “manufactured crises.” He’s declaring mission accomplished, they say, when he should be making another push for entitlement reform.
All of which demonstrates a truth that has been apparent for a while, if you have been paying close attention: Deficit scolds actually love big budget deficits, and hate it when those deficits get smaller. Why? Because fears of a fiscal crisis — fears that they feed assiduously — are their best hope of getting what they really want: big cuts in social programs.
During Part One of this series, I approached the end of my post with this paragraph.
Apart from the political opposition from the insurance companies that Medicare for All would have engendered, I think the main justification for abandoning Medicare for All and switching to the PO and eventually the PO-less ACA, was actually neoliberalism. The President, his main advisers, the Democratic leaders in Congress, and most progressives working for Washington progressive organizations were steeped in neoliberal doctrine. They viewed the Bush tax cuts and the two Wars as unpaid for. The ARRA stimulus Act was similarly unpaid for and added to deficit spending and to the debt-subject-to-the-limit. They believed and most believe today that the Federal Government can have solvency problems if the debt-to-GDP ratio increases too much, and interest rates on the national debt are driven up by the bond vigilantes.
A Medicare for All Act would have required Federal spending on health care to rise by $800 - $900 Billion per year over present levels. They were not ready to cover that with higher tax revenues, and they were not ready to deficit spend it because they viewed that as fiscally irresponsible, and believed then and still believe now that it's necessary to decrease the debt-to-GDP ratio over time.
So, they wouldn't consider spending for Medicare for All. They wouldn't look seriously at the hundreds of thousands of lives they were consigning to oblivion, at the bankruptcies and divorces they could prevent, or at the obvious fact that while HR 676 would have cost the Government $900 Billion more in money annually that the Government can create at will and at zero real cost; it would have saved the people who have to pay for health insurance, and health care out of pocket and in the form of “co-pays” $1.8 Trillion annually, thus providing a marvelous boost to the economy. Instead, they just said to everybody, that it was impractical and that the United States couldn't afford it; but that it would be able to to afford a self-supporting PO bill, and later when that was taken off the table, a deficit neutral insurance bailout like the ACA.
My friend Lambert Strether liked Part One and cross-posted it at Yves Smith's Naked Capitalism site. But the above statement bothers him because he thinks that using the label neoliberalism alone without explaining what aspects of that paradigm provided the justification for taking Medicare for All off the Table, and who the political actors are who adhere to this, makes my treatment incomplete. Even though I agree with the view that it's easy enough to google “neoliberalism” if someone doubts what I mean by the “term,” I also agree with Lambert that it would add something to Part One for me to be more specific about my thinking and show the connections between neoliberalism and the decision to take Medicare for All off the Table. Hence, this Part Two. Read more about Neoliberalism Kills: Part Two
It was very welcome to see The Washington Post cover MMT with a reasonably favorable post by Dylan Matthews, published on Ezra Klein's blog called “You know the deficit hawks. Read more about WaPo Covers MMT, But Does Its Usual Bad Job: Part One, Some Basics and Solvency
Rick Perry's loose talk about Social Security being a ponzi scheme, is generating a lot of contrary ink, or electronic bits as the case may be. Cullen Roche has provided an excellent analysis, accompanied by a great discussion which begins this way.
”First of all, let’s get the definition of a ponzi scheme right. According to the SEC, a ponzi scheme is “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.” Quite simply, a ponzi scheme involves the promise of future payments that current returns do not justify.”
So, a ponzi scheme is:
-- an investment opportunity Read more about Ponzi Schemes and the Ponzi Schemers
While some progressives are happy with the President's speech on the budget; others are suspicious, recognizing the President's repeated pattern of offering words that are reassuring to progressives while later acting to work against the general principles he asserts in a major speech. As Bernie Sanders is saying: “the devil is in the details.”
It surely is. But also, the devil is in the framing of the issues and the negotiation to come. And if the framing is done in such a way that the definition of the problem already implies an unfavorable solution for the middle class, American workers, the poor and the vulnerable, then I'm afraid the outcome is a predetermined defeat. So let's look at the framing in the form of a number of assertions made by the President during his speech. Read more about It's All In the Framing and That's Terrible
One of the most emotional issues in American politics is the sovereignty of the United States itself, and its independence from foreign powers, interests, other nations and their ruling elites, and emerging globalizing elites who place their own interests against the nation interest of America and its people. The issues of fiscal sustainability and fiscal responsibility should be discussed from the viewpoint of our national interest, not from the viewpoint of abstract financial ratios, or supposedly critical indicators that generate a lot of sound and fury signifying nothing. Read more about Why Do “They” Want To Limit Our Sovereignty In Our Own Currency?
The Modern Monetary Theory (MMT) approach to economics must be starting to make some waves, because today, Paul Krugman, followed his earlier attack on it and his debate with Jamie Galbraith and others last summer, with another swing at MMT. The debate last summer was an extensive one at Paul's blog site at the New York Times, and, in addition, there were a number of posts at other sites replying to Paul. The debate was a classic in the developing conflict of views between the “deficit doves” (represented by Paul) and the “deficit owls” (represented by Jamie Galbraith and other MMT writers).
Given the earlier debate, you'd expect that Paul's second try at MMT would reflect a bit of learning on his part, and also a characterization of the views of MMT practitioners that is a little more fair than he provided in his first attempt. This post will analyze Paul's new attack and assess how much he's learned. But first, I'll review the earlier debate. Read more about Paul Takes Another Swipe at MMT
Arianna Huffington is calling attention to “the great budget battle of 2011,” between the President and the Republicans. She correctly points out that whichever of the two sides win, we, the people, lose. She's right, of course, and says further:
Just look at this so-called "debate" we're having. The problem ostensibly on the table is the deficit. But, without any context, the raw deficit number is meaningless. If the country's debt were, say, $50 million, that wouldn't be a big deal. If some average American suddenly found himself $50 million in debt, well, that would be a big deal. And that's because the country's GDP is a lot bigger than the average person's income. So what we're talking about is really the debt-to-GDP ratio.
Yet the debate is concentrated almost entirely on the debt side of the equation and barely at all on ways to increase the GDP side. . . .
OBAMA'S REAGANOMICS ON STEROIDS: “Entitlement Reforms” a/k/a Back-Stabbing of Middle & Lower Income Americans
I notice my titles are getting longer and more bitter. I found I lacked the space, but this one should have read:
OBAMA’S REAGANOMICS ON STEROIDS: “Entitlement Reforms” a/k/a Ruthless Back-stabbing of Middle and Lower Income Americans by Raping and Disabling Their Social Safety Programs and Forcing Them To Postpone Retirement (Pretending They Could Manage to Stay Employed, Anyway)
I have just read a distressing article on Obama’s toxic Reaganomics sensibility by Eric Laursen in the indypendent. Read more about OBAMA'S REAGANOMICS ON STEROIDS: “Entitlement Reforms” a/k/a Back-Stabbing of Middle & Lower Income Americans
Ezra Klein did a piece yesterday offering the conventional deficit dove position on deficits and debt. Here's a commentary on it.
Gallup's survey of voter preferences for closing the entitlement gap is incomplete It suggests the options on entitlements are like a second-grade arithmetic problem: You can either add stuff (tax increases) or subtract stuff (benefit cuts). What's missing is the option you learn about in high school: growth.
Professor L. Randall Wray of the Department of Economics, University of Missouri, Kansas City is one of the leaders of the Modern Monetary Theory (MMT) approach to economics. His blogs are very clearly and simply written, well-organized, thorough, and generally fairly dispassionate. Read more about Randy's Terrific Rant
Today, Dean Baker questioned the sanity of The Washington Post, after its editorial staff once again came out for cuts in Social Security to avert a crisis which will not be Read more about Why Should We ACT Based on CBO's Projections?
After reviewing the terrible state of our economy and the need to reconstruct it so that people can find work and a vibrant middle class can be rebuilt. Bob Borosage suggests that Congress go back to first principles. he briefly reviews the post- WWII history of employment legislation and says: Read more about Reality Check Plus