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How do vanden Heuvel and Meyerson Expect Him to Get By "the Human Sacrifice Crowd"?

letsgetitdone's picture

Yesterday, must have been jobs day at The Washington Post since they ran two columns calling for job creation: one by Katrina vanden Heuvel and the other by Harold Meyerson. The crux of vanden Heuvel's column is:

Consistent, tenacious persuasion is an extraordinarily powerful tool. The Republican Party understands this. Over the past several months, it has relentlessly repeated its false mantra that spending cuts create jobs. And the public, in response, increasingly believes this to be true. What then, is to stop the president, powered by a movement of dedicated and mobilized Americans, from making his own case for the economy? What is to stop him from convincing the American people that the things the economy requires are the things we ought to be fighting for? What is required other than will? Great leaders, when confronted by crisis, act.

The answer to this question is that President Obama's been telling people since 2009 that we are running out of money and can't afford programs that aren't deficit neutral, and recently he's made clear that he's for $4 Trillion in spending cuts/tax increases including cuts to entitlements over the next decade. So how can he now argue that we can afford the many things we need to do to create jobs and improve the economy?

Katrina vanden Heuvel doesn't address this question. She advises him about what he ought do to improve the economy; but not on how he can show Congress, a media steeped in neoliberalism, and the people that not only do we need his job creation measures but also that we can afford them. Without that kind of explanation, what good is the exhortation that he should vigorously advocate for job creation policies? The first pushback he'll get to any proposal is “that's irresponsible; we can't afford it”!

I found Harold Meyerson's column a good bit more interesting than Katrina vanden Heuvel's, but no more enlightening about how to get around the “we can't afford it” objection. He says:

Which leaves us with this stark reality: If the federal government doesn’t intervene massively to help the economy, the economy will oscillate between neutral and reverse for many years.

What should that intervention look like? First, don’t just extend the 2-percentage-point reduction in the employee payroll tax, which is normally set at 6.2 percent. Eliminate the tax altogether, for employers and employees, at least temporarily. It would increase by $2,100 the take-home pay, and buying power, of workers making $50,000 annually. It would make it easier for small businesses to resume hiring. . . .

The payroll tax can’t be suspended indefinitely without compromising Social Security, which it funds. Its suspension should end when unemployment falls to a specified level — say, 7 percent.

Interestingly, this is an important provision in Warren Mosler's multi-part Modern Monetary Theory (MMT) --based proposal for creating full employment. Warren's been advocating it for 3 years now. Glad to see Harold Meyerson take it up. Meyerson goes on:

We’ll need other, less fleeting forms of stimulus, too. You should call for renewing aid to state and local governments. . . .

Warren and other MMT economists also advocate state revenue sharing. In Warren's proposal the states would be given $500 per person which they might use to prevent Government lay-offs. Some propose as much as $1,000 per person in revenue sharing.

Meyerson's next and last proposal is:

Infrastructure bank or no, you need a long-term program to make our nation navigable again. . . .

Those kinds of projects may take years to realize. Your first stimulus failed to establish a fast track for creating less-capital-intensive jobs in maintenance, rehabilitating buildings, and child- and elder care. It deferred job creation to state and local governments, which have taken forever to set up even such relatively low-tech endeavors as home-weatherization projects. This time around, you should acknowledge the bottlenecks in your first stimulus and call for a federal job corps to do this kind of work.

This is also reminiscent of an MMT proposal, specifically the MMT Federal Job Guarantee, which would end unemployment in a few months by providing a job at a living wage with fringe benefits to any American who wanted to work.

In sum, even though he doesn't admit it in his column, Meyerson's program is very similar to the program for recovery proposed by MMT economists such as Warren Mosler, L. Randall Wray, Stephanie Kelton, and others. Is this a case of MMT reaching the mainstream? That may be the case; but if so it's without attribution.

Both vanden Heuvel's and Meyerson's column, while exhorting him to do things that are undeniably needed by Americans, fail to tell him how, given the Republican House, he can politically beat the drive toward austerity to get them done. Without that, it's hard to see how either of these posts can help anyone. Fortunately, I've already done that here and here.

The ONLY practical way to do it given the current political and institutional constraints in Washington is to use very high value Proof Platinum Coin Seigniorage (PPCS) to demonstrate to people that 1) the national debt is being extinguished and will be nearly completely eliminated in 3 years; 2) Congressional Appropriations for deficit spending can be made without issuing debt for the foreseeable future; 3) the Federal Government can never become insolvent (“run out of money”), unless Congress makes that happen; and 4) there's plenty of money available for not only jobs programs like Meyerson's, but also for Medicare for All, rebuilding infrastructure, creating a world class educational system, and all the other critical things the US must do to make things work here again.

The basic idea is to mint a $60 Trillion platinum coin, turn it into electronic credits at the Fed, use the money, first to pay down $6.2 Trillion in debt immediately and the rest as it falls due, and confront Congress with a balance of of about $52 Trillion in the Treasury General Account (TGA). Then, facing that $52 Trillion in available financial resources, and with the President using the bully pulpit, let's see the austerity/human sacrifice crowd, even with all the money in the world behind them, try to justify voting against a job program like Meyerson's or Warren Mosler's. Please see the posts I've linked to above for more details of my proposal.

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Joe's picture
Submitted by Joe on

Joe, I think there'd be a better chance of MMT going mainstream if people like Krugman actually bothered to show the most minimal level of respect for those who subscribe to it. For example, check out Krugman's blog post today, where he complains about MMT folks, ascribes beliefs to them that they do not have, and doesn't even bother linking to an MMTer.

I think with Krugman we might have a situation where, since the great idea isn't his, he won't give it any oxygen at all.

By the way, hate to trouble you, but I left a comment on another post of yours and I was hoping you could respond if you have a chance...

Submitted by MontanaMaven on

Monetary Act at The American Monetary Institute and compare the ideas. "The Lost Science of Money" written by Zarlenga is a a page book but very easy to read. It returns monetary studies to being more experiential and historical rather than just theoretical. It shows how different societies have grappled with monetary systems. The new American Monetary Act is something that a group of economists came up with in the 1930s. At its core is the belief that a nation's money system must benefit the people not the powerful. It should therefore be controlled publicly not privately. The power to create money should only be the people's power.

I haven't found a comparison of the plans anywhere and would be interested in what you thought. I'm just a movie agent with an interest in this as I interviewed Zarlenga twice when I had a radio show.

First the Federal Reserve gets incorporated into the U.S. Treasury where all new money is created by our government – what people think happens now.

Second, It ends the fractional reserve system. Banks no longer have the accounting privilege of creating our money supply. All their previously issued credit is converted into U.S. Money through an elegant and gentle accounting change. The banks are held accountable for this conversion and from that point operate the way people think they do now – as intermediaries between depositors and borrowers.

Third, new money is introduced by the government spending it into circulation for infrastructure, starting with the $2.2 trillion the engineers tell us is needed to properly maintain our infrastructure over the next 5 years. Infrastructure will include the necessary human infrastructure of health care and education.

Banks are encouraged to continue lending as profit making companies, but are no longer allowed to create our money supply through their loan making activity.

malagodi's picture
Submitted by malagodi on

How will the coinage of $60t that is not backed up by $60t worth of platinum be any different than say, printing paper money or - better example - mining bitcoins? Everyone will still understand it's based on nothing more than faith in the military state in the case of paper, or faith in the corporate internet infrastructure in the case of bitcoins.

The point is, at the end of the day, money is the symbolic representation of energy. That is why we've been spending our stored wealth for the last 15 years in an energy war. The purpose of this ongoing one energy war, not the two or three distinct fronts of Iraq, Afghanistan and now Libya commonly discussed, is only to shore up the Western governments. This is why China and India are busy trying to secure and diversify their energy futures for the purpose of actual economic activity and why the U.S. and Europe are broke as we continue to see nothing other than oil and nuclear power for the next century.

If we're going to mint a $60t platinum coin out of nothing, then why not just say it's a $60t coin of Unobtanium, which we can then claim to use as fuel in our interstellar warships?

malagodi's picture
Submitted by malagodi on

Ok, so you replied to my obvious sarcasm at the end, but not the actual question at the beginning.

How is the coinage backed by nothing except statutory permission different than paper or bitcoins or any other faith-based system? It seems like just a way to get around the real problem, the full faith and credit issue inherent in any fiat currency. There's little doubt about the considerable resources in the United States, but our creditors expect payment in something of value. Creating $60t of value by statutory fiat seems rather dubious to me.

A sovereign's coinage is only as good as the expectation that the sovereign will survive as a trustworthy payer of the debt, right? Doesn't MMT attempt to create wealth by fiat, rather than actual value-adding economic activity?

I'm kinda like Krugman here in that I'm not really interested in some kind of squabble about this, it just seems like there's an ideological posture that's being taken here...

"We intend to destroy all dogmatic verbal systems." Wm Burroughs.

letsgetitdone's picture
Submitted by letsgetitdone on

A sovereign's coinage is only as good as the expectation that the sovereign will survive as a trustworthy payer of the debt, right? Doesn't MMT attempt to create wealth by fiat, rather than actual value-adding economic activity?

The answer to the first question is yes, and the bond markets are showing a strong expectation that the US will pay its debts, in spite of the recent episode. Minting that $60T coin, paying off some previous debt, and emerging with $53 Trillion in the TGA would greatly strengthen that expectation.

To answer your second question, MMT holds that real wealth and nominal wealth are two different things. it also believes that when there are output gaps a we have not adding net financial assets to the private sector through deficit spending can increase economic activity, employment, and eventually, growth in real wealth. In other words MMT knows very well that value-adding economic activity is needed to produce real wealth, and deficit spending on job creation is one of its tools for getting that done.

Submitted by Hugh on

vanden Heuvel is just another tiresome out of touch Establishment liberal and Democratic tribalist. Obama has made his case on the economy. He is a corporatist backer of the kleptocracy. By pretending he is anything else, vanden Heuvel facilitates his agenda and undercuts real, meaningful opposition to it. Meyerson is slightly to the left of her, but really a set of proposals addressed to Obama makes it sound, much like vanden Heuvel, like Obama really would entertain a progressive agenda, which is just wildly at odds with reality.

What they should be doing is addressing the American people and using their positions of prominence to organize against him. As it is, they are just distractions, and distraction is the primary weapon of class war. And guess what? They aren't on our side. Their ongoing efforts to legitimize Obama and treat him like a progressive ally at this late date are Trojan horse operations. I reject them.

BDBlue's picture
Submitted by BDBlue on

I saw her on a panel once and she had nothing original or even slightly insightful to add. She basically regurgitated establishment media talking points, particularly about Obama.

propertius's picture
Submitted by propertius on

The polling data says that the public doesn't believe the "spending cuts create jobs" canard, no matter how many times it's repeated by both politicians and their MSM fanboys. The only people who seem to be convinced of that live in Versailles.

letsgetitdone's picture
Submitted by letsgetitdone on

she believes that; only that there's a long-run deficit problem.

letsgetitdone's picture
Submitted by letsgetitdone on

It's also Borosage and the CAF crowd. They've been playing pattycake with the Petersons for a year and a half now pretending that they're trying to save SS.