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September 5, 2011

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Paul Krugman: The Fatal Distraction

Posted: 05 Sep 2011 12:33 AM PDT

Time to change the conversation:

The Fatal Distraction, by Paul Krugman, Commentary, NY Times: Friday brought two numbers that should have everyone in Washington saying, "My God, what have we done?"
One of these numbers was zero — the number of jobs created in August. The other was two — the interest rate on 10-year U.S. bonds, almost as low as this rate has ever gone. Taken together, these numbers almost scream that the inside-the-Beltway crowd has been worrying about the wrong things, and inflicting grievous harm as a result.
Ever since the acute phase of the financial crisis ended, policy discussion in Washington has been dominated not by unemployment, but by the alleged dangers posed by budget deficits. ... For example, in May 2009 The Wall Street Journal declared that the "bond vigilantes" were "returning with a vengeance," telling readers that the Obama administration's "epic spending spree" would send interest rates soaring.

The interest rate when that editorial was published was 3.7 percent. As of Friday, as I've already mentioned, it was only 2 percent.

I don't mean to dismiss concerns about the long-run U.S. budget picture. ... But the ... deficits we're running right now — deficits we should be running, because deficit spending helps support a depressed economy — are no threat at all.
And by obsessing over a nonexistent threat, Washington has been making the real problem — mass unemployment, which is eating away at the foundations of our nation — much worse. ...
Which brings me to President Obama's planned speech on the economy.
I find it useful to think in terms of three questions: What should we be doing to create jobs? What will Republicans in Congress agree to? And given that political reality, what should the president propose?
The answer to the first question is that we should have a lot of job-creating spending on the part of the federal government ... to repair and upgrade the nation's infrastructure. Oh, and we need more aid to state and local governments, so that they can stop laying off schoolteachers.
But what will Republicans agree to? That's easy: nothing. They will oppose anything Mr. Obama proposes...
This reality makes the third question — what the president should propose — hard to answer, since nothing he proposes will actually happen anytime soon. So I'm personally prepared to cut Mr. Obama a lot of slack on the specifics of his proposal, as long as it's big and bold. For what he mostly needs to do now is to change the conversation — to get Washington talking again about jobs and how the government can help create them.
For the sake of the nation, and especially for millions of unemployed Americans who see little prospect of finding another job, I hope he pulls it off.

links for 2011-09-04

Posted: 04 Sep 2011 10:11 PM PDT

"The Worst Possible Idea at the Worst Possible Time"

Posted: 04 Sep 2011 04:05 PM PDT

Steve Benen cannot believe the GOP is seriously promoting a balanced budget amendment as a job creation policy:

The worst possible idea at the worst possible time, by Steve Benen: Unemployment is at 9.1%; the jobs report released Friday was awful; economic growth is anemic, and Americans are desperate for policymakers to take this crisis seriously. Yesterday, just 24 hours after we learned the economy didn't generate any jobs at all in August, the Republican Party delivered a weekly address on the message the GOP wants the public to hear.

Republicans want President Barack Obama to demand a balanced budget amendment in his upcoming jobs speech to Congress.

"This would ensure spending cuts made today don't easily disappear tomorrow," said Virginia Rep. Bob Goodlatte in the GOP weekly address Saturday. "That doesn't just mean a fiscal house in order; it also means more certainty for the private sector and a better environment for job creation."

Oh my. If anyone was looking for a reminder as to why dealing with congressional Republicans on economic policy is practically impossible, the party's weekly address certainly offered one.

Keep in mind, a month ago, the House GOP leadership told its members that "the best thing they could do during the August recess" was to sell their constituents on the idea of a balanced budget amendment to the Constitution.

This is just madness... That congressional Republicans managed to create a BBA this year that was even worse than the previous version is a testament to their creativity, but it also reflects a degree of economic illiteracy that should disqualify them from any adult conversation on public policy.

What sensible policymakers should be doing is dismissing this "pathetic joke" of a proposal as quickly as possible. ...

I think sensible policymakers do dismiss it. The question is why members of the media (or sensible Republican economists) haven't laughed the GOP out of the room for even suggesting that we balance the budget in a recession, let alone as one of the keys to solving the employment crisis (the same question I've been asking about other statements from the GOP, e.g. claiming that tax cuts pay for themselves). Until there is some cost for making these statements -- and cost to a politician means loss of votes or loss of campaign support -- there is no reason to stop making them. Why aren't the costs higher? I suppose part of the answer is that the editorial page of the WSJ, Fox News, and other such outlets are ready to support "pathetic jokes" pretty much unconditionally so long as it furthers their ideological aganda (and keeps ratings high), and that keeps the political costs low relative to the benefits.

But to the point I wanted to make -- notice that he doesn't say, "This would ensure tax increases made today don't easily disappear tomorrow." If tax increases are allowed to happen at all -- and they won't happen if the GOP can possibly stop them -- the GOP believes they should, in fact, disappear as soon as possible. The BBA has nothing to do with job creation, or even the deficit and we shouldn't argue with the proposal as if it does. This is just another way to try to realize the GOP's ideological goal of a smaller government. A balanced budget amendment would ensure that either tax increases or spending cuts must be made, and to the extent that they can force this to happen through spending cuts rather than tax increases -- and right now they believe their ability to block tax increases is very strong -- it moves them closer to their goal. If they thought the budget gap would be closed primarily through tax increases rather than spending cuts, we'd be hearing that deficits don't matter and there would be no talk of balanced budget amendments. (A balanced budget amendment won't pass, but this keeps the "we must cut the deficit now" mantra alive in the public discussion and any addiitonal spending cuts they get because of it are a bonus, it allows the GOP to sell budget hawk credentials to constituents without having to actually earn them, and it helps to set the stage for a push on this issue down the road when they may -- shudder -- control all branches of government.)

"Must We Act As If They Mean What They Say?"

Posted: 04 Sep 2011 09:00 AM PDT

John Holbo tries to explain why conservatives get away with saying outrageous things, but liberals don't:

Must We Act As If They Mean What They Say?, by John Holbo: ...Let me switch over to a question Kevin Drum asked last week: why do Republicans get a free pass? He's absolutely right that they do.

Here's what gets me. Perry's views are getting denounced by all the usual lefty suspects but not much by anyone else. And the reason for this is something very odd: In modern America, conservatives are largely given a pass for saying crazy things. They're just not taken seriously, in a boys-will-be-boys kind of way. It's almost like everyone accepts this kind of stuff as a kind of religious liturgy, repeated regularly with no real meaning behind it. They're just the words you use to prove to the base that you're really one of them.

Kevin points out that if Hilary Clinton wrote a book about how much she wanted to repeal the Second Amendment and ban hate speech everyone would freak out that she was a radical. So what gives?

But the question answers itself: it's really true that Perry doesn't mean what he says. Mostly. As Kevin says, these are just the words he has to say to prove to the base he's one of them.

By contrast, Hilary Clinton would only write that book about wanting to repeal the Second Amendment, etc., if – against all likelihood – she really wanted to repeal the Second Amendment. Because, since she isn't a conservative, she's not going to get a Get Out of Crazy Jail Free card. So there is no profit to her in writing such a book. Turning the point around: given that liberals don't systematically employ a rhetoric of believing things they don't, but conservatives do, it makes a great deal of sense to give conservatives an endless supply of Get Out of Crazy Jail Free cards. And round we go.

Really it's more complicated. If people say crazy stuff long enough, they start to believe what they say, and other people do, too. The Overton Window gets dragged all over the place. (Michelle Bachmann really does seem to mean what she says. So she's unviable, in the eyes of Republican establishmentarians. Even though she isn't really saying anything absolutely crazier than Perry is saying at this point, and he's looking pretty ok.) Having the license to say crazy stuff, without getting called on it, prevents serious debate and allows people to conceal any crazy stuff that really do believe, by hiding it in plain sight, as it were. It's really true, I suspect, that when most conservatives say that they don't buy this global warming junk science, what they really mean to do is, simply, signal 'I'm in favor of capitalism'. If you are a conservative, talking to conservatives, and you say you think the scientists might be right, your audience is going to hear you refusing to send an 'I'm in favor of capitalism' signal. Needless to say, this means conservatives can't have reasonable discussions of global warming unless they are free from worries about what they are signalling, as opposed to saying. Which they never are, at least if they are politicians.

What to do? It's perfectly fair, rhetorically, to treat politicians as if they mean what they say, even if you know perfectly well they probably don't. ...

The deeper question, I think, is why it appeals so much to so many Americans that conservatives constantly say things that they don't really mean. Let's go back to that oft-quoted line from Free and Cantril (The Political Beliefs of Americans: A Study of Public Opinion). Americans are "philosophical conservatives but operational liberals". ... It's not too much of an exaggeration to say that what Free and Cantril found is that when Americans say Big Things about American politics, whose consequences they aren't really prepared to affirm, in practice, they say conservative things. Whereas when you find out what they really want, in practice, they are liberals. When Americans dream about something ideal, politically, that they kind of know they aren't going to get, they dream a conservative dream. Since conservatism is, officially, an anti-utopian philosophy, this creates the odd situation of collective dreams of anti-utopian utopianism. ...

This creates a problem for liberals: they get branded as utopian even when they are not utopian in the least. (Which they never are, in practice.) They can't use any utopian rhetoric or systematically exaggerate what they intend to do or any of that stuff. If they do, they suffer for it..., any bold thing you propose, even if it isn't utopian, will be denounced as utopian. And electorally it's a source of endless frustration. But the real source of this frustration is not conservative politicians but, ... the political beliefs of Americans. Or rather, their political beliefs plus their political non-beliefs.

Hilary Clinton is not going to write a book about wanting to repeal the Second Amendment, which she doesn't want to do, because she has no way to profit from doing so. But this isn't some sort of ultimate truth about American politics: the ultimate reason why this is the way of the world is that there isn't a market for books about how we should repeal the Second Amendment, written by authors who don't want to repeal the Second Amendment, for readers who don't want to repeal the Second Amendment, but who find it entertaining to entertain – philosophically – the idea that we need to repeal the Second Amendment. 'Entertain' being the vastly more operative word than 'philosophical' here.

I am not fully convinced by this explanation, but I don't have a better one to offer. Do you?

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