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February 4, 2013

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Posted: 04 Feb 2013 12:24 AM PST
Will Senate Republicans be able to kill, or at least defang, the Consumer Financial Protection Bureau?:
Friends of Fraud, by Paul Krugman, Commentary, NY Times: Like many advocates of financial reform, I was a bit disappointed in the bill that finally emerged. Dodd-Frank gave regulators the power to rein in many financial excesses; but ... the financial industry's wealth and influence can all too easily turn those who are supposed to serve as watchdogs into lap dogs instead.
There was, however, one piece of the reform that was a shining example of how to do it right: the creation of a Consumer Financial Protection Bureau... And sure enough, Senate Republicans are going all out in an attempt to kill that bureau. ...
Now, you might be tempted to say that while we need protection against financial fraud, there's no need to create another bureaucracy. Why not leave it up to the regulators we already have? The answer is that existing regulatory agencies are basically concerned with bolstering the banks; as a practical, cultural matter they will always put consumer protection on the back burner...
So the consumer protection bureau serves a vital function. But as I said, Senate Republicans are trying to kill it. ...
What Republicans are demanding, basically, is that the protection bureau lose its independence. They want its actions subjected to a veto by other, bank-centered financial regulators, ensuring that consumers will once again be neglected, and they also want to take away its guaranteed funding, opening it to interest-group pressure. These changes would make the agency more or less worthless — but that, of course, is the point. ...
And as always, you should follow the money. Historically, the financial sector has given a lot of money to both parties, with only a modest Republican lean. In the last election, however, it went all in for Republicans, giving them more than twice as much as it gave to Democrats (and favoring Mitt Romney over the president almost three to one). All this money wasn't enough to buy an election — but it was, arguably, enough to buy a major political party.
Right now, all the media focus is on the obvious hot issues — immigration, guns, the sequester, and so on. But let's try not to let this one fall through the cracks: just four years after runaway bankers brought the world economy to its knees, Senate Republicans are using every means at their disposal, violating all the usual norms of politics in the process, in an attempt to give the bankers a chance to do it all over again.
Posted: 04 Feb 2013 12:06 AM PST
Posted: 03 Feb 2013 01:56 PM PST
Idealist and dreamer Robert Reich:

Today, an Anniversary of America's First Progressive Revolution, by Robert Reich: Exactly a century ago, on February 3, 1913, the 16th Amendment to the Constitution was ratified, authorizing a federal income tax. Congress turned it into a graduated tax, based on "capacity to pay."
It was among the signal victories of the progressive movement ... reflecting a great political transformation in America. The 1880s and 1890s had been the Gilded Age, the time of robber barons ... when it looked as though the country was destined to become a moneyed aristocracy.
But almost without warning, progressives reversed the tide. ...
A progressive backlash against concentrated wealth and power occurred a century ago in America. In the 1880s and 1890s such a movement seemed improbable if not impossible. Only idealists and dreamers thought the nation had the political will to reform itself...
But it did happen. And it will happen again.
Posted: 03 Feb 2013 10:06 AM PST
We have already cut around $1.5 trillion of spending from the budget. Yet Tyler Cowen says:
I would view the sequestration as a kind of referendum on whether we are ever capable of cutting or restraining spending and I fear not.  
He also says defense is untouchable becasue:
When it comes to the defense budget, "gdp fetishism" suddenly makes a comeback.
But:
Two-fifths of the $1.5 trillion in savings from cutting and capping funding for discretionary programs comes from defense.
I'm all for more cuts to defense too, but it's only fair to note that some cuts have been made there already.
Also, why are only spending cuts mentioned when the discussion is the budget? Please don't tell me that if it's not spending cuts, i.e. if it's a tax increase, it doesn't count for budget discussions (and Keynesian economics, which is part of his discussion, does not make this distinction). Thus, note also that the American Taxpayer Relief Act (ATRA) added another half trillion in deficit reduction. Together, the $1.5 trillion in appropriations cuts, plus the $.5 trillion in tax increases in the ATRA, plus the $300 billion in interest savings amount to around a bit over $2.3 trillion in deficit reduction (see table 1 here). Once the economy can handle it, we need a bit more (though not everyone agrees) to stabilize the long-run picture, but to say we've made no progress at all is wrong and misleads about the urgency of finding further cuts. If people want more spending cuts, fine, we can debate that along with a debate over tax increases, and maybe even agree on cuts to defense and a few other areas. But in making the argument for an ideological position that government ought to be smaller, don't present the case as though nothing at all has been done to cut spending (and please don't hide the ideological call for a smaller government in a discussion about reducing debt). I was going to say that misleading people about the cuts we've made so far -- asking whether we'll ever be able to cut spending when we already have -- is no way to win an argument, but actually it is, and that's the problem.
Here's Tyler Cowen with more discussion of his column.
Here's Dean Baker with comments.

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