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February 4, 2013

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 03 Dec 2012 12:24 AM PST
Exposing the Republican con game on the deficit:
The Big Budget Mumble, by Paul Krugman:, Commentary, NY Times: In the ongoing battle of the budget, President Obama has done something very cruel. Declaring that this time he won't negotiate with himself, he has refused to lay out a proposal reflecting what he thinks Republicans want. Instead, he has demanded that Republicans themselves say, explicitly, what they want. And guess what: They can't or won't do it.
No, really. While there has been a lot of bluster from the G.O.P. about how we should reduce the deficit with spending cuts, not tax increases, no leading figures on the Republican side have been able or willing to specify what, exactly, they want to cut.
And there's a reason for this reticence. ...Republican posturing on the deficit has always been a con game, a play on the innumeracy of voters and reporters. Now Mr. Obama has demanded that the G.O.P. put up or shut up — and the response is an aggrieved mumble.
Here's where we are right now: As his opening bid in negotiations, Mr. Obama has proposed raising about $1.6 trillion in additional revenue over the next decade, with the majority coming from letting the high-end Bush tax cuts expire and the rest from measures to limit tax deductions. He would also cut spending by about $400 billion...
Republicans have howled in outrage. ... They say they want to rely mainly on spending cuts instead. Which spending cuts? Ah, that's a mystery..., when you put Republicans on the spot and demand specifics about how they're going to make good on their posturing about spending and deficits, they come up empty. There's no there there.
And there never was. ... Now Republicans find themselves boxed in. With taxes scheduled to rise on Jan. 1 in the absence of an agreement, they can't play their usual game of just saying no to tax increases and pretending that they have a deficit reduction plan. And the president, by refusing to help them out by proposing G.O.P.-friendly spending cuts, has deprived them of political cover. If Republicans really want to slash popular programs, they will have to propose those cuts themselves.
So while the fiscal cliff — still a bad name for the looming austerity bomb, but I guess we're stuck with it — is a bad thing from an economic point of view, it has had at least one salutary political effect. For it has finally laid bare the con that has always been at the core of the G.O.P.'s political strategy.
Posted: 03 Dec 2012 12:06 AM PST
Posted: 02 Dec 2012 02:20 PM PST
Jamie Galbraith's view on wage stagnation might surprise you:
Muddling Towards the Next Crisis: I think there is a tendency on the left to underestimate the success of the programs that created and sustained the middle class and the middle class mentality. There's a tendency to focus on some statistical aspects of what's happened to wages—median wages in particular—and to focus less on the role played by Medicaid, Medicare, Social Security, the housing programs, public education, and support for higher education, all of which gave us a population that had the attributes of a middle class society.
The story that is often told about what's happened to factory jobs, and what's happened to wage rates, is not a good way of getting at the threat to that existence. The typical story is that median wages peaked in 1972 and have been stagnant and falling since then. As a result, it must be the case that people who are working now are much worse off than they were ten, fifteen, twenty years ago. That's not an accurate story—at least not up until the crisis in 2008—because over that period the labor force became younger, more female, more minority, and more immigrant. All of these groups start at relatively low wages, and they all then tend to have upward trajectories. So there's no reason to believe that life was getting worse for members of the workforce in general. On the contrary, for most members of the workforce it was still getting better. Plus they had the benefit of technical change and improvement in the other conditions of life.
The real threat to the middle class is not there, it's in the erosion of the programs I just mentioned. That is to say, it's in the attack on the public schools, it's in the squeeze on higher education, it's in the threat to Social Security. When you look at housing, you have a very large unambiguous loss. Millions of people have been displaced, but many, many more have lost the capital value of their homes. They won't be able to sell and retire on the proceeds.
So I think there is a threat to the middle class, but if I were talking about it in political terms, I wouldn't be giving an abstract statistical picture of wages. This doesn't connect to people's experiences. If I were designing the boilerplate rhetoric of a popular movement, I would take a blue pencil to these statistical formulations. I don't like the stagnant median wage argument—I think it obscures what actually happened. And I don't particularly care for the "one percent" argument. I understand it has a certain power, but one can be much more precise about what it is you want to attack, and what it is you want to preserve and to build. I would cut to the chase: we need to tear down the financial sector and rebuild it from scratch in a very different way. ...
Posted: 02 Dec 2012 09:54 AM PST
Jonathan Weiler:
The Republican Party Should Have Zero Credibility on Deficits, by Jonathan Weiler: Speaker Boehner's angry response to the White House's opening gambit in the budget negotiations related to the so-called fiscal cliff provides a useful opportunity to remind folks that the GOP should have zero credibility on deficit reduction. Boehner claims that the Democrats proposal is not serious and is a bad-faith offer. Coming from him, that's rich. We have a three-decades long record to prove definitively that Republicans are themselves unserious about deficits. That has been evident during periods in which they've controlled the presidency, as both Reagan and W. presided over explosions in our national debt. And we have the account of GOP insider after GOP insider revealing the true motives behind GOP fiscal policy. As far back as 1981, Reagan budget director David Stockman admitted that Republicans' professed concern with the impact of deficits and debts on our children and grandchildren was just a ruse to allow Republicans to avoid responsibility for the adverse consequences of lowering taxes on the rich. Bruce Bartlett, a former Reagan treasury official has explained in detail that the right-wing's rhetorical push against deficits over the past thirty years was not the product of a sincere commitment to fiscal prudence. Rather, Bartlett has shown, the goal was to reduce taxes on the rich, which would starve the government of funds, which would require government to cut spending for the less well off. In other words, the concern was never deficits. The desire was to reduce social spending for those deemed undeserving by the Republicans, including poor children, the struggling elderly and other disfavored groups. Deficits were merely the excuse for doing so. And Vice President Dick Cheney stated as emphatically as he could that, when Republicans hold power, "deficits don't matter." ...
He says "Boehner claims that the Democrats proposal is not serious." Paul Krugman explains:
What Defines A Serious Deficit Proposal?, by Paul Krugman: Just a thought: if you follow the pundit discussion of matters fiscal, you get the definite impression that some kinds of deficit reduction are considered "serious", while others are not. In particular, the Obama administration's call for higher revenue through increased taxes on high incomes — which actually goes considerably beyond just letting the Bush tax cuts for the top end expire — gets treated with an unmistakable sneer in much political discussion, as if it were a trivial thing, more about staking out a populist position than it is about getting real on red ink.
On the other hand, the idea of raising the age of Medicare eligibility gets very respectful treatment — now that's serious. So I thought I'd look at the dollars and cents — and even I am somewhat shocked. Those tax hikes would raise $1.6 trillion over the next decade; according to the CBO, raising the Medicare age would save $113 billion in federal funds over the next decade.
So, the non-serious proposal would reduce the deficit 14 times as much as the serious proposal.
I guess we have to understand the definition of serious: a proposal is only serious if it punishes the poor and the middle class.
Here's an example:
On Sunday, during an appearance on Meet the Press, Sen. Bob Corker (R-TN) reiterated his call for restructuring entitlement programs like Medicare, highlighting the "very painful cuts" he has proposed as part of a package to avert the fiscal cliff. ...
Host David Gregory seemed to agree with Corker's characterization and pressed fellow panelist Sen. Claire McCaskill (D-MO) to accept reforms that will shift health care costs to seniors in order to show that Democrats are "serious" about entitlements:
CORKER: Look, I laid out in great detail very painful cuts to Medicare. ...
GREGORY: Name some specific programs that ought to be cut that would cause pain in terms of the role of our government that Democrats are prepared to support.
McCASKILL: Well,... a lot of us voted for more cuts in the farm program…and defense. I spent a lot of times in the wings of the Pentagon. if you don't think there's more money to be cut in contracting at the pentagon, you don't understand what has happened at the Pentagon. [...]
CORKER: David, as much as I love Claire, those are not the painful cuts that have to happen. We really have to look at much deeper reforms to the entitlements …
Note the "those are not the painful cuts that have to happen." It's not enough that the cuts be "painful." To actually count and be endorsed, the cuts have to be targeted at particular people and programs.

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