Ensuring there's enough money to pay for the war will require reforming the country's entitlement system, [House Minority Leader John] Boehner said. He said he'd favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation and limiting payments to those who need them.
This is the Junk Economics that financial lobbyists are trying to sell to voters: “Prosperity requires austerity.” “An independent central bank is the hallmark of democracy.” “Governments are just like families: they have to balance the budget.” “It is all the result of aging populations, not debt overload.” These are the oxymorons to which the world will be treated during the coming week in Toronto.
It is the rhetoric of fiscal and financial class war. ...
... today’s economic planning is not being done by elected representatives. Planning authority has been relinquished to the hands of “independent” central banks, which in turn act as the lobbyists for commercial banks selling their product – debt. From the central bank’s vantage point, the “economic problem” is how to keep commercial banks and other financial institutions solvent in a post-bubble economy. How can they get paid for debts that are beyond the ability of many people to pay, in an environment of rising defaults?
The answer is that creditors can get paid only at the economy’s expense. The remaining economic surplus must go to them, not to capital investment, employment or social spending.
There's lots more in the essay, including attacks on Obama and his Deficit Commission.
We are now, I fear, in the early stages of a third depression.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
... you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence.
Now that the banks and asset-holders (mostly in the markets) have been bailed out, why bother with everyone else? Krugman says there is a "failure of policy", but that's only true if the policy is supposed to help the lesser economic players (i.e. you). But given the way moneyed interests control much of governance, why expect such a "relief policy for all" to be something they care about?
There are a lot of gains to be made by the (restored) economically powerful when economies slump dramatically.
Democratic leaders in the Senate have apparently failed to win enough support to overcome a Republican filibuster of a bill to help the poor, the old and the jobless, despite making a series of cuts to the measure over the past several weeks to appease deficit hawks.
The legislation, known as the "tax extenders" bill, would reauthorize extended unemployment benefits for people out of work for six months or longer, would protect doctors from a 21 percent pay cut for seeing Medicare patients, and would provide billions in aid to state Medicaid programs.
Both chambers of Congress had already passed the measure, deficit spending and all, but when it came time to combine the bills in May, conservative Democrats and moderate Republicans lost their previous will to help the economy and forced party leaders to begin the nickel-and-dime process of trimming the bill.
The House shortened the Medicare physicians' fix, dropped the Medicaid money, and also $7 billion in subsidies for laid off workers to buy health insurance. The Senate cut $25 per week from every unemployment check and shortened the so-called "Doc Fix" even further, to six months, and on Wednesday Dem leaders trimmed another $8 billion by reducing the Medicaid assistance. The bill has shrunk over the past few weeks from $190 billion, to $80 billion, to $55 billion, to just over $30 billion in the current Senate version.
$30 billion would surely help those it's directed at, but that's going to leave plenty of other people in grim shape.
I never complain when conservative activists are nominated for the Supreme Court, so when the court makes a "miserable" ruling, like that allowing corporations to spend unlimited amounts on elections, I'll call for the easy remedy of a constitutional amendment. Because that's what you want, a Constitution that's as long and detailed as a state penal code.
This is something Brad DeLong would surely object to: (excerpts, emp add)
SEYMOUR, IND. -- There is one factory left in the United States that manufactures the basic ironing board, and its survival against Chinese competition demands unrelenting, production-line hustle.
The 200 people at the plant in this small town make their boards very, very cheaply and as fast as 720 in an hour.
"The people on the line are making pretty good money; it can work out to about $15 an hour," said Dave Waskom, 61, a tool and die maker who readied the plant's machinery for 37 years. "But they work like dogs."
... it is the tariff that gives the plant here, a division of Chicago-based Home Products International, its biggest advantage in selling to Wal-Mart, Target, Kmart and other companies.
... there is little doubt in Seymour ... that the tariffs saved 200 jobs and leveled a playing field that had been tilted in favor of foreign factories.
Won't anybody stick up for the DeLong free-trade utopia? Fortunately, there is someone:
"It doesn't make much sense to force millions of U.S. consumers to pay higher prices for ironing boards to save 200 jobs," said Howard Rosen, an economist at the Peterson Institute who has organized efforts to get retraining programs for workers displaced by the offshoring of jobs. "It would make more sense to help workers move to other jobs."
Thank goodness there is someone from the Peterson Institute to look out for the average Joe, advocating the scrapping of 200 jobs paying at most $30K, and telling the workers to look for "other jobs".
UPDATE: Yglesias isn't fond of the protectionist measure:
... if you repeal the [tariff], the profits will flow away from [the 200 employee manufacturing facility] and toward retailers like Target and Wal-Mart. Consumers will spend less money on ironing boards and will either spend more money on other things, or else will save more money generating extra investment funds. Either way, 200 people will lose their jobs but new jobs will be created from the extra investment and consumption financed by cheaper ironing boards. All-in-all, throughout the economy resources would be better-allocated and the vast majority of people will end up better off.
Think of all those people who use irons, saving $2 each (in Yglesias' scenario) and directing all that money to "extra investment funds".
Summers, in an interview with Globe editors and reporters this week, cited progress made during the 18 months of the Obama administration, but acknowledged that the recovery still faces risks, from the premature withdrawal of federal spending aimed at stimulating the US economy to a financial meltdown in Europe to increased tensions in Korea.
Summers, the former Harvard University president and Treasury secretary under President Clinton, presented a cautious, measured view of economic conditions. For example, after expressing confidence that European policy makers would contain the government debt crisis and avoid another global financial crisis, he added that the assessment was “my best guess, and I could be wrong.’’
Or, when asked if the nation had achieved a self-sustaining recovery, Summers responded, “I think that’s the right presumption and my expectation. I wouldn’t be foolish enough to be certain.’’
In his weekly address he talks about doing right for the United States, but if you look closely, he's sending a signal to his true benefactors, the Europeans. How so? Obama is wearing a tie that has diagonal lines in the European orientation (high side of stripe on wearer's left).
Alan Greenspan, that is. From his WSJ (paywalled) essay: (emp add)
An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.
Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.
Hey, it's "regrettable" that markets are functioning the way they are. This from an Ayn Rand acolyte! And Greenspan is calling for austerity, now that the banks have been bailed out to the tune of trillions. No flaw in that model, eh?
(There is an accessible comment section, the balance tilted in favor of what AG wrote.)
Current Bid: $15,000.00 Next Bid: $16,000.00 Ends: 6/21/2010 3:00:00 PM EST
Join Governor Sarah Palin and Glenn Beck at an invitation only breakfast on the morning of 8/28 before they speak at the Lincoln Memorial. You and a guest will receive VIP treatment while seated with Governor Palin and Glenn Beck at the head table, and you can remember this once in a lifetime experience by having your picture taken with the duo.
General question about this item
Is this merely seating at a large table among many others or is this a more selective, private seating with the ability to converse with Mrs. Palin and Mr. Beck?
This is a more selective, private seating experience with the ability to converse with Governor Palin and Mr. Beck. The winners will be seated at the head table next to either Mr. Beck or Governor Palin and will have time to talk and exchange ideas.
Government-sponsored mortgage purchasers Fannie Mae and Freddie Mac plan to delist their shares from the New York Stock Exchange.
The companies' regulator, the Federal Housing Finance Agency, said Wednesday that it expects Fannie Mae and Freddie Mac shares to trade on the Over-the-Counter Bulletin Board, an electronic quotation service.
The move to delist the shares isn't a surprise. The crash in the housing market has pounded Fannie Mae and Freddie Mac with heavy loan losses since 2007. Fannie shares have been below the $1 average price level for 30 trading days. NYSE rules require a company to take action to boost its shares or delist.
Fannie is selling for about 50 cents, Freddie for 70 cents. That's aproximately 1% of what they were selling for for most of the last 10 years.
For anybody with long memories, both those outfits were considered a safe, long-term assured growth, investment. The demise of the two is remarkable.
Even though large tracts of the Gulf Coast and many old and famous fisheries have fallen into the grip of the oily sludge and all the odious hydrocarbons of crude oil, we shall not flag or fail.
We shall go on to the end, we shall fight to protect the Louisiana Bayou, we shall fight on the ocean drilling platforms, we shall fight on the beaches, we shall fight to prevent the oil from landing on our shores, we shall fight for the wetlands, we shall never surrender.
Obama erred when he called for a "national commission" to understand the causes of the BP mess. Clearly, a "blue ribbon commission" is what's needed here. Major Obama fail. ref:
There was a great episode of "The Simpsons" a few years ago, in which the city of Springfield was looking to local officials to address a crisis. Mayor Joe Quimby, anxious to give the appearance of action without actually doing anything, announced the creation of a "blue-ribbon commission." Lenny responds earnestly, "Did he say a blue-ribbon commission?" -- prompting Carl to say, "Well, you can't do any better than that!"
But a year and a half into this presidency, the contemplative nature that was so appealing in a candidate can seem indecisive in a president. His promise of bipartisanship seems naïve. His inclination to hold back, then ride to the rescue, has sometimes made problems worse.
These three complaints all were issued in recent days (6-14, 6-13, 6-11) so there definitely is something in the air.
... this year, the Supreme Court narrowly found that some [campaign spending] restraints violated the free speech rights of corporations and struck them down. It is not clear how eager those groups are to buy more leverage in elections ...
Yup, it's definitely not clear how eager they will be to purchase legislators and legislation.
Dean Baker on proposals to "adjust" Social Security:
I'll just post the first two paragraphs: (emp add)
Will a Partial Default on the National Debt be Necessary to Get the Deficit Under Control?
That is what the Washington Post argued in an article on President Obama's deficit commission today. The article told readers that: "Adjusting Social Security benefits is a likely point of consensus, commission members say." [The word "adjusting" is presumably a typo. The only way to reduce the deficit is by cutting benefits.]
The Social Security trust fund holds more than $2.6 trillion in government bonds. According to the Congressional Budget Office, this money will be sufficient, along with current tax revenue, to pay all scheduled benefits through the year 2044. The decision to cut benefits would effectively mean defaulting on these bonds -- denying workers the benefits that they have already paid for through the designated Social Security tax.
Readers of this blog know that I'm insistent that the word "default" should be used when it comes to trying to weasel out of paying the full amount to the generation that paid "extra" (i.e. pre-funded) into the system.
[Social Security's] defenders argue that there is no crisis: If Treasury would repay billions of dollars in surplus Social Security taxes borrowed over the years, the program could pay full benefits through 2037. But many budget experts question whether supporting the existing benefit structure should be a cash-strapped nation's first priority.
Got that? Many "budget experts" question supporting the existing benefit structure that has already been paid for. Where were these experts when the opportunity to pay down a substantial part of the debt (so that it could be raised again during the SS-bond payout period) was lost? Instead, we got Bush tax cuts and a pair of unfunded wars.
Washington Post: red herring + dishonor Social Security bonds:
In an editorial bemoaning the debt-monster, the Washington Post says: (excerpts, emp add)
We don't know which way the U.S. economy is heading. Last week's jobs report was discouraging, and bad news from Europe has spooked other parts of the world. Maybe a case can be made for another round of unemployment benefits and other spending that reaches the economy quickly.
But as analysts ponder the mystery of weak private-sector hiring despite signs of economic growth, it's worth asking what role is played by government-induced uncertainty. With the federal government promoting major changes in health care, financial regulation and energy law, it wouldn't be surprising if some companies are more inclined to wait and see than they might otherwise be. And that's especially true when they look at looming American indebtedness and the effect that could have on long-term interest rates.
We'd find the stimulus-now, spinach-later argument more credible if its advocates gave some hint of where the long-term belt-tightening will take place. Even if there is a danger of tightening too soon, any number of measures could be set in motion today that wouldn't take effect for a year or two or even more. ... Adjustments could be made to the formula by which Social Security retirement benefits increase every year ...
"economic uncertainty" is always going to be present as long as we live in a democracy. What if the Tea Party types got into office? They'd really change things. So perhaps the Post is in favor of abolishing elections.
Paring back payments by the Social Security fund is a roundabout way of partially defaulting on the special Treasury bonds the trust holds. But it hurts the poor and unfortunate, not the rich, which is probably why the Post like that idea. Also, there are real cuts that could be made to defense, and health care spending (Medicare, Medicaid) could benefit from a move to a European/Canadian/Japan approach, but the Post ignores that. Instead, they like to (effectively) go after the massive Social Security trust fund surplus, because that's where the money is.
On Saturday, President Obama announced that he will be nominating Defense Department intelligence chief James Clapper to be the new Director of National Intelligence (DNI).
Liberal critics are pointing out that Clapper, while serving as the head of the National Imagery and Mapping Agency, helped assist the Bush administration lie that Iraq possessed illegal weapons of mass destruction. Speaking to reporters in October 2003, Clapper suggested that the illicit weapons had “unquestionably” been moved to Syria:
The official, James R. Clapper Jr., a retired lieutenant general, said satellite imagery showing a heavy flow of traffic from Iraq into Syria, just before the American invasion in March, led him to believe that illicit weapons material “unquestionably” had been moved out of Iraq. [...]
He said he was providing a personal assessment. But he said “the obvious conclusion one draws” was that there “may have been people leaving the scene, fleeing Iraq, and unquestionably, I am sure, material.” A spokesman for General Clapper’s agency, David Burpee, said he could not provide further evidence to support the general’s statement.
For that failure alone, he should not be the DNI. (If you are going to assert something like that you need bulletproof evidence, not a surmise from mere traffic.) But the question remains, why is Obama picking this guy?
Leon Wieseltier (yes him) writes in The New Republic:
It is hard not to conclude from this Israeli action, and also from other Israeli actions in recent years, that the Israeli leadership simply does not care any longer about what anybody thinks. It does not seem to care about what even the United States—its only real friend, even in the choppy era of Obama—thinks.
And I suspect the feeling is reciprocal. In a similar vein, when Israel doesn't care about objections to expanded settlements in the West Bank - which is a big stumbling block to any peaceful accord - why care back?
Is how Palin (or whoever writes on her Facebook page) describes some guy running for office.
Palin's frequent use of "commonsense" (or "common sense") really grates. Sure, common sense has it's merits, but not everything can be properly analyzed or solved using common sense. It's common sense that things can move faster than the speed of light. Common sense that all numbers can be made from integers and fractions. Common sense that when you start to skid on ice, you should slam on the brakes. Etc.
And common sense is limited in what it can do. People aren't only using common sense when designing a computer chip. Or when doing brain surgery. Or economic research (which is especially true when people treat a nation's fiscal policy as equivalent to a household budget)
As to the "constitutional" adjective, that's simply window dressing. And anyway, which constitution are we talking about? The one in 1800 that sanctioned slavery? Or the one in 1900 that denied women the vote? Or ...?