What has since happened is that the President has fallen into the Republican trap. Once again the President has joined the Republican narrative that the biggest crisis facing America is our debt and budget deficits. The fact is that neither the national debt nor the deficit are insurmountable problems or problems that need to be tackled now. The results of attempting austerity & debt reduction during recessions are clear. United Kingdom and the various other European countries that attempted this have depressed their economies further.
When one focuses on numbers and not emotions, clarity comes quickly. Paul Krugman’s New York Times article “Dwindling Deficit Disorder” needs to be read by our President. He should also pass it on to every Congressman and Senator.
Krugman, after stating the fact that:
For three years and more, policy debate in Washington has been dominated by warnings about the dangers of budget deficits. A few lonely economists have tried from the beginning to point out that this fixation is all wrong, that deficit spending is actually appropriate in a depressed economy. But even though the deficit scolds have been wrong about everything so far — where are the soaring interest rates we were promised? — protests that we are having the wrong conversation have consistently fallen on deaf ears.
The fact that Nobel Prize winning economist Paul Krugman along with economists like Joseph Stiglitz’ numbers and predictions over the years have been spot on while those “sanctioned” by Wall Street (e.g., Peter Morici) have been steadily wrong speaks poorly of the media’s reporting and politician’s honesty or at best their knowledge.
Krugman continues providing the realities of “public debt management”.
People still talk as if the deficit were exploding, as if the United States budget were on an unsustainable path; in fact, the deficit is falling more rapidly than it has for generations, it is already down to sustainable levels, and it is too small given the state of the economy.
Bear in mind that the budget doesn’t have to be balanced to put us on a fiscally sustainable path; all we need is a deficit small enough that debt grows more slowly than the economy. To take the classic example, America never did pay off the debt from World War II — in fact, our debt doubled in the 30 years that followed the war. But debt as a percentage of G.D.P. fell by three-quarters over the same period.
Yes, we’ll want to reduce deficits once the economy recovers, and there are gratifying signs that a solid recovery is finally under way. But unemployment, especially long-term unemployment, is still unacceptably high. “The boom, not the slump, is the time for austerity,” John Maynard Keynes declared many years ago. He was right — all you have to do is look at Europe to see the disastrous effects of austerity on weak economies. And this is still nothing like a boom.
Krugman acknowledges the structural problems that must be addressed with an aging population in the long term (not till we have a robust recovery).
There are, of course, longer-term fiscal issues: rising health costs and an aging population will put the budget under growing pressure over the course of the 2020s. But I have yet to see any coherent explanation of why these longer-run concerns should determine budget policy right now. And as I said, given the needs of the economy, the deficit is currently too small.
Krugman acknowledges that many are using the fear of the debt and deficit as an excuse to dismantle the social safety.
Now, I’m aware that the facts about our dwindling deficit are unwelcome in many quarters. Fiscal fearmongering is a major industry inside the Beltway, especially among those looking for excuses to do what they really want, namely dismantle Medicare, Medicaid and Social Security. People whose careers are heavily invested in the deficit-scold industry don’t want to let evidence undermine their scare tactics; as the deficit dwindles, we’re sure to encounter a blizzard of bogus numbers purporting to show that we’re still in some kind of fiscal crisis.
He finishes with the reality that must be broadcast loudly and often throughout the country.
The deficit is indeed dwindling, and the case for making the deficit a central policy concern, which was never very strong given low borrowing costs and high unemployment, has now completely vanished.
Many get upset when the President is accused of not leading. Most people who have made that accusation were rarely friends of the middle class, the poor, or of this President. The President has now been re-elected by a substantial margin. The policies he ran on are what most Americans want. These are not policies that can be considered the tyranny of the majority that need protection from Senate filibusters and obstructionists Republicans in the House (e.g., the majority pilfering the wealthy minority, the majority taking away rights of the minority). After-all, the converse is true.
With that said one must admit that if the debate is on the debt and deficits and not what ails the economy, the middle class, the poor, the students, the veterans, etc., then it is fact that the President is not using his bully pulpit to lead and to educate. It is true that the Right Wing echo chamber has polluted the body politic with misinformation as Krugman so aptly states. It is the President’s duty to now to begin the real fight against the damage inflicted on America by the Right. He is not leading on this issue. He has no more elections to be concerned about. It is time for him to pull his Party kicking and screaming if necessary to do the right thing.
- No cuts to Social Security. Raise the cap to ensure that the wealthy pays in more.
- Reform Medicare to prevent drug companies, hospitals, and specialists from pilfering the country’s coffers.
- Tax capital gains at the same rate as working people’s income.
- Remove all corporate tax breaks for companies that offshore and outsource American jobs.
This is not a tax the rich scheme. They are policies that acknowledge the structural income and wealth disparity built into our form of capitalism that can only be mitigated through policies that act as a damper to a structural defect. Is a teacher or professor worth orders of magnitude less than the broker or banker she taught? I cover much of this in my book “As I See It: Class Warfare The Only Resort To Right Wing Doom”.
In 2011 when the discussion focused solely on the debt and deficits, it took the emergence of Occupy Wall Street to change the narrative. Income inequality and wealth disparity entered the lexicon. After an election where middle class, income, and wealth was likely uttered more than in the last 30+ years, it is incumbent that the President, his Party, the middle class, and the poor do not allow Republicans to change the narrative for their ultimate goal of destroying America’s social safety net. It may take a new Occupy style movement to peacefully march on the streets with resolve to demand that their will is effected.
LIKE My Facebook Page – Visit My Blog: EgbertoWillies.com
Follow @EgbertoWillies
