Dec 08 2016

In Memoriam: John Glenn (July 21, 1921 – December 8, 2016)

Another legend has passed. Astronaut, the last of the Mercury 7, and former Senator John Glenn died this afternoon at Ohio State University Wexner Medical Center in Columbus, Ohio. This is just a portion of the tribute to Sen. Glenn’s life from The Columbus Dispatch:

Glenn lived a Ripley’s Believe It or Not! life. As a Marine Corps pilot, he broke the transcontinental flight speed record before being the first American to orbit the Earth in 1962 and, 36 years later at age 77 in 1998, becoming the oldest man in space as a member of the seven-astronaut crew of the shuttle Discovery.

He made that flight in his 24th and final year in the U.S. Senate, from whence he launched a short-lived bid for the Democratic presidential nomination in 1984. Along the way, Glenn became moderately wealthy from an early investment in Holiday Inns near Disney World and a stint as president of Royal Crown International.

In one of his last public appearances, Glenn, with Annie by his side, sat in the Port Columbus airport terminal on June 28 as officials renamed it in his honor — the John Glenn Columbus International Airport.

Sen. Glenn is survived by his wife of 73 years, Annie, his two children, Carolyn Ann and John David, and two grandchildren. He will lie in state at the Ohio State House followed by a public memorial service at Ohio University. He will be interred at Arlington National Cemetery in a private service. The dates and times to be announced.

Dec 08 2016

Even Indians Get MMT

Not Native Americans, the largest democracy in the world kind. Unsurprising, they invented Chess.

What Does Modern Money Theory Tell us About Demonetisation?
By Sashi Sivramkrishna, The Wire

The single most important assumption that economists, economic commentators and even politicians seem to build their macroeconomic arguments upon is that taxes fund government expenditures. This assumption has been reduced to commonsense and taken for granted so that no one even bothers to question its validity. And it does not matter which side of the spectrum you may be on, ideologically speaking. And it does not matter what the debate is about; from fiscal deficit targets to India’s recent demonetisation experiment. But what if this assumption is not quite legitimate? Would it change the macroeconomic logic that we have gotten so used to in conversations, newspapers, television shows and even in academic textbooks, seminars and conferences?

A small group of economists – perhaps just 10 to 15 – primarily based at the University of Missouri at Kansas City and the Levy Economics Institute at Bard College have been questioning the mainstream economics understanding of the monetary system and macroeconomics. Their ideas, originating in the works of John Maynard Keynes, Abba Lerner and Hyman Minsky, have more recently coalesced into what is referred to as modern money theory (MMT), an offshoot of post-Keynesian economics. MMT is not merely theory built upon a set of assumptions; it first attempts to demystify and describe the modern monetary system before actually developing a theory around and drawing policy implications from it. In this article, I explore just one, but perhaps the most fundamental tenet of MMT.

What it “modern money”? Presently, monetary systems across sovereign nations of the world are based on fiat currencies (currency by regulation or law), which are deemed to be legal tender. Fiat currencies are different from currencies that are convertible into something else at a fixed rate, such as precious metals like gold and silver or foreign currencies. Fiat currencies also act as a common unit of account in terms of which the nominal value of all other goods and services produced and exchanged in the economy are expressed; the numéraire.

In India the rupee is the unit of account as well as the money thing which corresponds to it. It is neither convertible into foreign currencies at a fixed rate and/or precious metals. If you walk into the Reserve Bank of India to claim their “promise to pay the bearer the sum of rupees …”, it would essentially translate into giving you two Rs.50 notes for one Rs.100 note or may be five Rs.20 notes . But the “promise to pay” tells us something fundamental about money, all money; money is an IOU (I owe you) or a promissory note. While you and I could also issue IOUs and therefore money, it is not the same as an IOU of the state or state money. Our money or private IOUs – like bills of exchange – would have limited acceptance and circulation unlike the state’s IOU, which everyone is willing to accept in discharge of claims and is in fact obliged to do so by law.

Banks too create money through credit or loans wherein a deposit account is created in an entity’s name, which could then be used by it to make effective exchanges in the market. While bank money is widely accepted today, it still does not have the same status as state money. This typically becomes apparent during a crisis when people might accept a cheque rather than a private IOU but would ultimately prefer state currency to bank money as even banks might go bust. The post-Keynesian economist, Perry Mehrling categorically asserts that “always and everywhere monetary systems are hierarchical”.

The overriding question then is why is state money (state’s IOU) at the top of the hierarchy? One answer is that it is legal tender – an IOU that must be accepted in settlement of a claim, by law. However, Zimbabwe’s recent experience with the Rand tells us that during crises, even legal tender could be shunned in favour of other currencies like the US dollar. Drawing upon the ideas of chartalists like Alfred Mitchell-Innes and Georg Knapp, MMTers instead argue that taxes drive state money or in other words, the state first defines the unit of account as well as the money thing, and then makes it mandatory that taxes be paid by the private sector to the state in that specific money thing only. If the state can enforce tax collection in the specified money thing then state money becomes widely accepted as a means of exchange, not just for transactions with the state but even within the private sector. While taxes are now paid by bank cheques, we must remember that this is possible because the state allows banks, and banks only, to convert bank money into state money (reserve money) to discharge private sector obligations to the state. In other words, our tax obligations to the state can only be discharged by returning the state’s IOU back to it (directly in cash or through commercial banks) and nothing else.

Warren Mosler, a founder of MMT, explains the idea of “taxes drive money” using a simple example. He pulls out his visiting card in a classroom and asks people whether they would be willing to work for him after class for a few hours – perhaps to clean up the classroom – in exchange for his cards. When no one agrees to, he then tells them that in order to leave the classroom they would have to hand over a card to his henchman at the door who has a deadly weapon on him and which he wouldn’t mind using if anyone attempts an escape. He then poses the same question. Everyone now raises their hand; they are willing to work the necessary hours he asks for in exchange for his visiting card. This is similar to how the state makes its money accepted, though a gun would be substituted by a prison sentence, and in doing so transfers resources from the private sector to itself in order to achieve its objectives. Mosler could have used force to get his students to work for him but a tax is a far more efficient way to procure real resources from the private sector. Furthermore, given the large number of transactions that the private sector has with the government in a modern economy as well as its status as legal tender, it is quite natural for state money to gain universal acceptability even within the private sector. It would, therefore, not be appropriate for the state to drain all of the money it has issued through taxes; instead, it would let a substantial portion circulate as the economy’s medium of exchange.

In addition to get students to work from him, there is something else noteworthy in Mosler’s exercise; unless he first issues his visiting cards or tokens in the classroom he cannot collect them back from students. This brings us to the fundamental tenet of MMT: the state must first spend its tokens (currency) into existence and then collect them back as taxes. Expenditure precedes revenue. The state does not need its tokens held by the private sector to spend. It’s the other way around; the private sector needs state money to settle its tax and other obligations to the state.

This important tenet of MMT questions the notion that taxes ensure the provision resources to fund government expenditure. Does Mosler really need his own visiting cards? No. In the same way, the government does not really need its own money to spend; it can simply issue more of them. Obviously, the question that comes to mind is the limit to government spending or issue of money. None actually; financially speaking. The only constraint is the real economy or the physical capacity or capability of a country to produce real goods and services, which includes its infrastructure, education, health and institutions.

When a government spends but the economy cannot respond adequately by increasing output because of limited capacity to do so, the result is inflation and consequently, depreciating domestic currency vis-à-vis foreign currencies. When the actual rate of inflation exceeds the acceptable rate (the inflation target) it serves as an indicator that the government needs to reign in its expenditure. To increase its ability to transfer more resources to itself without breaching its target rate of inflation, the state drains excessive state money from the system through taxes. In other words, the state issues it’s IOU/money through spending and then sucks some of it out through taxes. While the nature or type of tax could have different objectives – economic, social, moral – and implications on economic agents, this does not really matter from a purely monetary standpoint. An inefficient tax collection, or in other words, a large black economy, reduces the ability of the state to increase its expenditure and at the same time, keep inflation in check.

There you go. A semester’s worth of Economics in one article.

Dec 08 2016

You Thought I Was Done With Corbyn?

Au contraire, mon frère.

Why Corbyn Won
by Alex Nunns & Duncan Thomas, Jacobin

There were three major strands which came together in Corbyn’s first leadership campaign, and which continue to form the basis of the movement around him. These were existing Labour Party members, the trade unions, and a range of people on the Left without party affiliation, many of whom were active in various social movements. These people became the £3 members. What all three stands had in common was that they all sprang from resistance to the Thatcherite economic model, or neoliberalism, which suffered such a catastrophic collapse in 2008 and hasn’t recovered.

One thing I try to show is that the last of these three elements, the £3 voters — as important as they were — only really came into play after developments in the first two strands had put Corbyn in a strong position. In other words, the Labour Party was not simply “taken over” by outsiders, as you might think from most of the media coverage. There were long-term developments within the labor movement that, in retrospect, can be seen as crucial to Corbyn’s victory.

Contrary to popular perception, it was existing Labour members — hugely disillusioned with the New Labour project — who put Corbyn in the lead in the first few weeks of the 2015 contest, before the broader anti-austerity movement got behind him and flooded in. As I detail in the book, canvassing data clearly support this timeline.

In parallel to this, the unions began to respond to the end of their long-standing alliance with the Labour right. Eroded by several decades of neoliberal restructuring, this influence was further reduced under Tony Blair. Why bother with the unions? They were seen as an old-fashioned, declining force. As far as Blair was concerned, they were simply an impediment, and he was aggressive towards the unions during his time in charge. Most of Thatcher’s anti-union laws remained in force; Blairites talked of severing the party’s link with the unions; leading trade unionists were briefed against in the press.

The unions therefore found themselves as an opposition within their own party, shut out of their traditional alliance with the Labour right. This was new for them, and they had to figure out how to exert influence. There was also discontent among the rank and file, as members increasingly began asking what the point of affiliating to Labour was, when the party gave them nothing and indeed regularly humiliated them.

Given these developments, the unions began to fight for their influence within Labour, forming a series of tactical alliances with elements of the Labour left. It became clear how big an obstacle the Parliamentary Labour Party (PLP) was, and so a number of unions openly developed political strategies to try and reshape it in their favor. For example, Britain’s biggest union, Unite, had an official policy of supporting working-class (but not necessarily left-wing) parliamentary candidates, and political schools were organized by various unions to train potential MPs. The hope was that by 2020 they’d have a candidate for leader, with good support in the PLP.

This inevitably brought them into conflict with the Labour right, and in particular the Blairites, most notably over the so-called “Falkirk controversy”; Unite was accused of trying to stitch up the selection process for a friend of Len McCluskey, their general secretary. Although it later turned out Unite had not broken any rules, these allegations set off a bizarre series of events and provoked quite spectacular miscalculations from the Labour right, all of which — via a circuitous route — culminated in a radical democratization of how the party elects its leaders. Under a huge amount of pressure, the unions gave up their third of the leadership vote over who leads the part that had been guaranteed to them under the old electoral college system, on the condition that the PLP did the same.

The result was the switch to a one-member-one-vote system (OMOV) and the opening up to the public of the £3 voting fee. Ironically, this was driven by the right in the belief that it would finally smash the influence of the unions and the left — the result, of course, was very different. That Ed Miliband, the supposedly pro-union Labour leader, sided with the right during this episode, meant that union leaders were more open to something they would have never considered before: backing a figure from the radical left, more out of desperation than any expectation of actually winning.

Donald Trump insulted a union leader on Twitter. Then the phone started to ring.
By Danielle Paquette, Washington Post
December 7, 2016

Half an hour after Trump tweeted about Jones on Wednesday, the union leader’s phone began to ring and kept ringing, he said. One voice asked: What kind of car do you drive? Another said: We’re coming for you.

He wasn’t sure how these people found his number.

“Nothing that says they’re gonna kill me, but, you know, you better keep your eye on your kids,” Jones said later on MSNBC. “We know what car you drive. Things along those lines.”

“I’ve been doing this job for 30 years, and I’ve heard everything from people who want to burn my house down or shoot me,” he added. “So I take it with a grain of salt and I don’t put a lot of faith in that, and I’m not concerned about it and I’m not getting anybody involved. I can deal with people that make stupid statements and move on.”

Brett Voorhies, president of the Indiana State AFL-CIO, called Jones after Trump’s tweet caught his eye. Jones, he said, had just left his office in Indianapolis, where he manages the needs of about 3,000 union members.

“This guy makes pennies for what he does,” Voorhies said. “What he has to put up with is just crazy. Now he’s just got the president-elect smearing him on Twitter.”

Way to make friends. Oh wait… you’re more hated than Hillary.

Dec 08 2016

Pondering the Pundits

“Pondering the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Pondering the Pundits”.

Follow us on Twitter @StarsHollowGzt

Amanda Marcotte: Destroying Roe v. Wade: Ohio’s “unconscionable” Heartbeat Bill is “designed to punish women”

President-elect Donald Trump repeatedly promised on the campaign trail that he would help criminalize abortion. In his postelection interview with Lesley Stahl of “60 Minutes,” Trump doubled down, promising to appoint Supreme Court judges who will vote against abortion rights.

Well, Ohio Republicans clearly believe him and are downright excited about it — so much so that state legislators in both houses used the last few days of the lame duck session to pass a bill banning abortion after the embryo begins pumping blood, at about six weeks of pregnancy. It’s called the “Heartbeat Bill,” but that’s a bit of misnomer, since the circulatory system of an embryo that early in a pregnancy hasn’t really developed what most of us recognize as a proper heart.

Now the abortion ban is headed to the desk of John Kasich, Ohio’s governor and former Republican presidential candidate. Kasich is a hard-line opponent of abortion rights and takes a dim view of women’s health care generally. Since 2011, he has waged all-out war on abortion access, using backdoor regulatory schemes to shut down half of the state’s abortion clinics.

Keith Olbermann: Trump May Have Just Flushed the Economy Down the Toilet

Warning: Viewing NSWF. It’s Keith.

E. J. Dionne, Jr.: America will soon be ruled by a minority

Starting next month, the United States will have a minority government.

This assertion flies in the face of just about everything you have read, because the Republicans will control the White House, the Senate and the House of Representatives. But the American system of representation, invented 229 years ago for 13 states that hugged the Atlantic shore, is more than ever out of tune with how the country’s citizens have distributed themselves, across now 50 states and between metropolitan areas and the countryside.

For the next two and probably four years, a majority of Americans will be governed by politicians largely elected by a minority of us. With the country already sharply divided, this is a problem that can no longer be politely ignored. Worse still, a government put in place by the peculiar workings of an outdated system is threatening to pursue quite radical policies destined to arouse considerable resistance from the disempowered majority.

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Dec 08 2016

The Breakfast Club (Awareness)

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

 photo 807561379_e6771a7c8e_zps7668d00e.jpg

This Day in History

America enters World War Two; Former Beatle John Lennon is shot to death in New York.

Breakfast Tunes

Something to Think about over Coffee Prozac

Let us not look back in anger, nor forward in fear, but around in awareness.

James Thurber

Read the rest of this entry »

Dec 07 2016

Hard Facts

Yup. These are actual factual statistics that illustrate the rise in inequality in the United States.

No fake news here, though it does not suit the lying establishment beneficiaries, enablers, and gatekeepers.

Economic growth in the United States: A tale of two countries
by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, Washington Center for Equitable Growth
December 6, 2016

(O)ur data show that the bottom half of the income distribution in the United States has been completely shut off from economic growth since the 1970s. From 1980 to 2014, average national income per adult grew by 61 percent in the United States, yet the average pre-tax income of the bottom 50 percent of individual income earners stagnated at about $16,000 per adult after adjusting for inflation.5 In contrast, income skyrocketed at the top of the income distribution, rising 121 percent for the top 10 percent, 205 percent for the top 1 percent, and 636 percent for the top 0.001 percent.

It’s a tale of two countries. For the 117 million U.S. adults in the bottom half of the income distribution, growth has been non-existent for a generation while at the top of the ladder it has been extraordinarily strong. And this stagnation of national income accruing at the bottom is not due to population aging. Quite the contrary: For the bottom half of the working-age population (adults below 65), income has actually fallen. In the bottom half of the distribution, only the income of the elderly is rising.6 From 1980 to 2014, for example, none of the growth in per-adult national income went to the bottom 50 percent, while 32 percent went to the middle class (defined as adults between the median and the 90th percentile), 68 percent to the top 10 percent, and 36 percent to the top 1 percent. An economy that fails to deliver growth for half of its people for an entire generation is bound to generate discontent with the status quo and a rejection of establishment politics.

Because the pre-tax incomes of the bottom 50 percent stagnated while average national income per adult grew, the share of national income earned by the bottom 50 percent collapsed from 20 percent in 1980 to 12.5 percent in 2014. Over the same period, the share of incomes going to the top 1 percent surged from 10.7 percent in 1980 to 20.2 percent in 2014. … The gains made by the 1 percent would be large enough to fully compensate for the loss of the bottom 50 percent, a group 50 times larger.

To understand how unequal the United States is today, consider the following fact. In 1980, adults in the top 1 percent earned on average 27 times more than bottom 50 percent of adults. Today they earn 81 times more. This ratio of 1 to 81 is similar to the gap between the average income in the United States and the average income in the world’s poorest countries, among them the war-torn Democratic Republic of Congo, Central African Republic, and Burundi.

The bottom 50 percent of income earners makes more in France than in the United States even though average income per adult is still 35 percent lower in France than in the United States (partly due to differences in standard working hours in the two countries). Since the welfare state is more generous in France, the gap between the bottom 50 percent of income earners in France and the United States would be even greater after taxes and transfers.

The diverging trends in the distribution of pre-tax income across France and the United States—two advanced economies subject to the same forces of technological progress and globalization—show that working-class incomes are not bound to stagnate in Western countries. In the United States, the stagnation of bottom 50 percent of incomes and the upsurge in the top 1 percent coincided with drastically reduced progressive taxation, widespread deregulation of industries and services, particularly the financial services industry, weakened unions, and an eroding minimum wage.

Dec 07 2016

Chomsky At 88

Today is Noam Chomsky’s 88th birthday. Age has not slowed him down. Monday night, he spoke about the threat that Donald Trump poses to our very existence at the 25th anniversary of Democracy Now!.

Dec 07 2016

Pondering the Pundits

“Pondering the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Pondering the Pundits”.

Follow us on Twitter @StarsHollowGzt

Trevor Timm: If Republicans want to cut fat, they might start at the Pentagon

Republicans are always railing against “government waste” in their never-ending quest to cut government programs. Well, the Washington Post has presented them with the quintessential example of what they can tackle as soon as the new Congress is sworn in: an almost unfathomable amount of taxpayer dollars being wasted at the defense department.

The Post’s Craig Whitlock and Bob Woodward published an incredible investigation on Monday uncovering that the Pentagon itself commissioned an internal report aimed at identifying wasteful spending within its bureaucracy. The auditors, which only looked at the agency’s business and support operations, found a staggering $125bn that the Pentagon was wasting. [..]

Donald Trump, meanwhile, repeatedly claimed during the presidential campaign he would cut “waste, fraud and abuse” from the budget of all sorts of things , including the Pentagon. (It was his go-to cliché whenever someone asked him how he was going to pay for something he proposed). In fact, it’s been the Republican party’s mantra for years anytime they bring up the debt or the deficit.

So Trump and his Republican colleagues wants to get rid of “waste,” there’s literally never been a more giant and obvious example. Here’s their time to act!

Steven W. Thrasher: Walter Scott was shot on camera. When will he receive justice?

Like most black people I know, I wasn’t especially surprised that a jury was unable to convict white South Carolina police officer Michael Slager for killing Walter Scott, despite shooting him multiple times in the back and on video. The people I know who live in black and brown skin were also relatively unsurprised to learn last week that a white man in Louisiana, Ronald Gasser, was initially released from custody without charges after shooting and killing former NFL player Joe McKnight. He was charged with manslaughter on Tuesday.

Are we hurt by news of tragedies like Scott’s killing and a lack of justice for it? Yes. Are we sad to know Joe McKnight’s killer was walking around free after the shooting? Of course. Humiliated to know that Gasser could have emboldened other people to shoot black men with impunity? Very much so.

But are we surprised? Not at all. American society assumes black guilt at all times, especially from men who are deemed large. The reason why you read the description of people like Scott and McKnight as “unarmed” so much in news stories is because police and readers alike assume black men to be armed and dangerous at all times – even though black Americans killed by police are more likely to be unarmed than white Americans.

Read the rest of this entry »

Dec 07 2016

The Breakfast Club (Getting What You Asked For)

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

 photo 807561379_e6771a7c8e_zps7668d00e.jpg

This Day in History

On this date in 1941, Japanese forces attack the home base of the U.S. Pacific Fleet at Pearl Harbor in Hawaii – prompting America under President Franklin D. Roosevelt to enter World War II.

Breakfast Tunes

Something to Think about over Coffee Prozac

Any dictator would admire the uniformity and obedience of the U.S. media.

Noam Chomsky

Read the rest of this entry »

Dec 06 2016

A Real Agenda For The Working Class

This post by Bill Black touches on some of the points I tried to raise with yesterday’s Italeave piece.

Austerity is a failure and has been whenever and wherever tried, in the early 30s, in the late 30s, and for the past 6 or more years. It is impossible as a simple accounting rule for a country with a sovereign currency (one it controls the supply of and that is only redeemable in that exact same currency, like the U.S. Dollar) to go bankrupt. The only thing that can possibly happen is a little inflation which decreases demand for imported goods because they are more expensive, but also reduces Trade Deficits by making the cost of Labor and Domestic Material inputs lower.

And where is the inflation? Where is it? It’s less than the ridiculously low 2% Fed target (actually an average but because it’s still lower I won’t quibble) and has been for many, many years. People pay the U.S. for the privilege of borrowing their money (negative interest rates!). The big complaint of Banksters and Plutocrats is they can’t find those easy double digit growth plays they used to. Boo who? Mammon did not decree that you were divinely entitled to >10% returns on your investments!

As long as Institutional Democrats embrace a Neoliberal Austerity policy and ignore inequality and under and unemployment they are doomed to electoral failure! Want to blame the Gen-Xers and Millenials for not turning out big enough margins for Hillary (she won huge majorities from those groups btw, just not big enough)? Think about how incredibly fulfilling it is to find your Ivy League Degree qualifies you to be an under paid Night Manager at a Burger King which you supplement so you don’t starve to death by letting drunk people barf in your car as an Uber driver. What we’ve just seen demonstrated is that Identity Politics is not enough to win an election. The economy, stupid, treats women and minorities (women are a majority, you could look it up) worst of all.

Jobs, Jobs, Jobs – Not Austerity
by William Black, New Economic Perspectives
December 5, 2016

Any plan by Democrats to “Help Working People” should begin with the word “jobs.” But the creation of “jobs” funded by the federal government in its critical role of employer of last resort is not even an option when policy is in the grips of austerity fever. New Democrats take the bizarre policy position that it is too expensive to pay people who want to work to do useful work, but fine to pay them extended unemployment insurance because there are not enough private sector jobs to employ them full-time.

The NYT editorial is so mixed up that it never mentions either the primary problem – the devotion to self-destructive austerity of New Democrats and Old Republicans – and never mentions the essential policy that would transform our economy and win the devotion of the working class to whatever party puts the policy in place. That policy is a dedication to permanent full employment by making the federal government the employer of last resort for any American who wants to and is able to work. Instead, the editorial focuses on a number of desirable policies to help workers who are already fully employed. Yes, most Americans who wish to work are employed and we should implement policies that help fully employed working class Americans. But tens of millions of Americans are classified as “underutilized” by the Bureau of Labor Statistics. Many were so discouraged by the job markets that they dropped out of the work force. Worse, Americans in general and the working class in particular no longer believe that they have any meaningful job security – that our jobs could disappear without warning within months. The federal employer of last resort would transform the workplace by restoring job security.

The editorial’s sole emphasis is on increasing the income of fully employed workers. That is a worthy goal that should be pursued in parallel with the paramount goal – jobs and providing the security to all Americans of always being able to find a job if they are willing and able to work. More income for the already fully-employed working class is great, but Americans want to work.

Millions of Democrats are salivating at the prospects of being able (again) to chortle at the hypocrisy of Republicans when it comes to austerity. Yes, Republicans always say they love austerity, but when they are in power in modern times they always rise above their pro-austerity dogma and adopt at least some stimulus. Democrats are eager to attack the hypocrisy and Congressional Democrats are gleefully planning to trap Trump in a welter of demands for “revenue neutral” taxes (code for austerity) and “pay fors” (another code for austerity). The New Democrats are so eager to attack Trump’s “mountains of debt” that they are about to launch a new offensive against the working class in the New Democrats’ long war against the working class via economically and politically illiterate austerity.

And how will the Republicans respond? Enough will bend to Trump that they will likely do a major infrastructure program. Then the Republicans will confront the New Democrats with their own odes to austerity and “pay fors” and demand that the New Democrats make an analog to Sophie’s choice. Austerity demands budget cuts in other fields, so the Republicans will tell the New Democrats to choose which social program they are most desperate to preserve – and consign the other programs to death via austerity. In sum, the New Democrats are about to replay the same disastrous economic and political mistakes that have caused so much harm to Americans, particularly the working class, and gifted the presidency to Trump.

A government with a sovereign currency such as the United States is not “just like” a household or a corporation or the State of Vermont. A budget surplus or deficit for the U.S. federal government is not a moral issue. A budget “surplus” or “deficit” is not an intrinsically good or a bad thing – it depends on the economic conditions of the real economy. For the U.S., with its unique role as the international currency and large trade deficits, federal budget deficits are typically desirable – and typically occur under both Democrats and Republicans. We do not “burden” our “grandchildren” when we run federal budget deficit in typical circumstances or in response to a Great Recession. We greatly aid our children and grandchildren by rejecting austerity in such circumstances. We would help them far more if we provided a federal job guarantee of last resort.

Summers’ subtitle warns that Trump’s tax proposals “would threaten to increase federal debt and interest rates.” In other words, Summers is banging the war drums to renew the New Democrats’ long austerity war against the working class. There are two parts to Summers argument. First, Trump’s proposed tax cuts are crafted to help the wealthiest Americans. Second, the tax cuts would increase the budget deficit. Summers’ first argument is mostly fine, indeed, it is understated. (He makes the false claim that President Reagan’s tax cuts did not favor the wealthy and represented a “bipartisan” “reform.”) Trump’s plan is to betray the 99% and rig the system to lock in the power and wealth of the one percent (indeed, the top .0001). Trump remains, as he has been for decades, a crony capitalist.

Summers’ second argument is “Austerity Forever.” He leads with another code phrase for austerity, implying that the proper standard for any tax changes is that they be “revenue-neutral reforms.” That means no net tax cuts. Why? What we know, as even Summers agreed, was that President Obama (who told New Democrats that he was a New Democrat) proposed a stimulus program that he knew (because Summers told him) was far too small and then turned his back on stimulus and then in early 2010 in the State of the Union abandoned stimulus and proposed austerity (the code, provided by the Rubinite Jack Lew, was that the federal government should “pull in its belt” in response to the Great Recession because households were doing so).

The 2009 stimulus, though deeply inadequate, materially increased U.S. growth. The self-destructive switch by January 2010 to supporting austerity greatly extended the recovery time from the Great Recession and weakened job market recovery. The U.S. economy could benefit greatly from stimulus even now, so why should Democrats be insisting that they will fight any net tax cut? Summers’ answer, as always, is the need for austerity.

So, we now have the New Democrats’ lead economist, Summers, telling us we should be in panic mode because Reagan had such a dogmatic belief in austerity that he raised taxes (though, net, Reagan actually cut taxes). Summers is seriously proposing that the Democrats should take their policy advice on austerity from Reagan! He claims that Democrats, in response to the revolt of the white working class, should embrace austerity and renew the New Democrats’ long war against the white working class even though he knows that is terrible economics and politics. Reagan knew next to nothing about macroeconomics. Let me be explicit – both the Old Republicans like Reagan and the New Democrats shared this embrace of austerity’s long war against the working class. Reagan’s embrace of austerity was a key contributor to the stagnation of working class wages and the rise of the plutocrats. This is how out of touch the New Democrats are with the American people – Summers’ sees Reagan as the role model that Democrats should emulate.

But Summers’ primary cause is austerity, so he claims that we should accept weak growth and higher unemployment. If Summers were correct about secular stagnation, however, the imperative policy response would be to end the New Democrats and the Old Republicans’ long war of austerity against the working class and ensure that the federal government provided a guarantee that it would serve as the employer of last resort. Summers, of course, claims that our current condition closely approaches “full employment” and we need not worry about the millions of Americans who have dropped out of the labor force or are unemployed or underemployed. At the insipid growth rates he believes will become the norm under austerity, the unemployment rates would grow substantially.

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