Tag: deficit hysteria

Burning the Midnight Oil for Economic Populism

crossposted from Voices on the Square

Yves Smith at the excellent and insightful Naked Capitalism has recently been taking at a close look at the role of the Congressional Budget Office, the vaunted "CBO", in the "fiscal cliff" scam that the corporate aristocracy is attempting to perpetrate on us mere commoners.

On 4 November, 2012, in Fed Budgetary Experts Demolish CBO Health Cost Model, the Lynchpin of Budget Hysteria, Yves looked at how the CBO put its thumb on the scale to exaggerate the magnitude of the fiscal challenge that we face (as I noted just recently, while there is a challenge, there is certainly nothing of the magnitude or urgency to justify treating like a crisis). Yves does this by drawing on the analysis of analysts at the Fed that highlight the questionable and, in at least one case, clearly flawed, assumptions made by the CBO in their modelling. On 14 November, 2012, in The CBO’s Latest Con Job: Disappearing Data to Deter Analysis of its Deficit Scaremongering, Yves looks at how the CBO fudges the numbers, omitting figures it once included in the fine print of CBO analyses … after it has been pointed out that taking those figures into account, the CBO modelling implies debt staying below 80% of GDP through 2020, rather than rising to about 90% of GDP in 2022 as the CBO has been claiming.

However, those two are a bit "wonky", to use a term beloved of the recently losing VP nominee. They bookend a post in which Yves Smith points out the suspect behavior of the CBO in terms that are a bit less "wonky". And that is what I am taking a look at myself, in this essay.

We are being told that the mess this President caused when he helped pass the Bush tax cuts in exchange for 1 year of unemployment insurance – which was unnecessary because Republicans caved on UE extension before – WITHOUT even securing a rise in the debt ceiling by putting his full trust in John Boehner with the full faith and credit of the US. This of course gave Boehner immense political power and the right hostage needed to cause the debt ceiling debacle just like I predicted. Well here are are again dealing with the fallout.

Already? Obama Tells Supporters to Expect ‘Bitter Pills’

As the Huffington Post, who listened in on the call, reports:

The president, speaking from a White House phone, cautioned listeners to expect disappointments during his second term. As he has in the past, Obama warned that he was prepared to swallow some bitter pills during the negotiations, including some that would agitate the base.

“As we move forward there are going to be new wrinkles and new frustrations, we can’t predict them yet,” he said. “We are going to have some triumphs and some successes, but there are going to be some tough days, starting with some of these negotiations around the fiscal cliff that you probably read about.”

Though his encouragement to his activist base may be encouraging to some, the President’s preemptive admission that he’s willing to give away bargaining chips so early in the game will surely irk those who criticized Obama for his negotiating style throughout his first term. That will be doubly true for progressives who have publicly called for a more hardline stance when it comes to defending key social programs like Social Security, Medicare, and Medicaid.

We know from the president’s interview with the Des Moines register that much of what was in the memo revealed by Bob Woodward as part and parcel of all of this nonsense we shouldn’t even have to be dealing with in the first place is a starting point. Oh yes, many will screech about how Simpson Bowles is dead because the commission was a failure, but the horrible ideas live on through our elected leaders that keeps bringing them back to life.

Obama vows debt-cutting ‘grand bargain,’ immigration reform in Des Moines Register interview

“I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs,” Obama said. (The White House quickly clarified that he meant $2.50 of spending cuts for every dollar in new tax revenue.)

“We can easily meet-‘easily’ is the wrong word-we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction, and even more in the out-years …

This is not going to help the unemployed and it’s economic illiteracy. When you hear things like, “We all agree we must pay down the deficit,” it might as well be, “We all agree on economic illiteracy. Come on. Everybody’s doing it.”  Anyone who is still making excuses for this doesn’t even understand why this fake fiscal cliff, really an austerity bomb as Brian Beutler of TPM puts it, is coming back up in the first place.

“The past isn’t dead. It isn’t even past.” – William Faulkner

This is quite literally true so for all those “that was then this is now” excuse makers, you have a lot of studying and reading to do.