"What Planet Are Deficit Hawks Living On?

[LongTomH]

Robert Kuttner, co-founder and co-editor of the American Prospect magazine, calls bullshit on the M$M drum beat for austerity in an op-ed at Huffington Post: What Planet Are Deficit Hawks Living On? Kuttner slams the deficit hawks for the repeated lie that Americans are more concerned with deficits than "lost income, lost jobs,lost homes." He advises that the recommendations of the Deficit Commission would make all this much worse by imposing public austerity at a time (Oct 2011) when unemployment is predicted to still be high:

The economy is on the brink of a period of prolonged deflation. With the Obama stimulus of February 2009 already starting to peter out, state budgets in free fall, home foreclosures proceeding at the rate of several hundred thousand a month, and job creation too low to cut the unemployment rate, the outlook is for endless slump -- unless we get more public investment, not less.

Kuttner takes the NY Times to task for a recent editorial calling for "shared sacrifice" and calling any politician resisting the deficit hawk drumbeat "cowardly."

This is mostly nonsense. The sacrifices in the proposed list of measures are not shared. More than two-thirds of the proposed savings are on the spending side. Repealing the Bush tax cuts, costing $4 trillion over a decade, are not on the list at all. And there is no mention of taxing financial speculation, hedge funds, or anything else that would hit the very well to do. Politicians who resist this economic perversity are not cowards. They are heroes.

While the panel may affirm rhetorically the need for social investment, it is domestic spending that takes the biggest hit. Social Security, which is in surplus for the next 27 years, is on the chopping block and does not belong here at all. America needs more retirement security, not less.

Here's the meat and potatoes of the REAL problem with Social Security:

What pushed Social Security (very slightly) into the red is the fact that all the income gains have gone to the top. The chairmen's draft report, with its rhetoric of equal sacrifice, gets 92% of proposed Social Security savings from cutting benefits, and just 8 percent from increasing the income ceiling on payroll taxes. Some sharing.

As Kuttner points out, the deficit was really caused by the recession, the Bush tax cuts for the rich and the cost of two wars.

Kuttner's post links to a great article at American Prospect by two eminent political scientists: Chris Howard and Richard Valelly: Deficit-Attention Disorder

The authors also call bullshit on the idea that the public wants deficit reduction before economic stimulus:

But Hoyer, Axelrod, and other deficit hawks in the White House and on Capitol Hill have conjured up a nonexistent public -- and have also badly fumbled an important political opportunity. Along with many other poll-watchers and political scientists, we looked at several months of polling. Anyone who looks at the evidence will find what we found: There is very little to suggest that the public wants Washington to focus on the deficit or debt right now. A couple of polls do indicate that concern over the deficit is greater than concern over the economy and jobs. But the great majority of polls show that the public is far more worried about the economy's weakness than it is about America's large public debt.

Despite differences in question wording, these surveys show -- and have shown for many months, throughout the time that Washington has obsessed about the deficit -- that the public is concerned primarily with economic recovery and jobs. Curbing the deficit actually ranks low among its concerns.

[daleanime]

1. Nothing but net....

:applause:

[ladjf]

2. Politics Planet. Their logic is tragically over simplistic. nt

[unblock]

3. the austerity makes sense IF AND WHEN the economy is strong enough to generate inflation

we're obviously nowhere near that, yet, and with an excess of unemployment, that's not likely any time soon. it's really hard to generate serious inflation without strong labor bargaining power.

it's not unreasonable to contemplate austerity measures, but only ones that kick in down the road when we can afford it. THAT's the kind of "confidence" the market is looking for, not the kind that shoots itself in the foot when it's down.