Washington policy debates are primarily about being admitted to the club of participants rather than about logic and evidence. Until the public understands this fact, there is little chance that the vast majority of people will have much ability to influence the course of policy.
The budget deficit is the current obsession in Washington. You can get big bucks spinning scare stories of huge budget deficits that will bankrupt the government and sink the economy. However, the indisputable reality is that the large budget deficits of recent years are due to the economic downturn following the collapse of the housing bubble.
But the people who make this point are not invited to take part in the discussion. Pointing out this fact makes one shrill; you have to say that the deficit is a huge problem to be a serious person in Washington.
This sort of defiance of reality is not new for the serious people in Washington. Back in the late '90s when the stock market bubble was reaching its peak, you could find folks like James Glassman, the co-author of Dow 36,000, presenting their wisdom on a weekly basis in the Washington Post.
In fact, at the peak of the stock bubble, serious people in both the Republican and Democratic parties insisted that the stock market could continue to provide historic rates of return, even though the price to trend earnings ratio was more than twice its historic level. In fact, they wanted to invest Social Security funds in the stock market.
Some of us did try to warn that this defied basic arithmetic. We argued that lower future rates of return would mean problems not only for Social Security if its funds were placed in the market, but also for pensions and individuals who had invested their retirement money. This view was not allowed into the debate at the time; such warnings were dismissed as "shrill."
Ironically, the argument that the stock market will not provide its historic rate of return going forward, even though the ratio of stock prices to trend earnings has returned to historic levels, is currently fashionable among the serious people. This argument receives great favor in the context of the need to cut workers' pension benefits, especially in the public sector. The arithmetically grounded counter-argument, that when the price to earnings ratio is near its historic level returns will be near their historic level, has been virtually excluded from the Washington policy debate.
Of course it is not just economic policy where the outcome of the debate is determined by who is allowed to take part in the discussion. We went to war with Iraq to keep Saddam Hussein from using his weapons of mass destruction on neighboring countries. All the serious people agreed that the invasion was necessary. There were certainly people who disputed the evidence that Iraq had weapons of mass destruction or was close to developing them, but the Washington media largely excluded them from the debate or dismissed them as unserious types whose views should not be given credence.
Perhaps the best demonstration of the corruption of the Washington policy debate is that former Federal Reserve Board Chairman Alan Greenspan is still a member in good standing among the serious people. Last week he told a conference organized by Wall Street investment banker Peter Peterson that a recession would a price worth paying to get the cuts to Social Security and Medicare that he wants to see.
According to calculations by the financial reform group Better Markets, based on the Congressional Budget Office's projections, Greenspan's incredible mismanagement cost the economy more than $7 trillion in lost output, or more than $60,000 per household. But once you're admitted to the club of Washington's serious people, it takes more than a small mistake to get you thrown out.
The point here, as Greenspan put it so eloquently last week, the rich and powerful want to cut your Social Security and Medicare. They will say lots of things that are untrue about the debt and deficit to scare you. There will be few opportunities for correcting this nonsense, because hey, they control the news outlets.
So just remember, it's not even a bad movie. It's just the serious people trying to take money out of your pocket and put it in theirs.
Follow Dean Baker on Twitter: www.twitter.com/DeanBaker13
http://wh.gov/XLeU
Last year they gave themselves a raise and continue to get a 13% raise every year all while they are telling their constituents that we all need to pull together and do our part in getting out of debt! Where is their burden?? NOWHERE! They continue to reward themselves for writing checks that have put us in debt!
I know that by them taking a pay cut it will not fix everything I believe it's a good start to making them accountable. The petition states that they should make the same thing as the median household income of their constituents. That means that if the average median income of the people that represent is $60,000/year then so will their salary. This would do many different things. 1 make them shoulder some of the responsibility. While the average American household income continues to decline they raise theirs! 2 they would have an incentive to have their constituents make more money then their pay would increase as well 3 get career politicians OUT!
If you agree with sentiment then PLEASE sing and share this petition!
http://wh.gov/XLeU
Tell you what - how about we go back to Clinton's marginal rates, and cut spending back to 1996 levels.
Deal?
Correlation is not causation - Econ 101. It was also supposed to cap unemployment at 8% & reduce by today to 5.4%. The recovery under BHO has been the worst since FDR's Depression.
"Bush left our country in a deep recession" - how? Specifically, what Bush policies caused the mortgage crisis?
" By putting people back to work, many no longer have to depend on jobless benefits; now they are paying taxes into the system."
The unemployment rate only reduces when folks leave the labor pool, not the sign of prosperity and a growing economy. U6 is higher today (14.6%) than when BHO took office (14.2%):
http://www.portalseven.com/employment/unemployment_rate_u6.jsp
"Bush deficits that did not reflect the cost of the wars in Iraq and Afghanistan which were carried off budget."
The actual spending for those years carried that spending. Since the Dems controlled Congress from 2007- Jan 2011, why did they not raise taxes or cut spending? GWB certainly had no reputation as a budget vetoer....
Spending in Fiscal Year 2008 (bush's 7th budget): $2,982.5 trillion (in $s not adjusted for inflation)
Spending in FY 2009 (Bush's last budget): $3,517.7 T That's an increase of $536.2 B in ONE YEAR!!!
Spending in FY 2010 (Obama's first budget year): $3,456.2 T That's a DECREASE of $61.5 B.
FY 2011: $3,603.1 T increase of $146.9 B
"Outlays in fiscal year 2012 totaled $3.5 trillion, $59 billion (or 1.6 percent) less than spending in the same period last year. Excluding adjustments recorded in the budget for the estimated cost of credit programs (mainly the Troubled Asset Relief Program), however, the government’s outlays decreased by 2 percent relative to spending in 2011."
http://www.cbo.gov/publication/43656
By the way 2009 spending includes BHO's $852B stimulas - not part of GWB's budget. Also, the Dems ran Congress in 2007-Jan 2011 - they own the budgets for 2008 & 2009.
This is the real economic threat we face, not the budget deficit.
Yes, the real threat is freedom, enforceable property rights, open markets and limited government.
Bwahahahahahaha!!!!
But it goes against the myth perpetrated by rightwing hacks and with the complicity of some liberals that our debt is due to excessive govt spending on socalled entitlements.
A rational approach would be to rescind the Bush tax cuts on the rich NOW, and rescind ALL the Bush tax cuts within 18 months when our economy rebounds(even middleclass tax cuts).
Additional revenues to our treasury resulting from the improved economy, which will surely occur, along with additional revenues resulting from cancellation of the damaging Bush tax cuts, will go a long way toward reducing our debt.
We do need to trim some of the rates of increase on entitlements like Medicare, Medicaid and Social Security, AND we need to substantially cut Defense appropriations rates of increase, AND we need to drastically cut tax payer subsidies to corporations.
The Senate Budget Committee noted that under Obama's proposed budget, the debt will surge to $25.4 Trillion in 2022.
Google, do your research please.
The truth does not decompse, it is always out their, you just need to find it.
http://www.alternet.org/election-2012/5-facts-you-need-know-tonights-presidential-debate?akid=9536.174877.1TAVPx&rd=1&src=newsletter728005&t=5
Well lets look at the track record of the US government.... There is not one dime of your money in the SS account. Its all IOU's. So for you to get your money back, the Gov. has to either tax, borrow from China, or Print the money. Basically its gone. Compared to that track record? How can anybody say that we need to trust the government to "invest" our SS funds?
Then it goes on to the social security question. I don't trust the stock market either but how does that explain away the problems with social security? By the time I am ready to collect on years of payments, the yield will be -25% ( a 75 cent return for every dollar I invest.) Can ANYONE explain to me how this is good for me or my retirement, my wife, my children? Can anyone explain how social security isn't forcibly taking away my retirement money?
Supporters of not changing social security: can anyone explain how this is good for young working Americans? ANYONE?
2) Statistics show that Americans don't save and have a negative savings rate. Assuming that giving people that money will magically result in Americans making better investments and saving for their retirement seems quite foolish.
3) changes can be made to SS to make it sound without fundamentally changing the program. Increasing the retirement age and removing the lifetime cap on high wage earners will do that, but the problem is republicans don't want SS to be improved, they have been trying to dismantle the program for 50 years.
2. I save money and have since I was in 7th grade. Why do I have to fund other people's retirements when, after stripping away everything from cable TV to eating out (I have myself, my wife and my family living on a strict fixed income), I still do not have anything to save for retirement. I would if the government gave me back my own money. And the social security system will not return everything I am paying in, unless all the 'experts' on both sides are wrong.
3. Your solution is to take more and give back less... nice. That's a ridiculous solution.
My question remains, and you haven't answered it: how is taking my income and giving it back to me at 70 with a -25% yield fair? If the government just got out of the way, I could take care of my family. How is turning a frugal hardworking person into a dependent come retirement because you took away what he would have saved a rational 'plan?'
If your money Was all in the market what would you do when that market crashed? Most folks do not make enough to invest or the knowledge it takes to even be mildly successful.
Who's to say I would put my money in the market? There are lots of other ways to save. And just the cash value, even after inflation would be better then the current projections for social security. My point is: what's better than a guaranteed loser? Answer: Anything! Yet the government still takes my money and pumps it into a loser. It's mandatory and it's ridiculous. I'm sure, like my father, you've been waiting to get your SS back for a long time and can't see the system as broken but I do, and I'm waiting for someone to tell me the program can be made to continue working and be fundamentally sound for 50 years, 100 years and on. Or are we going for a flash in the pan here and just let our kids sort out the mess?
Why? Because the Republican Party discovered they could run up huge deficits by giving tax cuts to their constituents (the 1%); and, then use those deficits they created to argue we can't afford Social Security and Medicare and need to cut back or eliminate those programs, goals they have had since the programs were first begun.
A despicable political strategy; but, one that has proven highly effective when even intelligent people like Dean Baker can't recognize the deficits are an intentional political strategy of the GOP and not some natural economic outcome.
Where are the people who say that SS is not a problem now, that SS has nothing to do with our financial situation. Where are the people who say our economic meltdown & housing crisis are the causes of our financial situation. Where are the people who say that ObamaCare will start to address some of our health care costs, and the law has to be fully implemented first. Why so few voices say that the Bush43 tax cuts contributed more to the debt than what President Obama has done.
There appears to be a conspiracy where 'we, the people' only hear what the plutocrats want us to be aware of. In other words the plutocrats' spin on all issues. C-Span WashJournal is prime example to plutocrats' spin. Most guests are corporate lobbyists and congressional republicans - all telling us that they sky will fall if we don't cut back on 'entitlement' spending.
Yes, listening to Alan Greenspan now is a big joke. I remember him saying deficits don't matter while he was giving away the store to his corporate masters in the 1990s and 2000s.
And that is why it is so important that Senator Elizabeth Warren is placed on the Banking committee. The banksters ripped-off the economy, for $55 trillion dollars of the peoples wealth.