I had a busy day Wednesday, talking with progressives from various walks of life, from state-level policy advocates to Democrats on the Hill. Folks seem pretty shell-shocked, and I kept hearing the same phrase regarding the current state of affairs: "it's unbelievable!"
According to Greg Sargent (citing E.J. Dionne), more people are beginning to buy the most insidious arguments about immediate fiscal austerity -- large spending cuts that kick in right away -- leading to growth, even in the light of the current slowdown, which is itself driven in part by the fading of fiscal support.
As I noted Tuesday night, the UK is a living example of the damage done by premature contraculation, but you don't have to look abroad to see the problem. The figure shows how much diminished government spending has shaved off of GDP growth in the past six months. No wonder employment is in a stall, driven by job losses in the public sector.
But those are facts. And facts are not winning. Facts, in fact, are getting crushed. One almost feels embarrassed to raise them in this climate, as if you're impolitely butting your pointy head into the dream world of the Washington policy debate.
How did it come to this and how do we get out of it? I'll try offering some answers in coming days. For now, it's just unbelievable.
This post originally appeared at Jared Bernstein's On The Economy blog.
"Government spending crowds out the Private Sector"
EEK.
So, if you want to talk about raising taxes, that's fine I am willing to have that conversation. Just understand that that conversation is predicated on the fact that the 51% currently paying nothing, are going to have to start paying too.
It is unbelievable how facts seems to be treated like sewage in the political discourse of the USA. If reality cannot be looked at honestly then honest solutions cannot be achieved. I hope that part of your series attacks the attack on facts and how it waylays any hope of real solutions.
And please, don't be afraid to point fingers. This is public politics not an AA meeting.
Thanks for pointing out that the UK is being adult about their situation and instead of repeating the failed policies of the past, namely increasing borrowing and manipulating the money supply to create artificial and unsustainable government-driven economic growth and jobs. They have opted to ‘eat their peas’ and take a short term hit to their economy as a buy-in to real economic growth that is predicated on autonomous private sector growth and ‘real’ sustainable jobs. Do we really need more of the voodoo economics that have spurred three bubbles (real estate early 90’s, IT late 90’s, housing late 00) and created the moral and financial hazards that restructured our economy into unsustainable industries, as well as inefficient government-driven increases in aggregate demand predicated on other people’s money. Sheer lunacy! This type of ruinous policy has been tried again and again and has failed each time.
No! The way forward is to let our economy set at a lower baseline predicated on sound economic principles, not more borrowing at the expense of future growth. Let’s grow up and follow the UK model.
Countries that have opted to reduce spending when in situations like this have generally come away better for it. Or would we rather wait, and let our creditors start dictating when we cut…as is Greece, Ireland, Italy, etc?
Kai
At various points in their existence, Canada, Sweden, Ireland, Finland, Belgium, Netherlands, Spain, United Kingdom. Those learned their lesson and maintained the focus on shrinking the government, such as Canada and Sweden, continue to do well. Those that forgot that lesson and fell back to old ways have done are back where they started:
http://www.ecb.int/pub/pdf/scpwps/ecbwp634.pdf
http://www2.goldmansachs.com/ideas/global-economic-outlook/limiting-the-fallout-doc.pdf
Canada is my favorite example since they were in a situation not dissimilar to the US nowadays. They focused on permanent government expenditure cuts, 75% of restructuring, and on temporary tax increases, 25% of restructuring. The taxes have dropped away for the most part, the cuts have stayed. Next year they go to a flat 15% corporate tax rate and Ontario has just overtaken Michigan as auto capitol of the world.
http://www.hoover.org/publications/defining-ideas/article/80786
Sweden:
http://togetrichisglorious.blogspot.com/2011/04/swedish-lessons.html
http://danieljmitchell.wordpress.com/2011/01/29/sweden-is-a-role-model-but-for-free-market-reforms-not-socialism/
Don't let real-world examples stand in yoru way.
Kai
It was 3-4 long years before the debt came down to reasonable levels and Social Insurance was properly topped up. A $3 Billion "contingency" (of a $100Billion economy) built into each budget. That would be equivalent to maybe $150 Billion in current US budget.
Of course in Canada health care is cheaper because of single payer.
Al Qaida knows they won!
get paid by the number of psychiatric hospital admissions they create ? What is the payoff here ?
Make the other guy look bad ? Its clear that all this stuff started with Reagan, then was balanced by
Clinton, but " W " had a debt of 6 Trillion, which he doubled, besides getting Wall Street Drunk. I went to the express isle ( 15 items or less ) at the Grocery Store today. I had 5 pints of Ice Cream. The
lady in front of me had 23 bags of peanuts, and a loaf of bread, and paid 30 cents of her bill in pennies.
Thanks for the laugh!
Tragically so true.
About thirty years ago the networks decided to make the news division into a profit center under the entertainment division. Since then things have gone from bad to worst.
"They" are nothing more than an extremist front for the Republican Party who has sold its soul and Americas economy to their corporate big daddy.
Let me introduce you to ALEC.
http://www.justice.org/cps/rde/xchg/justice/hs.xsl/15044.htm
So why is it that he has chosen in his Administration to surround himself with Wall Street Republicans who bring with them their Wall Street agenda?
They say the definition of insanity is to keep repeating those mistakes that do not work.
Yet this is precisely what the Republicans in this country echo continually in their flat chorus of outrageously scripted mantras.
We all know about our Presidents’ exceptional pragmatic since-abilities, therefore we are forced to question him on HIS AGENDA.
Maybe, just maybe, it is time for our President to walk the walk, rather than saunter to the podium repeatedly with speeches full of concessions and capitulation to the Republican Party.
A Party, we must conclude, who has nothing to offer America other than the INSANITY OF REPEATING WHAT WE ALREADY KNOW DOES NOT WORK.
I trust you are not talking about Geithner. Because, that would be a case of being wildly misinformed.
Unfortunately, Republicans also know that the only way to protest the actions of one party is to vote for the other one in the next election. No end in sight........unless you like the Tea Party approach: killing off the entire Government with inexperienced naivety and wrong-headed policy.........that is, throwing out the baby, the bathwater, the parents, and the tub, just to get a first hand look at what a national disaster would actually look like.
The President can literally bathe in the juices of all of the progressive economists on the planet, but all that he's going to get through the 'chicken little' Congress is center-right solutions (at best). Not because the country is center-right, but because the Republican propaganda machine has stacked the deck. When they don't have a message they create doubt; when they do have a message it is wrapped in emotional gobble-de-gook designed to appeal the the baser instincts of voters (hate, fear, greed, jealousy, bigotry). This creates a multiplier effect in polls and sometimes voter sentiment that drives solutions and elections to the right. The President himself has no power to change that. Only Congress and the voters can fix this problem :-)
Obama got elected in 2008 because the country had had a full 8-year dose of Republican chicanery and hypocrisy, and decided to go for 'change'. The problem is that the current system is stacked against change, especially change that is not in the interest of Republicans. Democrats don't help by waffling and turning on themselves at the slightest hostile breeze.
Continued below
Simple as that.
Isn't that like cutting off your nose to spite your face? Par for the course for many on the Left, I'm afraid.
Jesus, if it is so easy, please go start your own business and school me.
And I'll take it a step further:
These 87 people actually vote how they believe. They keep their word. They stand on principle. They might believe a fantasy and their principle might be shaped and disseminated by the Koch Brothers, but they're a different breed. They're true to their convictions.
We need people like that, albeit next time it might be a good thing to find rational and informed version of these people. And while everyone, including idealogues, has to understand the necessity of "the deal", it might not hurt for the liberal base to find a few people like the Tea Partiers for their side - more Bernie Sanders, for instance.
It's time for liberals to get active. It's time for us to find people who have more principle than corporate sponsorship. And we might as well start now, as Citizens United has made it clear that we will never have enough money to win. We can only win by running on clear, concise, conviction-based ideas that do not test well, are not tested at all, and instead are based in the human condition.