It's crunch time -- way past crunch time, really -- in the debt ceiling/budget debate. While partisans are sharpening their knives in preparation of administering a deep, self-inflicted wound, markets are beginning to lurch around, tanking on bad news regarding the deal and visa-versa.
According to a GS research report from yesterday, consumer confidence in June took a hit from the impasse, and "a large rotation by individual investors out of equities and into bank deposits in recent weeks also is consistent with greater nervousness over the possibility of a looming crisis."
So damage is actively being done by the unwillingness of House GOP legislators to accept a deal. Not to mention the most damaging aspect of this: the opportunity costs of sole focus by policy makers on deficit reduction in an economy where un- and underemployment is 16%.
The latest lurch is a plan from the "gang of X" (I think it's six, but it was five for a while, which we liked because we got to call them "Five Guys," a burger chain in these parts). Read about it here if you want, but I wouldn't get too attached -- like I said, we're deep into Lurchville.
The latest plan if notable, however, because the gang is bipartisan, and their $3.7 trillion deficit-reduction plan includes $1 trillion in new revenue. So it raises an issue I've stressed from the beginning, that of balance: without significant revenue in the deal, there's too much weight on spending cuts, and that creates more pain than gain.
What's also notable this AM is that the people agree. According to a new Washington Post poll, 62% believe some combination of revenues and cuts is the best way to reduce the deficit. Even among Republicans, close to half -- 46%-agree. And -- take not elected officials -- among those highly-desired Independent voters, it's 64%.
This post originally appeared at Jared Bernstein's On The Economy blog.
Robert Reich: The Shameful Murder Of Dodd-Frank
Lincoln Mitchell: How the Republicans Mishandled the Debt Ceiling Debate
The Gang's latest concoction is one more attempt to befuddle the public and prevent them from understanding that full employment is the best deficit cutter there is. Obama's misguided grand compromise and Ryan's lunatic plan are also attempts to hide the power of full employment from the public's view. These plans all privilege Wall Street at Main Street's expense. Don't contribute to this massive deception game by taking any of these kabuki plays seriously. None will really deal with unemployment and consumer debt, our real No.1 and No. 2 crises. The deficit "crisis" is merely a smoke screen to hide the real crises and protect banks and investors.
Raising capital gains taxes is a good way to reduce productive behavior and encourage less productivity. Perhaps reviewing the words of JFK, who spoke not for his era, but on truths about how economics works:
President John F. Kennedy:
"Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is A PARADOXICAL TRUTH that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.
Nobody knows what the debt is. Nobody knows what the debt ceiling is.
All they know is if they have a paycheck and if there is anything left after taxes.
They really don't care about anything else.
Since they aren't getting paychecks and they don't have enough left after taxes; they will vote against any incumbent.
It really is a simple system. We don't need a bunch of polls to tell us if we're poor or if we're angry.
Trust me. We are.
We can move all corporations out of America by simply raising their taxes (their cost of doing business) and nanoscare won't have to worry about a few more holes in the safety net.
The net will be ripped apart in a blender called the Federal Government.
That Financial guy was right, teach your kids Mandarin! America is so collapsing and we're all begging Washington to save us from...Washington.
...I think you're bluffing... (snicker)
I think the American people are tired of supporting wealthy welfare queens.
The politicians are not in tune with the public.
Especially the Repugs.
Then again, they rarely are.
Who the crap do you think pays taxes? Who do you think hires landscapers, painters, contractors, home builders, tax accountants. Who buys large vehicles, boats, takes cruises, stays in hotels, tips waiters, buys fancy clothes from retailers that employ suppliers and part-time staff?
How do you get thru life by just hating the wealthy? Where would you rather they live? In what country would you rather they spend their money?
Would you be happier is the wealthy were homeless or hooked on drugs and breaking into your home and threatening you for your wallet?
Maybe if the wealthy had babies out of wedlock, they'd never have gotten rich. They could live off your taxes and they could DEMAND more of YOUR money!
I have, however, met a lot of people who are pretty upset that their house is now essentially worthless. And that some millionaire got a bonus for making it so. I’ve met a lot of people who are pretty upset that the school their children go to has had to cut programs, fire teachers and beg parents for donations just to keep the lights on. I’ve met a lot of people who are pretty upset that the roads they drive on, and the bridges they cross, are is frightening disrepair.
Here’s a thought, Republicans. If you’re talking to people who either want to suffer, or want to thrive while others suffer, maybe you need to talk to some better people. Maybe your go-to people are misinformed, undereducated or just plain sociopathic. Most of the country thinks people like that are dangerous and don’t ask them for advice.
they m,ight as well say it for what it really is - it is what their corporate masters want
Most of them do NOT care about the ordinary American people EXCEPT to get their votes.
At the end of the day, we have a Democratic president proposing to pay for the Bush tax cuts to the wealthy, 2 unfunded wars and the unfunded medicare part D by cutting the social safety nets.
The answer to our deficit is much simpler: expire the Bush tax cuts and beef up revenues w/ government investment in a deficit-reducing jobs plan.
According to the Bureau of Labor Statistics, over 2 million jobs have been created under Obama. That's a lot given that corporations got right down to the business of increasing their profit margins by, guess what? Cutting jobs, or off-shoring them. They had record-breaking profits in 2009, 2010, and continue to do so. Sorry, I haven't memorized the numbers, but I've seen plenty of reports about one company after another reporting increased profits following major lay-offs. I'm sure if you're really interested in the facts, you'll be able to find them.
Are those jobs you're talking about union jobs, by chance? Is that what slow-speed rail is all about?
Pelosi and the Dems had every opportunity to unfund those wars you see as inconvenient. Obviously, 9/11 had a big impact on you. After the Bush tax cuts, tax revenues to the federal government increased...his average unemployment rate was 4.8%. It's nearly double that now after all this spending.
Here's JFK's thoughts on taxes and budgets:
"Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is A PARADOXICAL TRUTH that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now."
And you call that fair, right?