Symbolic Blather: Washington's Congenital Disease

This Congress potentially could be the most productive in over forty years. It has passed the largest recovery plan in the nation's history. It extended health care to millions of children. It passed Obama's first budget with its significant down payment on education and energy. The House just passed the comprehensive energy bill. Health care reform and the most extensive financial reform since the New Deal are next up.

Yet this same Congress will take the time to debate legislation that might best be considered symbolic blather. Its only effect is symbolic and the symbolism is loony.

The best example of this is the bill championed by Blue Dogs in the House and Senate -- the conservative Democrats that the media labels "moderates" -- called PAYGO. Paygo is the Washington shorthand for a rule that requires the Congress to pay for any expansion of entitlements (guaranteed benefits like Social Security Medicare) or decrease in taxes. It's supposed to "discipline" the Congress on spending. Although discretionary spending -- the appropriations that Congress approves annually for the running of the government -- is not covered, the rule is designed to put significant pressure on Congress to limit spending.

Now House Blue Dogs are pushing to pass this self-imposed rule into legislation. At a time of unprecedented deficits, they want to parade their righteous commitment to cutting spending and balancing the budget. Since Democrats have already imposed paygo rules on their actions in the House and Senate, the legislation is purely symbolic. And the symbolism is utter blather.

For one thing, Blue Dogs are the first to line up to vote for massive spending on wars and adventure abroad, all of which is exempt from paygo rules. Thus Bush's three trillion dollar war in Iraq would not have violated paygo, nor does the special supplemental to fund the continuing war in Iraq and the escalating one in Afghanistan.

Beyond that, the message sent by the bill is wrong headed. In the short term, it puts an emphasis on cutting spending and balancing the budget. But we're in the midst of fighting the worst economic collapse since the Great Depression. In these conditions, with consumers and businesses cutting back, workers getting laid off, families losing their homes, the federal government must step in to boost the economy. Deficit spending is essential, not evil. In fact, as unemployment heads to double digits, states and localities face staggering cutbacks, banks aren't lending, businesses are cutting capacity not expanding it -- we will need to borrow more money to spend on a second stimulus plan. (as Paul Krugman among others argues) Paygo heads exactly in the wrong direction.

In the long term, paygo puts the focus on controlling "entitlement" costs. But virtually the entire long term structural deficit problem comes from projected soaring health care costs. We don't have an entitlement problem; we have to get health care costs under control. Ironically, the same Blue Dogs like Sen. Max Baucus that champion paygo are the ones doing the most to weaken the public option in health care reform, which will do the most to control costs by offering a choice to private insurance.

Paygo also is translated into the need to cut spending and limit tax cuts to balance the budget. In fact, as Clinton's experience showed, the way to balance the budget is to get the economy going. Without growth, budget deficits will increase and should do so.

Washington's dirty little secret is that we need more investment, not less. We're running a debilitating public investment deficit -- failing to invest adequately in areas vital to our future from modern infrastructure to research and development to new energy and education. In the new economy emerging out of the calamity, we need progressive tax reform with the wealthy paying far more in taxes than they do now, and increased public investment.

Finally, as economist Dean Baker argues, paygo is an atavistic throwback to the conservative economics that led us off the cliff. Growth, we were taught, comes from balancing the budget, sustaining a high dollar, deregulating banking, adhering to corporate trade policies, and ignoring the inequality and loss of good manufacturing jobs that resulted. That didn't work out so well. One would have thought that even the Blue Dogs understood that.

This week, progressive legislators will try to figure out where they stand on this lemon. At the very least, they should demand something sensible as a price for holding their noses as the symbolic blather passes. They could demand an investment bank or a capital account in the budget. Either would put the US in the same position as a family or state and local governments, financing investments in buildings or homes or education or research and development rather than budgeting their entire costs in the first year.

Speaker Pelosi supports paygo as a way of keeping the Blue Dogs as least partially on the leash. The question is why do the Blue Dogs so stridently demand it? It's like an ideological tic. They don't seem to understand how deep a hole we are in nor have a clue about how to get out. They simply want to croon the old ditties of a bygone and tawdry age.

Comments

[martinfrosa]

Sir,

I would not call piling up massive debt to fund massive spending programs "productive." If you think it is "productive", then why don't you try it with your own family's budget.

[zjr909]

I guarantee you that somewhere in the deepest bowels of our ruling oligarchy it has already been decided to scrap all so-called "entitlement" programs. There's all that money that's already been and is still being collected from all workers just sitting there in a trust fund (or at least what hasn't already been "borrowed" to fund other government programs is still sitting there) - money that the rich are just itching to get their greedy hands on. It's money that can help keep the vultures at bay a little longer. But from the looks of it, they're not willing to wait any longer. They want it now. So when their stooges and lackeys pass a piece of legislation mandating pay-as-you-go, rest assured it's far more than "symbolic." It's one step closer to attaining the great capitalist ideal: absolute serfdom for the working class.

[bobwalters]

Co-sign.

[Sean 6399]

"There's all that money that's already been and is still being collected from all workers just sitting there in a trust fund.."

Are you serious? There is no trust fund. There is no saved money. Our government has been running a vast Ponzi scheme for decades. All the people who expect social security and medicare to maintain their standard of living are going to receive a very disappointing shock eventually. It's like a game of musical chairs, as long as the Keynesian band plays on, everyone is happy and dancing around, but when Keynes' "long run" finally arrives a bunch of people are going to find themselves without a seat.

[mac03m]

"Deficit spending is essential, not evil" a classic Keynesian idea that says the only way to solve the problems of to much debt is... more debt. I always wonder if the people who call for more deficit spending by the government to "stimulate" the economy ever wonder where that money comes from. The government doesn't produce anything so the only way to get money is to 1) Tax it from the productive sectors of the economy or 2) print it.

On the one hand you are taking money from the productive sectors of the economy in order to give it to the non-productive sectors in the hope that this will make the entire economy as a whole better off. Problem there is that by taking money away from the producers you are limiting their ability to produce. The government can also print the money, which im sure anyone with common sense would agree to be a bad idea.

[harveyr2]

The liberal philosophy of increase government spending, increase public debt, increase government meddling into private industry, increase taxes, increase government intrusion into the lives of private citizens (e.g. public option for health care) has seen its day. The Obama revolution isn't. Washington remains the same city whether controlled by Dems or Reps.

Attack fraud which the CBO states will be at least 10% of the $800 billion stimulus bill, focus elected officials on public service rather than re-election fundraising, build credibility in the ability of the government to govern before you demand more of my money.

[tokenconservative]

What a joke - anyone in Congress supporting paygo. If you'll remember, Obama made a vivid and rhetorically flowy speech supporting paygo in January 2007. Hell, Steny Hoyer went into the pages of the WSJ with I wanna say Tom Carper a few weeks ago writing about Democrats' commitment to paygo (of course the article ended up being a hit-and-run piece attacking the "failed policies of the Bush administration" for three columns and one column of talking about how they cut out $950 million in government waste). The fact is that every Democrat loves rallying around paygo. Until it actually comes to paying.

[wilsonveteran]

More spending to stop the bleeding in the economy. The first stimulus did not send much to the economy. Business is waiting for the promised higher taxes so are laying people off to be solvent. We owe so much now that the future holds high inflation, high interest, and high unemployment. With the new Cap and tax around the corner some American business is talking of going to Canada. Our Corp tax rate is 38% Canada's is 21% and they are talking about lowering it to 15%. Soon Canada will have the strongest economy in the world with all of our buisnesses. What we need is less services, less government, and less spending. I would be happy to give up my Social Security to go for the less services.

[plea4helpcom]

Never ending squabble!

[PStefano]

The piece is absolutely correct. We need public investment in an our nation. Many communities and states are unable to maintain services. This is the exact time that the federal government should engage in deficit spending, this is the lesson from the Great Depression. States and localities should receive federal money in order to maintain services and most importantly keep people employed. The concept of PAYGO for our needs as citizens is comical and insulting. PAYGO is not applied to corporate needs like assistance to the banks or an unnecessary war it should not be applied to citizens needs.

[joster]

Why don't you give me $50,000 of your personal money and let me "invest" it for you as I see fit. Better yet, why don't you allow me to take out a $50,000 loan in your name and "invest" it as I see fit. I'm sure you won't mind. You'll gladly pay off the loan if I tell it is for a good cause, right?

[MrJoyboy]

Trickle down theory: Bullshit trickles down and wealth gushes up.

[Chernynkaya]

“Finally, as economist Dean Baker argues, paygo is an atavistic throwback to the conservative economics that led us off the cliff. Growth, we were taught, comes from balancing the budget, sustaining a high dollar, deregulating banking, adhering to corporate trade policies, and ignoring the inequality and loss of good manufacturing jobs that resulted. That didn't work out so well.”

No, it didn’t. That “trickle down” crAp was exactly what it sounds like: The rich get (outrageously) richer and the rest of us got the trickle of moldy crumbs from their feast.

As I see it, even most Democrats are still under the spell of Reaganomics. This country will continue to vote against their own interests until we grow up and face facts that we’re being played by the powerful. Blue collar workers are the most abused, but vote Republican. Poor education has a lot to do with it, but so does their overriding motto: Do what will punish the other guy rather than what’s good for me. And the other guy is anyone that’s not in their ethnic/religious group. Just look at how worried most people are that some illegal immigrants might get health care, even if they themselves need it.

Finally, Obama and the Dems chickened out on the stimulus by spending too little to make a real difference, and the chickens are coming home to roost. They’ll get blamed for the stimulus fail even though they spent a bunch. Rightly so. Krugman was right.

[egbegb]

Actually, the rich got richer and the poor got richer would be an
accurate reflection of the facts as gathered from the
Census data. Do you have facts gathered from some other location?

Stimulus is an economic dead end. What happens to those workers who
finish building a bridge? They become unemployed again, unless more stimulus
money is available. -- UNLESS, in the 9 months it took to replace the bridge
the economy actually recovered.

Obama's anti-business attitude is a strong deterent to economic
recovery. While that attitude prevails ever more stimulus money
will be required to help people while Obama "fiddles" with the
economy.

ECONOMIC DETERENTS:

Increased energy prices
Increased taxes leading to lower tax revenues
Discourage foreign trade
Price controls (salary control)
Increased regulation

All were tried and failed under FDR.

Stimulus is kind but keeping the economy from recovering
is just plumb mean.

[edva]

The inequitable distribution of wealth is the root of the problem. Capitalism's fatal flaw it seems.

[wilsonveteran]

So if I work hard and make more than you I should give you what I have so we will be equal.

[RickB47]

In the old days, we called income redistribution a nice way of promoting communism - now we call it Obamanism.

[Chernynkaya]

Relax. No one is advocating that. But if the top 2% have 80%-90% of the wealth, that seems equitable to you? So you suffer from Stockholm Syndrome? And if those obscenely rich earned their money fairly- without tax shelters and by laws enacted to protect them, and without greedily destroying the middle class- I might even agree that redistribution of wealth was uncalled for.

[groland]

That is a very simplistic view. There are plenty of people who work hard but are still poor. The people who clean my office at night for example, many work 2 minimum wage jobs. Wages are going down for non-skilled work. Yet, this is work that we still want done. Meanwhile, wages for the executive, legal, and financial sector are huge, even though these folks often do not create any wealth. Wages for engineers, teachers, software programers are also not competitive and are being pressured down even though these folks are a large part of any vital economy. The point is that the rewards often do not reflect the efforts or the contributions to the economy.

[edva]

A couple of good replies to your question already, so I will just say take a look at the ratio of Executive vs Labor pay scales. Fifty years ago, it was in the neighborhood of 14 to 1. Now, in the USA, it is several hundred to one. We're talking about roughly equal amounts of work here, where both you and I are working hard. So that is plainly inequitable.
This is precisely the reason for our current economic predicament. As many others have noted, basically all the wealth has been accumulated at the tippy-top of the pyramid, leaving insufficient funds for a healthy economy for everyone else.
This system, called "capitalism" by it's proponents, is clearly unsustainable. Recent events are a warning shot. True capitalism has a recognition that ALL must prosper, not just a few, for the system to work properly. Isn't that what we all want?

[lvtfan]

Might I suggest that you get to know the ideas of Henry George (b. 1839, Philadelphia; d. 1897, NYC)?

His book, "Progress & Poverty," shows why these two things seem to go together, and how we might have Progress, for all of us, WITHOUT involuntary poverty for a significant minority, even majority, of us -- both domestically and globally.

His analysis accounts for things that no other analysis does, and it provides the remedy, the key to unhitching these two things, which will benefit the vast majority of us, and our children and their children, not to mention world peace and sustainability.

I realize this sounds grandiose. My late grandparents were adherents to HG's ideas, and for whatever reason, I couldn't see the wisdom of it while I still could still pick their brains.

Progress & Poverty is online, as are a fine book of essays entitled "Social Problems" and a number of speeches.

[gavrielle]

"They don't seem to understand how deep a hole we are in nor have a clue about how to get out."

Of course they understand. But they aren't in that hole. We are in the hole they created and for some reason, your guess would be as good as mine, they want to keep us there.

Personally, I think they just like the way things are. They've got money, power, influence, excellent health care, and access to the best parties in Washington. Why would they want to change a system that works so well for them?

Honestly, I get the fact that the numbers you and other smart economists are crunching add up to a certain formula that could fix this mess. But what you aren't factoring in is the cost of satiating the personal greed of the Blue Dogs and their enormously well fed egos.

[Sean 6399]

" the federal government must step in to boost the economy. Deficit spending is essential, not evil."

Well, actually it is pretty evil. It's a philosophy that at its root is about authority figures using the force of government to rob from somebody, in order to give money to somebody else. It's a Keynesian notion of government manipulation of the economy that not only is morally repugnant, it doesn't even work.

The only thing the federal government can do to "boost the economy" is to maintain law and order and to stop forcing the misallocation of economic resources. The federal government doesn't know what is needed by the economy. Nobody knows. That is the entire point of the free market system. It is the mechanism to discover what the economy needs. Do people honestly believe that Obama and Pelosi can craft a five-year-plan for the U.S. auto industry that will efficiently serve the marketplace? It's a preposterous idea. If they know how to run a car business, then why did they go into politics?

[Pablo175]

Should their be any fiscal discipline in Washington?

The rest of the world is concerned that are projected deficits are too large. Are ability to fiinance deficits at reasonable rates is questionable. PayGo is a flawed and mild attept to at least show some discipline. Our government spending (Federal, State and Local) has never been higher.

[robbep]

HuffPost's Pick

The old saying that if you want to make money you have to spend money seems to be forgotten by the blue dawgs and repubs, they are ok with spending money to kill people but heaven forbid spending money to help the citizens of this country. The people who keep harping on the federal defecit (mourning joe and meeka) are really against doing anything to upset the status quo. I keep hearing how middle america is concerned about these defecits from the media but i (i live in ohio) hear most people concerned about no jobs. If we spend money that creates jobs that creates tax revenues we can grow ourselves out of this mess, if we do nothing or cut taxes only then we stay stuck. Obama's original idea to rebuild our infrastructure and to create a train system cld expedite our economic recovery but he will have to do more to get the blue dawgs in line. As for mourning joe and meeka middle america is not anymore concerned about defecits than cheney was.

[Pablo175]

The Chinese, the rating agencies, the Europeans all are worried about our deficits.

[tokenconservative]

All of that is premised on the notion that we're creating more jobs, and at the price of $262,000 per job, (divide 787 billion by the 3 million jobs that Obama promised would be "made or saved", not that his word means much as he promised the stimulus would prevent unemployment from touching 10%) we'd probably be doing better just initiating mass transfer payment programs than having more "stimulus."

[martinfrosa]

Robbep,

The government can create jobs but not wealth. Most people don't understand the difference - apparently you don't either. If Obama sends 1million Americans out to the desert to dig holes and fill them in again, he has created jobs. Is America better off because the government created these jobs? No!! The 1 million Americans digging and filling holes can only be paid by collecting tax revenue from the productive sectors of society. That same tax money, if left in the small businesses that created it in the first place, would have produced 1 million private sector jobs that actually increase our GDP or our country's economic output. Big difference.

By the way, the Cap and Trade bill just passed by the House will raise the cost of energy in Ohio and drive more jobs out of the state.

[plumbergirl]

It's my favroit saying. You gatta spend money to make money. You build a rail system, you need enginers for planning the rail system, workers to build roads to get there, to build the rails, resturants to feed the people, gas statioms, to get gas for people building the train station, roads and running the resturants. They need banks to get the money to get the food and gas. A grocery is needed for the workers to pick up food on the way home after work and a post office is needed to drop off the mail. With all these people retail is needed and so on. I see enginers, architect, construction workers, managers, service workers and so on working, paying taxes, spending money on school, rent, goods, food and entertainment. All would provide jobs. I'm from Ohio to and I truly wish they speed up on building more.

[egbegb]

You have to separate the temporizing play of "government created jobs" from fixing the economy. Some think that just hiring people for 2 years will fix the economy. That actually might work if the government didn't do other things to kill the economy. It wants to
tax foreign investments - raise taxes
Cap and Trade - raise energy prices
Health Care reform - raise medical taxes
increase union participation - give more control to unions for salary/benefits issues
increase regulation of business

All of these are tried and true economy busting techniques discovered and exploited
by FDR in the 1930's. If the government would just create infrastructure
jobs and stand back, the economy might recover. Obama's anti-business
attitude tells me the economy doesn't have a payer.

Anyone putting their money in the market?