Denying the Data Today Won't Make President Obama's Austerity Go Away

That's right. Remember my last diary where I did prove without a shadow of a doubt that the austerity that this administration has put forth right now, and in effect right now, does not make this President a Keynesian? I provided a lot of reference material on Keynes proving each point I made, because that's what we encourage on this site. That's called backing up one's assertions with facts and data. I did.

The same facts were put forth by economist Jared Bernstein who used to work for VP Joe Biden and is now a senior fellow at the Center for Budget and Policy Priorities. As a Post Keynesian MMT proponent, I don't have the same outlook on economics, to say the least, as the CBPP on a number of things, especially on public debt and deficits. However, there's no reason to doubt the data in this paper from Richard Kogan; it is clearly well sourced from the CBO and the President's own Office of Management and Budget analyzing the Budget Control Act of 2011 signed into law by the President.


This proves without a shadow of a doubt that anyone who shows up in every thread and types that "cuts only happen in the future" must not be very intellectually curious. After all, as most can see with thier own eyes, the 70% of recommended cuts from Bowles Simpson going into effect this year, the year 2013, occurring until the start of fiscal year 2023 actually happen every year accumulating up to 1.5 trillion in real cuts. These are the indisputable facts.     

This really is an easy to read chart showing each year, year to year from 2013 to 2022, the exact percentage of the the 1.5 trillion of cuts in exact dollar terms that I linked to in my last diary. And yet, still, some commentators actually revel in their proud willful ignorance while denying these facts. This austerity does not happen in the future after we get to full employment, if ever. It's happening now.

Comments like these below that hysterically deny these proven facts prove that there are some commentators out there that just do not care about the facts. There's no other explanation. I'm not going to name screen names or link the comments, but they are sadly real and show no intellectual curiosity whatsoever.

I must be having a browser problem. Every time I read the section in which you try to rebut the statement that Obama is supporting cuts in the out years, not during the recession, your extensive list of evidence seems to disappear, and all I can see are some defensive-sounding sentences intended to make it sound like that observation is wrong without actually doing the heavy lifting of showing it to be wrong.

I have to wonder how some people really define "the out years." The only way I can make sense of these bizarre comments is to suppose he or she making them doesn't care about full employment or the unemployed. I have to suppose he or she thinks 2.5% of growing GDP is the end all to be all, which it's not. However, as I have shown in my last diary, even according to Okun's law this mediocre growth we call a "recovery" is inadequate to the task.

I guess one can hold that opinion, however callous and economically ignorant it may be, that mediocre growth of GDP unable to lower income inequality or unemployment equals "boom times." However, they should at least be honest about it if they believe that myth. That's certainly not any kind of Keynesian analysis. Here's another bizarre comment replying to that one in agreement.

All that was explained to priceman in the previous diary. So well, in fact, he has to cut and paste an entirely new steaming hot mess to refute the simple concepts of now versus later.

IOW...tough day for the Obamasuxxers.

That right there is one of the reasons we can't have nice things in this country; people who don't know anything confidently explaining concepts they are incapable of understanding to people that have actually done the research and the heavy lifting and thus do understand. In this case it's not ignorance. Ignorant people actually want to learn and by definition just haven't leaned something yet. However, in this case, it is willful proud blind ignorance based on failed ideology and blind faith in a politician and a party without remembering or caring about its New Deal platform that defined it.

This is the same kind of blind faith in people that thought "at least we're better than Republicans" would work in 2010 or that blaming progressive critics in this same fashion would have merit. It doesn't. That's not cut and paste as he or she derisively and erroneously tried to call it. I had the actual intellectual curiosity to look into this and to do the research unlike this commentator.

This is because I work hard to source my arguments and to understand the reference material along with my POV. I don't make stupid ignorant comments like these that show a proud blind ignorance to the simple facts. Facts that I source and explain in the body of my work as I did in the opener of this diary. Facts that prove the willful blind ignorance of anyone who says the 1.5 trillion of cuts are "only cuts in the future" dead wrong.

Most serious writers on this site and others know that I don't just cut and paste. They don't always agree with me, but they know I put in the work and source my arguments unlike too many who make libelous comments like these. I know that won't stop this blind accusation from people who don't really know what cut and paste really means or how to write or think things through before they post ad hominem comments about someone. However, my record is solid nevertheless.

Their behavior eerily reminds me of when WMDs in Iraq were paraded as such a foregone conclusion that anyone who questioned it was derided as someone who didn't get simple concepts that were lies to protect a politician's war that killed thousands of Americans and a million Iraqis. Those same false claims were made without looking at the data from more sources than Curveball at the CIA when most sources knew these claims were false. Those that pointed it out were also called unpatriotic and disloyal for thinking for themselves.

Too many believed the lies though. It's a dangerous thing when there is blind allegiance to a politician; so much so that others who do take the time and do the work and inform others on the facts are derided, insulted, and dismissed off hand by the proudly uninformed who didn't the required reading. To speak with such authority without the intellectual curiosity to actually look into the well established facts is to have the partisan mindset similar to a Bush supporter in 2004 on the opposite side of the coin.

To them global warming is a myth. They don't need to look into it. To them trickle down economics works. They don't need to look into it. To people that deny that Obama believes in austerity and has enacted it, the same principle or lack of principle applies.

To be fair, even some commentators who don't agree with me on everything were surprised that people were making the bizarre claim that austerity enacted now by this administration with high unemployment and even higher real unemployment was somehow textbook Keynesian economics. Despite their political disagreements with me, most of this community knows I am right on this. They know Keynes cared about unemployment and viewed high unemployment as part of the slump.

That is why he chastised FDR for his 1937 mistake when he cut back spending and started balancing the budget in his letter to him in 1938. History Professor and expert on all things Keynes and FDR, Eric Rauchway, explains the text of the letter.

Keynes to FDR, February 1, 1938

Recourse to (iii) has been greatly curtailed in the past year.

I use the passive voice here to spare your feelings, but why oh why did you cut back on the WPA and the PWA, seeking a balanced budget, when the recovery had barely begun?

(iv) and (v) are functions of the forward movement and cease—indeed (v) is reversed—as soon as the position fails to improve further.

You see, the flywheel of government spending had only just barely engaged the gears of the economy when you timidly pushed the clutch back in, so of course you started immediately to slow down.

The benefit from the momentum of recovery as such is at the same time the most important and the most dangerous factor in the upward movement. It requires for its continuance, not merely the maintenance of recovery, but always further recovery. Thus it always flatters the early stages and steps from under just when support is most needed.
You need the government to spend more to get over that initial inertia and let the economy begin to run smoothly of its own accord.

It was largely, I think, a failure to allow for this which caused the ‘error of optimism’ last year.

Unless, therefore, the above factors were supplemented by others in due course, the present slump could have been predicted with absolute certainty.

I’m trying very politely not to say that a monkey could have told you not to cut back on government spending at just that moment. “Have you perhaps a monkey to advise you?” is the kind of thing I am avoiding saying.

Almost anyone could read this letter and tell that economist John Maynard Keynes would not view what we are experiencing right now as a boom nor would he want his name associated with the austerity President Obama is enacting. He wouldn't have approved of the way President Obama handled the banks either if you read the whole thing. Demand economics was what Keynes was about in order to get to a point where demand could be sustained by itself. The pathetic .4% growth we saw in the 4th quarter of 2012 certainly shows no signs of that and government spending fell 15% across the board while the employment population ratio has not really budged.

This is important because that brings me to another rather uninformed complaint of my last diary. It was asserted I was "cherry picking data" because of my reference to MMT economist Bill Mitchell's take on the March jobs numbers. I wrote that last diary the day before April's numbers came out and offered up Bill Mitchell's analysis because he offers a broad array of knowledge of our our economic system functions and why it's not working now in addition to that report so it was valuable.     

I knew there wasn't going to be anything special in April's report and that any claims to the contrary would be based on faulty metrics. For instance, it was falsely asserted, in an amateurish way, that "something big" happened in April's jobs report I was omitting. I say amateurish because ignoring population growth is amateurish. It's also bad math.

What was supposed to blow people away in April's report, I was told, is that the number of employed people rose by 290,000. It's too bad those asserting this do not even understand how you judge that static statistic, that these are not jobs, and you have to weigh them against population growth as well. To explain why this is, I refer to the Economic Populist's Robert Oak whom I consider to be the best in the business on these matters. He's right.

Unemployment Not Impressive for April 2013

The labor participation rate stayed the same and is 63.3%, mentioned above. The labor participation rate is at artificial lows, where people needing a job are not being counted. Maintaining a record low labor participation rate means that those who dropped out of the labor force are staying out of the labor force. For those claiming the low labor participation rate is just people retired, we proved that false by analyzing labor participation rates by age.

The number of employed people now numbers 143,579,000, a 293,000 monthly increase. We describe here why you shouldn't use the CPS figures on a month to month basis to determine actual job growth. These are people employed, not actual jobs. In terms of labor flows, the employed has been static for the last seven months, a increase of of 251,000 employed since October 2012 and 302 thousand since November 2012. From a year ago the employed have risen 1.645 million, but bear in mind the noninstitutional population has also increased by 2.391 million during the same time period. This gives the impression for the last six months adding employed people has slowed significantly from the previous. The statistics from the CPS do generally vary widely from month to month. Below is a graph of the Current Population Survey employed.

That's right. Those who touted the employed number in my last diary didn't factor in population growth meaning that even with the adding of those 290,000 of employed people, that trend has slowed down the last six months compared to the previous six months. This is extra comical to me, because it was inferred that this number was sort of a game changer I overlooked when looking into 12 month trends. Wrong.

The nonfarm payroll number needs to be growing much higher than 165,000 which is the official reported number. We need 8.7 million jobs to get back to a healthy labor market. The average growth rate so far in 2013 is 196,000 jobs a month; at that rate, it will take more than five years to return to the pre-recession unemployment rate. Any nudging of the official rate downward a little less than .1% is mostly do to people dropping out and or staying uncounted in the labor force.

The labor participation rate is at its 1979 low and be sure to check out Bob Oakland's excellent take-down of those blaming this on the baby boomers who are actually at one of their highest participation rates. When one takes the time to take all of this into account one realizes just how unimpressive April's unemployment report really is. People need to own up to that before deciding to type about what they think I don't understand. After all, they clearly don't understand the report. It was just like I thought it would be thanks to the disaster of fiscal responsibility that the President and Congress are fixated on.

I only made one mistake in my last diary. I tried to explain how budget appropriations and budgets work from year to year while assuming these same commentators had the intellectual curiosity to at least glance at this paper and the sourcing and learn something. I assumed the half of Democratic commentators on this blog who disagree with me were better than Republicans that post on red state. I was wrong. They are two sides of the same coin.

Some of my friends have explained to me that no amount of evidence will matter to some people because they are blind ideologues, and I accept that. I can no more convince them with actual facts and data than I can Michelle Malkin or Glenn Beck. They are blind third way fake Democratic ideologues who take their cues from politicians. However, I feel bad for the people who rec their comments and are generally confused.

When they hear claims based on hero worship instead of data like the myth they perpetuate about the President cutting all spending later in 2023 and not now starting with 107 billion accumulating up to 1.5 trillion each year until 2023, like the data clearly shows, it misinforms people. People deserve to know how we got here and the President's role in creating this whole mess while making sure the sequester was a reality since it came from his office. When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting along with their families because of these cuts and the sequester. That is why I write.

No one can say I have not tried to explain how the real economy works and why bipartisan deficit terrorists do not offer us a real future. I take my cues from Post Keynesian economist Abba P. Lerner's functional finance. This is the only guide on the deficit we need to be following even if one prefers 2% unemployment so the labor can move around and switch jobs in case they find something better. This is the principle that applies on how big or small the deficit should be or how much we should spend.

This is the guide to how much deficit spending there needs to be. Not Bill Clinton and the 90s that this President likes to talk about. Not the mythical confidence fairies he believes in, and certainly not the invisible bond vigilantes. As soon as unemployment reaches this desired level, we can and should stop deficit spending in order to keep demand pull inflation in check. That's it.     

That's right. Unless a politician is speaking in these terms, he doesn't know enough to care about any future or standard of living. It doesn't matter how much one thinks they are vicariously in his little club when they're not. Rather than insulting people who point out these vastly researched truths they should try to wake up outside of their bubble for once.

Full employment and a government job guarantee to drive up wages by shrinking the labor supply is not even mentioned while we have people apologizing for having to hear about the stupid deficit being a disaster. We need deficits to get to this goal. We need more deficits. Instead we get deficit terrorist propaganda and people apologizing for deficit terrorist propaganda even calling it Keynesian. That is absolute garbage as I have now proven.

Deficit terrorist propaganda is filled with code words that tell us we are on our won in this economy in shambles brought on by the Rubinites hired into President Obama's treasury. Stop fear mongering over economic lies and stop enacting austerity in this jobs crisis. Stop apologizing for this austerity, the sequester, and the rhetoric for more austerity in the future. It hurts people like the sequester is, except for the 1% that calls the shots.

These are the facts. If you made it this far and read everything without stopping in the middle to type mean comments, you are very intellectually curious. So I salute you even if you don't agree with me. Thank you to everyone who appreciates the reality based community here at this site.

I suppose this diary will be upsetting to some, but they do have some choices they can make. They could skip over it as suggested by some site moderators instead of leaving insulting comments for a diarist they don't like, or they could resort to the same behavior. However, that won't work out well for them in the end though, because let's face it....







Your rating: None Average: 3 (3 votes)