deficit

Go Ahead, Celebrate — You're Celebrating Failure

Not you at Voices on the Square. You know who.

Well it seems this continuing debacle every 3 months has ceased, for now. However, I really can't get over this pathetic celebration over the really low bar involved with regard to avoiding what I call a political default on the public debt. This is the same embarrassing type of celebration that ensued in 2011. We need to get real. Despite the government being opened up again, there's nothing to celebrate. We've already lost. After all, the debt ceiling was a precious gift Obama bestowed onto John Boehner in the 2010 tax deal as he put his full faith in Speaker John Boehner hands, as he took the full faith and credit of the United States hostage.

Of course, it was a deal struck between both of them to put who they called the "extremists" of both their parties in check, for a grand bargain like in 1983 when Tip O'Neil and Ronald Reagan cut social security. President Obama and Speaker Boehner weren't fooling everyone, though. Just those involved in their hyper deluded, hyper partisan, claptrap. To some of us, this was entirely predictable and preventable. Now people are suffering because some people, blinded by their hyper-loyal partisan illusions, couldn't or didn't want to see what was there. Maybe their lack of sight reveals they don't really care? It doesn't matter though. This will continue to be what we go through when some of this crap continues again in 4 months in February, regardless.

This austerity government will reopen at sequester levels of funding; a sequester I predicted would be born out by the stupid Super Committee from the super austerity Budget Control Act of 2011, which I saw was inevitable since the 2010 tax deal led to the first, now ongoing, debt ceiling debacle; a miniature crisis to crisis government with no plans to invest in its citizens' future. Anything else is possible though, from government shutdowns over the false prospect of defunding Obamacare, to any austerian Senator or Congressman using the threat of default for whatever demands they want.

We, the so called professional left as the White House derisively called us, warned about this. Anyone who denied this can either apologize now or forever restrain from speaking about matters regarding politics, civics, political deals, and the debt ceiling. We told all of you back in 2011 around this same time when that debacle was coming to its end — until this one and the next one 4 months down the line — that this was no victory.

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President Obama Gave Speaker Boehner the Debt Ceiling to Play With in 2010

Disclaimer: This forum rules like the moderators and contributors.

And here we are again! It started in 2010. The Bush tax cuts were about to expire. There was leverage to negotiate a debt ceiling raise or to just let them expire. How do I know there was leverage? I know Republicans like tax cuts for the rich, and there was a deal for the purpose of extending them with Republican votes. It passed with those Republican votes, which led to this whole thing because there was no debt ceiling raise included.

Maybe others are unaware of this? I don't know. It doesn't matter though; the uninformed shouldn't dictate fantasy as reality in a reality based community. This is the actual reality and why we are worried about a global financial calamity with regard to a possible political default on the public debt, which is a choice and otherwise impossible for a sovereign currency issuer.

Obama on the Debt Limit — December 2010

Q Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?
 

THE PRESIDENT: When you say it would seem they’ll have a significant amount of leverage over the White House, what do you mean?
 

Q Just in the sense that they’ll say essentially we’re not going to raise the — we’re not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you’re willing to do. I mean, what leverage would you have –
 

THE PRESIDENT: Look, here’s my expectation — and I’ll take John Boehner at his word — that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That’s something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.

You know, we on the left knew what this would lead to. You don't trust John Boehner with the full faith in credit of the United States unless one is completely clueless or an economic nihilist. The resulting signs we are starting to see of a financial panic in response to the prospects of a default on top of the ongoing depression, the jobs crisis, the continuing climate and ecological crisis all converging into one huge Epochal crisis, point to a special kind of disdain for the public that all our elected leaders have for us. I mean, we have enough problems without adding to them through a self induced global financial then economic crisis caused by the President's pursuit of a deficit terrorist grand bargain whether through incompetence or outright corruption.

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John T. Harvey: Austerity Leads To... Austerity!

In the real world and the reality based community, there is talk about austerity from people who understand the nuances of it and macroeconomic accounting identities. They point out the undeniable fact that there is austerity in the UK, the Eurozone, and yes, the United States. This interactive chart will show this, though I can't embed it here. So instead, I will add a small snapshot of some of the data.

Net spending in the United States has steadily declined since it rose from 2008 to 2009 when the inadequate stimulus(only $500 billion of direct spending at about 1.5 percent of GDP) was passed. Stimulus packages don't exist in a vacuum, and you have to count all government spending, which basically shows how exactly the numbers, including the stimulus as this does, didn't close the output gap. And since the numbers didn't, that is actually austerity. After all, spending went up in the UK and Eurozone from 2008 to 2009 as well, and since then, their spending has declined. Even though it is on a higher level, it is being cut at an even more alarming rate with its fate set to go below our miserable level by 2017.

I have pointed this out before. Sometimes I get frustrated, and point this out harshly, because some pride themselves on denying this established data to support whatever a politician in their party says or does. I don't know why. Denying reality is not going to give resources to people who need them. There is a reason my last diary has been cited by the reality based Post Keynesian MMT community, in which I am truly grateful for and humbled by; it is the truth.

The real economy of jobs and wages continues to go nowhere thanks to the lack of deficit spending and an illogical debate in DC about how much austerity we need to appease the invisible bond vigilantes and confidence fairies. It is neoliberal deficit terrorist economic insanity based on lies. And on that note, it is my pleasure to republish a piece by someone in the reality based economic community whom I can now proudly say is a friend of mine, Post Keynesian MMT economist John T. Harvey. He, once again, brings clarity to these matters in a way that only he can.

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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.

CONGRESS HAS CUT DISCRETIONARY FUNDING BY $1.5 TRILLION OVER TEN YEARS: First Stage of Deficit Reduction Is In Law

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.     

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The Reinhart and Rogoff Errors Discredit the Obama Administration and Austerity

Yes they do. I have heard a statement that bugs me a lot lately and that statement is that this was the go to analysis for the Republicans as if Democrats have never referred to it in any way. I'm here to say that is complete BS and we know this now. The Sequester created by the WH and passed in a bipartisan way, was based on Reinhart and Rogoff's BS analysis about scary scary long term debt to GDP ratios like their offer to cut Social Security.

So let's stop pretending this is only coming from Republicans, especially with the Obama administration using deficit lies and errors to come after Social Security. Reinhart and Rogoff's complete methodology was BS and neither of them understand the nuanced difference between countries with a sovereign currency; fixed exchange rates and floating exchange rates; gold standard countries and those with a fiat currency and how that relates to reserve banking at the Fed and our private current account and trade balance within. So therefore it skews the mean and amounts to garbage methodology even if done correctly.

I love How Mike Norman puts it. It kind of reminds me of how I would say it; those of you that are familiar with my work.

There's a solid account tying the Obama administration directly to the work of Reinhart and Rogoff. You will learn more about this below the fold.

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The Sequester: Lies, Damned Lies, and Libel Against Critics on the Left

Lately there have been some rumors about me that I feel need to addressed. Because I have more class than some people spreading nonsense about me and others, I am not going to name names or link to them, but some of you will know what I am talking about. First off, in the comments of my last diary it was rightly brought up that the President did issue a veto threats against anyone who wants to get rid of any part of the sequester.

This veto threat applied to anyone in both parties which also included the plan from Republicans that wanted to give federal agencies more leeway in how the sequester was implemented so as to spare the defense cuts instead of equal foreign and domestic cuts across the board. It's not surprising that no one else put anything forward with that veto threat.

Obama Threatens Veto on Bid to Avoid Automatic Cuts as Supercommittee Fails

President Obama said today he will veto any efforts to get rid of the automatic spending cuts that will be triggered by the supercommittee’s failure to reach a bipartisan solution to deficit reduction.
 

“There will be no easy off-ramps on this one. We need to keep the pressure up to compromise, not turn off the pressure,” the president said this evening. “The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion.”

Only those that enable the real life terror federal employees and their families will soon feel deny that this is a debacle created by the Executive and the Legislative working together for austerity. The direct quotes up above can only be ignored by those with an agenda and not one for working people. Get real.

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Laboring Under This Administration's Anti-Labor Ties

And no, I'm not talking about the past anti-labor ties like former COS Rahm Emanuel who called labor unions "f-ing retarded" and condescendingly opined about "where are they going to go?" if they expect more from Democrats. No, I'm not talking about the NAFTA and China PNTR hatchet man that helped crush US industry before he became mayor of the President's home town of Chicago attacking the teacher unions that helped elect this President. And I'm not talking the former U.S. Secretary of Commerce and JP Morgan Executive that also worked with Rahm and the Clinton administration to pass NAFTA either.

Of course, there still are plenty of anti-labor ties to choose from such as Jeffrey "China! China! China!" Immelt who serves as chairman of his outside panel of economic advisers while retaining his post as chairman of the board and CEO of the GE; the non tax paying conglomerate that outsourced its X-ray division from Wisconsin to China. Of course I don't need to which brings me to the main point of this piece.

(h/t Rick Pearlstein)

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Warning: Swallowing the President's Bitter Pills May Cause Harsh Austerity

We are being told that the mess this President caused when he helped pass the Bush tax cuts in exchange for 1 year of unemployment insurance - which was unnecessary because Republicans caved on UE extension before - WITHOUT even securing a rise in the debt ceiling by putting his full trust in John Boehner with the full faith and credit of the US was "worth it." This of course gave Boehner immense political power and the right hostage needed to cause the debt ceiling debacle just like I predicted. Well here are are again dealing with the fallout.

Already? Obama Tells Supporters to Expect 'Bitter Pills'

As the Huffington Post, who listened in on the call, reports:

The president, speaking from a White House phone, cautioned listeners to expect disappointments during his second term. As he has in the past, Obama warned that he was prepared to swallow some bitter pills during the negotiations, including some that would agitate the base.
 

"As we move forward there are going to be new wrinkles and new frustrations, we can't predict them yet," he said. "We are going to have some triumphs and some successes, but there are going to be some tough days, starting with some of these negotiations around the fiscal cliff that you probably read about."

Though his encouragement to his activist base may be encouraging to some, the President's preemptive admission that he's willing to give away bargaining chips so early in the game will surely irk those who criticized Obama for his negotiating style throughout his first term. That will be doubly true for progressives who have publicly called for a more hardline stance when it comes to defending key social programs like Social Security, Medicare, and Medicaid.

We know from the president's interview with the Des Moines register that much of what was in the memo revealed by Bob Woodward as part and parcel of all of this nonsense we shouldn't even have to be dealing with in the first place is a starting point. Oh yes, many will screech about how Simpson Bowles is dead because the commission was a failure, but the horrible ideas live on through our elected leaders that keeps bringing them back to life.

Obama vows debt-cutting ‘grand bargain,’ immigration reform in Des Moines Register interview

"I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I've been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs," Obama said. (The White House quickly clarified that he meant $2.50 of spending cuts for every dollar in new tax revenue.)

"We can easily meet—'easily' is the wrong word—we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction, and even more in the out-years ...

This is not going to help the unemployed and it's economic illiteracy. When you hear things like, "We all agree we must pay down the deficit," it might as well be, "We all agree on economic illiteracy. Come on. Everybody's doing it." Anyone who is still making excuses for this doesn't even understand why this fake fiscal cliff, really an austerity bomb as Brian Beutler of TPM puts it, is coming back up in the first place.

“The past isn’t dead. It isn’t even past.” – William Faulkner

This is quite literally true so for all those "that was then this is now" excuse makers, you have a lot of studying and reading to do.

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