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View Diary: McCain: Sure, we'll nullify debt deal law if Super Congress fails (57 comments)

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  •  Let's not forget the WH's role in the (3+ / 0-)
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    jds1978, pot, 2laneIA

    deficit trolling saga. The same way we have to share the sacrifice, Obama has to share the blame.

    “In the beginning there was nothing, which exploded.” Terry Pratchett

    by 420 forever on Thu Oct 13, 2011 at 12:41:18 PM PDT

    •  So, you think we can just deficit spend like (1+ / 0-)
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      Reagans and Bushes do?  Bad news: They rand the credit card balance up too high for that to continue.

      The White House merely took advantage of what the Republicans wanted to talk about, and called their bluff.  Quite effectively, it would seem.

      •  Remains to be seen if it is "quite effective". (1+ / 0-)
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        And yes, we should deficit spend in a time like this.

        #occupywallstreet "Either you taste, feel and smell the intoxication of freedom and revolt or sink into the miasma of despair and apathy. Either you are a rebel or a slave." -- Chris Hedges

        by pot on Thu Oct 13, 2011 at 03:53:32 PM PDT

        [ Parent ]

      •  Effective at what? (1+ / 0-)
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        Minnesota Deb

        Seems to me that the political geniuses in the WH have finally awakened to the fact that the cuts they have been pushing are opposed by roughly 3/4 of Americans, depending how you ask the question, and their buddies on Wall Street are sitting on their wallets, despite the solicitous efforts to please them.  So the rich-friendly policies that the administration has pursued have not done anything to improve the President's reelection prospects.

        The deficit drama queens in DC are all about "reforming" entitlements, but God forbid anyone should suggest a financial transactions tax.  Pete Peterson has had the long knife out for Social Security for years, because deficits are too terrible to contemplate.  At the same time he has lobbied without shame to preserve the 15% tax rate for hedge fund managers, of which he was one before he retired from Blackstone.  

        These are the people the President has listened to, and he is paying for it.  He has been preaching Republican philosophy about deficits, and it has hurt him politically while being exactly what we do not need during a recession. James Galbraith:

        Federal budget deficits in this situation are like IV-bags in an emergency room: they stabilize things. IV's are definitely linked to sickness, and no one would use them if they weren't necessary. But very few doctors propose to cut back on saline while the patient is still sick. Today, however, the official economists and their followers in Congress, the White House and the media are divided between those who would remove the IV's slowly, whether the patient recovers or not, and those who'd like to charge through the wards, yanking needles from arms. The debt deal enacted earlier this month put the first group in charge, but that's pretty cold comfort.

        He has listened to the 1% and the 99% are turning away from their prescriptions, as Joseph Stiglitz presciently speculated in May, in: Of the 1%, by the 1%, for the 1%.

        I recommend some further reading, in response to your comment: The Way Forward  by Roubini et al. and Krugman: "The Way Out of The Slump."  

        In the months immediately following the failure of Lehman Brothers, policymakers seemed to understand that we had entered a world in which the usual rules no longer applied—a world in which running huge budget deficits was an act of prudence, not folly, in which large-scale purchases of debt by central banks were a virtue, not a sin. But that understanding faded fast. Unconventional policies are as badly needed as ever; but policymakers have lost their nerve. Urged on by far too many policy intellectuals, they have reverted to conventional modes of thought.
        This is most obvious in the case of fiscal policy. From the halls of Congress to the corridors of the European Central Bank, dire rhetoric about the evils of budget deficits is the order of the day. The almighty markets, we’re told, will punish those who fail to impose harsh fiscal austerity even in the face of very high unemployment—even though, as we have noted, the reality of falling interest rates shows no indication that the much-feared “bond vigilantes”—investors who will stage a run on the debts of major nations, driving interest rates sky-high, unless deficits are brought down quickly—have any real existence. There is no sign that the US government, in selling bonds, will have trouble borrowing in order to finance deficit spending.

        Democrats should stop preaching the Republican obsession with deficits and advocate for more deficit spending, not less, or we are going to be in this economic trough for a very long time, while losing elections to people who care only about enriching themselves and their patrons.

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