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View Diary: “The History We Didn’t Know” About Last Year’s Grand Bargain Negotiations (505 comments)

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  •  I have never been one of the man's fans. (4+ / 0-)

    I admit it.  And we are still stuck with a bunch of his Rubinite alumni in and around the Obama administration, many of whom are out shilling for cuts to earned benefit programs.  Those people were among the reasons that I did not support H. Clinton in 2008.

    Listen to what he says around 51 seconds into the fiscal summit clip.  False equivalence created between Ryan's refusal on taxes and the Democrats' position on social insurance. "Everybody must sacrifice" has been the mantra for Wall Street Dems who want to cut social insurance.  I would give him the benefit of the doubt if I trusted him, which I don't.

    But the rest of the clip is more interesting in light of a new Federal Reserve analysts' paper that has taken a bat to the CBO projections upon which our current deficit hysteria is based. It is getting quite a bit of attention.  Dean Baker:

    If it turns out to be the case that the existing structure - perhaps with a push from the reforms included in the Affordable Care Act - is sufficient to contain costs, that would really be great. At least some of the money that employers would have otherwise used to pay insurance premiums will now go to higher wages. And the long-term budget horror stories will largely disappear.
    Yves Smith:
    A remarkably important and persuasive paper that calls into question the need for “reforming” Medicare has not gotten the attention it warrants. “An Examination of Health-Spending Growth In The United States: Past Trends And Future Prospects” (hat tip nathan) by Glenn Follette and Louise Sheiner looks at the model used by the Congressional Budgetary Office to estimate long term health care cost increases. Bear in mind that this model is THE driver of virtually all forecasts of future budget deficits.

    This paper, although written in typically anodyne economese, is devastating in the range and nature of its criticisms. And the reason this assessment should be taken seriously, independent of the importance of the issues it raises, is that the authors are uniquely qualified to make this critique. Follette is chief of the Fed’s fiscal analysis section. Sheiner, a fellow member of that group, has worked for both the Treasury and the Council of Economic Advisers previously. In other words, the sort of analysis they have made here is the core of what they do on a daily basis.

    More on the CBO reaction to Yves' blog post.

    If the Follette/Sheiner analysis is correct, what Clinton was saying is not a basis for big cuts to Medicare.  I will be watching whether any one pays attention to it with interest, as we are unceremoniously hustled toward a Grand Bargain by our betters.

    The state races are more consequential for our daily lives than the presidential race. GOTV

    by 2laneIA on Tue Nov 13, 2012 at 03:48:06 PM PST

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    •  Thank you. I really appreciate you going (1+ / 0-)
      Recommended by:
      2laneIA

      to such lengths to explain your position. I will be following the topic with interest, and not a little trepidation.

      „Wer kämpft, kann verlieren. Wer nicht kämpft, hat schon verloren.“ - Bertolt Brecht

      by translatorpro on Wed Nov 14, 2012 at 12:35:53 AM PST

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      •  I have only recently started reading (0+ / 0-)

        the economists who are advocates of Modern Monetary Theory, or MMT.  I found them through NakedCapitalism.com, and read their writing there and on NewEconomicPerspectives.  One of them, Bill Black, has been on Chris Hayes' show a few times.  Last night CSPAN ran a panel that included Stephanie Kelton (@deficitowl).  Both are at University of MO, KC.  The CSPAN panel included Jamie Galbraith as well.  I recorded it but it is probably on line if you care.

        Stiglitz and Krugman are not MMT supporters but have been writing extensively about the idiocy of the deficit obsession. So has Dean Baker at CEPR.

        Stephanie Kelton on why this is so important:

        Pete Peterson Has Won
        The US is broke. Government deficits are de facto evidence of a government gone wild. We’re careening toward Greece. Entitlements are the root cause of our fiscal woes, and the Chinese are coming for our grandchildren.  How many Americans believe this garbage? My guess? Most of them.

        Pete Peterson has won and the American people have lost.  There is no effective counter narrative, not even from the left.  Nearly all “progressives” have accepted the fundamental premise that the federal government is like a great big household. That it faces the same kinds of constraints that you and I face.  That it should spend only what it takes in and that deficits are morally and/or fiscally irresponsible.  President Obama told the nation, “We’re out of money.”  All of this is utter nonsense, as readers of this blog know, and it leaves progressives in the weak position of pointing at the 1% and yelling, “Get ‘em!  They’ve got all the money!”  Want to care for seniors?  Tax the 1%. Want safe roads, good schools, investment in alternative energy?  Tax the 1%.  The problem, of course, is that the 1% tend to fight back …. and win!

        The truth is, we’re not broke.  The US dollar comes from the US government (not from China, as we’re led to believe).  The US government is not revenue constrained.  It is the Issuer of the currency, not the User of the currency like you and I.  It plays by a completely different set of rules, yet it behaves as if it is still bound by the shackles of a gold standard.  It behaves irresponsibly  when it proposes policies to reduce the deficit when unemployment is high and inflation is low. We’re letting millions of Americans suffer because Pete Peterson and his ilk have convinced virtually everyone that we face a fiscal crisis in this country.  We live in fear of the Chinese, the Ratings Agencies, the Bond Vigilantes, Indentured Grandchildren, and so on.  And this fear is used by politicians on both sides of the political aisle to sell “sacrifice” to the rest of us.  And we keep buying.

        And here’s the really sad part.  It will never be enough.

        The most empowering thing we can do for ordinary Americans is to provide them with a counter narrative that undermines, fundamentally, the government-as-a-household malarky.  And we better do it quick, because America’s CEOs are already building their case against us.

        The state races are more consequential for our daily lives than the presidential race. GOTV

        by 2laneIA on Wed Nov 14, 2012 at 07:57:11 AM PST

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