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The argument that the budget-cutters and confidence fairy believers usually make in pushing for spending cuts and addressing the national debt immediately is that if we don't do this, the "bond vigilantes" will unleash their wrath upon us.  

Well lo and behold, uber bond vigilante Bill Gross, who manages PIMCO (Pacific Investment Management Co.), the world's biggest bond fund, has apparently gone all commie on us.  TPM reports that to deal with the jobs crisis, Gross "recommends a swift, deficit-financed investment in infrastructure," and specifically that "[G]overnment must take a leading role in job creation."  

Gross is further quoted as saying,

"Conservative or even liberal agendas that cede responsibility for job creation to the private sector over the next few years are simply dazed or perhaps crazed.... In the near term, then, we should not rely solely on job or corporate-directed payroll tax credits because corporations may not take enough of that bait, and they're sitting pretty as it is. Government must step up to the plate, as it should have in early 2009. An infrastructure bank to fund badly needed reconstruction projects is a commonly accepted idea, despite the limitations of the original "shovel-ready" stimulus program in 2009."

Obviously something along the lines of what Gross is talking about has zero chance of passing Congress given Republican control of the House and the overall debt hysteria that has swept over Washington.  President Obama has recently proposed an employer-based payroll tax cut as something that can realistically be accomplished, but as Gross says above we should not rely on that alone as the key to solving our economic woes.

Now I am well aware of President Obama's distaste for fighting losing battles, and I understand his reasons – fighting losing battles waste time and energy that can be better used on pursuing things that can actually pass.  Plus there's the possibility that the President will look ineffectual and delusional pushing for legislation that Congress won't pass and which everyone knows won't pass.  

Well I have a "both/and" proposal that President Obama might find acceptable.  Why not push a jobs package that includes additional infrastructure investment, state aid, and a payroll tax holiday?  Push hard as hell for everything, but when the Republicans inevitably vote down the infrastructure and state aid, there's a good chance the President will at least end up with the payroll tax holiday.  That would give the President the best of both worlds – he can blame the Republicans for blocking infrastructure spending that would've generated a bonanza of jobs, but with the payroll tax holiday he'll also have something to show for his efforts.  

Plus it will position him better politically if the economy continues to limp along – he can argue that the economy would've been doing better if Republicans hadn't blocked the additional infrastructure spending and state aid.  Frankly this is what the President should've done with the stimulus, namely he should've asked for as much as possible, so when he inevitably got less than he asked for and the economy continued to sputter, he could've come back later and said, "I told you we needed more spending."  Well now the President has a chance to demonstrate that he can learn from his mistakes.  

Of course, that would require the President to also discard the arguments of Treasury Secretary Geithner, who of late has apparently been winning over the President with his confidence fairy tales and horror stories about bond vigilantes coming to get us.  Given that the top bond vigilante himself is calling for more deficit spending, and specifically on infrastructure, the President should strongly reconsider his faith in Geithner's arguments.

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    "I used to try to get things done by saying `please'. That didn't work and now I'm a dynamiter. I dynamite `em out of my path." - Huey Long

    by puakev on Tue Jun 21, 2011 at 12:47:25 PM PDT

  •  I Wonder What the Village Will Dream Up Now (4+ / 0-)
    Recommended by:
    puakev, Pluto, retaj, neroden

    Since "bond vigilantes" were really just a cover for slashing spending so that the rich wouldn't have to pay taxes.  Anyone know how to alert Andrea Mitchell that the lies are getting old and need a change?

    Find me fast on Daily Kos by following me.

    by bink on Tue Jun 21, 2011 at 12:49:45 PM PDT

    •  Problem is that Mrs. Greenspan and her cohorts (2+ / 0-)
      Recommended by:
      bink, neroden

      won't even bother to mention this news.

      If Standard & Poor's just mentions that they might downgrade our credit rating some day, it's headline news on Politico, The Hill, Washington Post, NY Times, and virtually every political outlet out there.  Yet when the head of the world's largest bond trading outfit calls for more deficit spending there's not a peep about it, except from sites that only dirty hippies read.

      "I used to try to get things done by saying `please'. That didn't work and now I'm a dynamiter. I dynamite `em out of my path." - Huey Long

      by puakev on Tue Jun 21, 2011 at 01:00:13 PM PDT

      [ Parent ]

  •  Heh (4+ / 0-)

    Meanwhile, back at the ranch, Gross is shorting the entire US Treasury. A trader after my own heart. He knows what's wrong and how to fix it -- but if the stupid prevails, he's betting against America, where there's big money to be made doing so.

    •  What is is that Mencken once said? (3+ / 0-)
      Recommended by:
      Pluto, Great Lakes Liberal, neroden

      No one ever lost money betting on the stupidity of the American people?  Never truer than today.

      "I used to try to get things done by saying `please'. That didn't work and now I'm a dynamiter. I dynamite `em out of my path." - Huey Long

      by puakev on Tue Jun 21, 2011 at 01:04:28 PM PDT

      [ Parent ]

    •  What he said a few onths ago... (1+ / 0-)
      Recommended by:
      neroden

      ...and published in their annual assessment (PIMCO secular report)  is that they're not betting against the developed economies but they see a better profit to be made in the emerging economies right now which have lower unemployment and higher creditworthiness. They said that there was a chance that US politicians would make the right moves in time but that it's unreasonable to expect competency.  

      Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

      by kck on Tue Jun 21, 2011 at 03:13:48 PM PDT

      [ Parent ]

  •  Bill Gross might be able to fix the economy. (3+ / 0-)
    Recommended by:
    puakev, Great Lakes Liberal, neroden

    But he can't fix stupid!

    lol

    •  But he can sure bet money on stupid (2+ / 0-)
      Recommended by:
      Great Lakes Liberal, neroden

      and probably win big time.  

      "I used to try to get things done by saying `please'. That didn't work and now I'm a dynamiter. I dynamite `em out of my path." - Huey Long

      by puakev on Tue Jun 21, 2011 at 01:26:30 PM PDT

      [ Parent ]

      •  He's not shorting on US, he's investing in China. (0+ / 0-)

        Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

        by kck on Tue Jun 21, 2011 at 03:14:55 PM PDT

        [ Parent ]

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