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By Tim Price, originally posted on Next New Deal

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For Obama, a Victory That Also Holds Risks (NYT)

David Leonhardt notes that while President Obama got most of what he wanted in the fiscal cliff deal, he also gave up most of his leverage on the debt ceiling and other future showdowns. The question is, has he won in a way that leaves him nothing to do but lose?

Biggest fiscal cliff lessons (Salon)

Joan Walsh has four takeaways from the fiscal farce: the wealthy lost less than working stiffs, no one really cares about the deficit, Social Security and Medicare still aren't safe, and Nancy Pelosi runs the House (she's just letting someone else hold her gavel).

Spare the Stimulus, Spoil the Recovery (Prospect)

Roosevelt Institute Fellow Mike Konczal argues that the U.S. is already halfway through its very own lost decade, and the effects of phased-in austerity on the fragile but improving housing market will determine whether we get a real recovery or go for the back five.

U.S. now on pace for European levels of austerity in 2013 (WaPo)

Brad Plumer writes that even with the deal in place, Congress is set to enact $336 billion worth of spending cuts and tax increases, putting the U.S. ahead of countries like Britain and Spain in the "how far we can push people before they set stuff on fire?" sweepstakes.

FEMA Says Flood Insurance Program Will Be Broke By Next Week Without New Aid Bill (HuffPo)

John Rudolf notes that while FEMA is running out of money to help Sandy victims, House Republicans are dragging their feet on a relief package. It's even earned them a public tongue-lashing from Chris Christie, usually reserved for teachers and random passersby.

Should Social Security Cuts Be on the Table?: No Need to Cut the Little That Recipients Get (NYT)

Roosevelt Institute Senior Fellow Jeff Madrick argues that despite the deficit hawks' sleight of hand, Social Security isn't facing any sort of crisis, and there are much better ways to fix its finances than by downgrading its current benefits from inadequate to insulting.

The Poor Still Can't Breathe Easy Post-Fiscal Cliff (The Nation)

NND Editor Bryce Covert writes that while the poor got off easier than many feared in the fiscal cliff deal, they still took some painful blows, and the looming debt ceiling battle is the part where the defeated slasher villain stands back up and grabs his machete.

'Cliff' Deal is a Decent Start for Low-Income Americans (The Nation)

At the risk of interrupting some quality despair, Greg Kaufmann argues that progressives should instead accentuate the positives of the current deal: extensions of the EITC, child tax credit, and unemployment benefits, and no cuts to food stamps or entitlements.

Let's be straight on 'investing in our middle class' (EPI)

Lawrence Mishel writes that by attempting to spin the fiscal cliff deal as an investment in the middle class while bragging about how much it has shrunk the government, the White House is trying to have its cake, eat it too, and claim it's actually a revolutionary diet.

Time to play offense for the social safety net (MSNBC)

Ned Resnikoff makes the case that instead of constantly trying to defend the safety net from cuts, progressives should push to make it bigger and better and adopt the GOP's strategy of beating their heads against the politically impossible until it becomes a reality.

Originally posted to Daily Kos Economics on Thu Jan 03, 2013 at 06:47 AM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  The Washington Post blogger linked to the diary is (3+ / 0-)
    Recommended by:
    Odysseus, Mindful Nature, grrr

    way off.  He cites austerity measures in the US equal to 2.1% of GDP and claims the amount is more severe than what was implemented in Europe.  Then he uses 2011 stats to back that up.  In 2012, Spain's finance minister announced another  65 Billion Euros in austerity measures which translates to $86 Billion (US) or 8% of GDP.

    I wouldn't rely on the number he came up with the US either.  For one thing, he omitted the extension of unemployment benefits which is stimulative, not austerity.

    "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

    by leftreborn on Thu Jan 03, 2013 at 08:50:02 AM PST

    •  Doesn't change anything though (0+ / 0-)

      Just about everyone with any real power in this situation is pro austerity and there just aren't the safety nets in place in the US that there are in Europe.

      In other words Europe was and will be nothing compared to what is about to rain down on us here.

      Don't kid yourselves this will be deadly.

      •  Re (0+ / 0-)

        The US is consuming 23% of GDP in various government services and only taking in 18% of GDP in revenue.

        The situation is not sustainable and 'stimulus' and other forms of can-kicking aren't going to work long term.

        President Obama and the rest of the innumerates in Congress like to have their cake and eat it too, but the rest of the world isn't going to sit around and perpetually send us 6-10% of GDP in goods and services forever.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Thu Jan 03, 2013 at 12:04:19 PM PST

        [ Parent ]

        •  Stimulus was never meant to be long-term. (0+ / 0-)

          But with current interest rates it's possible to finance stimulus for as long as is needed to get the economy rolling again.  The longer this austerity demand from the Republicans is humored, the longer stimulus - including a good jobs program - will be needed.

          "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

          by SueDe on Thu Jan 03, 2013 at 12:31:01 PM PST

          [ Parent ]

          •  Greek bonds were trading at 4%... (1+ / 0-)
            Recommended by:
            nextstep

            ...in Nov 2009. They said the same thing (borrow now while rates are low!)

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Thu Jan 03, 2013 at 01:27:41 PM PST

            [ Parent ]

            •  Last time I checked America owns its own currency (1+ / 0-)
              Recommended by:
              SueDe

              And is the world's reserve currency in a world where there aren't exactly any other reliable currencies with the kind of global reach to be a reserve currency.

              •  Re (1+ / 0-)
                Recommended by:
                nextstep

                The reason why we are a "reliable currency" is that we don't (or at least didn't) borrow and spend profligately, not the other way around. If we behave irresponsibly, we will not be the "reserve currency" for long. Currency doesn't matter, it's what you buy with it.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Thu Jan 03, 2013 at 02:58:07 PM PST

                [ Parent ]

      •  Facts don't matter to people who create their own. (0+ / 0-)

        "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

        by leftreborn on Fri Jan 04, 2013 at 12:09:29 AM PST

        [ Parent ]

    •  I agree (0+ / 0-)

      The sequestration is problematic, but Pres Obama was in a tough spot in 2011 (his own fault, of course, by not pushing for a bigger stimulus in 09). However, this time, I don't fault PBO - I don't think he could have gotten a better deal. The only austerity is reverting to the original payroll tax - which I don't like, but compared to the recessionary consequence of the fiscal cliff...this, imo, was a better deal.

      Dems in swing districts: INSIST your republican rep incr tax on the wealthy -gerrymandering makes rep vulnerable...swing district list: http://www.dailykos.com/comments/1162387/48457188

      by grrr on Thu Jan 03, 2013 at 12:25:34 PM PST

      [ Parent ]

  •  Why does the political class not push for Jobs (3+ / 0-)

    above all other possible discussions. More jobs, more revenue, more taxes, less expenses, more balanced budget.

    Why does the political class not push for ending the Permanent War? Shift the money spent creating more enemies to productive uses, cut down on what we borrow, we get a more balanced budget. (Which feeds jobs.)

    If I understood Michael Hudson right on radio recently: Neo-liberals and Conservatives are agreed that US wages have to be driven down. Neolibs, because it "will make us competitive in the global marketplace." Cons, because, hell, lower wages mean more money for them, and a bigger boot on our face.

    Both scenarios require a big dose of unemployment, so wages get driven down. That is to say, precisely what we are getting for the last few years, and will have for years to come.

    So, neither Party treats off-shoring jobs, permanently, as something which must end (hell, you get tax credits to help do it!); neither Party is presenting a "Get Good Jobs Is Our Only Business!" policy; both Parties are obviously full of shit about worry over the debt, as per their inaction on the obvious fixes. (And the CBO says the latest deal actually INCREASES debt over the next decade).

    The Media, of course, remains silent on all this. As do most blogs, left, right, and center.

    So, what's up with all that, America? Do you feel represented?


    The Internet is just the tail of the Corporate Media dog.

    by Jim P on Thu Jan 03, 2013 at 11:43:59 AM PST

    •  More jobs (1+ / 0-)
      Recommended by:
      diffrntdrummr

      equals less leverage for exploitation.

      The 1% like having a huge pool of desperate unemployed biting at the heals of the minimum waged to keep them in line.

    •  The Government generally can't create jobs (0+ / 0-)

      At least not revenue-positive ones (one of the few things conservatives have correct).

      The only jobs that get us out if the hole are ones that produce goods and services of value to the rest of the world at prices they are willing to pay.

      All other activity subsists off the above, including all government, medical, and social service spending.

      The question is: what can the government do to stimulate export oriented industry?

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Thu Jan 03, 2013 at 12:08:17 PM PST

      [ Parent ]

      •  Hmm. You'll have to talk to (0+ / 0-)

        FDR, and my uncles at the CCC and WPA who went from sharing bone soup at dinner to real meals and shoes without holes when you're talking about "doesn't create jobs."

        You'll also have to talk about the people, and spin-off work, from building the Interstate Highway system, dams, bridges, etc.

        Consumerism is dead, btw, and as far as exports go we are competing with LITERAL slave labor. Thus back to my original post and the lack of job creation centered politics.


        The Internet is just the tail of the Corporate Media dog.

        by Jim P on Thu Jan 03, 2013 at 12:36:31 PM PST

        [ Parent ]

        •  Re (0+ / 0-)
          FDR, and my uncles at the CCC and WPA who went from sharing bone soup at dinner to real meals and shoes without holes when you're talking about "doesn't create jobs."

          You'll also have to talk about the people, and spin-off work, from building the Interstate Highway system, dams, bridges, etc.

          All of which is only useful if it enables other private sector activity. If it doesn't, it was just charity work. The sum total of the value contributed by the CCC and WPA is how they enabled the private sector (or in theory produced stuff like parks that have an obvious economic value).

          Because when the bill comes due and instead of deficit spending you are now surplusing (because you have to pay the debt off), your uncles and many more people besides them are back to bone soup again, sending the fruits of their hard work back overseas to pay the debt previously run up.

          Unless their actions enabled the creation of private sector value that wasn't there before. In that case, it's a net win.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Jan 03, 2013 at 02:55:07 PM PST

          [ Parent ]

      •  The government can indeed create jobs, (0+ / 0-)

        and whether they're considered revenue-positive depends on whether the jobs created end up making positive impacts on the general economy - that is, whether they turn out to be investments in economic growth or short-term expenses on the country's long-term balance sheet.  We don't necessarily have to have jobs that create demand for exports for the jobs to be worthwhile  economically.

        And we are never going to get rid of the country's debt, even though it's possible to bring down both the budget deficit and the trade deficit.   This country has always had debt (except for one year back in the mid-1800's), and today's debt is not even the worst we've ever had.  It took 25 years to bring down the debt to manageable levels after WWII, and it was done almost entirely through job creation, much of which was federal, and exports.

        "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

        by SueDe on Thu Jan 03, 2013 at 12:53:57 PM PST

        [ Parent ]

        •  Re (0+ / 0-)
          and whether they're considered revenue-positive depends on whether the jobs created end up making positive impacts on the general economy - that is, whether they turn out to be investments in economic growth or short-term expenses on the country's long-term balance sheet.  We don't necessarily have to have jobs that create demand for exports for the jobs to be worthwhile  economically.
          What's economic growth? If it's not exports (or goods and services of material value that theoretically could be exported) it's nothing or negative value.

          Think of it like a household. The only thing that matters is Dad and Mom's jobs. Sure, you can "create demand" by giving the kids allowance money in exchange for doing chores, but the root source of all prosperity in the household is the income from Dad and Mom's jobs.

          They export labor and in turn the family gets to import goods and services of value. If Dad or Mom loses their job (export income) you can hire the kids to do whatever services you want (public sector), but the household will be broke soon regardless! Even if the kids do necessary and important work like cleaning the house, fixing the cars (infrastructure), cooking dinner, etc, Mom and Dad's export-oriented jobs are the only thing that keep those activities alive.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Jan 03, 2013 at 02:50:37 PM PST

          [ Parent ]

  •  hmmm... I like the sounds of Ned Resnikoff's case (4+ / 0-)

    Time to play offense.

    ... instead of constantly trying to defend the safety net from cuts, progressives should push to make it bigger and better and adopt the GOP's strategy of beating their heads against the politically impossible until it becomes a reality.


    One may live without bread, but not without roses.
    ~Jean Richepin
    Bread & Roses

    by bronte17 on Thu Jan 03, 2013 at 11:47:50 AM PST

    •  I do also (0+ / 0-)

      I have long advocated for a more aggressive position across the board toward advocating for progressive policies, rather than constant retreat from them as if they are bad ideas.  

      I imagine few politicians will so this.  That's because the American people aren't going to support something the proponents back away from.   It's a catch-22

      Hay hombres que luchan un dia, y son buenos Hay otros que luchan un año, y son mejores Hay quienes luchan muchos años, y son muy buenos. Pero hay los que luchan toda la vida. Esos son los imprescendibles.

      by Mindful Nature on Thu Jan 03, 2013 at 12:08:03 PM PST

      [ Parent ]

  •  President Obama sneaks stimulus (0+ / 0-)

    funding into every negotiation, which tells me he's more clued in than most of the nattering class.  He's also had very good people looking at government spending, and has cut a lot of waste, fraud, and pointless regulation.  

    Being a Democrat really doesn't have to mean ignoring ways to improve the system.  Cutting spending doesn't necessarily mean gutting the safety net.  Since he's already cut spending without gutting earned benefits I'm guessing he has a handle on what needs to go in Defense spending, what can be streamlined without loss of services, and what has to be spent to keep the economy from tanking again.  He reads, he listens to lots of people, he knows what FDR did wrong, he's probably got a better handle on stimulus than Krugman does, given that Krugman has never run a country or worked as one branch of a three branch organization.  

    I'm far more interested in what he's accomplished against huge opposition than I am in guessing games from people who are invested in gaining readership/audiences, since conflict and fear are the things that drive media interest.

    I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

    by I love OCD on Thu Jan 03, 2013 at 12:02:00 PM PST

  •  To answer David Leonhardt's question, (0+ / 0-)

    and by coincidence Ed Rendell's argument about what concessions the Democrats will have to make to work through the debt-reducing arguments to come, it's time for our Democratic legislators to think outside the box.

    Rendell presumes the Democrats will have to placate the Republicans' covetousness for entitlement reform by giving in on raising the eligibility age for Medicare.  Capitulation on this point (especially by agreeing that retirees' life expectacy has gone up since 1965) is NOT thinking outside the box.

    If the Republicans really want to save money on Medicare, as opposed to destroying the program, they should be open to allowing Part D to negotiate drug prices like Medicaid and the VA can do already.  It's depressing to think we have to battle Democrats on this before we even start negotiations with Republicans.

    Now that my new Democratic Representative has been sworn in (and I worked on his campaign), I'm going to spend some time and effort talking to him about cutting Medicare's cost instead of just cutting the program's benefits.  I don't think it will do any good to contact my new teaparty star in the Senate, but I'll make the best argument I can to him.

    "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

    by SueDe on Thu Jan 03, 2013 at 12:26:28 PM PST

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