I believe Chris Hayes was the first to note the similarity between the deficit hysteria and the propaganda push before the war in Iraq.
The conversation—if it can be called that—about deficits recalls the national conversation about war in the run-up to the invasion of Iraq. From one day to the next, what was once accepted by the establishment as tolerable—Saddam Hussein—became intolerable, a crisis of such pressing urgency that "serious people" were required to present their ideas about how to deal with it. Once the burden of proof shifted from those who favored war to those who opposed it, the argument was lost.
The same ingredients are going into the latest cocktail of crazy: a relentless and shameless campaign of lies by Republicans, a complicit press, and a Democratic Party that is, by and large, cowed, corrupted, and corporatized.
By any measure -- unemployment, long-term unemployment, wage growth, poverty, economic inequality -- we're trapped in an economic crisis of historical proportions, a time screaming out not merely for government spending but massive government spending and DC is engaged in a very serious debate over how much to cut.
This is nothing less than insane.
It's mind-blowing how far to the right the debate has shifted. In 2008, George W. Bush signed a stimulus package when unemployment was at 4.7 percent. It's twice that much now (probably a lot more than twice, but...) yet anyone who advocates a serious stimulus package is regarded as a Scott Ritter-like freakazoid.
Along with everyone else, I cheered the latest fillibernie, but it's rather instructive to look at what's he's actually proposing. The socialist from Vermont, the great white-haired hope, is calling for debt reduction by which tax increases would equal spending cuts, a one to one ratio. That's better than what the Democratic Leadership is hoping to get, a revenue-to-cut ratio of one to four, but as the left pole in the debate, the "progressive" position -- have I mentioned that we're in the middle of an economic crisis? -- it's painfully conservative.
The Iraq War did great damage to this country, but it'll be minor next to the damage done by our deficit hysteria. If we're not already in a depression, we will be soon. This is not rocket science; it's basic economics. It's reality, as opposed to insanity.
Near-term spending cuts will tank an economy that is already struggling. We’ve been at over 400,000 weekly first-time jobless claims for 12 weeks, and the slack in the labor market from May has tipped into June. In that environment, if you cut federal spending, contracting fiscal policy when there’s already a demand gap, people will be laid off from the cuts, or they will find less in the way of services. They will have to stretch their dollar and as a result they will spend less. This will begin a death spiral of more job loss, followed by more reductions in consumer spending.
In fact, though, it's only really Democrats and ostensible liberals in Congress who've gone insane. The right-wing is behaving rationally in pursuit of long-sought political and ideological objectives. Insane are those who're following them, buying into the deficit hysteria even though it's not in the own self-interest to do so.
You would think that Democrats might worry about the political implications, that even if they didn't care at all about the suffering of their constituents, they might care about hanging onto their jobs. I'm not Mark Halperin, but I'm pretty sure a Depression is bad news for the President's party. But then some progressive bloggers are under the insane impression that the White House is getting the better of this debate, so maybe Dems in Congress do too.
Because they're insane.
UPDATE: In comments, Booman says I mischaracterized his post, that he wasn't suggesting the Dems were winning but that the White House is feeling confident about winning the political battle short-term.
In using my article as an example, though, I think you are bit unfair to me.
The article is about the mood inside the WH, their strong belief that Boehner will cave, what the likely actions of Boehner will be, and so on.
It isn't saying that a WH win in this context is going to be a solution for our economic problems.
I also think a lot depends on details. Not all government spending creates jobs. For example, a huge percentage of the cuts last December was phantom money that had been allocated but would never be spent. It was just accounting but it scored as cuts. No jobs were lost.
So, while I agree that the economy needs an infusion of money right now that only the government is in a position to spend, and I agree that our discourse is crazy, I don't think things are as bad as you fear. And while I think the immediate victim of this whole thing is going to be Boehner (who is totally screwed here), this deal will not help the economy and will have some detrimental effects on Obama's reelection campaign.
A lot of stuff is getting mingled here. The substance of the deal and the politics, the long-term politics (2012) and short-term (who won the deal?) There's also the fact that what's good politically for the President might not be good for other Democrats.
But I'll offer the general proposition that good economic policy is good politics. It's difficult for me to see a "win" in any shape or form coming out of this, although I realize that some progresssives might use that word to describe a scenario in which tea baggers aren't pleased with Boenher.