The research discrediting the Reinhart-Rogoff study is upending the economic policy discussion everywhere. Everywhere, apparently, except for HBO’s new series “Vice,” which recently featured Kenneth Rogoff as an expert on austerity.

Episode 4 of “Vice” on HBO, “Love and Rockets,” included a segment on austerity in Europe and the protest movements it has sparked. Most of the segment was “Vice” at its best: highly accessible narration, on-the-ground reporting of events as they take place and interviews with citizen-stakeholders that other shows might shy away from.

But one major flaw undermined the entire segment: “Vice” featured discredited Harvard economist Kenneth Rogoff as an expert commentator. “Vice” correspondent and founder Shane Smith introduced Rogoff as the former “chief economist of the International Monetary Fund…who’s now a Harvard Professor.” Nowhere does the show inform viewers that Rogoff is the author of a discredited study that is more responsible than any other academic paper for the austerity policies being protested in the segment. It does not even mention that his views are controversial.

For those who don’t know why this is so outrageous — why featuring Rogoff as an expert on the consequences of austerity is like presenting Thomas Friedman as an expert on the negative fallout from the Iraq War — let me explain. In 2010, Kenneth Rogoff and Carmen Reinhart authored, “Growth in a Time of Debt,” arguing, based on an examination of dozens of countries over decades, that debt becomes a drag on growth when it reaches 90 percent of GDP. The study itself did not assert that high debt necessarily caused economic stagnation, but Rogoff and Reinhart claimed as much in subsequent statements.

Rogoff and Reinhart now say that the study did not intend to prescribe certain policies. Instead, they say, politicians, especially in Europe, have mistakenly used the study to justify drastic austerity.

But time and again, the duo encouraged political leaders to interpret the study as an admonition to reduce debt. Both Rogoff and Reinhart testified about the urgency of addressing the national debt in Congress and the press on multiple occasions–and touted citations of their study by members of Congress on their site. When Senator Johnny Isakson (R-GA) asked Rogoff if reducing spending should begin that year, Rogoff said: “Absolutely. Not acting moves the risk closer. You have very few levers at this point.” A wide array of figures and institutions from Representative Paul Ryan (R-WI) to the Washington Post editorial board cited Reinhart-Rogoff to argue that austerity was a necessity, not an option.

There have been serious doubts about the meaning of Rogoff and Reinhart’s findings since they came out. For instance, Josh Bivens and John Irons of the Economic Policy Institute argued that high debt was the effect of economic stagnation, not a cause, as Rogoff and Reinhart claimed.

Then, in mid-April 2013, a new paper eviscerated the Reinhart-Rogoff study’s actual results. Thomas Herndon, Michael Ash and Robert Pollin of the University of Massachusetts-Amherst finally replicated Reinhart-Rogoff and identified three major mistakes in the paper, including a now-infamous Excel spreadsheet error. Had the study been performed properly, Herndon-Ash-Pollin concludes that the average real GDP growth rate in countries with public debt-to-GDP ratios of 90 percent over the period measured would be 2.2 percent rather than the -0.1 percent Reinhart-Rogoff estimated. In other words, there is not even a correlation between 90% debt-to-GDP and slow economic growth.

In light of this revelation, featuring Rogoff as an expert on austerity shows poor judgment. It bolsters Rogoff’s authority on a topic where his intellectual standards and judgment are in serious doubt.

You may be wondering: Rogoff’s background notwithstanding, did he actually say anything inaccurate or misleading in the “Vice” segment?

The answer is no. Rogoff did not say anything wrong per se. But his criticism of the European governments for being too tight-fisted was hypocritical. Take this gem:

They’re treading this very cautious path that involves a lot of belt-tightening. This idea: If we just wait, in a decade it may be better. I think they have been overly cautious, thinking they can just throw the weight of the adjustment on the unemployed, particularly on young people year after year after year, but it certainly provides the seeds of these more extreme views, these more extreme parties.

The same guy who told Congress that the longer the US waits to enact austerity, the worse off we’ll be, is lecturing the Europeans for engaging in “belt-tightening” too soon, and delaying stimulus too long? It is possible in theory to believe in long-term belt-tightening and short-term stimulus, but in practice, emphasis is everything. Rogoff leveraged his prestige and media presence to push for austerity and give intellectual cover for right-wing politicians. Now that both on-the-ground austerity policies and the intellectual foundations of Rogoff’s paper have blown up, he is rushing to disown his old deficit zeal and switch to the winning team. But having played such a significant role in the global push to cut spending, Rogoff’s born-again Keynesianism is just not credible.

Even if “Vice” was intent on featuring Rogoff, they should not have allowed the show to become an accessory in his plan to rehabilitate his reputation. At the very least, viewers watching the episode deserved to know that they were hearing from someone whose discredited paper was indirectly responsible for the austerity policies inspiring so much anger on screen. Although the segment was undoubtedly filmed and produced before Herndon-Ash-Pollin tore Reinhart-Rogoff to shreds, they could have added a disclaimer to the show before it aired–or provided one retroactively. In any event, Rogoff’s work was controversial enough before Herndon-Ash-Pollin that his background was worth noting then too.

Upon watching the episode, I tweeted “Vice” founder Shane Smith challenging the decision to feature Rogoff as an expert. Two weeks later, after receiving no response on Twitter, I e-mailed Vice.com’s editorial office with the same message. That was Tuesday. I still haven’t heard from them.

Although there is no evidence to suggest that HBO’s corporate brass influences “Vice”‘s editorial and production decisions, HBO executives’ professional and ideological ties to Kenneth Rogoff are worth noting, however remote they are. Richard Plepler, Co-President of HBO, serves on the advisory board of the Peter G. Peterson Foundation, the foundation of private equity billionaire Pete Peterson. Through organs like the Peter G. Peterson Foundation, Peterson has spent over $500 million promoting deficit reduction that is centered on cutting Social Security and Medicare and regressive tax reform. Plepler is apparently good friends with Peterson, and shares Peterson’s obsession with a looming debt crisis. A 2011 New York Times profile of Peterson includes this quote:

“Pete was right about the debt before it was popular,” Mr. Plepler said. “Now, he’s right when it is popular.”

Plepler may have little influence on “Vice”. But the inclusion of Rogoff, whose work has complemented Peterson’s cause, does raise the question as to how far Plepler’s–and in turn, Peterson’s–influence reaches.

“There’s this feeling that something happened and no one was punished,” Rogoff says in “Vice”, Episode 4, “Love and Rockets.” Rogoff is describing popular anger toward the big banks for their role in the financial crisis. But his words could just as easily apply to economists like himself, who provided the intellectual justification for austerity, and now pretend they were on our side all along.

If influential academics like Rogoff are not held accountable for the failure of the policies they have promoted, then they will produce shoddy, ideology-driven “studies” that cause suffering again and again with impunity. The lack of accountability for prominent intellectuals whose findings influence policy decisions is a major reason why our political system continues to fail ordinary people. Consider the ongoing credibility enjoyed by many of the same people who led us into the Iraq War based on claims that Iraq had WMDs, or economists who insisted that deregulating the financial sector would never endanger our financial system.

If “Vice” considers itself a responsible news outfit, it should not let itself become a platform for discredited economists to restore their reputations. “Vice” should correct its mistake. “Vice” must inform viewers that it omitted key information about Rogoff’s background and share the information that it left out the first time. That would be a lot more like the “Vice” I know and respect.

I explained the flaws in the Reinhart-Rogoff paper in greater detail on “Take Action News with David Shuster” a few weeks ago.

Why Reinhart-Rogoff is Incorrect, Part 1

Why Reinhart-Rogoff is Wrong, Part 2

Affluent business flyers inconvenienced by delays = national emergency that Congress immediately fixes. Cancer clinics closing = Congress does squat, goes home. This is just one more story of our corrupt times.

A continuing series
Read the full series

Last week the sequester cuts kicked in at airports and caused affluent business fliers to experience some delays, so Congress acted immediately to fix it. The same sequester has been forcing cancer clinics to send away patients so they can’t receive the chemotherapy that they hope will keep them alive. Is Congress rushing to the rescue like they did for affluent business travelers who faced some flight delays? Not so much. They do have their priorities, after all.

Sequester Causes Cancer Clinic Cuts And Closings

NBC: Sequester cuts hitting cancer patients, (click through for video)

Oncologists claim reduced Medicare funding, which took effect on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.

NewsOn6: Oklahoma Cancer Patients Worry About Cuts To Medicare Caused By Sequester.

Albequerque BusinessFirst: Gov’t cuts might force NM Cancer Center to stop treating some Medicare patients,

The Albuquerque-based New Mexico Cancer Center might have to stop treating up to 300 Medicare patients because of cuts to Medicare brought on by the federal sequestration budget cuts, the Cancer Center’s CEO said Thursday.

HuffPo: Sequestration Forces Cancer Clinic Patients To Travel Thousands Of Miles For Treatment.

ThinkProgress: Cancer Clinics: Congress Should Have Restored Our Sequester Cuts Before Addressing Airport Delays,

After automatic budget cuts slashed their funding, cancer clinics have been forced to delay chemotherapy treatment for their patients. Some clinics may actually have to close their doors altogether if the sequester cuts are not reversed. As several cancer doctors told the Hill, they suspect they may not have been at the top at Congress’ list because reduced access to chemotherapy doesn’t personally inconvenience lawmakers in the same way that airport delays do.

WaPo: Cancer clinics are turning away thousands of Medicare patients. Blame the sequester,

Cancer clinics across the country have begun turning away thousands of Medicare patients, blaming the sequester budget cuts.

Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.

It Costs Money, Doesn’t Save Money

The kicker, it doesn’t even save the government money, instead it costs money:

The care will likely be more expensive: One study from actuarial firm Milliman found that chemotherapy delivered in a hospital setting costs the federal government an average of $6,500 more annually than care delivered in a community clinic.

So not only does this sequester kill people, it costs the government much more than it saves.

Deficit Facts

1) The deficit is already falling dramatically. The deficit is already down by 50% as a share of GDP. From See Deficit Falling Even More Dramatically, Few Know It:

2) The intellectual foundation for austerity has been discredited. See anywhere on the web. Especially see The Colbert Report: Austerity’s Spreadsheet Error.

3) Europe’s experiment with austerity has brought nothing but stagnation, recession, unemployment and mass misery and suffering. See ThinkProgress: Austerity Pushes Europe Into Its Second Recession In Four Years, CNBC: Europe Risks ‘Endless Depression’ in Pursuit of Austerity, LA Times: Europe austerity strategy is hurting growth, IMF says, CNN: Austerity drives up suicide rate in debt-ridden Greece and hundreds more such reports…

4) The deficit argument is over. Henry Blodget: The Economic Argument Is Over — Paul Krugman Has Won.

It’s Just Corruption

From March, Surprising Studies Find DC Does What Wealthiest Want, Majority Opposes,

A new study, Democracy and the Policy Preferences of Wealthy Americans … sought to gauge the political and policy priorities of the wealthy, and how these concerns contrast with the concerns of the rest of us. Amazingly, the priorities of the 1% match up with the priorities of our political class, while the priorities and needs of the vast majorities of us are ignored.

This is about who has the money, and who gives it to politicians. That is the definition of corruption. It is not “ideology” it is corruption, nothing more.

Very wealthy people are profiting from this austerity push. Dean Baker explains, in Deficits Are Bad and the Sun Goes Around the Earth,

…many people can profit from slow growth and high unemployment. The after-tax profit share of GDP is at its highest level more than 60 years. For those who own lots of stock and are at the top of the income ladder, times are good. These people may see efforts to lower unemployment as posing a risk. With lower unemployment workers may be able to get a larger share of productivity growth. This may be good for most of the country and mean increased economic growth, but it would mean less for the one percent.

Yes, “people can profit from slow growth and high unemployment.” And politicians are being paid to maintain the slow growth and high unemployment and other things that are driving all the income and wealth to a top few. It is just corruption, nothing more.

From January: Call It Corruption Not Ideology,

Getting paid by corporations to block government action from helping We, the People but hurting corporate profits isn’t an ideology, it’s corruption.

Getting paid by corporations to cut taxes and regulations for corporations isn’t an ideology, it’s corruption.

Getting paid by billionaires to cut taxes for billionaires isn’t an ideology, it is corruption

Call it what it is, don’t launder it by calling it ideology. It is corruption.

This is corruption, it is not ideology, it is not “austerity.” Getting paid by wealthy people to block things that help We the People so those wealthy people can profit is corruption, nothing more. Don’t dignify it, don’t let it serve as a mask. It is just corruption.

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The deficit is already down by half. The intellectual foundation for austerity turned out to be a spreadsheet error combined with cherrypicked data. In Europe austerity has brought nothing but stagnation, recession, depression and suffering. But our own “sequester” ramps up with disastrous effects — unless it affects the affluent.

Deficit down by half. See: Me, See Deficit Falling Even More Dramatically, Few Know It,

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PS: Henry Blodget: The Economic Argument Is Over — Paul Krugman Has Won

PS: Think Progress: Just Four Lawmakers Show Up To Congressional Hearing On Long-Term Unemployment

Click here: Support Our Fight to Repeal the Sequester.

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Austerity is beginning to hit and the economy is slowing as a result. The most immediate effect is that flights are delayed, but unemployment checks are smaller and there are fewer things We the People do to make our lives and economy better — also called “government spending.” But hey, as Dean Baker writes in, Deficits Are Bad and the Sun Goes Around the Earth,

…many people can profit from slow growth and high unemployment. The after-tax profit share of GDP is at its highest level more than 60 years. For those who own lots of stock and are at the top of the income ladder, times are good. These people may see efforts to lower unemployment as posing a risk. With lower unemployment workers may be able to get a larger share of productivity growth. This may be good for most of the country and mean increased economic growth, but it would mean less for the one percent.

Deficit Falling, Few Know

In February I posted Deficit Is Falling Dramatically, But Only 6% Know That,

There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?

The post had a chart and some numbers… then,

Once again, because it might be hard to register due to the drumbeat of deficit-scare propaganda, this is a fact: the deficit is falling at the fastest rate since the end of World War II. It is down about 50 percent as a percent of GDP just since Bush’s huge $1.4 trillion fiscal 2009 deficit. And the deficit is projected to be stable for a decade.

… So let’s stop listening to the drumbeat of “deficit shock” propaganda and not be rushed into doing any more stupid, destructive cuts in the things We, the People do to make our lives better.

Finally the post linked to some polling news: only 6% of the public even knew that the deficit is down, most thought it is up, 94 percent of Americans don’t know the budget deficit is getting smaller. I got going about how our “news” media have to be actively misinforming us to get a number like that, only 6% of us even knowing the basic facts…

Big News — Deficit Falling Even Faster

So here’s the thing. It turns out that the deficit is falling even faster than that. Over at HuffPo Zach Carter writes up the story, in Goldman Sachs: Deficit Will Plunge Over Next 3 Years

After beginning the year expecting a $900 billion deficit for 2013, Goldman’s economic team, lead by Jan Hatzius, has now cut the figure twice, this time to $775 billion. By the close of 2014, the economists said, the deficit will decline to $600 billion, and clock in at $475 billion at the end of 2015. Goldman had previously expected a $650 billion deficit at the end of 2014 and $500 billion at the end of 2015. The improvements are due to stronger-than-anticipated tax collections coupled with lower-than-expected levels of government spending.

Of course, those “lower levels of government spending” are the reason the economy is slowing, but who’s counting? In a country where We the People make the decisions, “government spending” by definition is things We the People do to make our lives better. But who’s counting?

Here is a revised version of the chart from Deficit Is Falling Dramatically, But Only 6% Know That:

Note that the huge 2009 deficit was Bush’s last budget, not Obama’s first.

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The “Grand Bargain” is about showing the world that we can hurt people, so they will know we are “serious.”

Reading Jason Linkins’ HuffPo account of elite-pundit thinking about the “Grand Bargain,” Passing ‘Grand Bargain’ Voters Don’t Care About Is Critical To Confidence In Government, Apparently, I am struck by the similarity between the (elite pundit) Joe Klein quote Linkins references, and the elite-pundit thinking about invading Iraq.

Time Swampland contributor Joe Klein — who is confident that Congress will agree to a “grand bargain” — says that people like me who contend that voters don’t place a high priority on a grand deficit deal are correct but we need to pass a grand deficit deal anyway because reasons, shut up:

There are those on the left who will object that the deficit issue is overblown and not even a priority among voters. They are right. But we have reached the point where some sort of deal is necessary to restore the public’s, the business community’s and the world’s faith that the U.S. government can, occasionally, take significant action. I predict—tepidly, with no great confidence—that the Congress will finally decide it is time to act.

In other words, Klein is saying the elite punditry has made such a big deal about something we all know is the wrong thing to do, that the public has to see us follow through — “take significant action” — or they’ll lose confidence in the country’s ability to make things happen following a pundit frenzy like this one.

Now let’s remember the words of elite pundit Tom Friedman on why invade Iraq.

Tom Freidman, on Charlie Rose, May 29 2003: (link is CS Monitor, Thomas Friedman, Iraq war booster),

“And what we needed to do was to go over to that part of the world and burst that bubble. We needed to go over there basically uhm, and, uh, uhm take out a very big stick, right in the heart of that world and burst that bubble. And there was only one way to do it because part of that bubble said ‘we’ve got you’ this bubble is actually going to level the balance of power between us and you because we don’t care about life, we’re ready to sacrifice and all you care about is your stock options and your hummers. And what they needed to see was American boys and girls going house to house from Basra to Baghdad uhm, and basically saying which part of this sentence don’t you understand. You don’t think we care about our open society, you think this bubble fantasy we’re going to just let it go, well suck on this.”

Friedman said we had to invade Iraq so the world can see that we can use our immense power to hurt people there. Because Iraq is in “that part of the world.”

Joe Klein says we have to do the Grand Bargain to show the world that we can use our immense power to hurt people here, too.

That’s balance for ya.

The “Grand Bargain” is about hurting regular people (“shared sacrifice”) who have been sacrificing since Reagan. The rich have gotten tax cut after tax cut. Their corporations get breaks and subsidies. Wages have been stagnant since Reagan broke the unions, but prices have gone up. People used up their savings, then went into debt. Meanwhile government services for We the People have been cut, cut, cut. Our infrastructure is crumbling. Our transportation and electrical and other systems are just a mess. The safety net has collapsed. College has become unaffordable. Poverty is soaring and the middle class is disappearing.

So now regular people have to “sacrifice” to pay off the money the government borrowed to give the rich their tax cuts and subsidies. That’s the “Grand Bargain” in a nutshell.

P.S. Please read Linkins’ piece, it’s short. Linkins concludes,

” … a deal that will further immiserate Americans with painful cuts to earned benefit programs (like chained CPI) at a time when everyone’s still struggling to get by. Why anyone thinks this would restore the public trust is beyond me. Pundits really need to get out more.”

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Today, The Week published my essay “Why Obama’s Legacy Doesn’t Need a Grand Bargain.” While austerity ideologues like Alan Simpson are insisting that President needs a “grand bargain” – swapping entitlement reform for tax reform – to have a great historical legacy, I showed that 1) “history yawns at budget deals” and 2) neither Social Security nor Medicare face imminent collapse. Even if you believe retirement cuts are eventually necessary, Obama can let his successors make that call without any damage to the country or his legacy.

In researching the piece, I was reminded that everything that Obama is being pressured to do in a “grand bargain,” Reagan already did. How did that turn out?

On tax reform, the bipartisan deal Reagan achieved in 1986 looks much like what is generally proposed today: closing loopholes and deductions while lowering tax rates.

There would be potentially significant differences: Reagan’s reform was designed to be revenue-neutral, while Obama had made it clear any deal would have to raise additional revenue. And Reagan got a very flat (aka regressive) tax structure with only two income brackets of 15 percent and 28 percent. Obama has spent his first term making the tax code the most progressive since 1979, and while he has entertained lower rates as part of broader reform, it is implausible he would throw away his own achievement.

Nevertheless, the basic idea of reform through simplifying the code is parallel. So what happened when Reagan did it?

The heralded tax reform was not exactly treated as sacrosanct by Congress. More than 15,000 changes in tax law have happened since, unraveling the promised simplification.

Whatever the merits of simplification might be, it’s not a huge incentive for President Obama to take political risks on a messy compromise on a project that has little chance of remaining in place.

What about Social Security? Bipartisanship romantics like to talk about Reagan’s 1983 reforms which extended the solvency of Social Security by increasing the retirement age, taxing the wealthy, and futzing with the cost-of-living adjustment. That’s basically what the austerity posse is calling on Obama to do now.

Those reforms worked as intended – Social Security has been solvent ever since – though it amounted to a benefit cut for many. You could still argue it was necessary because the Social Security trust fund was on the verge of running a deficit which could have delayed the processing of benefits in the short-run – but not forced any immediate benefit cuts – and weakened the stability of the system in the long-run.

It was only 1980 when the Social Security trustees delivered the warning about the projected shortfall. After a couple of years of Reagan floundering with more radical Social Security changes, a more modest deal was struck.

Today, Obama is being pressured to cut a similar deal eight years before the trust fund might face a deficit, and 20 years before the trust fund would be depleted – which would force an immediate 25 percent benefit cut. As I note in The Week, these projections are not infallible and the trustees have a record of excessive pessimism.

You could argue that Reagan’s Social Security reform worked out better than his tax reform. But neither one created a historic legacy for him. Reagan is not “The Man Who Saved Social Security” or “The Man Who Made Everybody Love IRS.” He simply patched up Social Security at the point when it was widely agreed it needed a patching. That’s housekeeping, not greatness.

Today, we are not at the point where everyone agrees Social Security needs a patching, because projections can change.

But if the projections look dire eight years from now, what the Reagan experience shows us is, they’ll fix it.

And then everyone will forget about it.

The economy is not working for We, the People. But even with $4 trillion already cut from deficit projections, a deficit drop of about 50 percent as a share of gross domestic product, and Congressional Budget Office projections that the deficit is stable for the next 10 years Washington remains focused on even more economy-killing austerity. It’s talking only about what and how to cut instead of how to meet the needs of the people of the country and grow the economy.

This fight over spending cuts led to the “sequester,” which might take us back into recession. The fight will now roll into another manufactured crisis over the continuing resolution, with a government shutdown as the hostage, and of course this will be a further drag on the recovery.

Economics 101, Europe’s austerity experiment and the experience of history all tell us that cutting government is contractionary policy. Cutting government cuts economic growth and costs jobs, which leads to to lower tax revenue and higher government expenditures. Economics 101 and the experience of history also tell us that government investment in jobs, infrastructure, education, research and the rest grows the economy, which fixes deficits. Cutting deficits and debt is important but clearly should not be done when the economy is weak. This is the time to invest, and the investment returns will pay for the investment and more.

Again: There is no real discussion or debate about what we ought to be doing to make this economy work for working people. There is only discussion of what and how to cut. This is the wrong approach to our economic problems.

CAF is presenting job-creating and economy-growing ideas that ought to be debated so we can begin to turn this economy around and make it work for all of us instead of just a few of us. Jobs and growth fix deficits.

The Vast Trade Deficit Drains Our Economy And Jobs

Recently the 2012 U.S. international trade deficit in goods and services was announced. It fell slightly in 2012 (due in part to a decline in petroleum imports), to $540.4 billion from $560 billion in 2011. But 2012 saw a record trade deficit of $315 billion with China – approaching $1 billion a day. That is $540 billion a year drained from our economy, $315 billion of that just to China.

This vast trade deficit represents the loss of millions of jobs, tens of thousands of factories and entire industries. It hits at our ability to fix our economic problems. In particular, this problem affects our manufacturing companies, which provide solid, middle-class jobs and exports that strengthen the country.

Instead of the current focus on budget deficits, Washington should be talking about how to fix this vast trade deficit. Here are some of the things they should be talking about — and doing.

Fix Currency

Countries manipulate their currency rates because a “weak” currency means products made there are much more price-competitive. China’s currency is still estimated to be at least 20 percent below “market” rate, meaning goods made in China cost at least 20 percent less than goods made here, even before you factor in other things China does to give itself a trade advantage.

Confronting currency manipulation offers the biggest “bang for the buck,” requiring no tax dollars and reaping huge returns, shrinking the federal budget deficit by between $78.8 billion and $165.8 billion over three years.

Fixing this one problem could create between 2.2 million and 4.7 million jobs and increase GDP between 1.4 percent and 3.1 percent, helping manufacturers in particular, gaining between 620,000 and 1.3 million of those jobs. It would reduce the U.S. trade goods deficit by at least $190 billion and as much as $400 billion over three years.

Reform Trade Agreements

A $540 billion trade deficit doesn’t come from balanced trade; it is the result of one-sided trade agreements we have entered into. These trade agreements exposed America’s companies, workers, factories and tax base to direct competition with non-democracies, impoverished and exploited workers and countries that do not protect the environment. That could only go one way.

We have a democracy, in which people have a say. So they say they want good wages, safe workplaces and a clean environment. When we open that system up to direct, unregulated competition from places where people have no say and are told they can’t have those things, we put our democratic system at a competitive disadvantage in world markets. We make it a disadvantage to protect the environment, pay well, provide benefits, protect worker safety and the other things that we do and others do not do. Those become just “costs” to be eliminated.

Those trade agreements could have had different terms that lead to different results that lifted working people on both sides of the trade border instead of pushing terrible and increasing worldwide inequality. They could have lifted environmental protections on both sides of trade borders. They could have increased worker and consumer protections. They still can.

Our country’s trade agreements can still be reformed to do these things, rebalancing trade and lifting people and the environment. Future trade agreements should learn the lessons.

Bring Back The Bring Jobs Home Act

Last year Senate Republicans filibustered the Bring Jobs Home Act, but the bill had tremendous public support. It should be revived.

The Bring Jobs Home Act would have cut taxes for U.S. companies that move jobs and business operations to the United States, and ended tax loopholes that reward companies for shipping jobs overseas. The bill would have allowed companies to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the United States. It would have closed a loophole allowing a company moving jobs overseas to deduct various relocation costs.

Additionally, any new bill should tax the overseas income of U.S. corporations the same way domestic income income is taxed, so there would be no tax advantage to them from shifting income and jobs overseas.

Strengthen Buy America In Federal And State Procurement

There is no reason our own government should be undermining American manufacturers. “Buy America” provisions should be a mandate on federal, state and local government purchases, consistent with our trade laws. To accomplish this, our bottom line should be:

• All federal spending should have “buy America” provisions giving American workers and businesses the first shot at procurement contracts.
• New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction.
• Our military equipment, technology and supply purchases should have increased domestic content requirements.
• Renewable and traditional energy projects should use American materials in construction. State-level spending should have similar requirements, as well as strategies for getting them in place.

Many state-level procurement laws are very weak. As a result, a lot of tax dollars go to purchase goods made overseas instead of goods made in the USA. States should also strengthen their procurement policies to promote buying American-made materials.

The Invest in American Jobs Act of 2013, announced Tuesday, is a good start and deserves support and discussion. The Act strengthens Buy America preferences, closes loopholes and improves transparency in the federal waiver process.

These are a few examples of the things that Washington should be talking about. These proposals solve real problems in practical ways that help the American people.

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There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?

Congress should just repeal the sequester – we don’t need it. We have 10 years to fix the long-term deficit situation. We should not be stampeded by deficit-scare propaganda and instead take the time to carefully consider the right approach. That way we won’t make the mistakes that Europe is making.

Deficit Falling

Here is a chart of the deficit as a percent of GDP: (Data sources below)

Once again, because it might be hard to register due to the drumbeat of deficit-scare propaganda, this is a fact: the deficit is falling at the fastest rate since the end of World War II. It is down about 50 percent as a percent of GDP just since Bush’s huge $1.4 trillion fiscal 2009 deficit. And the deficit is projected to be stable for a decade.

All of that means that no, we do not have a “deficit emergency,” the deficit is not “out of control” and we have 10 years to decide how best to fix things.

So let’s stop listening to the drumbeat of “deficit shock” propaganda and not be rushed into doing any more stupid, destructive cuts in the things We, the People do to make our lives better.

Medicare Cost Growth Way Down, Too

You probably hear again and again that Medicare is the driver of future deficit trouble.

Here is something you probably didn’t know because of the drumbeat of deficit propaganda: Medicare cost growth is way down. From 2000 through 2009, Medicare spending climbed by an average of 9.7 percent a year. Now those increases are down to 1.9 percent and are still falling.

Take a look at this report from the U.S. Department of Health and Human Services, Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows:

The very slow growth in Medicare spending in fiscal year 2012 follows slow growth in 2010 and 2011. In 2010, spending grew at only 1.8 percent per beneficiary, and in 2011 at 3.6 percent. Over the three year period from 2010-2012, Medicare spending per beneficiary grew an average of 1.9 percent annually, or more than 1 percentage point more slowly than the average annual growth of 3.2 percent in per capita GDP.

Public Does Not Know Deficit Is Falling

One reason there is so much pressure for cuts is that the public has overwhelmingly fallen for the deficit-scare propaganda drumbeat. Jed Lewison at Daily Kos explains the problem, in “94 percent of Americans don’t know the budget deficit is getting smaller,”

It’s an indisputable fact: The budget deficit is getting smaller.

… But when Bloomberg News commissioned a survey asking Americans whether they believed the budget deficit was growing or shrinking, just six percent answered the question correctly. Ninety-four percent had no clue. And 62 percent actually thought it was getting bigger.

Jed’s post points us to Steve Benen at the Maddow Blog, who has more details in the post “A well-kept fiscal secret“:

A 62 percent majority believe the deficit is getting bigger, 28 percent believe the deficit is staying roughly the same, and only 6 percent believe the deficit is shrinking.

Here it is, louder: Only 6 percent believe the deficit is shrinking! But here’s the thing: the deficit is shrinking dramatically. That is not a political opinion; it’s just math.

Here is Steve again, “A conversation-ending chart”:

Now, I think it’s probably safe to say deficit hawks are no longer capable of embarrassment, so the chart’s impact is likely limited. That said, there’s a policy point to keep in mind: “Here’s a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it’s falling now without a coincident recession.”

Got that? Every time the nation has reduced the deficit this much, this quickly, economic growth suffers to the point that the economy actually shrinks.

Role Of Media In Democracy

Isn’t it the media’s job to inform the public, not misinform the public? Isn’t correct, accurate, objective information necessary for the proper functioning of a democracy?

What does it say about our country’s information channels, when only 6 percent of the public knows that the deficit is shrinking? Shouldn’t that be a signal to the media to run headlines for a month informing the public, instead of continuing to scare people that the deficit is going to eat them up?

When only 6 percent of the public knows the facts (the deficit is falling fast, it is just math, not political opinion) about the most serious policy discussion that is occurring, with the most serious consequences for our jobs, standard of living, our future … a 94 percent misinformation rate is so far beyond just media incompetence that it has to be looked at as something else.

Propaganda And Its Policy Consequences

“Blowback” is a term that means propaganda you use against a target comes back and hurts you. Anti-government propaganda has convinced the public that “government takes money out of the economy” and “government is in the way of business.” Other propaganda has convinced people that we have a “deficit emergency.” This propaganda is paid for by billionaires and the corporations that mask them, with a vast apparatus that distributes the misinformation.

The billionaires and giant multinational corporations want to cut their taxes and get government rules out of their way. But now they’re killing the economy that laid their golden egg.

Austerity – budget cuts – hurt the economy. They reduce the pressure to make the wealthy pay their taxes, but they cut economic growth for the rest of us. Europe is engaged in a grand experiment with austerity, and we can see the results. They cut their budgets, their economies decline, less tax revenue comes in the door, and their deficits as a percent of GDP actually go up making the problem worse.

Unfortunately, their leaders think that means they should cut even more. The result has been that their economies decline even more, revenue falls even more, and their deficits as a percent of GDP actually go up, making the problem worse.

Unfortunately, their leaders think that means they should cut even more. The result has been that their economies decline even more, revenue falls even more, and their deficits as a percent of GDP actually go up, making the problem worse.

Unfortunately … you get the picture. Unfortunately they don’t.

No Deficit Emergency – Repeal The Sequester

So we don’t have a “deficit emergency” or a “fiscal crisis” or an “out-of-control” deficit after all.

But we still have the “sequester” budget cuts starting Friday, and the consequences to our economy are really bad.

Congress needs to just repeal the sequester. They do not need a “deal” to cut something else out of the budget.

President Obama does not need to make a deal involving cuts that will just make things worse. That’s just falling into the Republican framing of demanding cuts as a solution to everything, strangling our government’s ability to make our lives better. From last week’s post, “Obama Says Cuts Bad, Proposes Cuts”:

Common sense might suggest that if a thug is holding a kid hostage and demanding money you don’t offer him half the money and say he can shoot half the kid. That is a “balanced” response to hostage-taking. But it is not the correct response.

Just repeal the sequester. And instead of cutting, how about repairing the country’s infrastructure, which means a lot of people get hired! And it means we have a modern, competitive infrastructure making our lives and businesses better.

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Chart data sources:
GDP Source: http://www.bea.gov/national/index.htm#gdp
2013 forcast using low 2.5%: http://www.bloomberg.com/news/2012-09-13/fed-officials-upgrade-economic-growth-outlook-in-2013-2014.html
Deficit: http://www.whitehouse.gov/omb/budget/Historicals
2013, 2014 deficit estimates: http://www.foxbusiness.com/government/2013/02/05/cbo-sees-fy-2013-budget-deficit-at-845b-smallest-since-08/?

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Republicans are now claiming President Obama is for big spending cuts that gut government and the things we do to make our lives better, and that Republicans are not for gutting spending. This one is almost funny, if it weren’t for the damage that will be done to people if the Republicans cause the “sequester” budget cuts to go into effect next week.

Yes, next week huge budget cuts will occur unless Republicans do something to stop it. But Republican understand that:

1. Cutting the things government does to make our lives better is hugely unpopular;
2. Cutting government spending when the economy is weak will threaten to return us into recession;
3. Cutting essential services will hurt a lot of people.

So they are trying to deflect the blame, and are actually trying to tell the public that it is Obama who has been for these big cuts all along, not them.

This latest lie is so preposterous you might think I am making this up. So watch this ad that the Republican Party has put out:

Buzzfeed has the story, in RNC’s New Ad Takes Obama Wildly Out Of Context,

The short clip makes it appear as if Obama is pledging his support for the sequester rather calling on Congress to come up with a broad approach to avoid it, using his veto as part of a threat to force a plan.

My post this week, Coming Sequester Cuts Will Hurt Jobs, Growth And People – And People Are Mobilizing, details some of the terrible consequences of the “sequester” should it occur.

Three things you can do:

1) Contribute to our Stop the Cuts campaign today

2) Tell your member of Congress: Disarm the Austerity Bomb. Stop the Sequester

3) Starting today, real people started pushing back through a series of more than 100 events that were scheduled in 23 states around the country. They are sponsored by a coalition that includes national labor groups, Americans for Tax Fairness and Health Care for America Now. (You can see a list of events at AmericaWantsToWork.org or 99Uniting.org.)

One more thing: As for who is for cutting essential service that make people’s lives better, and who is for keeping them, never forget that it was the Republicans who campaigned in 2010 and again in 2012 saying Democrats were cutting Medicare and they would never do that. In 2010 it worked and they gained a majority in the House of Representatives, but by 2012 people had started figuring it out.

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After President Obama called on Congress today to postpone the deep across-the-board federal spending cuts set to kick in on March 1 in the so-called sequester, Campaign for America’s Future co-director Robert Borosage responded by declaring that the sequester “should be repealed, not postponed.”

Meanwhile, the Congressional Progressive Caucus today unveiled its legislation to repeal and replace the sequester, called “The Balancing Act.” According to a Caucus news release, the legislation “achieves a fair and balanced approach to long-term deficit reduction and creates 1 million jobs all over the country. … The Balancing Act brings relief to working Americans by making sure the Pentagon and the nation’s biggest corporations pitch in and do their part to get our economy working again.”

The Caucus initiative is in line with our campaign to “disarm the austerity bomb and repeal the sequester.” We are sending tens of thousands of messages to members of Congress. Click here to send your message.

As Borosage said in this statement this afternoon, “The sequester irresponsibly will cost over one million jobs and impede an already faltering recovery. It should be repealed, not postponed. Congress should turn its attention to jobs and growth, not to more austerity.”

“The entire debate is upside down. America has a jobs crisis, not a budget crisis. The deficit is not out of control; it is already down 25 percent in relation to the economy, and falling faster than anytime since the demobilization at the end of World War II. The across the board cuts of the sequester are a ridiculous way to approach a budget. We need to fix the economy, not fix the debt. And you can’t fix the economy by focusing on fixing the debt. It is time to invest in America’s future, not strangle the weak recovery we now have,” said Borosage.

The two co-chairs of the Progressive Caucus echoed this message this afternoon.

“Almost $2 trillion has been cut over the past two years from teachers, firefighters, police officers, loans for college students, and infrastructure investments,” said Rep. Keith Ellison, D-Minn. said. “The American people shouldn’t continue to pay the price for massive tax breaks for millionaires and billions of dollars in subsidies to oil companies.”

“We’ve cut non-defense budgets to the bone. There are simply no major savings hiding in school lunch or nurse training programs,” said Rep. Raul Grijalva, D-Ariz. “We need investments. The Beltway refusal to make job creation our number one priority is a scandal, and the Balancing Act is the right way to fix it.”

The Balancing Act equalizes budget cuts and revenue by closing loopholes for America’s wealthiest individuals and corporations, raising $960 billion in revenue. It also creates over 1 million jobs by investing in infrastructure,
teachers, and putting money in consumers’ pockets, paid for by cutting wasteful Pentagon spending to achieve balance with non-defense cuts.