Remember the video of the guy in the “pimp costume” who got advice from ACORN employees on how to run his prostitution ring? Turns out the whole story was just a lie, a doctored-video smear job on an important organization. The guy never wore a “pimp costume” and the real, undoctored videos showed that ACORN employees did nothing wrong. But a lie travels around the world before the corporate media bothers to check the facts. The “news” media blasted the story everywhere, and Congress was so outraged they forced ACORN to close its doors. And here we are again.

The corporate media is blasting out the story that the IRS “targeted conservative groups.” Some in the media say there was “IRS harassment of conservative groups.” Some of the media are going so far as claiming that conservative groups were “audited.”

This story that is being repeated and treated as “true” is just not what happened at all. It is one more right-wing victimization fable, repeated endlessly until the public has no choice except to believe it.

Conservative Groups Were Not “Targeted,” “Singled Out” Or Anything Else

You are hearing that conservative groups were “targeted.” What you are not hearing is that progressive groups were also “targeted.” So were groups that are not progressive or conservative.

All that happened here is that groups applying to the IRS for special tax status were checked to see if they were engaged in political activity. They were checked, not targeted. Only one-third of the groups checked were conservative groups.

Once again: Only one-third of the groups checked were conservative groups.

Conservative groups were not “singled out,” were not “targeted” and in the end none were denied special tax status – even though many obviously should have been.

From last week’s House hearings on this:

Rep. Peter Roskam, R-IL: “How come only conservative groups got snagged?”

Outgoing acting IRS commissioner Steve Miller: “They didn’t sir. Organizations of all walks and all persuasions were pulled in. That’s shown by the fact that only 70 of the 300 organizations were tea party organizations, of the ones that were looked at by TIGTA [Treasury Inspector General for Tax Administration].”

Bet you didn’t see that blasted all over your TV news that night.

Click here to watch the video clip of this. It’s worth it.

And from Bloomberg reporting: IRS Sent Same Letter to Democrats That Fed Tea Party Row, (emphasis added, for emphasis)

One of those groups, Emerge America, saw its tax-exempt status denied, forcing it to disclose its donors and pay some taxes. None of the Republican groups have said their applications were rejected. Progress Texas … faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries.

In a statement late yesterday, the tax agency said it had pooled together the politically active nonpartisan applicants — including a “minority” that were identified because of their names. “It is also important to understand that the group of centralized cases included organizations of all political views,” the IRS said in its statement.

Again, for emphasis: “It is also important to understand that the group of centralized cases included organizations of all political views,” the IRS said in its statement.”

But no matter, its conventional wisdom now that “the IRS targeted conservative groups.” And it’s very useful to the right if people believe this. But it just is not true. (If you want to see conventional wisdom at work watch this clip from the most recent Saturday Night Live.)

What Did Happen?

Here’s the story. After the “Citizen’s United” decision allowed unlimited corporate money into elections there was a flood of applications to get special tax status that allowed an organization to hide its donors from the public, and in some cases even be tax-exempt. But the rules say that political groups can’t get this special tax status. The IRS has to check out applications for tax status to see if it is really a political group trying to sneak in to a special tax status.

Because they were flooded and couldn’t check out every applying organization, the IRS group looked for things in the applications that “flagged” an organization as possibly a political group. These flagged applications were then passed along to specialists to look deeper and determine if they were legit or not.

So What Was The “Wrongdoing”?

The Treasury Inspector General for Tax Administration (TIGTA) has issued a full report: Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review that looked into the accusation that the IRS “targeted” tea party groups that were applying for special tax status for extra scrutiny. The report is not all that long. You should read it. (Apparently most the people you are hearing from in the media haven’t read it.)

According to the report, the swamped IRS group involved in this came up with ways – “criteria” – to identify groups that really needed to be checked further because it was possible they might be engaged in the kind of political activity that would exclude them from getting the special tax status. (The rules for what constitutes political activity that would keep a group for getting special tax status are, to say the least, not clear. See the P.S. below.) Some groups were chosen to receive the required scrutiny because they had “political-sounding” names. Some of the “political-sounding names” included the words “tea party.” Others included “We the People” and “Take Back the Country.” (The inspector general’s report does not disclose if or which other “political sounding names” were also used as criteria.)

And the other problem was that the scrutiny these groups received involved some “unnecessary, burdensome questions.”

That was the extent of the wrongdoing. At a time when they couldn’t give all applying groups the necessary scrutiny they used criteria that included the names of an applying group to decide if it would get the required scrutiny. And they asked “unnecessary, burdensome questions.” That’s it. That’s the whole thing.

Normally all groups applying for special tax status would and should all get looked at to see if they were really political groups. In this case no groups received any extra scrutiny as has been accused, instead many received less than usual. No group was “singled out” or “targeted” for extra scrutiny, instead they were not given the free pass others were getting because of the overload of applicants.

The IG report concluded that it was wrong to use a group’s name as a criteria to help determine if an applicant would be checked out at a time when there were so many applications that every group was not being checked out. (However, the IG report did say that most of the groups forwarded with this criteria in fact should have been forwarded.)

Again, that’s the wrongdoing that has triggered the absolute frenzy of outrage you are hearing from … everyone. They said it was silly to use a group’s name as criteria for deciding if they should be checked out thoroughly at a time when the IRS was too busy to thoroughly check all applications as they usually do. And they said groups filing for a special tax status but suspected of political activity were then asked “unnecessary, burdensome questions.”

And again, that’s it, That’s the whole “scandal.” That’s the whole “IRS harassing conservative groups.” That’s the whole “Obama the dictatorial tyrant going after his enemies” hissy-fit. (Please read Digby’s The Art of the Hissy-Fit)

A Few Facts

Fact: The IRS is required to determine whether organizations applying for special tax status are “social welfare” groups or are instead engaged in political activity. Political groups cannot get the special tax status these groups were applying for.

Fact: Only one-third of the groups that were passed to specialists for a closer look were “conservative.” Lots of other organizations were also checked, including progressive organizations.

Fact: No groups were audited or harassed or “targeted” or “singled out.” This was about applications for special tax status being forwarded to specialists for a closer look to see if they were engaged in political activity that would disqualify them for the special tax status. This closer look is the kind of review all organization should get, but the IRS was swamped because of the flood of groups applying for a status that let them mask their donors, after Citizens United.

Fact: No groups were harmed. There were delays while the groups were checked to see if they should have special tax status. That’s it. But the rules are that they are allowed to operate as if they had that status while they waited for official approval.

Fact: The only groups actually denied special tax status were progressive groups, not conservative groups. In 2011, during the period that “conservative groups were targeted” the New York Times carried the story, 3 Groups Denied Break by I.R.S. Are Named . The three groups? Drum roll … “The I.R.S. denied tax exemption to the groups — Emerge Nevada, Emerge Maine and Emerge Massachusetts — because, the agency wrote in denial letters, they were set up specifically to cultivate Democratic candidates.”

Fact: The IRS commissioner in charge at the IRS at the time this happened was appointed President George W. Bush.

Fact: According to the inspector general’s report (p. 10) in the “majority of cases, we agreed that the applications submitted included indications of significant political campaign intervention.”

Other scandals?

The stage for this story to take off at this time was set by other “scandals” in the news. The scandal frenzy began when ABC News’ Jonathan Karl falsely reported that White House emails had “taken out” “all references to al Queda and all references to CIA warnings before the attack about the terror threat in Benghazi.” He said that these emails “show that many of these changes were directed by Hillary Clinton’s spokesperson …”

Click here to see the video of this report.

But a couple of days later CNN broke the news that the emails Karl used for his ABC report were edited by Republicans to make it appear they said these things. Parts of the edited emails Karl used were “inaccurate” and “invented” to make the administration and State Department look bad. (The word “fabricated” comes to mind.)

Next came a story that the Justice Department had looked at records of AP reporters to see who in the administration had leaked a story. The story was that an informer high up in al Queda in Yemen had delivered a new kind of bomb to target airliners, while the government was still analyzing how to detect it and the informer was still in Yemen. The Justice Department looked at call records – phone numbers only – to see if they could spot who had called AP. This became a “scandal” with accusations that the government was “wiretapping” reporters and “secretly monitoring” or “listening in” on their calls – with the “scandal” gaining traction with its conjunction with the “Benghazi scandal” story promoted by ABC.

Driving Right-Wing Themes Out To Wider Audiences

It is worth noting that Jonathan Karl is a graduate of a conservative-movement “media training” program, the Collegiate Network. The significance of this is explained by Fairness and Accuracy In Reporting (FAIR), in A Right-Wing Mole at ABC News: Jonathan Karl and the success of the conservative media movement,

Conservatives don’t just complain loudly, endlessly and inaccurately about liberal media bias. They also train right-leaning journalists to make their way into the supposedly hostile terrain of Beltway media. And one of the most famous alums of a conservative media training program is now a major star at a network news outlet: ABC’s senior political correspondent Jonathan Karl.

Karl came to mainstream journalism via the Collegiate Network, an organization primarily devoted to promoting and supporting right-leaning newspapers on college campuses – such as the Rutgers paper launched by the infamous James O’Keefe. The network, founded in 1979, is one of several projects of the Intercollegiate Studies Institute, which seeks to strengthen conservative ideology on college campuses. William F. Buckley was the ISI’s first president, and the current board chair is American Spectator publisher Alfred Regnery. Several leading right-wing pundits came out of Collegiate-affiliated papers, including Ann Coulter, Dinesh D’Souza, Michelle Malkin, Rich Lowry and Laura Ingraham.

ABC’s Jonathan Karl is also one of the reporters driving the “IRS scandal” story to a wider audience, with on-air reports like “Document Draft Shows IRS Targeted Conservative Groups,” “IRS IG Report: Targeting Conservatives Began In 2010,” “IRS Scandal Spreads Wider Than Cincinnati Officers” and more such stories, usually with inflammatory headlines and sensationalist scandal-hyping story lines.

The Daou Triangle

In 2005 Peter Daou wrote a widely-discussed paper describing how the right’s media machine works to drive false stories and smears out to wide audiences. In THE TRIANGLE: Limits of Blog Power Daou described how “a triangle of blogs, media, and the political establishment” worked together to “generate the critical mass necessary to alter or create conventional wisdom.” “…it’s still the Russerts and Broders and Gergens and Finemans, the WSJ, WaPo and NYT editorial pages, the cable nets, Stewart and Letterman and Leno, and senior elected officials, who play a pivotal role in shaping people’s political views.”

Describing a triangle of “netroots + media + party establishment = CW,” (netroots = “the base” and CW means “conventional wisdom”), Daou explained how they work together,

“…a well-developed echo chamber and superior top-down discipline, the right has a much easier time forming the triangle. Fox News, talk radio, Drudge, a well-trained and highly visible punditocracy, and a lily-livered press corps takes care of the media side of the triangle. Iron-clad party loyalty – with rare exceptions – and a willingness of Republican officials to jump on the Limbaugh-Hannity bandwagon du jour takes care of the party establishment side of the triangle. “

The Daou triangle described how Republican politicians work in concert with the echo chamber to turn false stories into “conventional wisdom.” One the progressive-aligned side? Not so much. Daou again,

Whereas rightwing bloggers can rely on their leadership and the rightwing noise machine to build the triangle, left-leaning bloggers face the challenge of a mass media consumed by the shop-worn narrative of Bush the popular, plain-spoken leader, and a Democratic Party incapacitated (for the most part) by the focus-grouped fear of turning off “swing voters” by attacking Bush. For the progressive netroots, the past half-decade has been a Sisyphean loop of scandal after scandal melting away as the media and party establishment remain disengaged.

Six years later Doau wrote an update, How the Democratic establishment shunned the left, spawned the Tea Party and moved America right. From Daou’s follow-up piece,

At the root of the problem is this: the GOP benefits from a superior communications mechanism with which to shape and reshape conventional wisdom. Faced with a public that holds opposing views, politicians can either change their positions to match the public’s views or change the public’s views to match their positions — Republicans almost always choose the latter, bolstered by a highly sophisticated framing and messaging infrastructure crafted and funded over decades.

… On the other side you have the Democratic establishment, political leaders, pollsters and strategists who, by and large, are poll addicts, chronically incapable of taking principled stands, obsessed with appealing to independent voters, hostile to progressive advocates, often just as captive to moneyed interests as their Republican counterparts. …

[. . .] So the brashest, loudest, most confident-sounding voices end up filling the knowledge void, voices that sound authoritative and principled. Rush Limbaugh, for instance. Or Sarah Palin. Sean Hannity. Ann Coulter. Bill O’Reilly.

Echoing these blaring ‘voices of authority’ are Republican politicians and the right’s online denizens. Conservative pundits and columnists then lend it all an air of seriousness. And the media, desperately seeking to appear “fair,” give an uncritical national platform to those voices. Not to mention Fox News, which pipes a steady stream of propaganda into millions of American homes. The triangle of establishment, media, and Internet comes together on the right and conventional wisdom is created. Pollsters then dutifully register that shift in sentiment and the media regurgitate it. A virtuous loop for the right.

There’s simply nothing comparable on the Democratic side.

If anything, in the debt debate, President Obama and leading Democrats were part of the Republican triangle, reinforcing GOP talking points and running roughshod over a country that didn’t even agree with the conservative position.

But The President “Admitted It”

Daou’s last point is key. While Republican politicians work with the conservative movement’s propaganda outlets, often Democratic politicians also echo Republican messages. In the case of the “IRS scandal” the President did just that, saying that what happened was “intolerable” and firing the acting IRS commissioner. This validated and propelled the false message that the IRS had “targeted” conservative outlets for “harassment” instead of refuting the accusations with facts. And this admission served to validate by proxy the other false right-wing scandal accusations about Benghazi and “wiretapping reporters.”

This is not the first time the Obama administration was taken in by false stories originating at right-wing propaganda outlets before the real facts were known. Van Jones had to leave the Obama administration after Glenn Beck accused him of being a “communist” and other right-wing sites accused him of being a “9/11 Truther.” Shirley Sherrod was fired from the Department of Agriculture after Breitbart (the same person who posted the doctored ACORN videos) posted doctored video that made it appear she had made racist remarks — even though the full video later showed the opposite to be true.

The great Brad Blog tells these stories, in IRS ‘Scandal’ Appears Nearly as Phony as Shirley Sherrod, Van Jones, ACORN ‘Scandals’,

… if you listened only to the corporate media, you — like the Obama Administration — also probably thought that the phony, trumped-up “scandals” that led to the inappropriate firing of USDA official Shirley Sherrod, the cowardly firing of White House green jobs adviser Van Jones and the outrageous federal defunding of ACORN were also the unhappy result of an endemic culture of corruption by the Obama Administration, the Democratic Party and its insidious political apparatchiks.

Those fake scandals, however, all three of them, were shams. They were eventually identified as such, though only after a great deal of harm to Sherrod, Jones and ACORN had already been done by the Democrats who fell for them and acted out of knee-jerk and cowardly fear to try and contain the perception of “scandal” which was, naturally, helped along by the very loud misreporting of “the nightly news”.

A Teachable Moment

This is a teachable moment — to us — to recognize how the right’s machine operates, to see how the corporate media and Washington Democrats react, and to learn not to get taken in by it. This is what they do. We shouldn’t fall for it — again and again. Remember, it was Washington Democrats who were taken in by right-wing smear operations, responding by defunding ACORN and censuring MoveOn.

These “scandals” are intended to distract us from the important stories that are unfolding around us, and obstruct the Obama administration from being able to accomplish anything more. For example, one unfolding story is how Senate Republicans are obstructing all attempts to get the government functioning and the economy recovering. By obstructing the National Labor Relations Board and Labor Department nominations, they are preventing the government from being able to enforce laws and rules that enable people to organize and bargain for better wages and benefits. By filibustering laws like last year’s Bring Jobs Home Act and The American Jobs Act, they are keeping us from growing the economy and rebuilding our infrastructure, and from preventing the offshoring of jobs. By using hostage-taking tactics with the debt ceiling they are forcing cuts in programs that help people and grow the economy.

This is where our attention should be focused.

PS – A Note About The Law vs. The Rules For Groups Applying For Special Tax Status

While researching this post I came across something interesting about the kind of special-tax-status organization that is allowed to do political work while masking its donors. This is called a 501(c)(4) organization, often just called a “C4.” According to the IRS,

The statute: IRC 501(c)(4) provides, in part, for the exemption from federal income taxation of civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.

The IRS regulation, or “interpretation” of the law: Section 1.501(c)(4)-1(a)(2)(i) of the Income Tax Regulations states that an organization will be considered to be operated exclusively for social welfare purposes if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community, i.e. primarily for the purpose of bringing about civic betterments and social improvements.

Note the shift from “exclusively” to “primarily.” These words have VERY different meanings. While the law says these “social welfare” organizations cannot engage in what is called political intervention, the IRS “interprets” this to mean that up to 49 percent of their activity can.

Recently the New York Times explained some of the ambiguity this difference creates, in Uneven I.R.S. Scrutiny Seen in Political Spending by Big Tax-Exempt Groups,

The tax code states that 501(c)(4)’s must operate “exclusively” to promote social welfare, a category that excludes political spending. Some court decisions have interpreted that language to mean that a minimal amount of political spending would be permissible. But the I.R.S. has for years maintained that groups meet that rule as long as they are not “primarily engaged” in election work, a substantially different threshold.

Nowhere do the rules specify what “primarily engaged” means, though there are indications that the agency has begun to re-examine the question. In March, the I.R.S. began sending out questionnaires to roughly 1,300 tax-exempt organizations, including some 501(c)(4)s, regarding their political lobbying and other activities. The agency has said it is merely seeking a clearer picture of how tax-exempt groups operate to ensure better compliance.

So all of those smear ads you see at election time, and no one knows who is paying for them? THAT is the difference between the law and this “interpretation” of the law. This “interpretation” of a law that requires groups with special tax status to operate “exclusively” for the social welfare is used to mask the corporate and billionaire donors and enable the smear ads that are destroying our civility and democracy.

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I got my first job while I was in high school through a small community organization run by Willie J. Hardy, a community activist (and later D.C. City Council member) who operated out of what legendary Washington Post writer William Raspberry described as a “tiny, hopelessly cluttered quonset hut” in the Deanwood section of Washington.

The work itself wasn’t particularly memorable, but the impact I will never forget. Instead of having to hang out at grocery stores and carry groceries for tips or go door-to-door scrounging for yard work or errands, I could earn steady money off the streets. For the first time, I had defined work hours, a timesheet to fill out, and in the end a check to cash. And that had an exponential impact on my dignity.

This summer too many teenagers will not have the opportunity I had to get a lift onto the first rung of the economic ladder. One reason is that organizations like Hardy’s that many youth could depend on for their first job long ago lost much of the federal support they need to provide these pivotal job opportunities. This year’s federal budget sequester worsens an already serious and continuing failure of Congress and the Obama administration to agree on a set of initiatives that would ensure an adequate supply of jobs to young people, particularly in communities where unemployment is highest.

It is making for a cold summer of discontent that will have a devastating impact on the lives of millions of young people and the economy as a whole.

Just in the past decade Congress has cut $1 billion from youth jobs programs, according to a report by the Center for American Progress. And that is at a time when even before the Great Recession youth unemployment was at chronic high levels: Average unemployment rates for youth between the ages of 16 and 19 had gone up from an average of 13 percent in 2000 to close to 16 percent in 2007, the year before the economy crashed. So far this year, unemployment rates in this age group are averaging 24 percent. The unemployment rate for 16-to-19-year-olds hasn’t been below 20 percent since October 2008.

There is currently a youth jobs deficit of 4.1 million; that is the number of jobs that the economy would have to produce to restore the job market to what it was in 2007, according to a Demos report on youth joblessness.

These unemployment rates remain historically high even as the labor force participation rate for teenagers has plummeted from around 50 percent in the early 2000s to an average of 34 percent in the past year. If it were not for that drop in labor force participation, the unemployment rate would have been far higher.

The same tragically high unemployment rates have rippled through the 20-to-24 age group. So far this year, unemployment rates in this age group have been averaging well over 13 percent. Their rates have been in the double-digits since May 2008. In 2007, this group was seeing rates hovering around 8 percent.

“Youth employment is at its lowest level since World War II; only about half of young people ages 16 to 24 held jobs in 2011,” notes a Youth and Work policy report by the Kids Count project of the Annie E. Casey Foundation, which calculates that at the end of 2012 6.5 million people ages 16 to 24 were both out of school and out of work.

The report paints a picture of a job market that pits young people, including college graduates, in a competition with adults for low-paid, entry-level service sector jobs. With so many more educated and more experienced workers willing to accept whatever job they can get, the hurdles for youth without at least a high-school education can be almost impossible to leap.

“At this rate, a generation will grow up with little early work experience, missing the chance to build knowledge and the job-readiness skills that come from holding part-time and starter jobs,” the report said.

At a time when the news is filled with whipped-up so-called “scandals,” one of the most serious real scandals in Washington right now is the failure of Congress and the Obama administration to come together on a jobs program – including a massive youth jobs corps program. Demos’ youth jobs report calculated that it would cost the government a net $85 billion to close the youth jobs gap through a variety of public sector initiatives, ranging from low-skilled maintenance work to higher-skilled jobs in areas from education to construction to health care. Imagine: Instead of an $85 billion sequester that is slowing down the economy and damaging lives, we could be investing $85 billion in repairing the economy and building the lives of young people through valuable work experiences that will have a lifelong impact.

It may be too late to do much for the teenagers who are now beginning to end their school years and will face a summer without serious job prospects. But Congress has still before it a fiscal 2014 budget. If House Republicans would end their stonewalling on negotiating with the Senate on the budget details, Democrats can insist that a robust youth jobs program be a priority for 2014.

This is not only a moral and economic imperative but a political one. Young people are going to remember who stood up for them and were their champions for economic opportunity, and who chose to respond to the youth jobs crisis by fighting government job-creation efforts and condemning young workers to a future of low wages and high debt.

According to a Pew Charitable Trusts study released Thursday, baby boomers and Generation Xers are increasingly unlikely to be able to afford the costs of retirement, making critical the need for a strong Social Security program to bridge this income gap. Instead of weakening the social safety net by using the “chained CPI” to reduce Social Security cost-of-living increases, this study proves that we need to increase the protections for the elderly to make sure they can maintain their standard of living.

In order to do this, Iowa Sen. Tom Harkin has put forth a bill that would strengthen Social Security, not weaken it, as President Obama’s budget have proposed. The Strengthening Social Security Act of 2013 (S. 567) would help place a bridge over the gap where America’s seniors are falling short. You can support this effort by signing this MoveOn petition, which is currently 12,000 signatures away from its goal of 100,000.

The Pew study’s findings are troubling. The study found that while early baby boomers may be in a better position to have a secure retirement as beneficiaries of the housing bubble and dot-com boom of the 1990s and early 2000s, those born after 1955 would have a much tougher time trying to secure their retirement. While most financial planners suggest being able to replace 70 percent of your earned income during retirement, the Pew study found that many late baby boomers will only be able to replace 60 percent of their current income, and Gen-Xers will only be able to replace half of their pre-retirement income.

The Pew study found that early baby boomers might well be the last generation to be able to afford a secure retirement, with late baby boomers and Gen-Xers accumulating too much debt from credit cards, mortgages and student loans to retire securely. Gen-Xers, who did not have the most solid financial foundation to start, took the hardest hit from the Great Recession, losing nearly half of their wealth in the crash.

With these findings, and the fact that an increasing number of seniors rely on their Social Security checks for between 50 percent and 90 percent of their income, it is easy to see that the chained CPI is going to hurt millions of seniors. The chained CPI uses the substitutions for cheaper items consumers make in response to inflation to come up with a cost-of-living increase that is a bit lower than the standard consumer price index. But the chained CPI does not take into account the items that comprise a higher share of spending for seniors, such as health care and housing, that tend to have a higher inflation rate thanconsumer goods generally. Researchers estimate that chained CPI would mean an average benefit cut of over $1,000 a year for someone who retires at age 65 and lives to be 95. Clearly, with so many people having a decreased ability to enough for retirement, now is the exact wrong time to be cutting Social Security benefits.

While the chained CPI would cut Social Security benefits to seniors, the Strengthen Social Security Act of 2013 would provide a form of relief. According to Senator Harkin’s office, the bill would:

• Strengthen Benefits by Reforming the Social Security Benefit Formula: To improve benefits for current and future Social Security beneficiaries, the Act changes the method by which the Social Security Administration calculates Social Security benefits. This change will boost benefits for all Social Security beneficiaries by approximately $70 per month, but is targeted to help those in the low and middle of the income distribution, for whom Social Security has become an ever greater share of their retirement income.
• Ensure that Cost of Living Adjustments Adequately Reflect the Living Expenses of Retirees: The Act changes the way the Social Security Administration calculates the Cost of Living Adjustments (COLA). To ensure that benefits better reflect cost increases facing seniors, future COLAs will be based on the Consumer Price Index for the Elderly (CPI-E). Making this change to Social Security is expected to result in higher COLAs, ensuring that seniors are able to better keep up with the rising costs of essential items, like health care.

These changes would soften the blow that many Americans’ savings took during the Great Recession, and provide a stronger program of relief when we need it the most.

President Franklin Delano Roosevelt, after signing the Social Security Act of 1935, said, “We can never insure one-hundred percent of the population against one-hundred percent of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”

Roosevelt had the foresight to see that America needed a safety net to protect its people from the excesses of the banks and Wall Street. From the Great Depression was born Social Security. Now, instead of recognizing that the wound from the Great Recession has not healed, there has been an attempt to short the American people by cutting a program that is increasingly important to seniors. Now that we know that many Americans will be unable to support themselves in retirement, we must not cut the program designed to insure the population against the hazards and vicissitudes of life, but strengthen it.

The deficit is now down 60 percent as a percent of gross domestic product. It is down more than the deficit hawks Alan Simpson and Erskine Bowles asked for. This rapid reduction is seriously hurting the economy and jobs, but demands for cuts continue. It is time for Congress and the President to “pivot” to focusing on our real problems: the jobs gap, the wage gap and the trade gap.

Mythical Deficit Problem Solved

The “deficit problem” is man-made. When Bill Clinton was president we were paying off the debt. George W. Bush turned Clinton’s budget surpluses right around, calling deficits “extremely positive news” because they would later force cuts in government. Ronald Reagan’s “strategic deficits” began a strategy to make the borrowing appear so bad that the public would be panicked into allowing cuts in the things government does to make our lives better – so the wealthy few could have even more wealth and power. (Reagan tripled the national debt, Bush doubled it again.)

So after Bush we had a problem. When ‘W’ left office the budget deficit was $1.4 trillion. Then after Obama took office Wall Street and the right started terrifying the public about deficits and outlining their “solutions”: Cut government, cut regulation of the giant corporations, cut entitlements, cut investment in infrastructure, privatize public assets, cut the safety net, etc… Cut the things that government does to make our lives better (government spending) and cut the things government does to protect us from the immense power of the insanely wealthy and their giant corporations.

But something got in their way. The deficit started coming down before all of the “solutions” could be forced on us. The deficit is now down 60 percent as a percent of GDP from the level Bush left behind (see the chart in this post).

The 2010 “Simpson-Bowles” plan called for austerity to lower our budget deficit to 2.3 percent of GDP by 2015. But the latest CBO budget projections say the deficit will be 2.1 percent of GDP in 2015.

Ezra Klein, in “CBO says deficit problem is solved for the next 10 years,” writes, “…the debt disaster that has obsessed the political class for the last three years is pretty much solved, at least for the next 10 years or so.”

Problem solved – austerity and the sequester can go away. For those of us outside Washington and in the real world we’ve been saying all along this isn’t the problem, the problem is that there aren’t enough jobs, people’s wages are stagnant or falling and the country is losing more than a billion dollars a day from bad trade deals. We have real problems to solve, so let’s get to it. Let’s address the job gap and the wage gap and the trade gap.

The mythical budget deficit is problem gone; let’s worry about our real problems.

The Economy Can’t Recover Without An Emphasis On Fixing Jobs, Wages And Trade

The economy can’t recover until housing recovers. Housing can’t recover until people can afford to buy houses. People can’t afford to buy houses until they can get jobs, and those with jobs can’t afford to buy houses until wages go up. Wages cant go up until the trade problem is fixed. And the trade problem is killing jobs.

Explained a different way:

1. The economy can’t recover until housing recovers.
2. Housing can’t recover until people can afford to buy houses.
3. People can’t afford to buy houses until they can get jobs,
4. and those with jobs can’t afford to buy houses until wages go up.
5. Wages cant go up until the trade problem is fixed.
6. And the trade problem is killing jobs.

They say that housing is the key to recovery from recessions. Forbes: Buffett Says Housing Is Key To Recovery, USA Today: Housing holds key to full job growth rebound, Time: Can the Economy Get Healthy Without a Housing Recovery? CAP: A Strong Housing Market Is Critical to Our Economic Recovery and so on. But on NPR Monday, in Is The Housing Recovery Just A Mirage?, they made the key point: “What we really need to do is focus on jobs and unemployment to get people able to have the money to spend on a house.”

Yes, jobs are being created. We were losing 800,000 jobs a month when President Obama took office, and now we are gaining just enough jobs each month to keep up with and get a little bit ahead of growth in the labor force. But there are not enough new jobs and too many of the new jobs are low-wage jobs. So the middle class is still shrinking, and people can’t afford to buy houses to get a real housing recovery underway.

We need more jobs. We have a jobs emergency.

The Jobs Gap

The Hamilton Project explains the jobs gap as “the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.” They say:

If the economy adds about 208,000 jobs per month, which was the average monthly rate for the best year of job creation in the 2000s, then it will take until April 2020 to close the jobs gap. Given a more optimistic rate of 321,000 jobs per month, which was the average monthly rate of the best year of job creation in the 1990s, the economy will reach pre-recession employment levels by December 2016.

One more thing: “As of April, our nation faces a “jobs gap” of 10.0 million jobs.”

10 million jobs still needed just to catch up to where we should be. That is huge.

Where did the jobs go?

The Trade Deficit

According to economist Dean Baker the trade deficit represents American consumers spending their money overseas rather than here. And that means those dollars are “creating jobs” there, not here. His point was driven home last year when he wrote that, “The main factor leading to job loss [in the 2000s] was the growing U.S. trade deficit.”

The trade deficit represents millions of jobs. That more than $1 billion per day we send out of the country represents how many jobs at $50,000 per year? That’s good jobs sent out of the country every day of every week of every year. That is the trade deficit.

We can start by fixing currency manipulation. A “strong dollar” is a lot of the problem because it means things made here cost more and things made elsewhere cost less. So we aren’t able to sell as much and we are buying more than we should.

A February report from the Economic Policy Institute, “Reducing U.S. trade deficit will generate a manufacturing-based recovery for the United States and Ohio,” written by Robert E. Scott, Helene Jorgensen, and Doug Hall, looked at the job-cost of the portion of the trade deficit that is caused by currency manipulation. The report concludes that fixing just this problem would reduce the trade deficit by between about $190 billion and $400 billion over the course of three years and bring us between 2.2 million and 4.7 million U.S. jobs. Doing this would lower the unemployment rate between 1 percent and 2.1 percent and increase GDP between 1.4 percent and 3.1 percent.

That is just the portion of the trade deficit caused by currency manipulation and you can see the immense cost. Imagine if we took that step as well as other steps to eliminate the trade deficit.

The Wage Gap

A trade deficit also means that our workers not only face high unemployment but are also pitted against exploited workers in countries where those workers don’t have a say in how things are done. This inevitably drives down wages as employers move jobs offshore and remaining workers compete for jobs, all the while afraid to make waves and ask for raises lest their job be shipped out of the country as well.

American workers face high unemployment and then on top of that they face competition from people who are paid a fraction of what Americans earn. The trade deficit represents a significant contributor to this problem.

Fixing the trade deficit also fixes some of the wage gap. But we also need strong unions and strong government to combat the power of the giant corporations and demand that regular working people a fair share of the proceed of our economy.

The “Sequester” And Other Budget Cuts Just Make Things Worse

On top of this, our own government is aggravating the problem, with this wealthy-donor driven focus on deficit reduction instead of job expansion.

For example, Politico: Sequestration gets real for furloughed workers,

Sequestration went from wait-and-see to here-it-is Tuesday when the number of furloughed federal workers hit an eye-popping 820,000. Defense Secretary Chuck Hagel told 680,000 civilian workers they’d have to stay home 11 days without pay. About 140,000 workers from other government agencies have already been given furlough notices.

The number is expected to grow …

The deficit is not a problem. The Simpson-Bowles target has been reached and passed. The austerity is harming the economy and hurting people. Congress and the President should pivot to jobs. They need to fix the jobs gap, the wage gap and the trade gap, and if they continue to ignore these real problems it is up to We, the People to apply the necessary pressure to make them do it.

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A continuing series
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Tell your member of Congress

Washington remains focused on a “deficit problem” when there is no deficit problem. According to the Congressional Budget Office (CBO) the 2013 budget deficit will be down 60 percent as a share of gross domestic product from President Bush’s fiscal year 2009 deficit (from 10% to 4% of GDP). The deficit is falling at the fastest rate since the end of World War II. But Congress keeps cutting which keeps the jobs/economy/wages downturn going.

Congress should just repeal the sequester – we don’t need it and it is harming the economy. We need our government to increase spending to get us out of this economic quagmire and return to full employment.

This chart shows the deficit as a percent of GDP:

Previously noted:

February 26: Deficit Is Falling Dramatically, But Only 6% Know That

April 23: Deficit Falling Even More Dramatically, Few Know It

Also see May 15: Sequester Actually Increases Spending. So Repeal It.

Join CAF and Daily Kos in telling members of Congress: Repeal the sequester!

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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

The Senate campaign in Massachusetts will be close and hard fought.  Ed Markey, the winner of the Democratic primary, knows he has to run a bare-knuckled, knock down, full bore campaign to win.  So it is notable that one of the first appeals to his supporters is to enlist them in telling the president that they oppose his proposal to cut Social Security benefits through the so-called chained CPI.   Markey clearly realizes the president’s proposal is electoral poison — and wants to get ahead of any Republican effort to link him to the president on this issue.  Democrats across the Congress would do well  to take note.  Here’s the Markey letter

This week, President Obama will travel to Austin, Texas to call for action on jobs. The proposals the president put forth in his State of the Union address – investing in infrastructure, expanding preschool, bolstering manufacturing assistance centers, raising the minimum wage – have been blocked in the Congress, and disappeared from the public debate.

The president wants to revive his jobs agenda while still touting the economic recovery. In his commencement address at Ohio State University last weekend, he reassured students:

“While things are still hard for a lot of people, you have every reason to believe that your future is bright. You’re graduating into an economy and a job market that is steadily healing.”

The White House points to 38 straight months of private sector jobs growth, but in reality, jobs have been largely left behind in the recovery. The stock market is setting new records, but over 20 million people still are in need of full-time work. The labor force participation rate – the percentage of workers who have a job or are looking for one – is down to levels not seen since 1979. The jobs being created pay less with fewer benefits than the jobs that were lost.  As a result, inequality is still growing; the middle class is still sinking. And young people are graduating into one of the worst jobs markets since the Great Depression.

In many ways, the fact that the economy is “steadily healing” back to the old economy is the problem, not the solution. That economy featured growing inequality and a declining middle class. It was built on debt and speculative bubbles. Trade deficits hit new records as multinational companies shipped good jobs abroad.

In his first year in office, President Obama argued that we couldn’t go back to that economy and shouldn’t want to. We had to build a new foundation for growth. But in fact, gridlock in Washington has virtually ensured that we would drift back into the old economy.

Once more the Federal Reserve offers the only ballast for the economy by holding interest rates at record lows. The big banks have emerged from the recession bigger and more concentrated than ever. That virtually ensures a reach for increasing risk as we wait for the next bubble. The trade deficit is back over $1 billion a day, despite the natural gas explosion that reduces U.S. dependence on imported oil. The assault on unions has escalated. Part-time minimum-wage jobs proliferate. The richest 1 percent of the country captured a staggering 112 percent of the income growth in the first two years coming out of the recession. The 99 percent on average lost ground.

It will take a dramatic change in policy to build a new foundation for growth in this economy. The president’s proposals are but modest markers on the path forward, but barely get notice in a Washington still focused on a debate about austerity – about what to cut and how deep. This will only change if citizens organize independently and demand that Washington move. Voters will have to identify and punish those legislators who are standing in the way.

The core elements of a jobs agenda for the U.S. now are not particularly controversial. Consider a three part program:

Smart Investment

With interest rates at record lows and the construction industry still moribund, we should be grabbing this opportunity to rebuild our aged infrastructure – everything from airports to sewer systems to the electric grid – to world-class competitive standards. This is vital both for public health and for the economy. The Federal Reserve is now spending $45 billion a month buying mortgage-backed securities. This bolsters the banks and helps keep interest rates low, but it only feeds the casino economy. Why not create an infrastructure bank, and have the Federal Reserve buy its bonds? This wouldn’t add to the national debt, would build things we need and put people to work.

Any smart investment agenda would also insure that we are providing the basics in education to every child – infant nutrition, preschool, smaller classes in the early grades, after school and summer enrichment programs, good teachers and affordable college. Instead we are laying off teachers, locking kids out of Head Start and making college increasingly unaffordable. No nation can afford to waste a generation.

An American Global Strategy

The world cannot afford to go back to the unsustainable imbalances in trade that contributed directly to the financial bubble and collapse.  The nation cannot afford to let multinationals define our global strategy.  We should announce that we will balance our trade over the next five years. That will put multinationals on notice that if they want to sell in the U.S. they should build in the U.S. We should crack down on currency violations and treat mercantilist nations as they treat us.

Balanced trade should be accompanied by an aggressive industrial policy to capture a lead in the green industrial revolution that will sweep the world. We should be expanding, not cutting investment in research and development. We should seed regional renewable energy strategies, set renewable energy standards that will accelerate changes that are already beginning. The U.S. should be leading, not lagging, in the industrial frontiers, from biotechnology to nanotechnology to 3D printing.

Fair Share Strategy

Finally, we need to insure that workers capture a fair share of the profits and productivity that they help to create.  Lift the minimum wage and index it to inflation. Empower workers to organize and bargain collectively. Pass immigration reform to bring millions out from the shadows. End perverse CEO compensation policies that give executives million-dollar incentives to plunder their own companies.

This isn’t rocket science.  It isn’t comprehensive.  It is a sensible beginning to creating good jobs and reviving a middle class.  We can pay for it through progressive tax reform, with particular focus on the trillions now sheltered abroad to avoid taxation.

The president’s plans provide markers on this path. He’d invest in preschool and infrastructure, provide assistance and tax breaks to domestic manufacturers, raise the minimum wage. What’s clear is that “recovering” the old economy is a path to ruin. The broad middle class that made America exceptional will disappear. A nation of haves and have nots, of bubbles and busts, of private wealth and starved public services will be nasty, brutish and without hope.

At this point, Washington isn’t debating how to create jobs and rebuild the middle class. It is arguing only about who bears the pain in the decline. This will change only when citizens demand it. The only question is how much damage will be inflicted before that begins.

Cutting Meals On Wheels doesn’t save the government a dime, it costs $489 million a year. Cutting IRS obviously increases the deficit because it lowers tax revenue. Other cuts also increase spending. All obviously hurt the economy. Tell me again, what’s the justification for this? Repeal this foolish and unjustified sequester.

A continuing series
Read the full series
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The sequester is a series of across-the-board budget cuts (except not for the FAA when it affects business flyers). This year $85 billion is cut from government spending. This not only takes $85 billion out of the economy, it takes it out from programs where the spending was set up to maximize the benefit to We the People. (That is the point of government spending.)

A few examples:

Meals on Wheels: The Center for Effective Government (CFFEG) reports that this year’s $10 million sequester “savings” on the Meals on Wheels program “will be dwarfed by at least $489 million per year in increased spending on Medicaid, both this year and in each subsequent year that sequestration remains in place.” By helping elderly people stay at home, the program keeps them from needing to move to nursing homes rather than home care. “The average cost to Medicaid of nursing home care per patient is approximately $57,878 annually.” “Nationally, according to a survey by the Administration on Aging, as many as “92% [of enrollees] say Meals on Wheels means they can continue to live in their own home.” Click through for more, calculations, etc.

IRS Cuts: Think Progress reports, in Automatic Cuts To The IRS Will Increase The Deficit, that IRS cuts could cost tremendously more than the sequester cuts “save.” For example, every $1 cut from enforcement, modernization, and management system costs $200.

In April, the agency announced it would furlough more than 89,000 employees to cope with sequestration cuts. Operating at normal capacity, the agency collected $2.5 trillion in government revenues last year, $50 billion from enforcement activities. But reducing operations will bring in less money. Every dollar invested in its enforcement, modernization, and management system reduces the deficit by $200, and every dollar it spends on audits, liens, and seizing property from tax evasion nets $10. One estimate calculated that furloughing just 1,800 enforcement positions could mean losing $4.5 billion in revenue.

Cuts the economy: According to USA Today, in Hidden costs of sequestration: Save now, spend later, slowed economic growth this year alone means that $85 billion of cuts costs the government $31 billion, so it really only cuts $44 billion. And the increased spending due to lost jobs, increased health care spending, etc. add to that,

Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee on Wednesday, the abrupt spending cuts this year could slow economic growth by 1.5 percentage points, which would reduce tax revenue. “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions,” he said.

See also NY Times, U.S. Spending Cuts Seen as Key in Slowing Growth.

Costs Jobs: The sequester is expected to cost up to 750,000 jobs. The resulting loss of income tax revenue and increases in unemployment compensation and safety-net programs is only the beginning of the cost of these foolish cuts. This loss ripples out into the larger economy with things like the loss of sales at local grocery and shoe stores and restaurants.

Scientific research: The future cost of cutting back on scientific research is not measurable, and will not be low. What if the Internet had not been invented, or had been invented by a private company and therefore held hostage for the profit of a few?

Medical research: What is the future cost in Medicare and Medicare spending from cutting back now on medical research? What is the cost of losing the researchers who can’t get funding?

Even defense cuts: Because cuts in the military budget are “across-the-board” and unplanned, so contract termination fees and resulting litigation, future cost of maintenance cutbacks and other new costs will actually increase future spending in this area much more than current cuts “save.” From the previously-referenced USA Today story,

…if you don’t replace the O-rings in a system and continue to use it, you’re going scruff up the cylinders. And now, instead of replacing O-rings, you’re overhauling an engine,” said Ron Ault, president of the Metal Trades Department of the AFL-CIO, which represents shipbuilding unions. “It’s going to cost millions extra. There’s not one penny of savings in this. It’s going to drive costs through the roof.”

In some cases, canceling contracts could result in termination costs for the government, said Alan Chvotkin, executive vice president of the Professional Services Council, a trade group of government contractors. Sorting out who pays for those costs could result in expensive litigation, he said.

No Justification For Sequester Or Other Cuts

The justification for the sequester was that “government spending is out of control,” that the deficit is too high and that economic growth is hurt by government debt. But these are only a few examples of how these foolish cuts actually increase government spending. The deficit is already down by 50% (as a share of the economy) from the levels Bush left behind. And the academic study that claimed that government debt hurts growth has been debunked because it not only used data selected to make this point, but because a spreadsheet error led to the wrong conclusions. So the justifications collapse on simple examination.

Repeal the sequester now. We need the government increasing spending to get us out of this economic quagmire and return to full employment.

Join CAF and Daily Kos in telling members of Congress: Repeal the sequester!

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Republicans continually drone on about how “government spending” is so bad… Infrastructure, medical research, education, law enforcement… bad … “out of control” … “take money out of the economy” … etc. And so because we have to do something about “out of control spending” we have this sequester.

A continuing series
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All of the stated reasons for the sequester have gone away:

• The deficit is down by half as a percent of GDP;
• The study that justified it turned out to have the conclusions completely wrong;
• Europe’s experiment with cutting government to boost the economy has shown this to be ass-backwards.
• History, on the other hand, has shown that we need to boost government spending and hiring to grow the economy during recessions and depressions.

But hey, Republicans are not going to let facts get in the way of causing human suffering and economic decline. Even many Democrats say “we need balanced deficit cutting” instead of hiring and stimulus. And here we are.

So, how’s that sequester going? Here are a few headlines:

Sequester Begins to Shut Down Medical Research …

Science and research hit hard by US sequester cuts …

HuffPo: Sequester Impact On Medical Research Results In Cuts To Promising Projects

… a group of 22 graduate students and researchers have been exploring ways to help repair the heart after it experiences trauma. … The National Health Institute informed the group at Temple that the $1.5 million grant funding their research would be reduced by ten percent, a consequence of the federal budget cuts known as sequestration. …

At the University of Kansas, … has been left in limbo after sequestration forced a delay … likened the situation to “closing off the vein.” … projects that enhance social and emotional development for children with severe behavior problems or autism and help educators understand how to work with children with or at risk for disabilities. … Greenwood said he would look to foundations and private philanthropy to help fill the void left by sequestration.

Bloomberg: Tumors on Ice as Budget Impasse Freezes Medical Research,

Rebecca Riggins, a Georgetown University cancer researcher, has had to freeze her work amid federal funding cuts brought on by sequestration. Literally.

[. . .] Joan Brugge, chairwoman of the cell biology department at Harvard Medical School, says the cuts are affecting experienced researchers in addition to scientists just starting out.

… “When you take what already has been an extremely tough environment for research and development funding and overlay sequestration on top of that, it turns a bad situation into a historically bad situation,”

PhysBizTech: Sequester could doom funding for promising cancer research

Across-the-board budget cuts ― known as sequestration ― took effect on March 1, and their potential impacts are just starting to become clearer. For cancer patients and their families, these cuts spell despair …

… Not only will sequester cuts lead to fewer prospective research projects being funded, fewer research jobs and less economic activity, but they may cut short promising genetic research initiatives that are leading to drug development for brain tumors, ovarian cancer, metastatic melanoma and cancers caused by genetic mutations.

… Cutting cancer research now hurts the nation both medically and economically.

There is no reason for this sequester. Just repeal it. Jeeze!

Tell your member of Congress: Repeal the sequester.

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