Another aging highway bridge falls, cars and people in the water… This problem was well-known and urgent years ago! But Republicans block it, saying fixing our infrastructure is “more government spending.” Fixing our infrastructure is also jobs and economic growth. And after you fix or build a bridge you have the bridge.

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In Seattle another aging bridge has fallen. The American Society of Civil Engineers report America’s 2013 Infrastructure Report Card gives us a D+ and says we are $3.6 trillion behind in infrastructure maintenance. And this is just to catch up, not get ahead.

This work has to be done at some point but today we have a 10 million person employment gap. And today we can get the money to do this at close to zero percent. We have the double need — it needs doing and we need jobs — and we can get the money almost free.

The hiring and purchase of American-made materials involved in fixing the infrastructure would bring millions of jobs. It would boost the economy, increase the tax revenue and decrease safety-net spending.

Fix Or Build A Bridge: You Have The Bridge

And did I mention that when we fix or build a bridge we have the bridge? After we have updated the roads, bridges, electrical systems, dams, airports and everything else that means our economy is much more competitive and efficient. So the benefits continue. Compare that to the supposed benefits of tax cuts. After the tax cuts you are left with the debt they cause and less revenue with which to pay it off.

This is a trifecta of the urgent need to fix our aging infrastructure matched with all the good that it will do for us to do this now.

WTF is the matter with Republicans, that they won’t even let us maintain the country’s infrastructure?? They call it “just more big-government spending.” In fact they force this sequester of cuts, and demand even more cuts! (More here, here, here, here, here, here, here.)

In this mornings post, Washington’s Literal Sinkhole, And Our Idiotic Fixation On Deficits — written before the bridge collapse — Bob Borosage laid it out,

There is an idiocy about our current national politics that is simply stupefying. We are sitting idly, watching, and suffering, as our nation disintegrates into a run-down backwater. Our airports are a global disgrace. Our railroads, broadband, energy grid are all outmoded by international standards. A bridge falls every other day. Our sewage systems are overwhelmed by normal use, and collapse in the extreme weather that has become the national norm. Sinkholes now are becoming a life-threatening peril.

At the same time, over 20 million people are in need of full-time work.

1) Urgent need to fix the infrastructure.
2) Urgent unemployment problem.
3) Fixing #1 fixes #2.
4) We can get the money for free.
5) It isn’t “government spending” it is investment in ourselves because after we fix or build a bridge we have the bridge and all the things that does for the economy.
6) WTF?

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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 “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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The “sequester” – mindless, across-the-board spending cuts designed purposefully to be abhorrent to both political parties – now seems likely to go into effect on March 1. If not reversed, we will see the degrading of all government services from food inspection to airport controls, as mass furloughs – 20-30 day forced absences without pay – shudder agencies.

The sequester cuts added to spending cuts and tax increases already scheduled will slow growth and cost jobs, according to the Congressional Budget Office and most economic analysis. Government austerity has already contributed to the worst recovery in post-World War II history. In Europe, austerity has driven the economies back into recession, with the countries enforcing the harshest cuts suffering the most.

Why would the U.S. repeat this folly, despite warnings from the International Monetary Fund and Federal Reserve officials? Every calamity has many authors – Obama’s premature turn to deficit reduction in 2009, the Tea Party zealots, a hapless and clueless Republican congressional leadership and more.

Pete Peterson’s Mighty Wurlitzer

One major contribution comes from the money and monomania of Pete Peterson, a Wall Street billionaire who has committed about half a billion bucks rousing hysteria about deficits and debt. Today, The Nation magazine and the Center for Media and Democracy are releasing an expose of Peterson and his latest front, the Fix the Debt coalition, with a new resource detailing the background at the center’s SourceWatch.org.

Peterson, Nixon’s former Secretary of Commerce, says that he “has been wailing about this (debt and deficits) since 1980.”

Peterson made his billions on Wall Street, taking the private equity firm Blackstone Group public, after benefiting from the obscene “carried interest tax deduction” that allows hedge fund billionaires to pay lower tax rates than their chauffeurs. (His former partner, Stephen Schwartzman, famously labeled the effort to end this obscenity as a war, the equivalent of “when Hitler invaded Poland.”)

Peterson has three relentless harangues. First that the pillars of family security – Medicare, Medicaid and Social Security – pose a “catastrophic threat” to the country must be cut deeply. Peterson scorns Social Security and Medicare as providing “a publicly subsidized vacation” for “the last third or more of one’s adult life.”

Second, Peterson wants to move from income and corporate taxes to far more regressive consumption taxes. If he could, he’d eliminate corporate and income taxes and replace them with sales and gas and sin taxes, with adjustments to “protect the poor.” At a time of extreme Gilded Age inequality, this is a recipe for hiking taxes on the middle class while lowering them on the rich.

Finally, Peterson has been warning that deficits and debt would cause a “Pearl Harbor moment” for years. Ironically, he never raised a murmur about the housing bubble or the Wall Street wilding or the global trade imbalances that eventually blew up the economy, led to the Great Recession. (He got his money out early.) Nor did the fact that the collapse came when the deficit was less than 2 percent of gross domestic product and the debt to GDP ratio was falling cause any change in his views. Instead, he has sought to use the crisis to force through his utterly unpopular views.

Peterson has thus far committed about $500 million of his fortune to the campaign on deficits, paying for a mighty Wurlitzer of propaganda.

He has funded ersatz national “town meetings,” sprinkled think tanks right, center and left with grants, sponsored national conferences and events. He’s seeded what the National Journal calls “a loose network of deficit hawk organizations that seem independent but that all spout the Peterson-sanction messages” on deficits – including the Concord Coalition, the Committee for a Responsible Federal Budget, America Speaks, and Comeback America.

He launched his own news service – The Fiscal Times – feeding articles to increasingly cash-strapped newspapers. He purchased both ad campaigns and the tendentious “I.O.U.S.A” documentary that received national screening. He sponsored bipartisan commissions to develop debt reduction plans, including partnering with and helping to staff and promote the President’s “bipartisan commission,” known for the co-chairs, Alan Simpson and Erskine Bowles.

The Drumbeat $500 Million Can Buy

Bowles and Simpson serve as co-chairs and co-founders of Peterson’s latest front, the Fix the Debt Coalition, which rounded up 127 CEOs and a $60 million budget, retaining at least four major public relation firms, to drive the campaign for a “grand bargain.”

Despite the consultants, “Fix” has exhibited a hilariously tin ear. They trotted out Goldman Sachs CEO Lloyd Blankfein to lecture Americans on “lowering their expectations” and accepting less in Social Security and Medicare. Who better to argue for “shared sacrifice” than the head of a Wall Street firm that helped blow up the economy and got bailed out by taxpayers while its leaders pocketed the millions they made along the way?

Blankfein was followed by David Cote, the CEO of Honeywell, calling on Americans to be responsible about funding our public pension plan. Who more qualified, as the Institute for Policy Studies pointed out in a scathing report, than a CEO with $78 million dollar personal retirement plan tucked away, while his company’s employee pension plan is underfunded by $2.8 billion?

But the egregious gaffes aren’t as telling as the incessant drumbeat that $500 million can buy. So last week, Fix the Debt helped trot out the tireless minstrels of austerity, Alan Simpson and Erskine Bowles, to issue dire warnings once more of the damnation to come from deficits, while peddling a new “bipartisan” plan on deficit reduction.

This plan called for even more deficit reduction over 10 years than the last plan the co-chairs promoted. (There was never a Simpson-Bowles commission plan, since the co-chairs’ draft was rejected by the commission.) Instead of a one-to-one ratio of new revenue to spending cuts, the co-chairs now call for three times as much in spending cuts than in increased revenue.

But they stayed true to the Peterson principles. They would raise the eligibility age for Medicare and the retirement age for Social Security, reducing that “paid vacation.” They’d cut Medicare and Social Security benefits. Tax reform would close loopholes – no doubt hitting employer-based health care plans – but use the money largely to lower top tax rates for individuals and corporations. And they call for deeper ceilings for cuts in domestic and military spending, ducking the question of what programs would take the hit.

Get The Focus Right

Following this advice would surely weaken the already faltering recovery and cost jobs. It could easily drive the economy back into recession. Simpson and Bowles and the Peterson claque ignore the fact that the deficit is already falling faster than any time since the demobilization after World War II. They admit that soaring health care costs are what drive the scary long-term debt projections. But they fail to note that the rise of these costs has already slowed. The Congressional Budget Office has already reduced the projected costs of Medicare over the next decade by more than the cuts demanded in the original Simpson-Bowles report.

What we need is a focus on putting people back to work, and a strategy to make this economy work for working people. And continued efforts to fix our health care system – starting with using Medicare’s purchasing power to lower prescription drug prices, or by setting up a public option in Obamacare to compete with private insurers and limit their rip-offs.

Instead, Pete Peterson’s $500 million has helped to focus America on how to “fix the debt” rather than how to fix the economy and put people to work. And he’s redoubling his efforts to make America’s most vulnerable – its seniors, its disabled, and its retired veterans – pick up the tab for cleaning up Wall Street’s mess. And if he gets his way and forces a “grand bargain” and even harsher austerity, his $500 million just may end up purchasing a new recession.

President Obama today warned that the “brutal” budget cuts in the looming “sequester” — the latest Republican-manufactured hostage-taking crisis — will take a “meat-cleaver” to government and cost “hundreds of thousands” of jobs. He proposed eliminating tax loopholes and … other budget cuts … as a solution, calling it a “balanced” approach. He has even offered up cuts in Medicare and Social Security.

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.

The Sequester — 750,000 Jobs Lost

The “sequester” is yet another manufactured “crisis.” This time a series of harsh budget cuts will occur at the end of February unless House Republicans decide not to do that. This “crisis” is the result of a bargain that came in response to the “fiscal cliff” hostage-taking, manufactured crisis, which was the result of the “debt-ceiling” hostage-taking, manufactured crisis.

According to The Washington Post, in Obama presses Congress for stopgap sequester fix, the cuts “could be devastating for government contractors, civilian employees and the overall economy”:

While the reductions — the first of $1.2 trillion set to occur over a decade — may start March 1, they would only be felt over time. The cuts ultimately could be devastating for government contractors, civilian employees and the overall economy, which economists say could lose 750,000 jobs as a result.

Economy Reigniting

What effect will yet another manufactured “crisis” — this one costing as many as 750,000 jobs — have on business and consumer “confidence” and optimism? This could nip a reigniting economy in the bud. John Cassidy sums it up at the New Yorker’s Rational Irrationality, in ECONOMIC OPTIMISM VS. THE SEQUESTER,

Most Americans haven’t realized it yet, but there’s a good deal of positive news about the economy. Four years after the nadir of the Great Depression, disposable income, consumer spending, and corporate investment are all expanding at a decent clip. Employers are hiring more workers, and, perhaps most importantly, the housing market, which has been the biggest drag on the recovery, is finally turning around.

[. . .] As the economics team at Goldman Sachs pointed out last week, the household debt-to-income ratio is now back to its 2003 level—a little over a hundred per cent. And with interest rates at historic lows (thanks to the Fed), the amount of money that people have to devote to interest and principal repayment has fallen sharply. In 2007, households were paying close to fifteen per cent of their incomes on servicing their debts; today, it’s about 10.5 per cent—the lowest figure since 1983.

With the value of people’s investments in stocks and real estate both rising, all of this means that the underlying outlook for consumer spending, which makes up more than two-thirds of G.D.P., is pretty good.

… Unfortunately, we can’t avoid the fiscal gridlock in Washington, which is now the single biggest threat to the recovery.

Deficit Already Falling Dramatically

The budget deficit is already falling at the fastest rate since the end of WWII. In fact that there would be no deficit at all except for the Bush tax cuts, Bush doubling of the military budget, the Bush hand-out to drug companies in the Medicare Prescription Drug, Improvement, and Modernization Act, and the after-effects of the Bush crashing of the economy. Remember, we had a budget surplus before Bush. (See Did Bush Leave Us Bankrupt, Corrupt, Ungovernable?)

The economy is reigniting and the deficit is already falling dramatically. Why give in to this manufactured “deficit” scare and cut the things We, the People do to make out lives better — also known as government? What about taking the case to the people and demanding that we just drop this whole sequester idea?

Just repeal the sequester. (See 14 Reasons To Repeal The Sequester.)

President Proposes … Cuts?

But instead of proposing just not doing the sequester at all, the President has proposed what he calls a “balanced” approach of further cutting deficits by eliminating tax loopholes for corporations and the wealthy and … in spite of election results and every single poll … cuts in programs that We, the People absolutely depend on.

To avert the sequester, President Obama offered budget cuts and closing tax loopholes. Yahoo: Obama: ‘Meat-cleaver’ sequester will savage jobs,

Obama has repeatedly called for a blend of spending cuts chiefly affecting entitlement programs like Medicare and new tax increases achieved by targeting loopholes that chiefly benefit the wealthy and rich industries.

Republicans Insist On … Tax Cuts?

Meanwhile Republicans insisted on tax cuts:

“We should close loopholes and carve-outs in the tax code, but that revenue should be used to lower rates across the board,” the Republican leader said.

The right answer is not to negotiate at all with hostage-takers. That only encourages more hostage-taking, and muddles the public’s understanding of just who should be held accountable for what.

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Well, there they go again. Less than a week after its chief economist apologized for wrongly imposing austerity on European nations – hey, sorry about that, unemployed millions! – the International Monetary Fund is misleading another country into the miasma of austerity economics: ours.

The IMF released a report that rates nations on their “profligacy” and places the United States at or near the top. Among other things, this demonstrates that their grasp of language rivals their grasp of economics.

To be “profligate” means that you’re “wildly extravagant” and “completely given up to dissipation and licentiousness.”  Synonyms for “profligate” include ”debauched,” “degenerate,” “depraved,” “dissipated,” “dissolute,” “iniquitous,” “lax,” “lewd,” “libertine,” “licentious,” “loose,” “promiscuous,” “reprobate,” “shameless,” “unprincipled,” “vicious,” “vitiated,” “wanton,” “wicked,” “and “wild.”

I don’t think they’re suggesting that the halls of Washington rival Caligula’s court. Nobody’s marrying their sister, opening a brothel, or installing a horse in the Senate. (Although, to be fair, it couldn’t do much worse than the current minority.)

The Real Debauch

The far right (which is to say, all of the American right) will love this idea, of course. It plays into all their worst prejudices. But is the United States government really on a wild spending spree?

Poverty’s at record levels and so is unemployment.  The truth is, we don’t have a spending problem at all. Then what is our problem? This is: We’re coddling corporations and indulging the wealthy.

Repeating the IMF’s poorly-chosen label is like calling Mom and Dad “profligate” for trying to feed Grandma after their billionaire nephew stole the car, the home and the bank accounts.

We’ve got the charts to prove it.

Words Matter

The IMF report calls us “profligate” because of the imbalance between the amount of money our government collects and the amount it spends. But, as Howard Schneider notes in The Washington Post, Denmark offers much better social benefits than the U.S. and isn’t called “profligate” because it collects the revenues to pay for it.

Still, the term’s a loaded one and shouldn’t have been used. It won’t lead to a serious debate about tax revenues in this country, and we’re certainly not having one now. We’re fixated on spending, and the revenue side of the discussion has been narrowed so radically that the only debate going on in Washington is over which six-figure incomes will be taxed at a historically low rate of 39.5 percent.

Let’s go to the charts. First up:

1. We spend very little on government in this country.

And remember, we spent a trillion dollars on the wars in Iraq and Afghanistan during this period, along with a lot of other unnecessary military spending. (The Pentagon takes roughly one-fifth of the government’s budget.)

2. Government spending went up after Wall Street crashed the economy, because it had to. (Revenues went down, too.)

(via Business Insider)

3. But taxes in this country are actually low …

Source: Center for American Progress

4. … especially for the well-to-do, who are paying historically low rates …

5. … and especially for the really rich, who are paying much less than in the past  (even at the new tax rates) …

6. … while also reaping most of the benefits of our so-called ‘recovery’ …

7. … as everybody else loses out.

Meanwhile …

8. We don’t have our jobs back.

Courtesy Bill McBride, Calculated Risk 

9. To make matters worse, governments (federal, state and local) are cutting  jobs rather than adding them – and our deficit debate is about how many more to cut.

(via New York Times)

And as you can see, the jobs we are getting are going to the financial and professional classes, or to low-paying types of employment.

10. There’s a relationship between unemployment and deficits …

(courtesy Business Insider)

… and yet the so-called ‘deficit hawks’ are ignoring unemployment and cynically hawking even lower corporate tax rates. Nobody’s calling them on it, even though ….

11. … the corporate taxes we collect now (as opposed to the pre-loophole ‘statutory tax rates) are extremely low.

12. They’re also targeting Social Security benefits, which don’t contribute to the deficit and are already lower than most developed countries’ …

13. … while ignoring the trade deficit, which spiked in Friday’s report.

(US Bureau of Economic Analysis, Census Bureau)

And yet they’re treated like serious commentators, rather than cynical corporate hacks, by most (if not all) of the mainstream media.

14. They’re successfully distracting us from our real problems.

We created this chart after running Google News searches on five topics (they were also labeled “United States” to exclude other nations’ results).

The Federal deficit is getting much greater coverage than any other topic. It received nearly twice as much coverage as the trade deficit, even though the trade figures that were released  showed a surprising setback for the United States that means more unemployment and less growth.  The “deficit” topic got more than twice the coverage unemployment received, and nearly three times as much coverage as “long-term unemployment.”

“Wealth inequity” and “wage stagnation,” which are destroying the American middle class, didn’t even make the grade.

All Apologies

At this rate, only concerted action can stop the trend toward more of the same austerity madness that has wounded Europe, and us, thanks to the misguided guidance we keep receiving from institutions like the IMF. The organization will no doubt “apologize” for this absurd report someday too – long after the damage has been done.

Bloggers have learned some hard lessons about engaging with right-wing nutcases who leave nasty comments: “Don’t feed the trolls.” Starve them of the attention they seek. Ignore them and move on. This advice also applies to the right-wing nutcases threatening to bring down our economy by refusing to raise the debt-ceiling limit. They won’t get any traction on this unless Democrats engage with them. So ignore them, isolate them and scorn them but do not engage with them. Their billionaire & Wall Street funders will stop them and the pubic will see them for what they are, but only if we all just leave them alone. They aren’t really going to hold their breath until we all die.

And if they actually did take down the economy (they won’t), the country will be better off in the long run because it means the end of the radical right as a force in our politics.

So let them hold their breath until the country turns blue.

Crisis To Crisis, Destruction As A Tactic

Our country is now governed by crisis. We go from crisis to crisis because causing a crisis and making everyone panic works. But it only works if we let it work.

Look at the obstruction and destruction of the last few years. Obstruction has kept us from hiring millions to modernize our infrastructure, making our buildings and homes more energy efficient, helping people with things like the Dream Act and Medicare-for-All, sufficiently stimulating new industries like wind and solar energy production, and SO MUCH more.

And the accelerating, destructive hostage-taking has cost us so much! Giving in to hostage-taking in the first place has only meant more and more of it, with bigger and bigger costs. We gave in when they held back from authorizing unemployment benefits for millions. We gave in when they threatened to shut down the government, including denying elderly people their Social Security checks. The fiscal cliff “crisis” was just more hostage-taking.

Now they are actually threatening again to take the entire economy hostage, if we don’t give in and hurt our people even more.

Crisis to crisis. Hostage to hostage. Destruction to destruction. And always obstruction and destruction of the things We, the People to do make our lives better.

Again and again. They hold their breath and threaten to do damage, and we give in and let them hurt us a little so they don’t hurt use a lot. And so they do it more.

Crisis to crisis. As long as we engage, it works for them. Each time a bigger hostage, demanding that we hurt ourselves even more before they will take the gun away from the hostage’s head.

Now the biggest hostage, the debt ceiling.

What The Debt Limit Is

The process of raising the debt ceiling is basically a mistake in the law. Raising the debt ceiling authorizes Congress to pay the bills that Congress has already committed to paying. But since the Reagan tax cuts and then the ‘W’ Bush tax cuts the country has not had sufficient revenue to meet the needs of our people without borrowing, so the debt keeps increasing.

What the Republicans are threatening to do is refuse to honor our debts and pay the bills that the United States has already promised to pay. They would default on our bonds – most of which are held by Americans. This would ruin the credit of the country, dramatically increase all future borrowing costs, and forever end America’s status as a “safe haven” place to keep money. It would end our status as the “reserve currency.” It would be a vote to tell the world that the US dollar is not worth the paper it is printed on.

This would crash our economy and take the world’s economy down with it.

That is what they are threatening to do. They are literally threatening to hold their breath until they die because we are afraid we will die, too.

What Is Their Real Power?

The Republican Party is threatening to take us all down with them unless we hurt ourselves even more. But they only have power on this IF we engage. If we don’t engage on this they have no power. If we don’t engage they are just a bunch of crazy people threatening to kill themselves if we don’t kill ourselves, and that’s crazy.

They can’t be serious, so don’t take them seriously. Ignore them. Don’t feed the trolls. They have no power this time if we just ignore them.

And ignore the corporate media that feeds on crisis and feeds panic, and the “Fix the Debt” corporate-funded propaganda that tries to convince us to engage.

The debt ceiling is not a crisis unless we help them make it into a crisis. If we ignore them they have to go away.

Not A Crisis Unless We Make It One

This is not a crisis unless we make it a crisis.

Are we really afraid the 2-year-old will actually hold its breath until it dies? Seriously?

And haven’t we learned yet what happens later, after we give them what they want when they hold their breath?

Do we really believe the Republicans would take down the whole economy? Really? Do we really believe Wall Street and their billionaire funders will let them do this?

They only have power if we engage with them on this. Their only power is making us afraid.

What To Do This Time

Ignore them. No negotiations, not even any conversations. Don’t fall for it this time. If someone even says the words “debt ceiling” just tell them to go away, you have things that need doing, that deserve attention. Just let them spout their nonsense and don’t respond. Like the crazy guy who stands up at the city council meeting and talks about how UFOs are shooting energy waves into his brain, when he gets done say “Thank you” and just move on to the next item.

Seriously, they threaten to destroy the economy if they don’t get what they want? And what they want is things that make our lives harder and less healthy? Really? Then just let them shout it, and let the voters see it, and hold them accountable.

They won’t really do that. And if you think they will actually vote to do that -– and the people who fund the Republican Party won’t stop them at the last minute -– then just let them this time. And let them own the reaction. Because if they do that, our country’s minority-party obstruction/destruction/hostage-taking/extortion/intimidation problem will be over.

If debt-ceiling day comes and they are still threatening to do it, just sit back and watch their Wall Street and billionaire funders panic.

Do not engage. Let them hold their breath until the country turns blue.

Update – Or, as an alternative, say “please proceed, Republicans.”

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Washington is careening off the fiscal cliff smack into the debt ceiling.  These mind-numbing mixed metaphors are not the currency of a well-governed nation.

Once more, Washington is fixated on what and how to cut.  Once more, the media is clamoring for a deal, for “shared sacrifice.”  Once more, Republicans have indicated that they are prepared to hold the full faith and credit of the United States hostage to exact deep cuts in spending, with Social Security, Medicare and Medicaid their primary targets.  Once more, the president has indicated that he wants more deficit reduction, with a “balanced” program mixing spending cuts with tax hikes.

“Our government, “ wrote Supreme Court Justice Louis Brandeis, “is the potent, the omnipresent teacher.”  But in Washington’s budget bedlam, reason gets lost in the din.  As we hurdle the sequester while bouncing off the debt ceiling, it’s worth remembering some basic common sense about where we are.

1. The economy is still broken

More than 20 million people are still in need of full-time work.  Wages are falling.  Family wealth – largely the values of their homes – has been decimated.  The middle class is sinking.  Trade deficits are over $1 billion a day.  Corporate profits are setting records as percentage of economy; wages are at new lows.  Inequality is at record extremes.  Catastrophic climate change is already wreaking havoc.  This economy does not work for working people.

2. You can’t “fix the debt” without fixing the economy

The furious debates and painfully exacted deals on cuts and taxes will be washed away if the economy goes back into recession.  More workers will be thrown out of work.  More families will lose their homes.  More children will go hungry.  Tax revenues will fall; spending will soar on unemployment and food stamps and other supports for those thrown out of work.

Despite the Bush tax cuts, two unfunded wars, and the unfunded prescription drug company rip-off program, the annual deficit was less than 2 percent of gross domestic product in 2007 and the accumulated national debt was under 40 percent of GDP .   Then Wall Street’s excesses blew up the economy, exploding the housing bubble, and created a recession with mass unemployment, driving us into trillion-dollar deficits that will end up more than doubling the debt burden.

If the economy is fixed, deficits and the debt burden will decline.  The best and necessary deficit reduction program is to put people to work.  In fact, even the modest growth we’ve witnessed since 2009 has reduced the deficit by about 25 percent relative to the size of the economy, declining faster than any time since the demobilization after World War II.  Jobs and growth are essential to any deficit reduction agenda.  The worst thing we can do is to endanger growth

 3.  You can’t fix the economy by “fixing the debt”

And threatening the faltering recovery is what Washington is doing.  You can’t cut your way to prosperity.  Austerity – spending cuts and tax hikes – costs jobs, slows growth and threatens a return to recession that will explode deficits.  Austerity has helped to drive Great Britain and the European Union back into recession.  It would be ruinous to repeat that experiment here.

Virtually unanimous bipartisan agreement on this reality drove the frenzy to avoid going over the infamous “fiscal cliff,” the spending cuts and tax hikes piled up by Washington to scare itself into action.

The fiscal cliff melodrama added $600 billion in taxes over 10 years, including a 2 percent tax hike on working Americans with the expiration of the payroll tax holiday.  That will likely slow growth by nearly 2 percent of GDP and cost about a million jobs.  It comes on top of the $1.5 trillion in spending cuts imposed in the last debt-ceiling debacle.   These also are costing jobs and dragging down a weak recovery.  Now Washington is descending mindlessly into another hostage crisis about more cuts without apparent concern for the economic effects.

4.  You can’t “recover” to the old economy

This economy wasn’t working for working people before the Great Recession.  The middle class was sinking; the richest 1 percent captured two-thirds of the rewards of growth.  Families stayed afloat by taking on more debt.  Good jobs were being shipped abroad.  We can’t go back to the old economy that was built on bubbles and debt, and we shouldn’t want to.  But a slow growth recovery won’t address these challenges.  More cuts in spending or token stimulus won’t help.

5.  You can’t build by focusing on what to dismantle

We need fundamental reform, a new strategy for the economy that will rebuild the middle class.  That involves far different questions than what programs to cut and whose taxes to hike.

A new strategy must address the real challenges we face and the opportunities we have.  Low interest rates give us an historic opportunity to launch a 10-year program to rebuild America’s decrepit infrastructure, from sewers to the electric grid, and modernize it to meet the challenge of catastrophic climate change.  The global consensus against extreme trade imbalances provides the opportunity for a new strategy in the global economy that will expand but balance our trade, and make things in America once more.  With sensible policy, America’s capacity for innovation provides us the opportunity to lead rather than lag in the green industrial revolution that is sweeping the world.

To revive the middle class, we need to empower workers to gain a fair share of the profits they help generate, lift the minimum wage and curb perverse CEO compensation packages.  To provide our children with a world-class education, we have to invest in the basics, from pre-kindergarten to affordable college. Financial constraints should force a cutback of our commitments to police the world.  These and many other needed reforms will require new investments, progressive tax reforms and new priorities.  But simply cutting spending or raising taxes to reduce deficits won’t get it done.

6. Washington needs more Hippocrates and less hypocrisy. 

In the short term, the president and Congress should first do no harm.   Call a halt to this inane hostage-taking.  Repeal the sequester – the automatic spending cuts designed as a time bomb to force action.  Amend the debt ceiling to rise automatically to meet congressional obligations unless the Congress acts affirmatively to renege on what it has voted.  Stop laying waste until we get a good sense of whether the faltering recovery can withstand the cuts and tax hikes already passed.  Americans are sensibly turned off by the farcical Washington face-offs.  And they will be rightfully furious if the folly drives the economy back into recession.

 7. Focus on the predators, not the prey

As part of focusing on real reforms, Congress should address the sole source of the deficit projections that are used to terrify everyone.  Instead of chopping away at the pillars of family security – Social Security, Medicare and Medicaid – fix our broken health care system.  If we spent per capita what other industrialized countries spend on health care (while getting better public health results), we would right now be projecting surpluses as far as the eye can see.   The good news is that costs haven’t been rising as fast as expected.  Understanding how to build on what is working is a sensible next step.  For savings, take on the culprits — the powerful drug and insurance company lobbies, the private hospital complexes that profit from driving our health care costs up.

In any case, “shared sacrifice” is for suckers.  It is neither just nor sensible to demand sacrifices be shared by the predator and the prey.  It doesn’t make sense to ask everyone to sacrifice when the top 1 percent has captured 93 percent of the country’s income growth as it did in 2010.  It makes no sense to cut spending on everything when long-term deficits are driven by one thing – our broken health care system.  And it makes no sense to cut everything without being clear about what we need to build.

At the end of World War II, our debt burden was about 125 percent of GDP – far higher than it is now.  Yet our leaders were focused on how to put the GIs back to work and avoid a return to the Depression.  So they enacted the GI bill to educate a generation.  They subsidized housing and built the suburbs.  They converted wartime industries to peacetime development.  They launched the Marshall Plan to rebuild Europe and create markets.  They built the interstate highway system to pave way for a national market.  They fought over deficits and budgets, but they did what needed to be done. And they built the first broad middle class in the world’s history that made America exceptional.

They fixed the economy.  They generally ran deficits and added to the nominal debt.  But the economy grew far faster and by 1980, the debt was down to below 40 percent of GDP and not a concern.  They are remembered as the great generation.  We might learn a thing or two from them.

Before ‘W’ got in and made changes in taxes and military spending we were paying off the debt. Bush said the deficits that resulted from his changes were “extremely positive news.” (Yes, that is in quotes, click the link.) Before that Reagan also caused deficits on purpose. He called it “starve the beast” — as if democracy is a “beast” that needs to be killed. So don’t fall for all this deficit hysteria, let’s just fix what caused the deficits and move on.

This Deficit Story Can’t Be Repeated Often Enough

From May, This Deficit Story Can’t Be Repeated Often Enough,

Any time any DC elite complains about “the deficit” remind them that when Clinton left office we had a huge surplus, so big that at the rate it was being paid down the entire US debt was going to be paid off in 10 years. Bush demanded that we give back the people’s money and Greenspan warned of the danger of paying off the debt. Etc. Etc. Etc. Then Bush doubled military spending — and started two wars on top of that!

So we went from big surplus to huge, huge deficits. Bush said it was “incredibly positive news” when we went back into deficit spending. He said it was good news because it continued the plan to use debt to force the government to cut back. He said that. It was the plan. (Don’t take my word for it, click the links.)

The Reagan people said it too, back when they started the massive deficit spending. It was the plan: force the country into massive debt, “starve the beast,” and use that to force the government out of business, or at least to be “small enough to drown in a bathtub.” They forced the tax cuts and Reagan said this was “cutting the government’s allowance.” The point was to use revenue cutbacks to force government to shrink, to get out of the way of the 1%.

Now that government is very much out of the way of the 1% we are seeing how things work out when the 1% dominate everything.

It was the plan. They forced these deficits on us on purpose. Reagan called it “strategic deficits.” It was a “shock doctrine” tactic, to get us to panic, and then move in with their “solutions.” So we are arguing about how much to cut out of the things We, the People do for our benefit, which the wealthy and their corporations get vastly wealthier and more powerful.

Low taxes on the rich = less money to use to do things that benefit We, the People. Higher military budget = less money to use to do things that benefit We, the People.

The ONLY response to this “fiscal cliff” shock-doctrine nonsense is to repeat over and over that we were paying off the debt, then Bush made changes, so let’s undo Bush’s changes. If you are so bothered by the deficits, then fix the things that caused the deficits.

And then we can get back to the business of democracy: We, the People doing things for the benefit of We, the People.

See also:

Ten Years Ago We Were Paying Off The Nations Debt But Then We Elected Obama

Deficits: Get the Money From Where the Money Went

“Government Doesn’t Have the Resources to Stop It”

Reagan Revolution Home To Roost America Drowning In Debt

Why We Have A Deficit

What Is The Real Agenda Of The Budget-Cutters

Cutting Government Creates Jobs Like Cutting Taxes Increases Revenue

Jobs Fix Deficits

Did The Rich Cause The Deficit

Jobs First Because Jobs Fix Deficits

The Real Deficit Is Jobs!

Why the Deficit Dominates DC Thinking

See WHY Austerity Can’t Reduce The Deficit

Deficit Trouble – Right Here In River City

How To Fix The Deficit

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Just how radical and extreme are the Republicans today? Republicans didn’t oppose Boehner’s radical “Plan B” because it would devastate American families and small businesses and destroy government — that was OK, in fact that wasn’t even enough destruction for them. They opposed it because it would raise taxes a small bit on the billionaires who grease their wheels. In other words, they opposed it because it was not extreme and radical enough.

To understand just how radical and extreme today’s Republicans are, it is worth looking at what was in the “Plan B” that Speaker Boehner tried to bring before the House. They hate government and they mean it. Plan B cut off unemployment benefits for 2 million Americans. It actually raised taxes on most Americans while cutting taxes on the billionaires. It moved every cut onto the backs of domestic discretionary spending, dramatically gutting government all at once. This would literally destroy the government and certainly plunge the economy into recession.

But the reason conservative Republicans opposed this was not because of the consequences on the rest of us, it was because it increased some taxes on a few billionaires.

You can’t even imagine that you have the responsibility of being a legislator — never mind Speaker of the House — if you are prepared to offer a bill like this to the Congress, never mind that most of them favored this, and opposed it only because it was not radical enough. The cuts and destruction were fine with them, they wanted no tax increase whatsoever on the billionaires.

What Was In “Plan B”?

According to Americans for Tax Fairness if the Boehner “Plan B” passed these would have been some of the consequences,

…continues large tax cuts for the very wealthiest individuals – on average, millionaires would see a tax break of $50,000 – while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on and ending critical incentives for our nation’s businesses. It would also cut off a vital lifeline of unemployment assistance to 2 million Americans fighting to find a job just a few days after Christmas, while deeply cutting Medicare.

The deficit reduction is minimal, and perversely, given its authors, solely through tax increases with no spending cuts.

• The 0.3 percent of households with incomes over $1 million would get tax cuts averaging $50,000 per year because of the lower taxes on the first million.
• Makes permanent the current estate tax levels, which provide an average of more than $1 million in tax relief to estates worth more than $7 million
• Raise taxes by an average of $1,000 on 25 million working families with children and students: Plan B does not continue the American Opportunity Tax Credit and improvements to the Child Tax Credit and Earned Income Tax Credit.
• Fail to continue critical tax incentives for business, like the Research & Development credit, energy incentives, and temporary measures like bonus depreciation.
• Cuts reimbursements for doctors seeing Medicare patients by 27 percent.
• Eliminate a tax incentive for college education for 11 million families, raising their taxes by an average of $1,100.
• Reduce the refundability of the child tax credit for 12 million working families, raising their taxes by an average of $800.
• Eliminate the increase in the Earned Income Tax Credit (EITC) for larger families and increases the EITC marriage penalty, together raising taxes on 6 million families by an average of $500.
• About 100,000 children would lose access to Head Start.
• Some 10,000 special education teachers and related staff would be out of jobs.
• Close to 700,000 women and children would lose the nutrition assistance they need.
• Research and development, which is critical to long-term economic growth, would suffer profoundly, with about 700 fewer new grants from the National Institutes of Health and up to 1,500 fewer grants from the National Science Foundation.

And that wasn’t even enough.

2013 will be fun.

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