The Beltway moved immediately from the election to an obsession with the “Grand Bargain.” The discussion about the budget deal is focused almost entirely on the question of how much increased revenue we should obtain from taxes on the wealthy. That is an important question, but it is the least important of the four important issues that the deal would address.
The four most important questions, in descending order, are:
- Will we inflict austerity on the nation, forcing the U.S. back into recession, raising unemployment, and increasing the deficit?
- Will we begin to unravel the safety net, enriching Wall Street and betraying our promises to those most in need?
- What social programs will we cut, and how deeply?
- What increases will we make in tax revenues from wealthy Americans?
The Grand Bargain that Obama and Boehner reached general agreement on in July 2011 would have inflicted austerity on the U.S. and begun to unravel the safety net. It would have made extremely large cuts in social programs, including major cuts to the safety net. It would have produced modest increased tax revenues from wealthy Americans. Austerity, as was the case in Europe, would have thrown the nation back into a recession. Unemployment, which was 9.1% in July 2011, would have risen to over 10% and would have been rising throughout 2012 as we went into the election. Because social programs would have been slashed by the deal the misery of this increasing unemployment would have been compounded. Obama would have suffered a crushing defeat, the Democrats would have lost their majority in the Senate, and the Republicans would have achieved major gains in the House and in state races.
The austerity component of the Grand Bargain was economically illiterate. Within the administration, it was the product of refusing to listen to its economists and listening instead to Treasury Secretary Timothy Geithner. Geithner is not an economist. Geithner hated Obama’s stimulus program and embraced austerity. He convinced Obama to embrace an austerity deal that would have inflicted a gratuitous second recession on America and doom Obama’s chance of re-election.
Geithner had a powerful ally in convincing Obama to adopt such a program. Obama had decided to signal his fidelity to Wall Street by appointing William Daley as his Chief of Staff. Daley was from JP Morgan Chase. He came from (and has returned to) The Third Way – a Wall Street front group dedicated to pushing austerity and trying to further enrich Wall Street by privatizing Social Security. Daley’s Third Way bio emphasizes his roles:
“As Special Counsel to President Clinton in 1993, Daley coordinated the successful campaign to pass the North American Free Trade Agreement (NAFTA).
He was co-chair of the US Chamber of Commerce Center for Capital Markets Competitiveness.”
“Capital markets competitiveness” is code for pushing the deregulation of finance. The Chamber of Commerce is Obama’s fiercest critic. The Chamber loves austerity and detests the safety net.
Obama had the great luck that House Tea Party fanatics ultimately caused Boehner not to consummate the Faustian bargain.
But Obama, Geithner, and Daley were not content to have the Tea Party snatch defeat from the jaws of a Republican political victory that would have doomed Obama politically by doing horrific damage to our nation. When it was clear that the Great Betrayal and austerity would fail Obama successfully sought from Boehner an agreement to create a “trigger” that would impose austerity should the parties fail to agree to an austerity deal. This led to the creation of what the media now (inaccurately) calls the “fiscal cliff.”
The fiscal cliff is an austerity program (but not a betrayal of the safety net). It is not analogous to a cliff. The tax increases and spending cuts take place over 2013. The great bulk of the tax increases are likely to be retroactively rebated even if the trigger isn’t postponed for several months. (It is likely that the trigger will be postponed.) Here is the curious fact – the beltway now believes (correctly) that if we sat back for a year and did nothing the austerity imposed by the trigger would force the nation back into recession, increase unemployment, and greatly increase the misery of those who lost their jobs because it would slash public services the unemployed need. Most of the Beltway also believes (correctly) that the austerity trigger would increase the deficit rather than reduce it. Recessions greatly diminish government revenues and increase expenses. Adopting austerity for the purpose of reducing a “deficit and debt crisis” is a perverse policy that generally causes the deficit and debt to grow.
The Beltway crowd is telling us we must avoid the austerity-induced recession the “fiscal cliff” is purportedly about to cause. The fact that Obama and Boehner tried to impose even more self-destructive austerity in July 2011 is ignored. The fact that Obama and Boehner insisted on the trigger that produced the so-called fiscal cliff is ignored. Given the belated understanding of the Beltway that austerity would be disastrous two obvious questions arise.
- Why are Obama, Boehner, and the media treating the July 2011 effort to commit the Great Betrayal not as a cautionary tale of the idiocy of austerity but as a tragic tale of bipartisan bickering in which austerity is the path of righteousness and courage?
- Why are Obama, Boehner, and the media treating it as obvious that we must act immediately to prevent the austerity of the so-called fiscal cliff by imposing greater austerity and unraveling the safety net through the Great Betrayal?
Incoherent is an inadequate word to describe the logic behind the administration’s renewed effort to throw the nation into recession, increase unemployment, greatly increase misery by cutting vital social programs, betray the safety net, increase the deficit, and cause devastating losses to the Democratic Party in the next two elections.
It was predictable that the Washington Post would lead the charge for the Great Betrayal, and it did with a featured op ed from Erskine Bowles, the co-leader with Bob Rubin of the Wall Street wing of the Democratic Party. The Beltway media have an autonomic reflex that causes them to worship any bipartisanship even if the bipartisan agreement is an economic suicide pact that will harm the nation and further enrich Wall Street. Logical incoherence is irrelevant to autonomic reflexes.
The only real question was where MSNBC would come out on the budget issue. MSNBC has strongly defended the stimulus program and the importance of the safety net. How would it respond to a purported “Grand Bargain” that would inflict self-destructive austerity and begin the Great Betrayal of the safety net? Logic would compel MSNBC to oppose the deal. But MSNBC has a warring imperative – its hosts worship Obama and are awash in endorphins as a result of his re-election.
(Full disclosure, I voted for Obama in both presidential elections though I am a strong critic of his financial policies and his administration’s abject failure to hold fraudulent financial elites accountable criminally for their crimes that drove the financial crisis and the Great Recession. I was one of many who warned before the 2012 election that our task immediately upon Obama’s re-election would be to defeat his efforts to commit the Great Betrayal. He remains fixated on the dream that the Grand Bargain will establish his legacy and make him famous for his policies rather than for his election successes or his embarrassing Nobel Prize.)
Prior to the election, Lawrence O’Donnell correctly pointed out that the fiscal cliff was a misnomer and that Obama would have far greater negotiating leverage were he to wait to until the Bush tax cuts expired and freed Republicans from any need to violate their pledges to Grover Norquist. What would happen on MSNBC after the election?
Obama, as he promised, immediately sought his Grand Bargain. I spent nearly two hours listening to MSNBC’s midday coverage of the issue without hearing a single journalist, commentator, or politician recognize the logical incoherence of this embrace of austerity premised on a claim that the austerity of the fiscal cliff was about to throw us into recession.
I then watched four hours of MSNBC’s evening coverage of the fiscal cliff. Only Lawrence O’Donnell (of the six MSNBC hosts that I watched that day), noted that the fiscal cliff is not real. The others treated it as an imminent disaster. Every host, every journalist, and every guest on the programs who discussed the issue took it as a given that it was essential and urgent that Obama and Boehner agree to austerity and severe cuts in the safety net. There was no discussion of the merits. It was treated as obvious. The consistent message was that it was essential that we support our President unreservedly.
The first day of MSNBC’s coverage of this issue was dismal, but one can hope that the endorphins wear off and the quest for analytics clicks back in. The truth is that Obama’s interests coincide with America’s interests when it comes to the Great Betrayal. If he had succeeded in July 2011 in reaching the deal he offered Boehner he would have destroyed his presidency, crippled his nation and his Party, and ruined his legacy. The same is true today. The best service media can render to any President is the candor of honest criticism. Every President has a legion of sycophants eager to provide praise.
As always, Mr. Black gets it right!
That said, he may have missed the late afternoon MSNBC shows in his survey… The Cycle is refering to “the fiscal slope” and has been discussing the subject objectively, IMHO.
I’ve rarely seen a soul on MSNBC not talk of some aspect of entitlement reform as being essential. Even if they allow a token MMT’er type to speak, the overwhelming talking point around there is strongly “Grand Bargain”. MSNBC is populated by largely corporate center left types, as opposed to its sister @ CNBC, which has a strong corporate rightest bent. The differences between the two networks are in degree, not kind, relative to entitlement reform.
Why are Obama, Boehner, and the media treating the July 2011 effort to commit the Great Betrayal not as a cautionary tale of the idiocy of austerity but as a tragic tale of bipartisan bickering in which austerity is the path of righteousness and courage? Professor Bill Black
We have two sources of money creation in the US – defict spending by the monetary sovereign (the Federal Government) and money lent into existence (so-called “credit”) by the banking cartel. The banks would prefer that they be the only creators of money since defict spending potentially reduces their real profits. Thus the banks and their supporters attempt to portray the US government as an irresponsible money user instead of a responsible money issuer responding to a recession. But the irony is that the banks are the villains in that they are the ones who caused this recession by driving the population into unsustainable debt AND that it was their welfare from the Federal Government (government deposit insurance and a legal tender lender of last resort) that allowed them to do so.
The banks live in a glass house when it comes to making accusations of unrighteousness since their very existence to any large extent depends on unrighteousness – their ability via government priviledge to lend stolen purchasing power for usury.
But the irony is that the banks are the villains in that they are the ones who caused this recession by driving the population into unsustainable debt.
It might have slipped my mind, but I don’t remember any bankers sticking a gun in my face and demanding that I borrow some of their money. On the other hand, I do remember the feds taking a mandatory regular deduction out of my paycheck, which they may well have used, at least in part, to keep the banks solvent. In fact, while a person can be fairly successful in keeping his relationship with the banking industry to a bare minimum, there’s no avoiding daily encounters with one level of government or another.
It doesn’t take a gun; the banks create negative real interest rates in housing at least so trying to save to buy a house is punished.
Might it be possible to educate MSNBC on this?
How about a campaign to get Bill, Stephanie, Randy and/or Warren as guests on some of their programs, preferably those running in primetime? Now that the election is over, I’d like to think there’d be some real openness at MSNBC to an MMT-oriented perspective on the deficit, and the kind of themes Bill would be likely to raise regarding financial reform, etc.
My sense is that the MSNBC team is the most “educatable” among the broadcast/cablecast MSM on these issues. And also the most likely to appreciate the fundamentally anti-progressive nature of the types of “Grand Bargains” that have been discussed. It seems possible that at least one of their hosts would grasp the essence of MMT and its progressive implications, especially in the current “OMG, the fiscal cliff is coming” environment. If that was the case, maybe it would spread beyond that, as the power of the argument gains more attention.
Of course they will. [comment removed by admin]. The ‘network even liberals can watch!’ was just a meme they fed to the left to get enough eyeballs to watch and even hopefully trust their network. This was so that at an untold point in the future the corporate whore media can pimp out their whore pundits and hopes that they’ve banked enough affinity fraud to carry the day.
Doesn’t matter if it causes the network to lose all credibility. The corporate whore media pulled the same bait-and-switch with CNN. And moderates and conservatives still get to bleat that CNN is liberal. And there’s always more money and room for corporate propaganda; there are plenty of access whore assholes wanting to get into the Kool Kid Klub and the externalities of having a tame media makes it well worth the cost. After MSNBC goes down as NPR/CNN 2.0, expect another shill network catering to liberal suckers to pop up.
MMT historians take note:
Yesterday morning, Sunday, November 11th, 2012, a host on an MSNBC program responded to a Wall Streeter who was a guest on the show. The dirt-ball in question was spouting all the usual drivel about leaving the debt to the grandchildren, etc., etc., and he closed with a smug, very well-satisfied rendition of “well, someone will have to pay for it!” The show was “Up With Chris Hayes”, the host, of course, was Chris, and his historic response, delivered with a slightly devilish smile at the corners of his mouth, was something very close to: “Really? Is that really the case here? I’m not sure about that. Some people are now saying….” He tried to go on, but was over-spoken by the rest of his panel, who wanted to take things down the conventional “Yeah, but the way to do it is to tax the rich” direction. But there was no mistaking Chris’s own original reaction. He’s hearing something and/or reading something that is taking him in our direction. And he is, with the obvious exception of Rachel Maddow, the smartest person on T.V. right now.
I think we should start an MMT campaign to send a united message to Chris Hayes, confirming his suspicions and urging him to dig deeper – and, once he is sufficiently convinced, to help take MMT main-stream using his show. And this brings me back to my musings about the affable Professor Black and his remarkable ability to get on radio and T.V.
I know very little about any of this, but Dr. Black must know, so I appeal to him for leadership. Please explain it to us: what conditions do they (the producers et. al.) put on someone before they are allowed on national T.V.? Based on what I see, there seems to be a very clear messaging area that “expert-witness” type guests are supposed to stay inside of. In Dr. Black’s case, this almost always appears to be defined by the question,”Why aren’t any of these guys in jail?” This is, after all, what makes him a credible expert and a logical person to ask: before he was the happy warrior of MMT, he was already the guy who nailed and jailed infamous mega-crook Charles Keating in the S&L debacle of the 1980’s.
But what would it take to enlarge or even completely alter that messaging area? Such that Dr. Black (for example) could clearly and directly answer Chris Hayes’ question, and lay out the basic principles of MMT in the process – this, lest we forget, for an audience which we already know enjoys the sound of smart people talking.
What could/should the MMT community do to try and make that happen?
So glad this came up. Been thinking about this myself and I think the answer is a crowd-sourced publicity campaign. Though I live in the Bay Area, and listen to NPR, all I hear in the media shows or commentary which tows the neoliberal line. From countless Robert Reich interviews, to “Marketplace”, “Forum” , and “Your Call” all of them assume the “Grand Compromise” as if there is no alternative (TINA) . Thus, the media is the problem. I’ve spoken to lots of engineering friends here and they get MMT in a minute of two. They just get it. So I heard NPR was present at the Green Festival / Expo over the weekend in San Fran and I decided to crash the party and make a direct appearance. So I found an NPR booth and I asked them point blank how to get a guest on a show on the topic of political economics and the fiscal cliff. They asked me if the guest has credentials and I said “you bet” and then they instructed me to submit email to a particular show’s email address. And that is all. Lame.
So if I send a well crafted note, maybe they read it and do something and maybe not. But I figure if they get a hundred ( authentic) similarly crafted notes, asking them to put someone on the air with a different POV, say Mosler or Dr. Kelton or Dr. Black, then maybe something happens . No ?
So , if we had a platform to use as a tool for Marshaling people and targeting a particular venue, that might give this movement an opportunity to get more of a mainstream voice .
Great input bubblerefuge. Maybe if we reach out to other sites like Naked Capitalism, dailykos, etc. (see the list of sites where Joe posted his crowdsourcing exercise and where he may be a regular contributor) we could get a lot more people involved, and maybe get help from these (somewhat overlapping and sometimes quite large) communities in terms of setting up and mobilizing the appropriate platform to support such an effort. I can’t think of a better time for the wisdom of “deficit owls” to at least get a hearing with the more left-leaning sectors of the MSM (and hopefully beyond).
Joe (and everyone else)…if you read this thread, let us know what you think of this idea and any thoughts you have about how to reach out to dkos, NC, FDL, etc. to get their support.
I like your suggestion, Dale, to focus an initial outreach effort on Chris Hayes, especially in light of what your saw on his show this weekend. He’s always struck me as really smart, and often quite insightful and able to see things from a non-typical perspective.
Personally, I kinda like the “deficit owl” moniker as a simple and memorable way to distinguish MMT from the “hawks” and “doves” that reside in the right and left regions of neo-liberalism land. I can just see Hayes’ “slightly devilish smile” as he introduces a guest MMT expert on his show as a “deficit owl.” It seems appropriately catchy and clever for a guy like him (or Rachel Maddow, for that matter, who’s also pretty good at wordplay). And it strikes me as a simple and memorable way to clarify the distinctions among these three economic perspectives (owls, as we all know are “wise”).
And though I don’t have any good answers to your final question, I’d like to second it as something we all should consider: What could/should the MMT community do to try and make that happen?
What could/should the MMT community do to try and make that happen?
Several things occur to mind. The most relevant is to put up a
crowd-sourced cooperative action site (CAS)
which could evolve into a global network of CAS.
Web solutions developers, any suggestions for implementation?
Was thinking something tied to twitter to get a jump start. But yes, some kind of structured web workflow is needed . Users submit events —- > admins publish the events —-> users commit to participate in events –> users get up-votes based upon participation level, credibility, etc. This platform could at least allow the MMT community to turn up the volume at the local media level which should provide a path to national media. No ?
Obama’s learned lessons from the 2011 budget showdown. Warning: will make you ill–
…”He “will travel beyond the Beltway at times to rally public support for a deficit-cutting accord that mixes tax increases on the wealthy with spending cuts. On Wednesday, Mr. Obama will meet with corporate executives at the White House as he uses the nation’s fiscal problems to start rebuilding relations with business leaders… He hopes to enlist them to persuade Republicans in Congress to accept higher taxes on the assurance that he can deliver Democrats’ votes for future reductions in fast-growing entitlement programs like Medicare and Medicaid….”
It is amazing how people who themselves are on the dole, who create nothing, can blog on how you can continue to trade nothing for something … As we litereally watch entitlement nations unravel before us daily, you want people not to believe what they see. Get out and run an enterprise that generates economic value in this society and then come back and blog (you would of course have to find another site …). You won’t be so quick to take from the productive when you are part of that crowd. And while both the productive parts of our society and y’all here that read this junk can agree that Wall Street is a shark tank, they do provide necessary services. Our country produces about 25% of the worlds economic output, and we would not be so successful without some type of wall street environment. While you talk, Wall Street make deals that over long periods of time have an absolute track record of creating economic value (sorry about the cyclical nature but government causes a good part of that pain to be sure). Please name for me a highly socialized state that has created anything close to that type of sustained economic output on a per capita basis. This blog site would be hilarious, but for the fact that you actually scheme how to spew your nonsense as facts.
(sorry about the cyclical nature but government causes a good part of that pain to be sure). Jay Fraker
It is the government-backed counterfeiting cartel, the banking system, that is the cause of the boom-bust cycle.
And yes, the theft of the population’s purchasing power by the banks to lend to entrenpenurs has produced material progress but the ends do not justify the means. Moreover, that material progress is threatened by the instability of the money system and its huge social costs such as workers disemployed by productivity gains financed with their own stolen purchasing power.
“Please name for me a highly socialized state that has created anything close to that type of sustained economic output on a per capita basis.”
Scandinavia (Sweden, Norway, Finland, Denmark), the Netherlands (until they started doing austerity when they had absolutely no reason to do it), Belgium, Germany (although abolishing the minimum wage proved disastrous for many hard-working people – who are now just like in the US forced to take several low-payed jobs to make ends meet), …
But I want to emphasize something entirely different: as much as your comment spills over with opiniatedness, ‘giving examples of socialized states’ is hardly a basis for any socio-economic argument. The history, particularity, and complexity of any nation (and the parts it is composed of) cannot be ignored in these issues. By the way, think about what you said: ‘per capita’ is absolutely no indication for judging a nation to be able to offer its citizens the prospect of a job, an income, an insurance for the insecurities of life, and a chance to lead a life in dignity overall.
Oh and please, do not imply that a nation that was just hit with apocalypse because of a neo-liberal capitalist system has anything to do with ‘sustainability’…
Please name for me a highly socialized state that has created anything close to that type of sustained economic output on a per capita basis Forget socialized. I’ll give you a communist state: CHINA
And while both the productive parts of our society and y’all here that read this junk can agree that Wall Street is a shark tank, they do provide necessary services. Sir I find your pro-wall street arguments absurd. With a tiny wall street. In the 40’s , 50’s, 60’s ,70’s we built the backbone of this country and our share of world GDP was higher than it is today. Today we have a huge wall street , high unemployment , and unprecedented wealth inequality supported by legislation and government actions created for and by wall street agents who have captured the government. So why don’t you educate yourself on what MMT is about and ask questions rather than a boring rant.