Tag Archives: President Obama

Will We Ever Get Change if We Keep Electing People Who Represent Special Interests?

We can see the positioning and the messaging on the Democratic side beginning to take shape for the 2016 elections. Bernie Sanders and Elizabeth Warren with nods to Thomas Piketty and various economists have stepped forward to offer the themes of salvation for the middle class, moderating the extremes of inequality in American society, and doing something real about jobs and wages.

Clinton World seems to be responding, not yet with forthright statements from Hillary Clinton, but recently with articles by stalwarts of neoliberal Clintonism (and veterans of the Obama Administration) such as Larry Summers and Peter Orszag, expressing concerns about inequality and proposing measures to alleviate it, even including increased taxation on the wealthy.

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Return of the Coin?

By Joe Firestone

The last few weeks have seen at least two posts calling attention to the potential use of the platinum coin in America’s political economy. The first to appear was Rob Urie’s piece in Counterpunch provocatively titled: “The Trillion Dollar Catshit Coin” And the second was Mike Sandler’s post in The Huffington Post called “Greece and the U.S. Senate: Economics for the 99%.

Let’s begin looking at these with Sandler’s effort. He reports on two challenges to austerity. The first is from Syriza’s victory in Greece and its promise to Greek voters that it will end austerity. The second:

The austerity mindset faces a new foe in the U.S. Senate as well. The re-shuffle of the last U.S. election that put austerity-minded Republicans in power has ironically resulted in a new anti-austerity economist being hired by Senator Bernie Sanders (I-VT) in the Senate Budget Committee — Professor Stephanie Kelton of the University of Missouri-Kansas City. Professor Kelton is a proponent of Modern Monetary Theory (MMT), a very pro-stimulus economic approach. Her hiring represents the biggest step forward for MMT, since the PR coup of the Trillion Dollar Platinum Coin in 2013. At that time, Kelton reportedly created the #mintthecoin hashtag that was featured in columns by Paul Krugman and others.

Sanders’ hiring of Kelton is a break from the more conciliatory “balanced budgeting” approach of some Democrats, such as former treasury secretaries with ties to Wall Street and fiscally-conservative “deficit hawks.” Kelton and her MMT colleagues go beyond the traditional Keynesian stimulus of short-term deficit spending. They seek to unleash the power of monetary policy to circumvent the scarcity mindset imposed on government action, perhaps even bringing the Trillion Dollar Coin back into the discussion.

Of course, Sandler means to say fiscal policy in the above, since MMT economics greatly favors reliance on fiscal, rather than monetary policy, in spite of the “monetary” in its name. But apart from that, he projects that we may see the platinum coin come back into prominence soon. Continue reading

The State of the Union Speech and the President’s Credibility Gap

By Robert E. Prasch
Professor of Economics
Middlebury College

Last night, President Obama gave a great speech. He almost always does. And to that ever-shrinking group of die-hards who continue to insist that somehow, and in someway, President Obama will validate the hope kindled by his 2008 presidential campaign, it was a moment of triumph. Yes, they are saying, in his heart – very deep down, perhaps – Obama does in fact share our values and concerns, etc., he just has a hard time finding ways to express it, etc.

But let’s take a different tack. Let us begin with the old adage that “talk is cheap.” The fact is that this president has had six years to demonstrate – in deeds rather than words – what exactly constitutes his priorities. Let us, as this is a website devoted to economics issues, set aside the Obama Administration’s genuinely horrific record on civil liberties (The sordid record is long, but highlights include unchecked domestic spying by the NSA; drones deployed to terrorize the citizenry of numerous foreign nations; proclaiming and defending the prerogative to unilaterally kill American citizens with ever stating charges, much less presenting evidence or seeking convictions in the courts; solely and exclusively prosecuting those brave individuals who alerted the public to the Bush Administration’s war crimes, even as he comforted or promoted those who committed the crimes, etc.). Let us focus solely on economic policy. What follows is a brief review of the low moments thus far. These are not presented in any order and is not a comprehensive list:

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A Credibility Problem?

President Obama’s remarks to the Business Roundtable on Trade raise alarm bells for us all, and suggest that he is still pushing his pro- 1% agenda for all it is worth. Perhaps it would be better if Congress just treated him as a lame duck from here on in. Here are a number of statements from his talk and answers to questions, and my comments on them.

Trade: In Asia, there is a great hunger for engagement with the United States of America, and the Trans-Pacific Partnership is moving forward. Michael Froman, who is here, has been working non-stop. I’ve promised his family that he will be home sometime soon. We are optimistic about being able to get a deal done, and we are reinvigorating the negotiations with the Europeans on a transatlantic trade deal.

If we can get that done, that’s good for American businesses, it’s good for American jobs, and it’s actually good for labor and environmental interests around the world. Because what we’re trying to do is raise standards so that everybody is on a higher, but level playing field. And I think that your help on that process can make an enormous difference.

So, he’s telling us that he’s still pushing for the notorious TPP, and well as the TTIP (also called TAFTA), and the Trade in Services Agreement (TISA), even though all three elevate the right of corporations to sue Governments for loss of potential profits if Congress or the legislatures of other nations pass laws to protect the environment, attempt to moderate climate change, exclude certain energy sources from use, or do anything else that harm the potential future profits of companies that are signators to this treaty. Such provisions clearly breach the sovereignty of the United States and assert these potential profits above the potential will of the people which in seeking public purpose goals may harm or extinguish these potential profits.

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What that Letter Should Have Said

By Joe Firestone

On Valentine’s Day, Senator Bernie Sanders sent a letter to the President, authored by himself and signed by 15 other Senators, all Democrats. The letter was a response to the rumors that the President intends to include his Chained CPI proposal to cut Social Security benefits in the budget he will soon send to Congress. It summarized:

“Mr. President: These are tough times for our country. With the middle class struggling and more people living in poverty than ever before, we urge you not to propose cuts in your budget to Social Security, Medicare, and Medicaid benefits which would make life even more difficult for some of the most vulnerable people in America.

We look forward to working with you in support of the needs of the elderly, the children, the sick and the poor – and all working Americans.”

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The TPP: A Dangerous Proposal Whose Time Has Gone

By Joe Firestone

A recent, very good post at Naked Capitalism by Clive, suggests:

. . . Dear readers, you may think that writing to your elected representative, commenting negatively on articles you read in the mainstream media about the TPP and generally kicking up a bit of a fuss, making some noise, is a waste of effort. That is not so. The world does watch what goes on in the US. If popular sentiment is against something, the US government has a much harder job of convincing foreigners that it’s just them being awkward and reactionary and not getting the big, progressive, reform-minded, modernising picture.

I agree that this is a good proposal for one way the American public could register its objections to the Trans-Pacific Partnership (TPP) with foreign leaders. But, I think that such letters ought also to point out that even if the TPP were railroaded successfully in the next few months, then it is unlikely to stick. After all, it is only a Treaty. Wouldn’t an electoral victory here by a movement dedicated to overturning corporate control of the political system, result in withdrawal from the TPP before any concrete legislation likely to conflict with it was passed by Congress?

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Dick Durbin Insults Everyone Else’s Intelligence About Social Security

By Joe Firestone

Yesterday on Fox, Senator Dick Durbin said:

WALLACE: I’m going to talk about ObamaCare on a second, but you’re not answering my question. Why does taxes — why do taxes have to be on the table? Why can’t you just make a deal, short-term spending for long-term entitlement reform — which, Senator, you support and President Obama support. You have supported the idea of some entitlement reform.

DURBIN: That’s right. I do, and I’ll tell you why — because Social Security is going to run out of money in 20 years. I want to fix it now, before we reach that cliff.

Medicare may run out of money in 10 years, let’s fix it now. And that means addressing the skyrocketing cost of health care. That’s what ObamaCare is focused on, and yet, the Republicans want nothing to do with it.

If we don’t focus on the health care and dealing with the entitlements, the baby boom generation is going to blow away our future. We don’t want to see that happen. We want to make sure that Social Security and Medicare are solid.

The “. . . may run out of money. . . . ” and “. . . dealing with entitlements. . . “ memes, in reply to Chris Wallace’s question together suggest that a deal trading increased revenues for Social Security and other entitlement cuts is acceptable to him. So, Durbin’s argument is that because Social Security Trustee and CBO projections, based on very pessimistic economic growth projections for the whole period, show a shortfall in the Social Security “Trust Fund” in 20 years, it is acceptable to make entitlement cuts now if the Democrats can get increased revenue from higher taxes, as if entitlement “reform” were the only way to meet the perceived Social Security solvency problem. But who would it be acceptable to?

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What Happens Now?

In the aftermath of the great 2013 government shutdown/debt ceiling crisis, and the kicking of the can down the road while maintaining austerity once more, the subject on many minds is where do negotiations over fiscal policy go from here? Will the new “budget committee” produce more austerity and do a grand bargain including the “chained CPI”? Will Congress finally turn towards economic growth and job creation, or will we continue to have more shutdowns and debt ceiling crises in 2014?

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Off the Debt Limit Hook for at Least the Next Four Months

By Joe Firestone

Provided that the Senate and House follow through on the scenario now on the table, it looks like the game of chicken worked for the Democrats this time. We’re off the hook on default and Government shutdown for now, and Washington village pundits are in full-throated cries of celebration.

Congress is off the hook too. They don’t have to offer any solutions to real, rather than manufactured, problems.

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Rationalization and Obligation, Part VI: What He Ought to Do, What He Probably Will Do

By Joe Firestone

This is Part VI of a six part series replying to a claim by the President at his recent White House News Conference. Part I covered the News Conference and the first two (the selective default, and the exploding option) of seven options the President might use to try save the US from defaulting in the face of continued deadlock in the Congress on raising the debt limit or repealing the law enabling it in its entirety. Part II discussed Platinum Coin Seigniorage, invoking the 14th amendment to justify continuing to issue conventional Treasury debt instruments, and consols. Part III discussed premium bonds, and Treasury sales of the Government’s material and cultural assets to the Federal Reserve. Part IV, then evaluated all seven options in light of variations among them in likely degree of legal difficulties they might face, and also the likely impact of each on confidence in the bond markets, if used. Part V then summarized my evaluation of the seven options. This part will end the series by saying first, what the President ought to do, and then by saying what I think he is most likely to do.

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