Goldman Sachs

Vampire Squid

Individuals who strongly want to cut Social Security and Medicare see the upcoming lame duck session as their best chance in years. Already big pocket donors are raising millions to spend on promoting a “grand bargain” after the election and Wall Street CEOs are out promising that the certainty pixies will sprinkle their magic dust to make everything better if a deal is reached. From Politico:

“Imagine what kind of stimulus it would be if politicians just reached some kind of long-term budget agreement to eliminate all this uncertainty?” Goldman Sachs chief Lloyd Blankfein told POLITICO in an interview. “It’s not that it’s easy to do. It will require some political sacrifice on both sides. But the solutions are so clearly within our means.”

Added Jamie Dimon, chief executive of JP Morgan Chase: “Either a President Obama or Romney will have to deal with this and reach some kind of agreement that will take this threat off the back of the economy both now and in the longer term.

I can’t tell if Blankfein’s statement is part of an active campaign of deception or a result of him believing this nonsense, but it hardly matters. If pushing through a deficit reduction package during a weak economy created growth we would expect England’s economy to be soaring right now. Instead it has suffered greatly as the result of the Conservatives’ misguided decision to completely reject Keynesian economics and focus on deficit reduction.

What I find most ironic about these CEO deficit hawks complaining about the “uncertainty” that is hurting the economy is that they are the ones responsible for helping to create said uncertainty to begin with. The deficit obsession created the uncertainty about raising the debt ceiling. Similarly, they constantly pushed for a big deficit deal resulting in the creation of the sequesters, which are seen as a big source of the fiscal uncertainty at the moment. The main “uncertainty” about government policy right now is how the government will clean up the mess created by past efforts to force a deficit deal.

Expect the magic of the certainty pixies to be evoked often during the lame duck session to justify adopting policy that the American electorate opposes.