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The great problem with President Obama’s State of the Union is that he has created a bizarre reality in which there is no money. This is a narrative that is not only going to continue to hinder our weak recovery, but also make new progressive spending programs impossible.
In his speech Obama said the first thing we must do is find another $1.5 trillion in deficit reduction. This is no easy task. A dozen committees, super committees, commissions, one-on-one negotiations, etc… have all tried and failed to do this over the past three years. There simply isn’t a bipartisan agreement on what revenue to raise and what programs to cut. There is not some $1.5 trillion politically easily cut pork program, because if there were it would have been cut by now.
If a deal is ever reached it will not only consume every single piece of low hanging fruit but also many pieces from the top branches. It will take every tax loophole closing the GOP can stomach and every domestic cut Democrats are willing to accept, and then some.
On the off chance there is a deal that can be struck, it will leave no politically acceptable “pay fors” left for new programs, be it tax increases or spending. That is what doomed Obama talking about spending more on jobs programs, infrastructure improvements, and preschool
Obama said every one of these ideas would not add a dime to the deficit, but Obama still can’t even get Congress to pay for the deficit reduction he wants. If Obama can’t get the $1.5 trillion to pay for deficit reduction, it simply defies belief to think he could get even more to pay for new initiatives.
In the real world, interest rates are so low people are basically paying to loan the federal government money. Given that we still have high unemployment this would be a perfect time to borrow money on the cheap to pay for smart long-term investments, like infrastructure improvements and preschool, that would also put Americans to work. Sadly, our President doesn’t believe in this reality and has instead created his own in which the country shouldn’t borrow even though its borrowing costs have never been lower. A reality in which the only path forward is more austerity.
Photo by Ramberg Media Images under Creative Commons license.
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Silly emoprog… that’s not a bug, that’s a feature!
… and what the heck is an “emoprog” actually supposed to be anyway?
When someone lives and works in a bubble within a bubble within the bubble that is the Beltway, they believe that “most economists” think that we need to cut, and not “just” stabilize, the Federal debt.
This piece on NPR this morning perfectly illustrates the way that reality is not allowed to intrude.
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Obama learned his economics from his One Percenter mentors and sponsors, so what do you expect him to say or do? He is hindered by his ignorance and refusal or inability to understand economics.
We are screwed by his inability or ignorance and by his fealty to the Powers That Be. Those “savvy businessmen” banksters and Wall Streeters. Those clever hedge fundies.
What can we do? Serious question. Krugman tried to speak sense to him and what happened? More of the same from Barry and his One Percenter econ crew.
I can wring out a trillion and a half savings in ten years from a trillion a year national security budget. Make them get by on $800 billion a year for DoD, intelligence community, homeland security, international military aid. $200 billion times ten years is easily a $1.5 trillion in savings. Offset those cuts with increases in the minimum wage, Social Security benefits, earned income tax credits, and increases in education and health care budgets (which go through the states). The economy will not stall out. And the deficit will drop even faster and begins paying down that scary $15 T in national debt.
If the minimum wage can be forced through Congress, the financial sector and other businesses that are hoarding cash, will have to spend in on labor. That is stimulative in the consumption term of GDP. It just has to generate revenues higher than the cuts to the government spending term of GDP. Reduction in the trade deficit (or even a trade surplus) adds to the stimulative effect.
There are ways that can generate those deficit reductions. Getting the mechanisms through Congress is still an issue.
My suspicion is that the minimum wage increase proposal is a hedge against the sequester actually going into effect. The nice thing about the Grand Bargain is that so far the Republicans have not wanted it to succeed. Can’t have Obama having any more legislative victories.
As far as understanding of economics goes, the Village sets the limits of what the economic understanding is. And most of the folks that the Village listens too, and thus that the Congress listens to are pretty dismal.
Every dollar cut from the Federal budget creates another debt slave for the banks. Obama is a deceitful clown and beholden to Wall Street. But then we already knew this.
Austerity. Yep, its all about austerity.
It makes me nuts when we talk about the scary debt. We are about as smart about this as Obama. Truth is we can never become insolvent in our own currency. I mean never, ever. And the interest we pay is only what we choose to pay. We don’t have to pay anything. We don’t even have to issue debt except congress makes us do it. Bit what the hell. We might just as well join the fools in the village. Can’t beat them. Oh and the bonds China holds is really just a savings account. Nothing more.
So lets just keep playing this silly game.
We are running out of money you know. Our government just can’t issue any more. We ran out of digits on the Feds computers you know.
Rather than borrow and shovel money into our Masters’ coffers, Mint a $100T Coin, then push for major progressive programs until we have a real economic constraint rather than this bullshit about running out of money.
I won’t hold my breath for a power-serving murderer to do something like that though. We’re fucked with Obama and the rest of the corporatocrats calling the shots.
The wall st banks are broke but the fed prints up trillions so the Fed can buy their debt. The BS excuse is the banks will put the money back into the hands of every day people. Instead they keep the money. Now Obama is talking about an public private partnership for rebuliding the country more BS this is just another scam so the 1% can keep looting the country.
There is no such thing as an “emoprog.” The hysterical pragprogs psychologically project it onto actual progressives in a vain attempt to trivialize criticisms of Precious Leader.
Wall Street banks are broke? hello mr bear , are you having hallucinations?
President Obama has an idea.
Raising taxes 95 % in everyone would erased deficit.
The real question, as Wallerstein pointed out, is one of what is to replace capitalism once it ends. Obama votes for plutocracy.
Beautiful.
I always thought that the great problem with anything that Obama says is that you can’t trust what he says. You can’t trust him not to deceive intentionally. You can’t trust him not to fudge so that you can’t say later that he actually lied. Oh, and you can’t trust him to keep what little he does clearly and nequivocally promise.
In light of that, I will post here what I posted on Nathan Solomon’s thread parsing Obama’s SOTU speech:
Yes they are insolvent. The reason why they have any money is we (Fed govt/Taxpayers) are either bailing them out and or printing money for them. If this process stopped they would be out of business.
An article from Bill Black explains it..so the next time you hear a wall st banker complain about givng money to free loaders they must be talking about themsleves
http://dailybail.com/home/bill-black-the-banks-are-still-insolvent-and-obama-is-not-on.html