Diagnostics

July 29th, 2011 at 12:30 am

I said I’d get back to the questions I raised in this post from last night, but the smart and articulate Larry Haas beat me to it.  Lots of thoughts from commenters too.

Summarizing Larry, comments, and adding some complementary thoughts, here are some of the problems folks raised:

President Obama: The POTUS is taking a lot of heat right now: he leads from behind, he’s embraced the austerity/anti-Keynes theme, he’s much too quick to compromise, he caved on revenues in the current budget deal after caving on high-end Bush cuts last year.

I’m still a big believer in the President’s economic agenda, which is forward looking and strong in investment, in innovation, and in creating new opportunities for American workers.  But that may be more because I remember this agenda from back in the day when we used to talk about it.  I agree that there’s something to these critiques.

I don’t like the austerity language either (I’ve been critical of the gov’t budget=family budget language from the early days of OTE) and I dislike the policy implications—accepting a budget deal with no revenue–even more so.

But I’m less critical of the President than many others on the left.  It’s probably true that as a pragmatist up against ideologues, he’s brought a knife to a gunfight.  But I have a hard time imagining anyone with the best interests of the country at heart doing a much better job against the people with whom he’s dealing.

And while these last weeks have not been his moment, I can’t forget how damn tough and persistent he was during health care reform and throughout the depths of the economic crash.  I know there are real issues here, but I believe this President is going to find his footing again soon and remind a lot of people of what he can accomplish for this nation and this economy.

R’s are United Behind a Simple Message, D’s are Not. Absolutely.  Guilty as charged.  But Larry needs to push further here, beyond diagnosis and into cure.  Help us out, dude!

Recovery Act/Keynesian Stimulus is Perceived to Have Failed. This is a tough reality with which we must deal.   As stressed in this strategy memo, and echoed by Haas, if folks believe their hard-earned, much-needed dollars are wasted on boondoggles that don’t help the economy, they’re going to respond much more positively to tax and spending cuts than stimulus policies.

Their perception is wrong, but clearly perception is trumping facts right now.

The Media: Eh…maybe, and sure, always lots of examples of bad and lazy work.  I’m particularly frustrated by the “pox on both your houses” routine, when it’s clearly one House that’s refused to negotiate, “Cantoring” away when the deal moved from spending cuts to tax revenues.

But I don’t think this problem is any worse than usual, and there’s also been a lot of good reporting of late.  I refuse to make a list of the reporters I consider to be strong, fact-based, and willing to call out falsehoods when they see them because I’m sure I’ll leave someone out.  But you know who you are.

Again, all of this is diagnosis.  Still to come, prescriptions.

 

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15 comments in reply to "Diagnostics"

  1. Evan says:

    Actually, I’m glad there was no deal on revenues. That means the complete expiration of the Bush tax cuts remains on the table; all the revenue deals seemed to include locking in some portion of those. Of all the things we could do to curb the deficit, allowing those tax cuts to expire (in their entirety, thanks) is one of the biggest.


  2. Misaki says:

    Their perception is wrong, but clearly perception is trumping facts right now.

    Is the goal of fiscal stimulus short-term, or long-term recovery?

    The government is able to spend money to accomplish some specific, short-term goal. But as the public is aware (Q. 13, 26% blame Bush admin., 8% Obama admin, 25% Wall Street and fin. inst.), the money just ends up at Wall Street where rich people fail to efficiently spend it on kittens because “want to feel as smart about giving as they were about making their money” and giving money to “whoever says they need it” is not very smart.

    I’m particularly frustrated by the “pox on both your houses” routine, when it’s clearly one House that’s refused to negotiate, “Cantoring” away when the deal moved from spending cuts to tax revenues.

    This was posted to Mr Paul Krugman’s blog, and would seem to be relevant:

    Actually, the Republican party is aware they will be seen as responsible if the US goes into default.

    The claim that it will be the Democratic party’s ‘fault’ is only because it is unreasonable to argue that going into default would be good for the nation; even if this is what a portion of the US believes. Anyone who argues that it will be the Republican party’s fault is actually playing into their hands, because of the undercurrent of opinion that the party with the courage to take the blame for a failure of the current political process is, by doing so, rejecting the actions which would nominally lead to a higher reputation but at the expense of the actual economic state of the nation.

    There is a reason Confederacy flags are still sometimes seen. But please keep ignoring the evidence in front of your nose on the rise in corporate profits since the start of the recovery and general attitudes toward fiscal stimulus.

    Again, all of this is diagnosis. Still to come, prescriptions.

    At the risk of being spammy… which of the following two positions does it advocate with regard to jobs?

    The economics profession needs to realize the obvious: economics is the distribution of scarce resources, and in the present world consumer demand for consumption of products is scarce, meaning that the work required of society is also scarce. Since in non-communist societies income is directly related to work done, economics has the responsibility of understanding the allocation of scarce amounts of work.

    A 9.2% unemployment rate and 5 unemployed for every job vacancy does not demonstrate an acceptable understanding of this basic concept. Either there must be a resolution that society should create larger amounts of “work” that do not increase the standard of living as defined by the choices of people who refrain from spending their money, or the economic profession should accept that the goals of people place an upper limit on the total amount of work society feels it is necessary to do, and should advise policymakers on ways to distribute this work fairly among the able population.

    Anyone who cares about the inevitable consequences that result from the unequal distribution of work, who feels that these consequences are “destructive” or indicative of “a true moral failure“, should consider which of these choices is superior instead of contemplating the future in a fruitless morass of indecision. (MMI)


  3. Procopius says:

    Well, you know more about the President’s economic agenda than we do. Since inauguration he’s been pretty good about keeping it a secret. But all the recent appearances, and some of the things he said in the past, make it appear that high on his agenda, something he REALLY wants to do, is cut Social Security benefits. He, after all, is the one who selected Bowles and Simpson as co-chairs for his Catfood Commission. He’s the one who keeps offering cuts to Social Security, which has absolutely nothing to do with the deficit. Also, aside from economics, he’s the one who chose John Brennan as his “security” adviser and has relentlessly followed and expanded the Bush/Cheney agenda.


    • Cary King says:

      Agreed.

      If POTUS Obama has a consistent economic agenda then it has been a closely held secret.

      There has been no consistent messaging, and less consistent acts from Democrats since 2007 when they assumed majority. And, even less consistency since 2009 inauguration.

      Obama has seemed to act on the supply-side frame that Tea-Publicans have created around the discussion of economics.

      Worse, Obama and Democrats have not acted in any consistent manner with economics.

      The so-called stimulus package was half supply-side economic tax cuts. The perception from the too small by many times, and mixed approach is a failure.


  4. foosion says:

    Perception that stimulus has failed: the Republicans went against letting the Bush tax cuts on those making over $250,000 expire and are trying to slice Social Security, Medicare and Medicaid, despite overwhelming public opinion being opposed to their plans. Why is public opinion irrelevant for them, but necessary to pass stimulus?

    POTUS: it might be acceptable to accept spending cuts the public appears to want, but adopting the Republicans talking points about austerity and especially attacking Social Security, Medicare and Medicaid against overwhelming public opinion and rational policy is another matter. It’s terrible policy and terrible politics.

    Compare his recent speeches to FDR’s and tell me no one can do better.

    Part of the reason we’re in this mess is the 2010 elections. Better policy and politics could have prevented the Republicans from doing as well as they did.

    I expect to be attacked by my enemies. I don’t expect to be attacked by those I regarded as my friends.

    What can we do? Pivot to a focus on jobs and to strengthening Social Security, Medicare and Medicaid. Educate the public. Win the 2012 election and then pass useful bills.


  5. The Raven says:

    Well…I think the President starting fighting too late. He probably would not be in this fix if he had addressed unemployment, housing, and banking to begin with. But he seems constitutionally unable to act against the wealthy. Outside of his administration, it’s not clear what he’s fighting for, apparently because his model of political negotiation is the backroom deal with the rich and powerful.

    I’m sorry. I’d like to be more sympathetic. But, really, what have we seen that shows outsiders that this administration is worthy of sympathy? A Republican health care plan? It’s a huge giveaway to some of the least-trustworthy businesses in the USA. Gay rights, maybe. But that does not offset the Administration’s intensification of immigration enforcement, or its defense of the worst abuses of the Bush II administration.

    You are still, I think, partly in the reality distortion field that affects people high in the US government. Outside of that field, most people either think that Obama is a disaster, or are trust him personally, beyond logic.

    Me…I think he’s the wrong man for the hour. We hoped for someone willing to take on the authoritarians and the banksters, and someone willing to renounce the Bush II expansions of executive power. Obama has so far done none of these things. It was asking a lot of him, and he has come into one of the worst situations of any President in history: worse than what FDR faced, and as bad as that of Washington and Lincoln. Obama has pursued his own agenda instead of the crying needs of the American people. I cannot imagine anything he can now do that would remit that.

    Croak!


  6. Geoff Freedman says:

    The latest GDP numbers just came out. The U.S economy grew at 1.3% the last quarter. The first quarter numbers were revised downward to .4% Consumer spending has flattened out to .01% in the last quarter after rising 2.1% in the first 3 months of the year.

    Irregardless of how the debt ceiling crises is resolved, our credit ratings will be going down because the embarrassing spectacle in Washington. This spectacle has effectively wiped out any confidence that the ratings agency and the rest of the world had in our ability to deal effectively with our economic and budgetary issues. Interest rates will be going up shortly as a consequence.

    If, on top of this if we don’t raise our debt ceiling, and start to piecemeal payments of our monthly obligations our economy will be pushed over the cliff in a matter of weeks, maybe sooner. Even with zero interest domesticallty we could possibly have deflation
    with this kind of contraction, because consumer spending will go negative as a consequence.

    What will higher rates do to our banks, as well as the consumer economy.

    And we are going to cut government spending on top of all this while we continue to fund two wars and a huge industial military complex that we are unwilling to pay for?

    This is very very bad.

    We have met the enemy and he is us.


  7. AndrewBW says:

    Here’s an easy message, and one that should be applied to both families and the government: “Save during good times so you can spend during the bad.”

    Here’s another: “You have to spend money to make money.”


  8. jonathan says:

    He seems to believe, to actually believe, in post-partisan Presidency. I can’t think of any less partisan president, other than Washington. That is dangerous, truly dangerous because this is not a post-partisan world.


  9. Kafar says:

    Jared issue is Obama has obsession with bipartisanship, here are the example
    1. In stimulus in put lots of tax cuts hoping that republican will vote for it and let Queens from Maine cut help for States.
    2. In healthcare he let Sen Baucus negotiate with Se. Grasley while R’s and Grasley himself painted reform as Death Panels. In the end no R’s supported the reform.
    the list goes on


  10. John says:

    I liked Haas’ article. One thing, though; I’m not befuddled about why “progressives” are befuddled. It’s called cognitive dissonance. It’s what I usually comment about here.

    I’m a socialist. A Christian socialist, not remotely a Marxist. I don’t call myself a social democrat – I consider the “democrat” part redundant. To me, democracy isn’t just voting – it’s economic empowerment. What we have here isn’t democracy – it’s plutocracy.

    I’m not crazy or extreme. I consider myself objectively rational. But maybe as much as anything, I can’t endure cognitive dissonance.

    I don’t know of anyone who doesn’t call themselves a socialist who doesn’t think socialism is extreme. And they think as much, in this political and economic environment. We socialists are definitely extreme in the opinion of most, but the Tea Party, they still deserve to be taken seriously by the President, as of his 10:30AM press conference this morning.

    That’s pragmatic in the face of ideology? No, it’s more ideology, and anything but pragmatic.

    Brad DeLong – he who rants at the mention of Karl Marx – is now saying that Obama needs to mint $100 billion coins NOW, along with invoking the 14th Amendment. I don’t think he’s extreme. I suggested it here last week, and you “weren’t buying it.”

    You have 2 upcoming appearances scheduled on Lawrence O’Donnell’s show. He’s a socialist, just like me. Is he extreme? Seems to me he called this debacle as the election results were coming in last November. From where I sit, he wasn’t even prescient; it was predictable. But it took a socialist to predict it, and he did.

    The problem with so-called “progressives” is really pretty simple. They love them some free-market religion – aka capitalism – as much as the Republicans do. And that being the case, to dismiss the extremism of the Republicans for its real root cause, would be to dismiss their own beliefs. They can’t do that. That’s cognitive dissonance.

    Progressives want to defend our successes at socialism but they can’t, because that would require them admitting to being socialists, which they don’t want to do. They want to be able to call themselves capitalists. But the right is right about this – The programs being fought over – Medicare and Social Security – are not capitalism; they’re pure socialism. To defend them is to admit as much. Progressives don’t seem able to admit as much.

    Capitalism is dying. Again. And I’m not talking about the debt ceiling. Austerity is killing it. Capitalism has no other choice – Keynesian stimulus is socialism to any capitalist, whether Keynes himself thought so or not. It’s only “progressives” who want to believe it’s still capitalism. But progressive will make it ineffective by trying to hide its real socialism, by trying to make it about money instead of helping folks in need more directly. They have to go looking for ways to avoid socialism being called socialism.

    You can’t serve two masters, Dr. Bernstein. You have to choose a side. There is no middle.

    Mene. Mene. Tekel. Parsin.


    • John says:

      Attributed to Keynes (saw this yesterday on Democratic Underground, via WikiQuotes):

      ‘Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”’

      Not an endorsement of socialism, but not an endorsement of capitalism either. And this from Albert Einstein, a socialist:

      ‘The definition of insanity is doing the same thing over and over and expecting different results.’

      According to Einstein, both our “pragmatic” President and the Republicans in the House are insane. And we socialists are extreme? Just sayin’.


  11. Michael says:

    If the President were AGAINST the GOP, I’d be more ok with him losing.

    He’s just another version, and now we all lose.


  12. Joseph Patrick Bulko MBA says:

    You want prescriptions? Well, for one, let’s stop waiting for the government to do anything useful to resolve our ongoing economic woes! The seemingly endless (and pointless) ideological civil war raging in Washington pretty much rules out the possibility of any helpful legislation being enacted. We should, instead, be looking for a private-sector solution. I should note here that I do not like dealing with the private-sector, especially the Wall Street types, because I’ve concluded that they aren’t really human. They are not like you and me. They possess an insatiable unquenchable hunger for more and more wealth, way beyond what any human should ever need or want. I consider them to be some sort of heartless (soulless?) wealth-craving space alien. They don’t know any better. So, I’ve devised a solution to the ongoing economic mess with this realization in mind, knowing too that you can’t get “blood from a turnip” or convince a zebra to change its stripes (or expect space aliens to respond to anything other than the acquisition of even more wealth). As the tepid economic “recovery” fizzles to a stall and an ideological civil war rages in Washington, millions and millions of otherwise hard-working Americans wonder if they will ever be employed again. Clearly, we need a jobs solution NOW! I have a plan to restore the U.S. economy to full employment. It’s a complex private-sector mechanism that involves giving another dose of financial nitroglycerin to Wall Street hoping that this time they won’t nuke the economy. In exchange, we get lots and lots of jobs. Read the plan here: http://jpbulko.newsvine.com

    Joseph Patrick Bulko, MBA


    • Michael says:

      There is no private sector solution to the government not functioning. Or, alternatively, there are private sector solutions, but they are grossly inefficient and obviously massively inferior.


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