Jun 28, 2011 at 11:52 pm
I’ve been meaning to share a bunch of interesting stuff I stumbled on today—just a few peeps thinking interesting thoughts about our current predicaments.
First, my pal Ron Klain on how important it is for the President to pivot to the jobs deficit. Even if jobs ideas don’t become law, the people need to see their leader fighting for their living standards. And that means jobs. It doesn’t mean: “we must lower deficits, because if we don’t, gov’t borrowing might crowd out private sector borrowing, which could lead to higher interest rates and slow investment which might create jobs.”
I’m being glib—as Ron correctly notes, people want to see spending cuts and see them they will. But they also want evidence that the administration is not complacent on jobs.
“The president should put forward a half-dozen job-creation ideas in July, and call on Congress to come back early from its August recess to give these proposals up-or-down votes before Labor Day. Then, he could propose a half-dozen more, and demand votes on those before Congress finishes its session this year. The administration may lose some of these votes; and ideas that win approval by Congress in fall or winter of 2011 may have limited impact on the employment rolls before Election Day 2012, but the American people will be grateful for the president’s determination.”
Ron neglects to mention FAST, so I will.
Next, in a discussion about the deficit debate, I like the way economist Bill Gale puts this:
“What happened in the last couple of years is that we’ve had the short-term deficits that have galvanized attention to the ‘deficit’ problem – arguably, the wrong deficit problem, since the short-term deficits are not the real concern, they are actually helping the economy, and if there were no medium-term or long-term deficits, no one would really care about the short-term deficit.”
In addition, as our CBPP graph shows, the short term stuff doesn’t contribute to future deficits because it’s, um…short term (note, eg, the vanishing share of Recovery measures). Basically, a better time to have gotten freaked out by deficits was when the Bush league—yes, with lots of help from members of both parties—was passing deep permanent tax cuts, while putting the wars on the credit card.
Finally, Greg Sargent nails this critique of a Republican attack ad where Democrats are accused of “decimating Medicare” because they’re trying to make sure it stays intact as guaranteed, publically-provided health coverage for seniors. IE, they’re not privatizing or voucherizing it. And since, according to this twisted version of the facts, Medicare is going bankrupt, the D’s are standing on the sidelines, watching as the venerable program dies a slow death.
Except it’s not going bankrupt, the Affordable Care Act includes ambitious Medicare reforms, and the R’s plan merely shifts the cost burden to seniors who, armed with an inadequate voucher are on their own to fight it out with insurers.
Really finally, among the many interesting questions I was asked today:
1) What did you think of the release of oil from the Strategic Petroleum Reserve?
2) How can you tell if a sovereign debt crisis is a liquidity crisis or an insolvency crisis?
My answers: 1) Probably not the best use of the SPR, but potentially good and much-needed stimulus.
2) Ask yourself: can this country realistically generate the revenue to service its debt in the medium term? Does it have both the underlying economy and institutional infrastructure to do so? If so, liquidity provided through the feds and central banks could work. Otherwise, restructure the debt and start over. This is also why the US is not Greece.
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