Other Thoughts from Other Peeps

June 28th, 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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9 comments in reply to "Other Thoughts from Other Peeps"

  1. Susie Madrak says:

    “As Ron correctly notes, people want to see spending cuts and see them they will.”

    Where do you get that idea? Yes, the media and the insiders have relentlessly pounded that drum, but the polling’s been pretty consistent. It’s only Beltway insiders who want spending cuts; people want jobs.


  2. Tyler says:

    The Republican Party’s starve-the-beast strategy has worked wonderfully.

    Politics is so much like sports. Thus far, President Obama has been like Tony Dungy, but he appears to be moving toward the Belichick approach. And we all know Bill Belichick has won two more Super Bowls than Dungy.

  3. Mary says:

    I’m not going to go into detail about the roundabout way I came at this, but I started thinking about the minimalist movement and then it occurred to me: that’s what the Republicans have seized onto. After the crisis, people were forced to become more “minimalist” at least in their spending habits, and the Republicans tapped into that movement and tried to extend it to the government. But actually what they’re doing isn’t at all minimalistic. As so many people, including your friend, Ron Klain, have pointed out, they are actually transferring not minimizing. Extending tax cuts to the rich, while cutting back on social services isn’t minimizing government; it’s transferring its benefits to the rich. They are transferring more financial burdens onto the middle class while extending more financial liberation to the upper class. But the American people have been tricked into thinking that it’s a paring down of “big government.”

    So the question is: what would a minimalist government look like? Of course, now is not the right time for a minimalist approach to government. But theoretically, can you successfully transfer the idea of minimalism (which I think is great on an individual level, when not taken too far), to a government. I believe that you can, in a way, but it wouldn’t look at all like what has been proposed by Republicans because it would have to optimize the private and public sectors (the balance between the two) until maximum efficiency is attained for all its citizens; i.e., until everybody is getting their needs met with the least amount of waste. In fact, theoretically, it would probably end up looking quite socialist rather than capitalist simply because the government is more efficient at delivering many social services than the public sector. The inefficiency of an abundance of choices generated by the public sector with its unnecessary competition is not at all minimalist.

    Thus, my conclusion is that yes, you can sort of achieve a minimalist government or rather country, but it would probably look more like Sweden than the myth perpetuated by the Republicans.

  4. Mary says:

    Ironically, I’m rather distracted by this blog today. http://mnmlist.com/undistracted-reading

    I am so not zen. A little on the minimalist side though. So at least there’s that….

  5. David Kaib says:

    What makes you and Klain think that people really want cuts? At best, polls show people are in favor of cuts in the abstract but pretty much oppose any and all cuts when they are specified. (Note too that both parties have been treating government spending as, at best, a necessary evil for a generation. If one party took a contrary view, those numbers would likely shift pretty quickly).

    And there is zero evidence that such poll responses allow us to infer that the public demands action on this score.

    It is the elites that demand certain kinds of cuts – i.e. cuts in social insurance or other sorts of spending that help the poor and middle class. Those same elites are perfectly fine with increases in other sorts of spending, such as on wars.

  6. comma1 says:

    Ron Klain is correct, of course. Correct and about 3 years late… welcome to the party. The president’s failure to do anything about jobs is going to be written next to his statue. What a waste.

    I’d be interested to hear what the result of changing OT laws would be on boosting employment. Common sense suggests mandating 3x pay for OT work would go a long way to boosting the number employed (likely not pay). It also seems to fit the “narrative” that those who work hard get rewarded. (We can just pretend the last 30 years didn’t happen). This seems especially true now because of employers reliance on temp work and stretching the workforce to it’s breaking point before hiring. (Not to mention it has a certain progressive quality of life/human dignity component as well).

    I’d also be interested to hear the implications of putting in place demand side policies in a country whose wages haven’t budged in a generation — namely, ours. This is truly the real problem. Much like the current focus on short term deficits, the current focus on short term job deficits ignores the fact that the middle class has been languishing for a generation and that the pain is only worsening with tech improvements. I have yet to hear demand side economists recognize that it is not 1950, we have globalization today. Although I agree with demand side policies, this seems like a possible major error. In the 1950’s if you pushed demand up, American co.’s were enriched. Today doing the same adds to India’s bottom line — what is the answer? When will economists register that globalization is not benefiting most Americans?

  7. Alessandro Rosa says:

    I am really getting tired of listening to the Republicans claim they want balanced budgets and are fiscally conservative and have the best interests of the country at heart when they are unwilling to budge on taxes; but I am also growing impatient with President Obama trying to play nice and being reasonable.

    So what I would like to see is President Obama give the Republicans exactly what they want. A budget that reduces the deficit solely with Spending Cuts. The way I would want The President to structure the cuts is to propose cuts and closures to programs and expenditures such as Military Bases and Federal Offices predominantly in Republican Congressional districts and States with Republican Senators and Governors. Then these fiscally-minded Republicans will have to either go along with the cuts or show their true colors and reject the proposed budget produced entirely of spending cuts. Republicans want to cut off America’s nose to spite its face; President Obama needs to get them into a Machiavellian trap to prove once and for all what the Republicans are made of.

  8. Custom IDX Solutions says:

    This elections is already won. Trust me if you dont think the dems and Reps get together in a room and promise this for that you are crazy. Obama will be back for another 4.