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Tag Archives: Deficit reduction

Hillary breaks out of the “Beltway Deficit Feedback Loop”

04 Sunday Sep 2016

Posted by willykay in Uncategorized

≈ 2 Comments

Tags

Balanced Budget Amendment, Chuck Raasch, Claire McCaskill, Deficit reduction, Jason Kander, missouri, national debt

There must be something in the local water that leads Missouri Democrats to wail and figuratively rend their garments over the question of deficits and the national debt. It also often leads them to support what can only be described as stupid policies. Claire McCaskill worked hard to establish her me-too, “bipartisan” fiscal credentials by embracing the very bad idea of a balanced budget amendment. Jason Kander, who hopes to join her in the Senate next year, drew gasps of horror from many potential Democratic supporters when he jumped on that same bandwagon. We’ll soon see how far it will carry him.

Showing that he’s on the cutting edge of Missouri deficit thinking, Chuck Raasch, a political columnist at the St. Louis Post-Dispatch, revived the Oh-dear-me-the-deficit-is-looming! refrain in a column published today (9/3), which dealt with the responses of the two presidential candidates when asked to describe what they would do to reduce the deficit (yearly overspending) and manage the nation’s debt (the  sum of past years’ deficits).” Raasch was disturbed by what he considered the failure of either to adequately address the issue. In the case of Donald Trump, who, as Raasch points out seemed to confuse the trade deficit with the federal spending deficit, most rational people would agree.

As for Hillary Clinton, Raasch seems to think that while she proposes tax reform to generate new revenue, she fails to address what he calls the “eat-your-peas challenges,” presumably spending cuts to programs like social security and Medicare, the necessity of which Raasch seems to think has been indisputably established. He also gives short shrift to Clinton’s  implicit claim that directing the new tax revenue to infrastructure and education spending would generate deficit-shrinking growth. In short, Raasch evaluates her answer on the basis of the bill of goods Republicans have been hawking since the dawn of modern political time.

First off we should get our facts straight. Deficit spending is not necessarily the problem alarmists want us to think it is. Lots of economists, liberal and otherwise, are emphatic that our current yearly deficits are not excessive when viewed as a percentage of GDP, nor is the national debt potentially unmanageable.

Among those who hold these views are widely respected economists like the Nobel prize winner Paul Krugman who is actually arguing that now is the time to increase the deficit. Nobel prize winner Joseph Stiglitz believes that there is a long-term debt problem although he has definitively rejected the “eat-your-peas” solution. (He famously described anti-debt, European austerity programs as a “suicide pact” – a description that seems prescient as austerity-raddled EU economies stall.) Neither are industry economists inclined to worry about current deficits. Business Insider notes that Scott Brown, chief economist at the investment firm Raymond James has argued that the current deficit rate of %2.5 of GDP is easily sustainable and goes even further, asserting that warnings about the long-term dire effects of the national debt are overstated.

Many of these same economists would also endorse the deficit reducing effect of the proposed Clinton program of progressive tax reform combined with economic programs designed to lessen economic inequality. Although this program leaves Raasch unimpressed, it is very suggestive of the remedies proposed by economists like Stiglitz and Brookings economist Henry Aaron who remarks that:

Many analysts, from both political parties, agree that the federal government should do more now to spur economic growth and that it should simultaneously take steps to lower projected long-term deficits. Republicans and Democrats often don’t agree on the details. But here is one illustrative strategy that economists from both parties have endorsed. The first element is increased investment in what is called ‘infrastructure’—meaning roads, bridges, tunnels, harbors, and airports. Many are in need of repair, replacement, or expansion. Furthermore, interest rates are abnormally low just now, which means that borrowing is unusually inexpensive. When interest rates are low is the best time to undertake long-lived investments. Carrying out those repairs and improvements would put people to work now and improve productive capacity in the future. So would increased support for scientific research and increased spending to support post-high-school education of those who cannot now afford it. These measures would promote economic recovery right now and boost U.S. productivity in the future.

Hillary isn’t necessarily evading the “eat-your-peas” issues, she just has a different perspective than the false economic orthodoxy sold to journalists like Raasch.

Raasch, like our other Missouri Democratic Sistren and Brethren mentioned above, is a victim of what Greg Sargent has described as the “Beltway Deficit Feedback Loop” in which “the relentless bipartisan focus on the deficit convinces voters to be worried about it, which in turn leads lawmakers to spend still more time talking about it and less time talking about the economy” – the real economy, that is, the economy in which the deficit is a rather minor consideration and the growth of the national debt is an easily managed problem.

And why is this feedback loop so prevalent? To paraphrase Mount Holyoake College professor Douglas J. Amy, it has provided the GOP with an issue to help fan resentment against government and against their Democratic opposition. Additionally, it is a tool that can be used to fight progressive programs that the GOP has long opposed such as Medicare and Social Security.

What’s sad is the fact that the deficit chorus is endlessly echoed by otherwise competent journalists like Raasch and that otherwise astute politicians like McCaskill and Kander have so easily succumbed. But we can still be happy that we have a presidential candidate who declines to sing the same, sad old song.

*Edited slightly for clarity, 9/4, 10:29 am.

[This article has been cross-posted to Occasional Planet  under the title, “Hillary has a progressive view of the deficit and national debt. [They’re different, by the way.]”]

[For a more comprehensive discussion  of  Hillary’s economic policies and the concomitant debt reduction strategy see my later post, “More on Hillary Clinton’s approach to federal spending and debt.”]

Missouri’s Bridges: Another reason to send the GOP packing

09 Sunday Sep 2012

Posted by Michael Bersin in Uncategorized

≈ 2 Comments

Tags

deficient bridges, Deficit reduction, Economic Growth, jobs, missouri, The American Jobs Bill, toll bridges

During the Democratic convention President Obama noted that one of the ways that we need to invest in our future – while creating jobs in the process – would be to address our aging infrastructure. I think that he even mentioned bridges which ought to be a big deal for Missourians since we have hundreds of bridges that are disasters waiting to happen.

I invite you to take a look at this interactive map at SaveOurBridges.com. The little tags that spring up when you run the cursor over the map represent bridges that are both “structurally deficient” and “fracture critical.” To give you an idea of what this means, the I-35W Bridge in Minneapolis that collapsed a few years ago, killing 13 and injuring 145 people, had been determined to be structurally deficient and fracture critical. When you look at the map, you will notice that Missouri is almost obscured by the number of symbols indicating bridges in a similar state. There are so many deficient bridges that you have to keep zooming in closer and closer in order to make out specific problem bridges.  

Most of these decaying bridges carry fewer than 24,000 cars a day, but the traffic on two bridges in the St. Louis area and one in Kansas City average between 25,000 and 75,000 cars daily. I don’t know about you, but this sort of statistic makes me very nervous. According to Forbes

The sad state of America’s bridges is likely to make an already challenging fiscal future still more so.  It will cost an estimated $70.9 billion to address the current backlog of deficient bridges, according to FHWA’s 2009 statistics.  This estimate may prove wildly conservative.

While the size of this investment may seem massive, the political consequences of delay seems likely to be so substantial that one would suspect the Uncle Sam to pony up whatever funds were necessary.  Surprisingly, this does not appear to be happening at anywhere near the scale needed to avoid more catastrophes like the one that took place in Minnesota.

Unlike William Pentland, the Forbes contributor whom I quote above, I am not surprised at all by government inaction. Certainly since the cooperation adverse Tea Party Republicans who elbowed their way into the congress in 2010 have been banging the deficit-über-alles, our-way-or-the-highway drum, it seems as unlikely that we will address our infrastructure problems as it is that we will effectively deal with our employment problems – even though renewing and maintaining our aging bridges would go a long way toward meeting both needs.  

This is not to say that we won’t get some new bridges, although we may have to wait until there are a few more horrendous events like the Minneapolis bridge collapse. However, given the GOP reluctance to commit to using government to build and maintain infrastructure, it may be private investors who take up the slack – which will probably be just fine with the original crony capitalists. Get ready to say hello to toll bridges since politicians, both Democrats and Republicans, seem to lack either the clout or, often, the intestinal fortitude to take on the anti-tax, deficit cutting claque in order do the right thing. So it looks like we will end up paying over and over for the right to get from one place to another. Time Magazine‘s Barbara Kiviat summarizes some of the arguments against turning our national infrastructure over to private interests:

… Tolls often skyrocket under private owners, though with the blessing of elected officials, who avoid the political costs of raising tolls or taxes themselves. That’s how privatized roads deliver double-digit returns for investors and often lead to upgrades like electronic tolling. But there are other devils lurking in the details, like noncompete clauses that may prevent transportation agencies from building new roads, or the inability to use roads for economic development by, say, adding a new exit to attract businesses. Some officials get queasy about locking themselves into long leases; Colorado officials already regret offering a 99-year lease for the Northwest Parkway. …

It is likely that, no matter what, we will see a few more private-public partnerships to build new bridges in the future. We don’t need to totally surrender our national infrastructure to the big-money boys, however; there is another way.  The President’s jobs bill, The American Jobs Act (pdf), allocates $27 billion for transportation infrastructure programs, including bridge and highway repair.

We’d get new jobs and new bridges. What’s not to like? All we’ve got to do is say no to Romney/Ryan and vote the rest of the GOP bums out. And guess what? If we’re finally able to get the level of public infrastructure spending that we need to boost the economy, we’ll speed up the recovery overall, increase tax revenues and we will finally be in a real position to deal with deficit reduction in a sane, reality-cognizant fashion.

Epistolary follies – bipartisan version.

04 Friday Nov 2011

Posted by Michael Bersin in Uncategorized

≈ Leave a comment

Tags

Billy Long, Deficit reduction, Emanuel Cleaver, Jo Ann Emerson, missouri, supercommittee

Duane Graham, of the excellent The Erstwhile Conservative blog, debates whether or not Rep. “Ozark” Billy Long (R-7) deserves praise for joining fellow Missourian Jo Ann Emerson (R-8) and 40 other House Republicans in signing a bipartisan letter to the deficit Supercommittee which, among other things, suggests that revenues must be on the table as the group works its deficit-busting hocus-pocus. Graham concludes that no, indeed, Long does not deserve praise.

Remembering Long’s almost comical eagerness to let the United States government default last July during the debt-ceililng crisis, Graham notes that:

If someone who had been holding a hostage suddenly decided to let him go, would we be obliged to reward the hostage taker by giving him or her a medal of honor?  Republicans, including most of the signers of the letter, have been serial economic hostage takers. The fact that a few of them may have put the gun down and decided to try another way does not merit uncritical admiration.

He adds:

Then, I noticed that the letter did not include any specific proposals or any definition of what “revenues” meant, in terms of raising them….

Indeed, the devil is always in the details, and in that regard the brief letter is remarkably skimpy, simply declaring that:

To succeed, all options for mandatory and discretionary spending and revenues must be on the table. …

My question, though, is whether or not this detail-dwelling devil lets Rep. Emanuel Cleaver (D-5), who joined 60 other House Democrats in signing the same letter, off the hook. No actual cuts were specified, but Democrats who signed this letter have essentially signified a willingness to permit cuts to the pillars of the social safety net, Social Security, Medicare and Medicaid.

In fact, it’s very hard to see how the vagueness of this letter gives Cleaver any wiggle room. We already know that the Democrats on the Super-Committee have been listing dangerously rightward, and it doesn’t seem like they need more encouragement to give up the game – they’re doing a good enough job already. The Center on Budget and Policy Priorities characterizes their leaked plan as a near capitulation:

The Democratic plan contains substantially smaller revenue increases than those bipartisan proposals while, for example, containing significantly deeper cuts in Medicare and Medicaid than the Bowles-Simpson plan. The Democratic plan features a substantially higher ratio of spending cuts to revenue increases than any of the bipartisan plans.

This little bipartisan epistolary exercise has, as well, helped revive the false narrative about a non-existent deficit crisis when we were just beginning to succeed in shifting the emphasis to job-creation instead of more job-killing budget cuts. While vague about specifics, the letter reinforces the deficit crisis meme so wholeheartedly it even demands bigger deficit reductions than the committees’ $1.2 trillion mandate:

… In addition, we know from other bipartisan frameworks that a target of some $4 trillion in deficit reduction is necessary to stabilize our debt as a share of the economy and assure America’s fiscal well-being.

So there we have it. Is Cleaver demanding even more job-killing budget cuts and signaling a willingness to balance the budget on the backs of the poor and elderly? Or is he just trying to be a good, bipartisan fellow and go along to get something, anything, done. And isn’t the latter just as bad as the former?  

Whew! … at least Vicky Hartzler's farm subsidies are safe

16 Wednesday Feb 2011

Posted by Michael Bersin in Uncategorized

≈ Leave a comment

Tags

agribusiness, Budget cuts, Deficit reduction, farm subsidies, missouri, Vicky Hartzler

This morning lots of blogging space is properly being given over to indignant chortling about John Boehner’s declaration that the U.S. has to make dangerous and destructive spending cuts because the country is “broke.” The punchline consists in the fact that he is at the same time insisting on retaining funds for a boondoggle defense project that will benefit his home state. I’m speaking of funding to develop a second engine for the F-35 Joint Strike Fighter – a project that even the Pentagon wants to abandon. A wasteful earmark by any other name … eh?

But Boehner isn’t the only GOPer playing Simple Simon –  you, know – do as I say, not as I do. Among the five significant categories of wasteful spending identified by Think Progress’ Zaid Jilani where big cuts could be made without significant repercussions are agribusiness subsidies:

The federal government “paid out a quarter of a trillion dollars in federal farm subsidies between 1995 and 2009.” “Just ten percent of America’s largest and richest farms collect almost three-fourths” of these subsidies.

Of course these five areas of expenditure, which almost all, like farm subsidies, benefit the wealthy, have been treated as if they are off-limits by the GOP. Which brings us to Vicky Hartzler (R-4), who when she is not trying to impersonate one of the people’s representatives, is a well-to-do Missouri farmer who has benefited handsomely from those very farm subsidies. Her own good fortune in retaining taxpayer support, no doubt, makes it easy for her to cheer the destruction of programs that benefit those poor and middle class deadbeats who not only benefit from, but often survive thanks to the programs she and her House cronies want to stamp out because we are, you know, “broke.”  

Claire McCaskill: dazed and confused.

14 Tuesday Sep 2010

Posted by Michael Bersin in Uncategorized

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Tags

Claire McCaskill, Deficit reduction, missouri, Robin Carnahan, Roy Blunt, Spending, TANF, tax cuts for the rich, Tax policy

Steve Benen began a post on the upcoming battle over tax giveaways for the wealthy with this comment:

How to lose after being dealt a good hand…. The high-profile fight of the moment is over tax policy, and by most measures, Democrats are in a reasonably good position. Republican leaders are arguing amongst themselves; polls show President Obama’s proposal to be considerably more popular  than the GOP’s; and just weeks before the midterm elections, Republicans are prepared to fight tooth and nail to hold middle-class tax cuts hostage.

It’s not a bad scenario for Democrats, right? The only way for Dems to screw this one up would be for them to start breaking ranks and siding with Republicans on the minority party’s misguided, unpopular, and irresponsible plan, and start echoing bogus GOP talking points.

Well, Mr. Benen, I’m here to tell you that our poor Missouri Democrats, at least, are unable to seize opportunity when it’s offered on a silver platter. We’ve all seen how  Robin Carnahan went all wobbly on the topic right away and surrendered before the first shot had even been fired – for all the good it’s dong her. Blunt, who seems to have no inconvenient hang-ups about honesty, has an ad currently running that trumpets the over-the-top claim that she supports the “largest tax increase in history.”  

Our current Democratic senator, Claire McCaskill, on the other hand, has been strategically silent on the topic. There are now, however, indications that she is finally crawling out of the cave where she’s been hiding in order to test which way the wind is blowing:

Sens. Claire McCaskill (D., Mo.) and Michael Bennet (D., Colo.) said their first priority was ensuring the continuation of the tax cuts for those earning less than $250,000, but both left the door open to a short-term extension of the lower rates for higher earners if it could lead to a compromise agreement with Republicans.

“I am inclined not to support [extending] the top rates, but I want to keep the door open to any possible compromises that in the long-term would be positive for our economy, and have a great impact on reducing the deficit,” McCaskill told reporters after a Senate vote Monday.

Bear in mind that this is the same deficit-obsessed McCaskill who just a few weeks ago was strutting around, pretending to be St. George confronting the budget dragon. She was firm that all new spending be offset by corresponding spending cuts.

So tell me, how could she even contemplate extending costly tax giveaways to the richest 2% of the country while opposing the less costly and potentially far more stimulative Temporary Assistance to Needy Families (TANF) program because it wouldn’t be “fiscally prudent.” Just to underline the absurdity, note that TANF will add 2.5 billion dollars to one year’s spending, while the top bracket tax cuts will cost the economy 1.1 trillion dollars over a similar one year period decade.  

To date I have supposed that McCaskill has simply been pandering for political purposes, but in this case she seems not only inconsistent and wrong-headed in terms of policy, but, if you agree with Benen, politically tone-deaf, albeit in a timid sort of way. Could it be that the explosive Tea Party noise in Missouri has left her in such a state of shell-shock that she’s too dazed and confused to adequately function?  

Carnahan tiptoes into combat waving a fiscally responsible banner

02 Tuesday Feb 2010

Posted by Michael Bersin in Uncategorized

≈ 5 Comments

Tags

Claire McCaskill, Deficit reduction, Keynesian economics, missouri, Robin Carnahan

Taking a leaf out of the McCaskill “fiscally responsible” playbook, Robin Carnahan yesterday revealed that she was no slouch when it comes to pandering to the received wisdom about deficits:

From where I stand here in Missouri, I’m disappointed in the President’s budget recommendation. Budgets are about setting priorities and it’s time Washington started making fiscal discipline and tackling the long-term budget deficit higher priorities.

Carnahan even resorted to McCaskill’s favorite cliche, comparing deficit spending to household finance:

Missouri families have to balance their checkbooks and our government should be no different

Problem is the comparison is not only trite, but wrong. As former Treasury Secretary Robert Reich puts it:

… If John Maynard Keynes taught us anything, it’s that a federal budget is not at all like a family budget. In fact, it’s precisely because families have to pull in their belts that the federal government has to let its belt out. When consumers and businesses aren’t buying much of anything, the government has to fill the gap. That’s the only way to get jobs and get the economy moving again. Once the economy is percolating, the government can pull back. By then, tax revenues will soar, and the long-term deficit will shrink.

Don’t believe me?  Think about Herbert Hoover and the great depression. Then think about the prosperous, post-war years when Keynesian theory was given its head.

The Keynesian formula has worked well in the past, and can work well again – even the itty, bitty stimulus program (relatively speaking) that was put into place last spring has had positive effects. But it will only work again if we stop allowing our media and politicians to indulge in irresponsible rhetoric about “irresponsible” spending. At all costs, we should certainly hold our Democratic representatives accountable for more than leadership by slogan – al least when the slogan is demonstrably, disastrously wrong.

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