From a Nobel Prize winning economist:

December 1, 2012, 5:37

What Defines A Serious Deficit Proposal?

….So I thought I’d look at the dollars and cents – and even I am somewhat shocked. Those tax hikes would raise $1.6 trillion over the next decade; according to the CBO, raising the Medicare age would save $113 billion in federal funds over the next decade.

So, the non-serious proposal would reduce the deficit 14 times as much as the serious proposal.

I guess we have to understand the definition of serious: a proposal is only serious if it punishes the poor and the middle class.

[emphasis in original]

Are you listening, Claire?

Clark is correct when he acknowledges that Claire McCaskill did Missouri proud with her votes on DADT and the DREAM Act – and also with her vote for the START Treaty today. He is equally correct that if she really is serious about fighting for reform of rules that permit the abuse of the filibuster, we will owe her majorly. We need to give our Senator a little Christmas gift and let her know how much we appreciate her willingness to line up with the real Democrats on these issues. Her support for these measures justifies to a certain extent those people who continue to say that no matter what she has done, she is still better for Missouri than her GOP opponent, Jim Talent, would have been.

These generous-minded folks are right, but, Grinch-like, I still have to take back some of the Christmas goodwill McCaskill may have generated in progressive circles in the last week. The reason I am still seething deep down is her propensity to sign on to really bad ideas, ideas that can hurt us all seriously if she can’t be persuaded to change her mind.

This month, while she was doing the right thing on DADT, DREAM and START, she also signaled her intent to vote against the omnibus spending bill had it made it to the floor. Although the congress did manage to push through a temporary spending extension, the failure to pass the omnibus bill hands the GOP the tools they need to deny funding for implementation of the Affordable Care Act (AFC) and the financial reform bill.  Thanks for nothing, Claire.

Why did McCaskill do this to us? She wants to impress small-town Missouri that she’s serious about the big, bad deficit so she’s pushing the asinine spending caps that she and her GOP ally, Jeff Sessions, have been shopping around the Senate for the past year or so:

She says a similar spending policy worked in the 90s when America was operating at a surplus, not a deficit. Along with spending caps, she says there were slightly higher taxes and Pay Go, meaning new programs had to be funded before they could be implemented.

What’s wrong with this? Last time I heard we’re in a recession – not the boomtime 90s and not the right time to cut government spending. And guess what else: the tax rate got lower a long time ago – it’s one of the reasons we’re in such bad shape. Doesn’t sound like the 90s environment to me at all. Am I foolish to expect my Senator to address our current situation? We certainly shouldn’t be putting the breaks on stimulative, short-term, spending hikes in order to address long-term problems, like the deficit, that we can deal with more intelligently when we are in better shape job-wise. I bet if I were to ask her why she doesn’t go at the deficit from the perspective of raising revenue (taxes to you and me), she would say that a recession isn’t the right time to do that – well, the same thing goes double for cutting stimulative government spending.

It would be bad enough if McCaskill were consistent in her misdirected war against government spending, but she’s not. Last week she signed onto a letter at the behest of Chuck Grassley (R-Iowa) and Kent Conrad (D-N.D.) to extend ethanol subsidies – a bad idea at any time since ethanol is of questionable value as an alternative energy source, and subsidizing its production amounts to little more than shoveling pork at chemical and big agricultural interests. And this particular bad idea comes at a cost of $5.3 billion dollars. Coming from Senator “Earmarks-hurt-my-brain” McCaskill, who thinks “entitlements” like Social Security have to be “fixed ASAP,” it’s inexcusable.

Paul Krugman, last Sunday, described the failure of the pragmatic left as a failure to stand firm against what economist John Quiggin calls zombie economics, “ideas that the crisis should have killed, but didn’t.” Krugman contrasts Reagan and Obama:

People tend to forget that Ronald Reagan often gave ground on policy substance – most notably, he ended up enacting multiple tax increases. But he never wavered on ideas, never backed down from the position that his ideology was right and his opponents were wrong.

President Obama, by contrast, has consistently tried to reach across the aisle by lending cover to right-wing myths. He has … adopted G.O.P. rhetoric about the need for the government to tighten its belt even in the face of recession, offered symbolic freezes on spending and federal wages.

None of this stopped the right from denouncing him as a socialist. But it helped empower bad ideas, in ways that can do quite immediate harm.

Sound like somebody we know here in Missouri? Understand why I’d like to be McCaskill’s own private Grinch? But still … as all my gay and lesbian friends who have been fighting for equality for so long would attest, she’s much, much better than Talent would have been. She’s certainly the closest approximation to a Democrat we have to run against the raggedy GOP crew that’s lining up for a go at her Senate seat – unless we get really lucky between now and 2012.

Do what our overlords and all the very the serious inside the beltway cocktail weenie circuit sycophants want us to do. Transfer the wealth – upward.

The Hijacked Commission

By PAUL KRUGMAN

Published: November 11, 2010

….So how, exactly, did a deficit-cutting commission become a commission whose first priority is cutting tax rates, with deficit reduction literally at the bottom of the list?

Actually, though, what the co-chairmen are proposing is a mixture of tax cuts and tax increases – tax cuts for the wealthy, tax increases for the middle class. They suggest eliminating tax breaks that, whatever you think of them, matter a lot to middle-class Americans – the deductibility of health benefits and mortgage interest – and using much of the revenue gained thereby, not to reduce the deficit, but to allow sharp reductions in both the top marginal tax rate and in the corporate tax rate.

It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans. And what does any of this have to do with deficit reduction?….

Good questions. Go. Read the whole thing.

We may as well let the republicans finish the job they started, eh?

Roy Blunt tweeted earlier today:

Biden says failing $862B “stimulus” was too small and would have been bigger with more Democrats. The choice is clear on Nov. 2.

Failing stimulus? Guess Roy prefers to ignore the figures from the new Congressional Budget Office (CBO) report on the impact of the stimulus on employment and economic growth:

* Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,

* Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points,

* Increased the number of people employed by between 1.2 million and 2.8 million, and

* Increased the number of full-time-equivalent (FTE) jobs by 1.8 million to 4.1 million compared with what those amounts would have been otherwise. …

Or maybe Blunt is agreeing with VP Biden that the stimulus should have been larger?  That would certainly also put him in agreement with economists like Paul Krugman and Nouriel Roubini who are pointing out that the current slowdown in the recovery can be traced to an inadequate stimulus package. Somehow, though, I doubt that our Roy is much swayed by expert opinion, so I think we are left with a nasty little exercise in how to be both dishonest and snide in 140 characters or less.

Blunt is, of course, like the proverbial broken clock that is right twice a day, unequivocally correct that the choice is clear come November. Sadly, though, he seems to be relying on the not unreasonable hope that the Republican effort to obstruct economic progress while muddying public perception will win out. As Paul Krugman observed today:

Since Mr. Obama took office, they [i.e. Republicans] have engaged in relentless obstruction, obviously unworried about how their actions would look or be reported. And it’s working: by blocking Democratic efforts to alleviate the economy’s woes, the G.O.P. is helping its chances of a big victory in November.

Remember this, from February?:

Just saw Krugman’s comments on reduction in recov act. Question for him. Would no stimulus act be better than one thats 800 B instead of 900

Paul Krugman:

…What happened was a, a lack of conviction, a lack of, you know, if you’re gonna do something like this you’re gonna have a stimulus program you gotta go and do it…This is the kind of situation where you’re trying to build a bridge across an economic chasm. If you build half a bridge it doesn’t work. You have to do the real thing…

This morning, from the Bureau of Labor Statistics:

THE EMPLOYMENT SITUATION — SEPTEMBER 2009

Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today….

And U-6?:

Table A-12. Alternative measures of labor underutilization (Percent)

U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers (Seasonaly adjusted)

Sept 2009 17.0

[emphasis added]

That’s one in six.

Take a look at this comparison of the percentages of job loss from peak employment.

Now what?

As Michael noted, Claire McCaskill is now defending herself against Krugman on Twitter:

Just saw Krugman’s comments on reduction in recov act. Question for him. Would no stimulus act be better than one thats 800 B instead of 900.

She follows that up with

Compromise had to happen or we would NOT have 60 votes. Period.

And for further evidence of how much the bill is the same, she claims:

Original Senate bill was 60% appropriationss, 40%tax cuts. Compromise was 58, 42.Senate bill is 90% the same as House bill.

I’m glad that’s she expressing herself here, and that we’re able to somewhat have a dialogue. But I’m not sure how much in good faith it is. McCaskill began by stating how glad she was that they got a $100 billion cut out of the bill, that the “silly stuff” that Republicans didn’t like is now out. She then switches to a passive aggressive mode in defending the cuts – it’s basically the same bill and it wouldn’t have made it through the Senate – but glosses her own role in making the cuts. From the way she talks about the bill, wouldn’t she have been among those voting against the bill if the cuts hadn’t been made and new non-stimulative tax cuts hadn’t been added in?

UPDATE: One of the last tweets from the only Twitter feed McCaskill is following (which is her press secretary’s):

So glad that Claire was part of this moderate team Nelson is calling “the jobs squad”. Very cool. Hopefully the others will see this is best 6:33 PM Feb 6th from web

…And another tweet from McCaskill’s press secretary approvingly points to an awful article by Dana Milbank about how McCaskill, Lieberman, Lindsey Graham, and the other “moderates” are workhorses trying to get the bill done, while everyone else, including Harry Reid and Barack Obama, are just show ponies trying to get attention.

An excerpt below the fold:

“As I have explained to the people within that group, they cannot hold the president of the United States hostage,” fumed Majority Leader Harry Reid (Nev.). “If they think they are going to rewrite this bill and Barack Obama’s going to walk away from what he has been trying to do for the American people, they’ve got another thought coming.”

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Holding the president hostage? This caused the workhorses to rear up.

“Oh, goodness, no,” said Joe Lieberman (I-Conn.) as he returned to the dealmaking table in Dirksen. “I’m for human rights.”

And Claire McCaskill (D-Mo.) chuckled at her leader’s accusation. “A little dramatic, don’t you think?”

It’s so obvious that I resent having to repeat it:

…If we whitewash the abuses of the past eight years, we’ll guarantee that they will happen again…

– Paul Krugman – Forgive and Forget?

The villagers are gonna wring their hands about all this unpleasantness: What’s CIA Director Hayden Hidin’?

Where to start? Despite how much of the day I’ve spent on buses and light rail, not to mention the time spent chit chatting with other bloggers and networking in general, I still heard more I want to report than I have a prayer of finding time to write about.

At the Missouri caucus breakfast this morning, for example, I ran into Jim Ross, who works for Jill Schupp’s campaign (she’s trying to hold onto Sam Page’s House seat, HD 82, for the Dems.) Jim tells me that she and her volunteers have already knocked on all 14,000 doors in the 82nd (well, except for gated community type situations) and are starting to go round for a second time. And it’s looking good in that district. Her campaign ran a poll hat showed Obama and Nixon with double digit leads in that district and Jill herself with a “substantial lead”.

Jim worked as well for Andria Simckes this year, and I talked to her as well, asking her what the future holds for her now that she’s out of the treasurer’s race. She had a broad smile when she told me that I haven’t heard the last of her in Missouri politics, but for the nonce she’s working as a surrogate speaker for “the team”, meaning Nixon, Obama, Page, perhaps even Zweifel. And of course, the upside of losing that race is that she gets to reintroduce herself to her husband and small children. It’s a treat having a personal life again.

Other nuggets I picked up this morning will be showing up in later postings as I have the time to write about them in some depth.

The bloggers’ tent is mayhem. It is elbows next to elbows, the unrelenting hubbub of friendly bloggers, and some determined souls tuning it all out like white noise as they hunch over their laptops. I fled, for peace, to the panels. They were excellent.

If Bobby Kennedy can’t light a fire under you about the climate change issue, then you’re a corpse. When asked what we need to do in this country about the energy crisis, he spoke in favor of an open market instead of a rigged one, emphasizing that our current policies reward bad behavior and penalize good behavior.

For example, we give a trillion dollars a year in subsidies to the oil industry, another trillion to the coal industry, and half a trillion to the nuclear industry. What we need instead is a new grid, a federal backbone instead of the archaic, inefficient and misaligned lines we now have, one that will carry the electrons efficiently across the continent, so that the windpower of Montana and other western states can be carried to New York instead of petering out before it crosses the Mississippi.

And we need an open grid. Houses using solar power should be reliably able to sell their excess power to the grid. The fact that the grid is not open to such an arrangement is an inexcusable obstacle.

“In fifty states, we get fifty different utilities and commissions, each with an arcane and byzantine set of rules that restrict access to the grid.”

Kennedy says the federal government needs to pass laws forbidding the states from controlling access to the power grid. But rather than take the sensible measures of building a new and efficient grid and making it open so that any home can become a power plant that sells electricity to the grid, we have subsidized coal, for example. And the costs environmentally are huge, from fish dead of pollution to mountains destroyed in West Virginia and 2200 rivers buried as a result of mining. Those hidden costs should not be allowed. As for oil, allowing drilling off the coasts is, to his way of thinking, like offering more crack to a coke addict.

He decries the $156 million that the oil and coal industries have poured into the political process, money that has turned our public servants into “indentured servants”–and they’re not indentured to us.

Finally, Bobby Kennedy spoke about the possibilities of moving to electric cars. Israel, he says, is doing so rapidly. They expect to move from gas powered cars within three years, making driving less expensive, instead of 40 cents a mile, they’ll costs 6 cents a mile. What that takes is political will.

Uh oh. It’s getting on toward ten at night and we old folks need to be moseying off to bed. But I haven’t even begun to report on the panel, moderated by Thom Hartmann, in which John Podesta, Paul Krugman, Arianna Huffington and David Sirota talked about the ongoing conflict between progressivism and conservatism. The panel was well worth while, but I’m giving it short shrift and quitting for the night.

Huffington stressed that we should not frame this election as left versus right, but as the center versus extreme right. On all the progressive issues, huge majorities of Americans–60-70 percent–favor our side, whether it be maintaining Social Security and Medicare, obtaining universal health care, shifting the policies in Iraq, or dealing with global warming.

David Sirota agreed and felt that progressives and Americans generally are ahead of our leaders, that the way to get Washington to do what we want is to make them understand that the populace will have their back when they make the important changes. We don’t so much have leaders as people who get into office looking for a parade. As soon as they spot one, they run to the front of it and pretend they’ve been leading it from the beginning. What we need to do to get them at the head of the “fair trade” parade, he said, is say two words: Sherrod Brown. Brown defeated an incumbent in Ohio in 2006 by focusing on progressive ideas about the economy.

It’s late; I’m sleepy. Whatever else I of interest that I heard I’ll have to save for another day.

In this presidential election year, populism is seeing a resurgence, no doubt because the last couple of decades have seen rising inequality of income in this country, so much so that the wealthiest families have opened up a larger gap between themselves and the rest of the country than we’ve had since the roaring twenties.

In The Conscience of a Liberal, Paul Krugman describes how that earlier inequality, what he calls the Long Gilded Age (from the 1870s to the early 1930s), came suddenly to an end, ushering in thirty years of prosperity for the middle class. And he suggests that the right policies now could conceivably do the same again.

In the twenties, taxes had been a minor factor for the rich. The top income tax rate was only 24 percent, and because the inheritance tax on even the largest estates was only 20 percent, wealthy dynasties had little difficulty maintaining themselves. But with the coming of the New Deal, the rich started to face taxes that were not only vastly higher than those of the twenties, but high by today’s standards. The top income tax rate (currently only 35 percent) rose to 63 percent during the first Roosevelt administration, and 79 percent in the second. By the mid-fifties, as the United States faced the expenses of the Cold War, it had risen to 91 percent.

Moreover, these higher personal taxes came on capital income that had been significantly reduced not by a fall in the profits corporations earned but in the profits they were allowed to keep: The average federal tax on corporate profits rose from less than 14 percent in 1929 to more than 45 percent in 1955.

And one more thing: Not only did those who depended on income from capital find much of that income taxed away, they found it increasingly difficult to pass their wealth on to their children. The top estate tax rate rose from 20 percent to 45, then 60, then 70, and finally 77 percent. Partly as a result, the ownership of wealth became significantly less concentrated: The richest 0.1 percent of Americans owned more than 20 percent of the nation’s wealth in 1929, but only around 10 percent in the mid-1950s.

So what happened to the rich? Basically the New Deal taxed away much, perhaps most, of their income. No wonder FDR was viewed as a traitor to his class. (pp.47-48)

Along with these changes in the tax code, labor unions tripled their membership from the early thirties to the mid-fifties.  The Depression prompted angry workers to organize, and the new power of unions was self reinforcing because those new union members supported organizing efforts in other places. Furthermore, FDR (and the court members he appointed), unlike his predecessors, supported unions rather than helping industry suppress them.

As a result of all these changes, typical families in the postwar boom from 1947-1973 saw their real income double, from $22,000 in today’s dollars to $44,000.

Many of us in the progressive movement would like to see New Deal Redux. By the same token, though, many economists disagree and would argue that similar tax policies and governmental support of unions today would be disastrous to the economy. They would insist that attempts to defy the laws of supply and demand usually fail and that such radical tax policies “would wreak destruction on the economy by destroying incentives.” (p.54)

They would also point warningly to the possibility of:

“Eurosclerosis,” the relatively low employment and (to a lesser extent) economic growth in many Western European economies.” (p.54)

Perhaps those dire consequences would result from FDR-type policies. But consider that textbook economics would have said that FDR’s policies should fail. They didn’t. Perhaps instead, such policies should be a model:

For now let’s simply accept that during the thirties and forties, liberals managed to achieve a remarkable reduction in income inequality, with almost entirely positive effects on the economy as a whole. The men and women behind that achievement offer today’s liberals an object lesson in the difference leadership can make.

I’d be willing to risk soaking the rich and enforcing the long-neglected laws that should protect labor unions. What we need are leaders like FDR, similarly willing to take the chance. Willing to lead.  

Paul Krugman, speaking at the Women’s Democratic Forum of Greater St. Louis at a Thursday luncheon, opined that the long, Alaskan winter of Republican dominance is ending.  And Krugman, no Pollyanna, has solid reasons for thinking that “It’s almost over, or at least it can be over.”

Krugman began by explaining how the country has gone awry since the seventies.  The once powerful middle class of the fifties and sixties in this country, created by the New Deal, was decimated because many of the programs that enabled more equality than this nation had ever seen before have been dismantled by Movement Conservatives.  They have taken us into a second Gilded Age, with the concentration of wealth as great at the top now as it was in the twenties.  For example, last year the top 25 hedge fund managers made as much money as the 80,000 New York City teachers make in three years.

Conservatives have wrought this change because they see the Great Society and the New Deal as a violation of American principles.  Grover Norquist, when asked once what he wanted to accomplish, said that he intended to take this nation back to the time before Teddy Roosevelt introduced socialism. 

The reason Republicans were able to take us out of an age of equality and into another gilded age, according to Krugman, was that they gained a grip on power by appealing to racism.  The Civil Rights Act was the signal for many Southern white males to switch parties.  By the time Reagan was running for president, Republicans had learned to use race.  Reagan went to Mississippi, during his first presidential campaign, and spoke there–at the urging of Roger Ailes, currently the  president of Fox News–in favor of “states’ rights”, code for racism.   He popularized the notion of the “welfare queen”, even though the woman he described never existed.  She was a product of his fertile imagination.  Reagan’s successor, George H.W. Bush, relied on Willie Horton to get himself elected.

As the Republicans gained power, their goal was to weaken labor.  Union membership declined from 30 percent of the workers in the sixties to 12 percent now.  Canada, on the other hand, still has about a 30 percent union membership workforce.  Why the difference in the two countries?  The Reagan years saw open warfare on unions, and it is no accident that Wal-Mart, with its focus on keeping unions out, began its climb to power during those years.

Now, however, the Republican hold on America is losing its grip.  Racism is less powerful.  Look at what happened to George Allen last year, in Virginia no less, for using a racial epithet, “macaca”.  His racist comment put Jim Webb into Allen’s senate seat.

The other critical factor in loosening Republican power is a surge of progressive economic populism.  Americans see what is happening to their jobs and their health insurance under Republican rule.  Last year Democracy Corps did a poll which revealed that 70 percent of Americans think the country is headed in the wrong direction.  Respondents in the poll were asked to choose from various phrases that described the possible reasons they thought so.  The most commonly chosen phrases were “Big business gets everything it wants” and “leaders have forgotten the middle class.”  Americans are angrier than those pollsters have ever seen them.

The place to begin progressive reform, Krugman believes, is with health care.  We spend 60 percent more on health care than France, for example, and yet the French get better health outcomes than we do.  Now, however, there is a strong progressive coalition behind health care reform, and all three major Democratic presidential candidates have introduced health plans that could eventually turn into Medicare for All.  (Krugman’s only caveat was that he fears interest groups might be able to buy their way out of real health care reform.)

Less than three years ago, it looked as if we might lose social security, but the left fought back and we didn’t.  Now, we may get health care reform by 2009.  The times they are a-changin’, and Paul Krugman believes they’re likely to be better.