Monday, August 01, 2011

Financial Nonsense and Republican Hostage Policies

"Welcome to the normalization of extortion politics."

A deal on debts and defaults means what??

It's not a solution. It's a promise to come up with a solution, somehow, someday." (via)

The Republican job plan means cutting job plans and spending:

This mean-spirited political twist amounts to blaming the victims. There should be no mystery about what caused the $14 trillion debt: large deficits began in 1981, with Ronald Reagan’s fanciful “supply side” tax-cutting. Federal debt was then around $1 trillion. By 2007 it had reached $9 trillion, thanks to George W. Bush’s tax cuts for the wealthy and his two wars in Iraq and Afghanistan, plus the massive subsidy for Big Pharma in Medicare drug benefits. The 2008 financial collapse and deep recession generated most of the remainder, as tax revenues fell drastically. Obama’s pump-priming stimulus added to the debt too, but a relatively small portion.

Whatever supposed solutions Congress eventually enacts, the misleading quality of the debt crisis should become widely understood once the action is completed. The debt and deficits will probably keep expanding, because the economy will remain stagnant or worse, with near 10 percent unemployment and falling incomes, and that is fundamentally what drives deficits higher. It should become obvious that deficit reduction did nothing to revive economic growth or to create jobs. In fact, cutting federal spending may make things worse, because it withdraws demand from the economy at the very moment when demand for goods and services is woefully inadequate."

Proposals to grow the economy with spending and demand, that is gaining a foothold in most places except in Washington.

It’s a forgotten detail, but going into 2000, the government was expected to run a deficit. What happened? The economy was growing so fast, and unemployment was so low, receipts far exceeded expectations. It was a striking reminder: good economy = good fiscal picture.

Of course, Republicans soon dominated after Clinton’s departure, the deficits came back, and those who claim credibility on fiscal issues stopped paying for their agenda and added several trillion dollars to the debt.

In our current decade, growth alone won’t be enough to balance the budget anytime soon. The shortfall is too large. That said, growth was responsible for reducing the deficit in 2009, and more growth would mean more jobs, more jobs would mean more revenue, and more revenue would mean a smaller deficit."


"Basically the Republicans said we'll blow up the world economy unless you give us exactly what we want, and the President said OK. That's what happened. . . . We're having a debate in Washington which is all about, "we're going to make this economy worse, but are we going to make it worse on 90 percent of the Republican’s terms or 10o percent of the Republican’s terms?" And the answer is 100 percent."

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