Showing posts with label deficit hawks. Show all posts
Showing posts with label deficit hawks. Show all posts

Friday, January 03, 2014

One of every two Americans are now in poverty or low income. We’re not just hungry for food. We’re hungry for jobs, homes, for schools, for the basic necessities of life. We are hungry for justice! Democrats and Republicans, the bipartisan corporate parties in Congress (the only parties allowed in our faux democracy), reached a budget deal that will restore full military spending while allowing food stamp and unemployment cuts to move forward. The dominant culture in the United States tells us that we have rights to abstract concepts such as freedom but not to the tangible basic necessities of education, housing, health care, jobs and more. (Exerpts from this highly researched and well written essay)





America Is the Most Inhumane Developed Country on the Planet — Are We Going to Let It Stay That Way?

This week marked the 65th anniversary of the signing of the Universal Declaration of Human Rights. What would it be like if people in the U.S. knew they had these rights?

Photo Credit: Shutterstock.com/corgarashu
December 14, 2013  |   This week marked the 65th anniversary of the signing of the Universal Declaration of Human Rights.  It was drafted by a commission of the United Nations that was chaired by Eleanor Roosevelt. The Convention became effective in 1951, the United States finally ratified it in 1988 and it was signed by President George H.W. Bush.

What would it be like if people in the United States knew they had these rights and demanded to have them realized? We believe it would be a very different world – the economy would be a more equitable with full employment, healthcare for all, no people without housing and more humane on every front. Instead, this week an annual report of Credit Suisse ranked the US as the most unequal of all advanced countries.

As a general guide for understanding human rights there are five principles that should be applied to every policy:  universality, equity, transparency, accountability and participation. In a nutshell, universality means that policies apply to all people. Equity means that people have what they need in order to be at the same level as others. Participation means that people have input into the policies that affect their lives.

Harriet Tubman once said, “I freed a thousand slaves; I could have freed a thousand more if only they knew they were slaves.” Similarly, we have human rights and our rights are being violated every day, yet many are not aware of this.

Economic Inequality and Austerity

Wealth inequality has worsened under the Obama Presidency. This is remarkable because historically after an economic collapse, the wealth divide closes during the recovery phase. According to the 2013 report, “In the U.S., the bottom 90% of the population own only 24.6% of all the privately held wealth, whereas in most of the developed world, the bottom 90% own around 40%; so, the degree of wealth-concentration in the U.S. is extraordinary…”

There hasn’t been any recovery for the bottom 90%. Public policies have continued to funnel wealth to the top while cutting the social infrastructure. Ellen Brown explains that the Federal Reserve Act prevents the Quantitative Easing (QE), the $85 billion created each month, from being used to invest in businesses and create jobs. She describes the Act as being “drafted by bankers to create a banker’s bank that would serve their interests. It is their own private club, and its legal structure keeps all non-members out.” So, instead of assisting Main Street, the QE has gone to Wall Street and has been used for financial trading that places our entire economy at risk of collapse. Activists will begin a yearlong campaign to change the Fed on Dec. 23rd at all 12 Federal Reserve Buildings.  Taxpayers need to take back the power to create money in a transparent way; the government should be spending debt free money on urgent necessities and providing people with the money they need to survive and create full employment.

Since early 2010, the Obama administration with Congress has pursued austerity with the federal budget, which is the opposite of what is needed in order to stimulate the economy and reduce unemployment. Working closely with deficit hawks such as Alan Simpson and Erskine Bowles and the Peterson Foundation, whose mission is to end social insurances, necessary programs such as unemployment benefits, food stamps, Medicare and Head Start have been cut.

Pascal Robert writes that this year alone, the Sequester forced “$9.9 billion in cuts to Medicare, $840 million in cuts to special education programs, and $400 million in cuts to Head Start, in addition to the nearly $2 billion slashed from housing aid.” He calls this “Obama’s war on the poor.” Economist Robert Reich calls the new budget “dumb” because it “doesn’t close tax loopholes for wealthy, restore food stamps to poor, or extend unemployment benefits for jobless.” He calls for investment in repairing our failing infrastructure which would solve critical safety concerns and create jobs.

The economic trends look bad for most of us. College students are graduating with higher levels of debt each year into an employment environment in which they are forced to delay their desired career path and work for poverty wages. While the official unemployment rate for college graduates has dropped, that doesn’t consider the 1.7 million who have stopped looking for work.

The combination of poverty wages, the foreclosure crisis and the buying up of distressed homes by investors has caused the percentage of renters to rise dramatically to 35% of households, the highest in ten years. And more than half of renters are paying over 30% of their incomes on rent alone. It is a landlord’s market and some renters are wondering if it is time to revolt.

And there is no end in sight to this economic situation. The Guardian writes that the State Policy Network, funded by the Koch brothers and Kraft, is gearing up to push legislation in a number of states that will undermine public employee pay and pensions, further privatize education, oppose Medicaid and even try to stop efforts to mitigate climate change. They are even pushing to get rid of income tax in certain areas, a move that will appeal to some but will force more cuts to important social programs.

The simultaneous transfer of wealth to the top and austerity measures for the rest looks like certain social suicide, but it seems that those in power are sick with greed and cannot help themselves. Chris Hedges describes the problem to Paul Jay of The Real News this week in an interview called The Pathology of the Rich, saying “They will extract more and more and more, because they have no self-imposed limits, without understanding the economic, political, and social consequences of what they’re doing.”

Trade Agreements and the Federal Budget

The wealth divide is created by policy choices made by those in power. We can see how they rig the economy for their wealthy donors and big business interests, at the expense of local businesses, entrepreneurs, workers and the poor. Right now this economic rigging is playing out in the secret negotiations for the Trans Pacific Partnership (TPP).

We are witnessing the acceleration of a global neoliberal economic agenda through the TPP and the Atlantic version, TAFTA. In Europe a document was leaked that described the strategy of lying to the people of Europe of the “management of stakeholders, social media and transparency” to give a false appearance of listening to them and silencing them. At the same time their TAFTA communications strategy will promise jobs and economic growth – when we know from past corporate trade agreements those are false promises.  The approach in Europe is taken from the playbook of the Obama administration in the United States: mislead the public, hide the truth and keep the contents secret.  

Stan Sorscher writes that these trade agreements are about more than trade. They are “political, social, cultural and moral documents, which set political and social standards for countries and communities.” They create a legal system that overrules the ability to pass laws that protect the public and environment if that protection interferes with corporate profits.

Fortunately, because of public protests and exposure that the US is pushing polices that violate international norms, the TPP negotiations this week in Singapore broke down. Wikileaks revealed that the US remains inflexible pushing extreme pro-corporate policies as other negotiating countries try to represent the interests of their people.

The World Trade Organization concluded its meetings this week in Bali. Hundreds of people from civil society groups protested both inside and outside of the meetings. An agreement was reached but still has to go to each country for ratification before it takes effect. The reaction of civil society showed great concern about the contents of the agreement in particular because of the expansion of corporate rights and the threats to food sovereignty. They write, “No country should have to beg for the right to guarantee the right to food.”

In the US, a coalition of civil society groups also responded to the budget passed this week in Congress with their own People-Peace-Planet Budget announced on December 10, Human Rights Day, which contained up to a 50% reduction in military spending and investment in domestic needs. They said “One of every two Americans in now in poverty or low income. We’re not just hungry for food. We’re hungry for jobs, homes, for schools, for the basic necessities of life. We are hungry for justice!” A small delegation brought the budget to Congress and presented it to the offices of Rep. Paul Ryan and Senator Patty Murray unannounced. Dennis Trainor, Jr. of the Resistance Report covered their response.

A few hours later, Democrats and Republicans, the bipartisan corporate parties in Congress (the only parties allowed in our faux democracy), reached a budget deal that will restore full military spending while allowing food stamp and unemployment cuts to move forward. The agreement has been described as “awesomely destructive” because it continues austerity, does not extend unemployment or restore cuts to food stamp. It cuts pensions, cuts Medicaid and taxes Medicare but restores military spending. It is a job-killing, economy-weakening budget. “This deal asks essentially nothing of the richest Americans while placing terrible burdens on the unemployed as well as new federal employees, and continuing the fiscal policy drag on our still-unfinished recovery,” said Lawrence Mishel, executive director of the Economic Policy Institute.   

Fighting For Our Human Rights

Many in civil society are beginning to understand that human rights are not being respected. Our rights outlined in the Universal Declaration of Human Rights and illustrated in this graphic, such as the right to healthcare and other basic necessities, privacy and unrestricted travel, are being violated. It is up to us to organize and mobilize to demand that these rights are honored.

In fact, one of those rights according to international covenants is the right to resist, which US founders called Freedom of Speech, Freedom of Assembly and the Right to Petition Government for Redress of Grievances. Maciej Bartkowki and Annyssa Bellal write that the international community must support nonviolent civil resistance so that “a ‘people polity’ may represent a decisive force for a final push away from traditional state-driven discourse and practice … towards people-oriented, popular sovereignty based on the rights and responsibility to uphold them.”

On December 10, we participated in a meeting at the office of the National Economic and Social Rights Initiative (NESRI) in New York City. NESRI facilitates organizing by groups around the country that use a human rights framework. The first step is for activists and their communities to understand that they have certain rights. The dominant culture in the United States tells us that we have rights to abstract concepts such as freedom but not to the tangible basic necessities of education, housing, health care, jobs and more. And the second step is to identify where these rights are being violated and organize to restore and protect them.

When the human rights framework is applied to any issue, the solution becomes evident.  For example on healthcare, it would not  treated as a commodity that is a profit center for wealthy investors, but a public good provided as a public service to all. For employment, it would mean a full employment economy where workers were paid a livable, not a poverty, wage. These are two examples of many.

One area where there is an aggressive fight for human rights is the campaign for $15 an hour minimum wage.  We examined the breadth of this class war conflict in a recent weekly review: the 1,500 Walmart protests and the 100 cities where low-wage workers walked out being two recent examples. People are realizing this is not just a struggle for a fair wage but for a different kind of country that respects human rights. And people realize that our tax dollars are subsidizing the unethical practices of Walmart, McDonalds, Starbucks and others who pay poverty wages while taxpayers subsidize their employees’ food, healthcare, housing and CEO income.

In SeaTac, the town where the Seattle-Takoma airport is located, people voted to raise the minimum wage to $15.  This is an incredible victory. Not only do workers get $15 an hour (about $31,000 annual wage) but they get paid sick days.  Of course, the people who profiteer from low-wage workers do not want to give up their virtual slave labor. Alaska Airlines and the Washington Restaurant Association have challenged the new law in court. This is often part of the battle for fairness. 

In another victory Schneider Logistics, a company that runs warehouses for Walmart has agreed to pay $4.7 million to as many as 568 workers after they sued over stolen wages, i.e. failing to pay overtime and deducting wages from their paychecks among other things.  Walmart, well known for forcing contractors and suppliers to reduce their prices, tried to escape public blame by saying the workers did not work directly for them. This does not pass the straight face test because we know this is part of the Walmartization of the economy.

In another remarkable story , Flor Molina, who came to the United States so she could feed her family in Mexico, was promised a job because of her sewing skills. When she got here she found out that she had become a slave, locked into a room with other slaves in Los Angeles and forced to work.  After 40 days she escaped and found a group, the Coalition to Abolish Slavery and Trafficking (CAST). The group helped her to deal with the abuse she suffered and she is now a pioneering member of CAST’s Survivor’s Caucus, a group of women from 13 countries who escaped slavery in the United States. They work to craft policies that meet the needs of trafficking victims on issues like health care and visa protections. “Now that I’m a grandmother, I want a world free of slavery,” Molina says. “Now that I survived, I want to change something.”

Others who stand up and fight back need our support. We urge everyone to boycott Dominos Pizza because of their mistreatment of workers. In one case, Dominos workers who complained about being paid less than the minimum wage were fired. Wage theft is very common. In New York, one survey found 84% of workers reported forms of wage theft. The Dominos in Washington Heights on 181st street practices a type of wage theft. Let @Dominos know that you will not buy their products until this injustice is corrected. Solidarity is critical to defeating these human rights abuses.

Starbucks, which is in the top ten companies with poverty wages, has a contractor that provides them with their paper coffee cups. The union is fighting for a fair contract but the owner is trying to force them to accept cuts to the salaries and benefits, including losing a paid lunch hour. Recently the workers took their fight public with the help of the Starbucks Workers Union (SWU), a small grassroots network of baristas and shift supervisors. They organized an international Week of Action in 15 major cities to call attention to the injustices they’re facing. They want Starbucks to step in and join their call.  Tweet @Starbucks and tell them – respect their workers, support the workers at their Paciv Stockton paper cup company.

Another major area of human rights is the right to education. The Universal Declaration says “Everyone has a right to education” and that “Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms.” These rights are being violated in the United State as austerity and corporatization undermine education. 

People are standing up to fight for their right to education – this includes students, parents and teachers.  We especially need to support the efforts of students who stand up for their rights like the inspiring Algebra Project youth. This week, there was a day of actions across the country to take back public schools.

One more area where human rights are violated in the United States is housing.  Not only are economic policies making housing unaffordable, but people who can no longer afford housing are being widely criminalized, as are those who provide food to the hungry. This week in San Francisco, housing activists blocked a google bus to protest the evictions resulting from tech-driven gentrification that makes housing too expensive for many.

These are just a few examples. We can look to almost every issue and find the violation of human rights. And, we can also see that if the five principles of human rights were applied, the policies would be very different and we would see a country that met the necessities of people and protected the planet from ecological destruction.

Time for Outrage

In 2010 Stephane Hessel (here’s a website inspired by his work) who fought in the French Resistance and was the youngest member of the staff of the drafters of the Universal Declaration of Human Rights wrote a short book “Time for Outrage” (Indignez-vous!).  He was 95 when he died in 2013. His book is credited with being one of the catalysts of the Indignado movement, the forerunner of the Occupy Movement. It has sold millions of copies and been translated into 17 languages.

Hessel begins by piercing the false rhetoric of the type we hear from the bi-partisans in Washington and neoliberals around the world:

“We are told, shamelessly, that the state cannot bear the cost of certain civil measures any longer. But how can we lack the funds when our nations enjoy greater wealth than any time since Liberation, when Europe lay in ruins? How else to explain this but for the corrupt power of money … which is now greater, more insolent, and more selfish than ever.
“The wealthy have installed their slaves in the highest spheres of state. The banks are privately owned. They are concerned solely with profits. They have no interest in the common good. The gap between rich and poor is the widest it’s ever been, the pursuit of riches and the spirit of competition are encouraged and celebrated.”

Hessel final chapter calls for a “Peaceful Insurrection” and concludes by putting forward a charge for all of us today, one we should take seriously as we work for a better world built on the foundation of universally recognized human rights. In his final paragraphs he writes:

“How can I conclude this call for indignation?
“By reiterating that on the sixtieth anniversary of the Program of the National Council of the Resistance – March 8, 2004 – we, veterans of the Resistance who fought for Free France between 1940 and 1945, said the following: ‘Yes, Nazism was defeated, thanks to our brothers and sisters of the Resistance who sacrificed their lives, and thanks to the nations united in their opposition to fascist barbarity. But the threat persists; we are not entirely rid of it. And against injustice, our anger remains intact.
“Indeed, the threat persists. We therefore maintain our call for ‘a rebellion – peaceful and resolute – against the instruments of mass media that offer our young people a worldview defined by the temptations of mass consumption, a historical amnesia, and relentless competition of all against all.
“To the men and women who will make the twenty-first century, we say with affection:

“TO CREATE IS TO RESIST

TO RESIST IS TO CREATE”

Every day, rights guaranteed by US laws as well as the Universal Declaration of Human Rights are violated against the people of the United States and around the world.  Let us recognize that these rights are our inalienable rights and that only we can ensure that we have them. They will not be given to us; we must take them and be indignant in our constant demand that they be respected.

Sign up for the daily news digest of Popular Resistance, here.

This article is produced by PopularResistance.org in conjunction with AlterNet.  It is based on PopularResistance.org’s weekly newsletter reviewing the activities of the resistance movement.



Kevin Zeese and Margaret Flowers are participants in PopularResistance.org. They also co-direct It’s Our Economy and are co-hosts of Clearing the FOG, shown on UStream TV and heard on radio. They tweet at @KBZeese and MFlowers8.

Wednesday, March 13, 2013








The Sequester Is President Obama’s Fault

Dean Baker
Truthout, March 4, 2013
See article on original website

Now that we are counting up the days of the sequester instead of counting down, it would be a good time to cast blame. And my candidate is President Obama.

I’m not blaming Obama for the reasons that Bob Woodward came up with in his fantasyland. I am blaming President Obama and his administration for trying to be cute and clever rather than telling the public the truth about the economic crisis. The result is that the vast majority of the public, and virtually all of the reporters and pundits who deal with budget issues, does not have any clue about where the deficit came from and why it is a virtue rather than a problem.

The basic story is incredibly simple. Demand from the private sector collapsed when the housing bubble burst. We lost $600 billion in annual demand due to residential construction falling through the floor. We will not return to normal levels of construction until the vacancy rates return to normal levels. Vacancy rates are still near post-bubble record highs.

We also lost close to $500 billion in annual consumption spending due to the loss of the $8 trillion in housing-bubble-generated equity that was driving this consumption. This demand will also not come back.

This creates a gap in annual demand of more than $1 trillion. The stimulus, which boosted demand by roughly $300 billion a year in 2009 and 2010, helped to fill part of this gap, but was nowhere near big enough. Furthermore, stimulus spending fell off quickly in 2011 and the stimulus is now pretty much gone altogether. This means that we are still faced with a huge hole in private sector spending.

We know the Republicans love the Job Creators and President Obama has gone out of his way to show his love also. But in the real world, investment in equipment and software has never been much above its current share of GDP except in the days of the dot.com bubble. This means that unless we drug investors so that they are willing to throw hundreds of billions of dollars into the stock of worthless companies, we are unlikely to see any substantial rise in investment.

As a result we are stuck with an economy that is mired well below full employment. President Obama’s top economic advisers from his first term all claim that they understood this point. But they said that they could not get a bigger stimulus package through Congress.

That assessment may well be true, but the real issue is what President Obama did after the stimulus package passed. He could have told the country the truth. He could have said what all his advisers claim they told him at the time: the stimulus was not large enough and we would likely need more. He could have used his presidency to explain basic economics to the public and the reporters who cover budget issues.

He could have told them that we need large deficits to fill the hole in demand that was created by the collapse in private sector spending. He could have shown them colorful graphs that beat them over the head with the point that there was very little room for investment to expand even under the best of circumstances.

He could have also explained that consumers would not go back to their bubble levels of consumption since the wealth that had supported this consumption had disappeared with the collapse of the bubble. The public would likely understand this point since most homeowners had themselves lost large amounts of equity and understood that they were much poorer as a result of the collapse of the bubble.

In this context the only choice in the near term is between larger budget deficits and higher unemployment. The people who clamored for cuts in government spending and lower deficits are in fact clamoring to throw people out of work and slow growth.

We will never know if President Obama could have garnered support for more stimulus and larger deficits if he had used his office to pound home basic principles of economics to the public and the media. But we do know the route he chose failed.

He apparently thought the best route to get more stimulus was to convince the deficit hawks that he was one of them. He proudly announced the need to pivot to deficit reduction after the passage of the stimulus and then appointed two deficit hawks, Erskine Bowles and Alan Simpson, to head a deficit commission.

This set the ball rolling for the obsession with deficit reduction that has dominated the nation’s politics for the last three years. Instead of talking about the 9 million jobs deficit the economy faces, we have the leadership of both parties in Congress arguing over the debt-to-GDP ratios that we will face in 2023.

This would be comical if lives were not being ruined by the charade. The unemployed workers and their families did not do anything wrong, the people running the economy did.

Now the sequester comes along throwing more people out of work, worsening the quality of a wide range of government services and denying hundreds of thousands of people benefits they need. Yes, this is really stupid policy and the Republicans deserve a huge amount of blame in this picture.

But it was President Obama who decided to play deficit reduction games rather than being truthful about the state of the economy. There was no reason to expect better from the Republicans in Congress, we had reason to hope that President Obama would act responsibly.


Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The End of Loser Liberalism: Making Markets Progressive. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

Friday, May 06, 2011

HISTORY OF HOW THE RICH HAVE DELIBERATELY RUN UP DEFICITS SINCE REAGAN'S TIME LARGELY BY CUTTING THEIR OWN TAXES, LEADING INEVITABLY TO PRESSURE TO SLASH SPENDING ...WHICH TO THOSE IN POWER DOESN'T MEAN CUTTING SPENDING FOR ILLEGAL WARS BUT RATHER SLASHING FUNDING FOR HEALTH, EDUCATION, AND SOCIAL SECURITY.


  theREALnews

May 5-6, 2011
Part 1

Austerity Hawks Want a Return to 1920's Capitalism

James Crotty: Objective of austerity campaign is a return to unregulated capitalism and weak unions


More at The Real News

Part 2

High Deficits were the Objective of Right Economics

James Crotty: High deficits deliberately created to justify return to 1920's capitalism.

More at The Real News

Find originals here.

Bio

James Crotty is a Post-Keynesian macroeconomist whose research in theory and policy attempts to integrate the complementary analytical strengths of the Marxian and Keynesian traditions. He received his Ph.D. from Carnegie Mellon University in 1973, and after teaching at the University at Buffalo and The State University of New York, he joined the Economics Department of the University of Massachusetts Amherst, Amherst. He has made contributions to the social structure of accumulation (SSA) theory; the implications of radical uncertainty for macro theory and theories of financial markets.

Saturday, August 21, 2010

The Steady Deficit-Hawk Drum Beat for Cutting Social Security Must Be Drowned Out by Ever Louder Citizen Protests!

In order to cut the deficit, Republican Minority Leader John Boehner just proposed deep cuts to Social Security, while refusing to say whether he believes that extending tax cuts for the wealthy would add to the nation's deficit.

To see how popular Boehner's plan is, the political-action organization MoveOn asked Sam Seder, the former Air America host and political satirist, to hit the streets to see what some everyday folks think.  The video below was the result.

Saturday, June 26, 2010

Nobel Award Winner Paul Krugman on the Hypocrisy of the Deficit Hawks





June 17, 2010

That ’30s Feeling

By PAUL KRUGMAN

BERLIN

Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

But despite these warnings, the deficit hawks are prevailing in most places — and nowhere more than here, where the government has pledged 80 billion euros, almost $100 billion, in tax increases and spending cuts even though the economy continues to operate far below capacity.

What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up. Arguing with German deficit hawks feels more than a bit like arguing with U.S. Iraq hawks back in 2002: They know what they want to do, and every time you refute one argument, they just come up with another.

Here’s roughly how the typical conversation goes (this is based both on my own experience and that of other American economists):

German hawk: “We must cut deficits immediately, because we have to deal with the fiscal burden of an aging population.”

Ugly American: “But that doesn’t make sense. Even if you manage to save 80 billion euros — which you won’t, because the budget cuts will hurt your economy and reduce revenues — the interest payments on that much debt would be less than a tenth of a percent of your G.D.P. So the austerity you’re pursuing will threaten economic recovery while doing next to nothing to improve your long-run budget position.”

German hawk: “I won’t try to argue the arithmetic. You have to take into account the market reaction.”

Ugly American: “But how do you know how the market will react? And anyway, why should the market be moved by policies that have almost no impact on the long-run fiscal position?”

German hawk: “You just don’t understand our situation.”

The key point is that while the advocates of austerity pose as hardheaded realists, doing what has to be done, they can’t and won’t justify their stance with actual numbers — because the numbers do not, in fact, support their position. Nor can they claim that markets are demanding austerity. On the contrary, the German government remains able to borrow at rock-bottom interest rates.

So the real motivations for their obsession with austerity lie somewhere else.

In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.

German deficit hawkery seems more sincere. But it still has nothing to do with fiscal realism. Instead, it’s about moralizing and posturing. Germans tend to think of running deficits as being morally wrong, while balancing budgets is considered virtuous, never mind the circumstances or economic logic. “The last few hours were a singular show of strength,” declared Angela Merkel, the German chancellor, after a special cabinet meeting agreed on the austerity plan. And showing strength — or what is perceived as strength — is what it’s all about.

There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area, making it that much harder for Spain and other troubled economies to recover. Europe’s troubles are also leading to a weak euro, which perversely helps German manufacturing, but also exports the consequences of German austerity to the rest of the world, including the United States.

But German politicians seem determined to prove their strength by imposing suffering — and politicians around the world are following their lead.

How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day.

Monday, May 31, 2010

Social Security on the Chopping Block: Obama and the Congress getting set to pull off what Bush could not ...UNLESS WE STOP THEM!





Whacking the Old Folks