Cat Food Commission II – wasted opportunity

When I read about Senator Max Baucus (D-MT) and, unfortunately, a majority of other Democrats on the “Super-Committee” (Which progressives refer to as “Cat Food Commission II”) offering a radically regressive plan to make $500 billion in Medicare cuts, I read a few more sentences. I saw that, sure, fine, okay, the plan would also ask for $300 billion in stimulus funds, but the result of that would obviously be $200 billion in lost consumer demand as people would either lose work from sickness or would spend money they would otherwise spend on other things. I shot out a few letters to my representatives, but I agree with this piece that says the proposal was a horribly wasted opportunity to make a clear statement to the American people as to what Democrats actually want to do and what Democrats really stand for.

Really? Do Democrats really want to see $2 trillion in spending cuts balanced against only $1 trillion in new taxes? At a time of 9% unemployment?!?! At a time when the Occupy Wall Street movement should have been making it absolutely crystal clear to politicians that the time for austerity measures is long over?!?!!?

How on Earth could Democratic politicians have possibly concluded that Republicans were going to agree to new taxes? What on Earth made them think that anybody in America was so anxious for an agreement that they'd take a slowdown in the economy in return for a wildly uneven agreement that would hurt an already-hurting economy still further?

And remember the outcome of the debt-limit debacle. Speaker of the House John Boehner said he got 98% of what his side wanted out of the deal and, not surprisingly, President Obama's approval rating promptly cratered. That's because he gave up far too much in return for far too little.

Sorry, but Baucus' offer is a major FAIL in every possible way that one can look at it. Fortunately for the American people, Republicans turned up their noses at the offer and refused to even discuss it.

Update: Washington Post puts together an excruciatingly bad front page editorial piece (They pretend it's a news piece) that completely misrepresents the status of Social Security. Piece includes link to mailing list with which to contact media and request correction.

Round-up on Occupy Wall Street

6:14 PM PT: Herman Cain is really frustrated because he doesn't understand what the OWS movement wants. "Do they want the bankers to come downstairs with checks in their hands?" he asks. He's totally bewildered and obviously pissed about it. He wants to know what to do to make them go away. And he can't figure it out. And, of course, that's exactly the point. That's the question the OWS movement wants him to be asking. And eventually the Herman Cains of the world will be forced to figure it out.

Daily Kos covers Republican debate of 18Oct2011

A Huffington Post writer explores just why the Occupy Wall Street (OWS) movement has been so successful. BTW, percentage of those who approve of the Tea Party: 27%, percentage of those who approve of OWS: 54%. Heck, New Yorkers like them by a margin of 67%.

Dissenter at FireDogLake.com contributes another, very typical story about what motivates the OWS movement. My own story on visitng OWS in New York. Our allying of Occupy Philly with Philly Against War. Treasury Secretary' Timothy Geithner's vow to do "more" to help the 99% rings a bit hollow as no one remembers him doing much of anything to begin with. And last Saturday's protests? Wow!!!

Is the Democratic Party close and all buddy-buddy with OWS? Not exactly. Both sides have good reason to keep their distance. The National Review website is convinced that the two are in cahoots anyway. Good round-up of views on Democrats and OWS.

See, here’s a big part of the problem

Jeffrey Immelt, the former head of General Electric, is America's "Jobs Czar." What's the problem with that? Well, first off, corporate executives don't necessarily know anything about creating jobs for regular American citizens. Their whole expertise, from Mitt Romney (Republican presidential candidate) to Rick Scott (Governor of Florida) to Meg Whitman (Spent $160 million to become Governor of California and lost), consists of doing what benefits them and them alone. Perhaps a few cronies can share in the spoils, but their whole ideology revolves around "What's good for General Motors (Or whatever corporation they run) is good for the USA!"

Because the ideology of business holds that whatever is good for them personally is also good for America as a whole, they simply can't see where what's good for them personally ends and when the good the country should take a higher priority. There never was any indication that corporate executives make good politicians. There are of course exceptions, there's nothing about being a corporate executive that automatically makes one unqualified to be a politician or a political appointee, but when Immelt fired one-fifth of GE and made hundreds of times what the average worker at GE made, there's nothing that should give us any confidence that Immelt has the vaguest clue as to what he's doing.

Please let's get off the idea that corporate executives automatically make good politicians. G.W. Bush was the first President to have earned an MBA and look where that got us!

Occupy Wall Street

A running log of events in the Occupy Wall Street movement.

Economist Dean Baker makes an extremely good point about the mocking NY Times piece on the protests:

The NYT used its news section to mock critics of Wall Street. It presented the comments of some of the people protesting Wall Street. While the people quoted in this article do appear to be confused about the role of the financial industry in the economy, the paper would have no difficulty finding articulate critics of the financial industry.

For example, it could present the views of Nobel prize winning economist Joe Stiglitz. Or, it could present the views of Nobel prize winning economist, and NYT columnist, Paul Krugman. Or could interview Simon Johnson, a former chief economist at the International Monetary Fund.

Are lefties doing as much as they can to help the movement?

It's no secret that the protesters on Wall Street are actively being marginalized by the press. Of course, it's also no secret that the protesters themselves are doing an effective job of self-marginalization as well through a lack of focus on media management, goal orientation and message coordination. One of the challenges of the protest movement on the left is resistance to the forms of coordinated discipline that maximize the efficacy of group action.

But this also isn't exactly the fault of the protesters. The reality is that labor orgs, Democratic clubs and central committees and other left-leaning organizations should be putting the full weight of their money, messaging and organaizing capacity into a directly anti-wall street movement. In the absence of that, particularly in New York, the action is left to a ragtag bunch of college kids and disparate activists with little in the way of media skills and organizational experience.

President Obama and the war on the middle class

The war against the middle class has been a relatively silent one until now. For decades, certain corporate interests and their influence peddlers in Washington (both lobbyists and politicians alike) have orchestrated a stealth ambush targeted at the core of American society. By and large, outside of high-information circles, the legislative actions that filled their coffers at the expense of middle class wallets went largely undetected by most Americans.

Obama’s proposal

We got ourselves some vigorous criticism from one of our "usual suspects" and we have ourselves a warning about how Obama intends to pay for the new stimulus (Not at all clear as to why, but President Obama is avoiding using the term "stimulus").

The news about how the debt-ceiling debacle was perceived by the public is that, as a sheer, unmitigated disaster, it ranks a bit below Hurricane Katrina/flooding of New Orleans and just a hair above Iraq's inavsion of Kuwait in 1991. Personally,  I regard that as extremely good news because that means that Obama is likely to avoid that sort of complete collapse/surrender in the upcoming negotiations over how much of his proposal to put into law.

And sure enough, the President is reacting to House Majority Leader Eric Cantor's plea "The message was: either accept my package as it is, or I will take it to the American people. I would say that that’s the wrong approach." by taking his case directly to Cantor's own district, telling citizens to contact Congress and demand quick action.

Economists are generally happy about the plan and what's really, REALLY cool is that the White House is refusing to make preemptive concessions!

Recommendations for the President

Rep. Michele Bachmann (R-MN) has gone on record, saying that God is displeased at America's spending habits and “we’ve got to rein in the spending.”

 

House Majority Leader Eric Cantor is making noises about attaching spending cut measures to disaster-relief bill.

 

The good news is that Obama's debt-ceiling deal was politically, a catastrophe. 46% to 32%, the public thought it was a lousy deal that would hurt the economy.

 

Obama signed the bill all alone.

 

Absolutely no one wanted to be visually associated with the deal, even though Speaker of the House John Boehner said "We got 98 percent of what we wanted," he said adding that the framework cuts more spending than it raises the debt limit. It also caps future spending to limits in the growth of government.

 

The problem for the President is not that lefty bloggers are critical of him and his performance (They are), but that they're the canaries in the coal mine who are warning him that he's really starting to slip in the estimation of the voters. The President's embrace of austerity was a really bad move that he really needs to pivot away from.

 

My recommendations are two: Obama needs to demand a clean bill for disaster relief. No cuts or the bill gets vetoed. He can't let himself get rolled again by giving in to blackmail as he did in the debt-ceiling deal. Two: He needs to cancel Cat Food Commission II, or as Senator Pat Toomey calls it, the super-committee to cut spending. He can do it by quietly telling all the Democrats on the Commission to simply not show up for meetings, Republicans will then complain, Obama can then come out and say the Commission was a lousy idea to start with and he supports Democrats who stay away from it. He should then stand with the public and say that he's opposed to any further cuts.

 

Failure to do this could very easily result in a President Romney/Perry/Bachmann.

 

Update: Progressive Keynesian economist Dean Baker examines Obama's proposed job creation schemes and finds them most underwhelming. If this is the best he can do, it means he hasn't learned anything and is probably doomed to be a one-term president.

 

Further update: Good! Looks like that's just what he's doing.

Cat Food Commission II

A few days ago (Aug 7th), Representative Allyson Schwartz (D-PA) caught my attention with the statement: "[The debt increase agreement] cuts $2.7 trillion from federal spending over 10 years, protects Medicare and Social Security, and does not harm our economic recovery." I immediately sent her a letter, protesting that any and all cuts to government spending harmed the economy. A Republican/Tea Party Representative sent a letter to the Congressional Budget Office, asking about the effects of cuts on the economy. The CBO's answer was:

"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.

The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual." [emphasis in blog post]

In other words, yes, cutting the budget by anything harms the "economic recovery." Elmendorf adds that cuts "would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used." In other words, no, there is no "safe" level of cuts that will not harm the recovery.
Of course, this is quite significant given Cat Food Commission II, or in Senator Pat Toomey's (R-PA) words, the "deficit super-panel," which just finished picking its roster of persons to serve on it, is constituted to produce cuts only. Toomey himself says "I'm not interested in some kind of big tax increase; that would be counterproductive."

Senate Minority Leader Mitch McConnell (R., Ky.), who chose Toomey, said his main criterion was finding senators "who are interested in achieving a result that helps to get our nation's fiscal house in order. . . . That means reforming entitlement programs that are the biggest drivers of our debt, and reforming the tax code in a way that makes us more competitive and leads to more American jobs."

So, whether Democrats agree or not, and at least some of them are in agreement with Republicans that there should be spending cuts, but no tax increases, the real problem is the Committee itself:

The super-committee itself is a profoundly conservative and anti-Democratic entity, immune from public pressure and tasked with deciding between two bad choices—a so-called grand bargain that would significantly reduce the social safety net vs. deep across the board cuts at a time of economic peril. The idea of doing anything to stimulate the economy is totally absent from its purview. The scope of the committee itself, rather than who’s on it, is the real problem.

And as to the notion that the Democrats on the Commission are flaming lefties, erm, no.