D-squared Digest — FOR bigger pies and shorter hours and AGAINST more or less everything else: Just to be clear on this, as I think some people are confused. The bad thing about cutting the federal deficit is not that it might affect Social Security or Medicare. Even if these were totally ringfenced it would be a bad idea. The bad thing about cutting the federal deficit is not that some other virtuous program might be defunded. Even if all the savings came from military procurement it would be a bad idea. The bad thing about cutting the federal deficit is not that it “shrinks the state”. Even if all the deficit cuts were obtained by tax rises it would still be a bad idea. The bad thing about cutting the federal deficit is not that the burden falls disproportionately on the poor. Even if the deficit were reduced specifically by taxes which only fell on the top 1% of the income distribution it would still be a bad idea.

The bad thing about cutting the federal deficit is that unemployment is very high and interest rates are very low. Given that, taxing productive activity to pay down debt is really obviously the wrong thing to do, and borrowing money to employ currently unemployed resources is really obviously the right thing to do. It would not need to be spent on “shovel-ready” projects. By definition, for purposes of expansionary fiscal policy, anything you can spend money on is shovel ready. It doesnt have to be spent on vital infrastructure. Even completely pointless activity would be better than nothing. In some cases, even actually destructive activity, like war, has had a stimulative effect on the domestic economy.

The basic issue, and the one which ought to have people running around like their hair is on fire, is the unemployment rate. That, combined with the interest rate, shows you that deficit reduction is the stupidest possible policy at the current time. This is a very important issue, and the current President of the USA is on the wrong side of it.

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If the Clinton tax rates had remained in effect, the entire national debt would have been paid off by 2012

I had long wondered about something like this being true. Back in June of 2009 when I wrote: Whose Deficit Is It? I was stunned by the 673 billion dollar figure for the Bush contribution to the deficit in the NY Times How Trillion-Dollar Deficits Were Created chart (and I was also always bothered by the question ‘just who gives a tax-cut in the middle of a war‘ question too). I wondered had we not instituted those tax cut just where would we be today?

While just a great robust and informative speech that is well worth listening to in it’s entirety if you have only limited time listen to the section running from 24:00 to 30:00 in which the realization above about the Clinton tax rates appears and how we are ignoring the potential in the world’s future energy market and ceding the leading position to China.

Some excerpts from karoli’s C&L article and the video of the Kerry speech given in front of the Center for American Progress:

John Kerry Serves Up a Reality Check

by karoli

John Kerry gave a speech last week at the Center for American Progress that should become the marching song for every liberal in this country. He was clear: The last 10 years have cost us too much, and if the hyper-partisan tone doesn’t change to one of true concern for the direction of this country, we will cede any chance to lead to others.

He hits it all: Infrastructure, energy, debt, climate change. Every point. The one that hit home for me was when he talked about where we might have been, had Bush and the Republicans not unwound progress made during the Clinton administration.

Here’s an example. We talk about how the Clinton tax rates generated a surplus, but we stop there. We don’t talk about the fact that if the Clinton tax rates had remained in effect, the entire national debt would have been paid off by 2012. Imagine what a difference that would have made in today’s dialogue. And more importantly, why aren’t we hammering this home every single time one of those self-righteous Republican buffoons stands up and talks about how our national debt is killing the country?

Kerry points out that we would be at a point where our financial position would be at it’s strongest point ever. What would that have meant when (or if) the bottom fell out of the economy? Most assuredly, we wouldn’t have to be speaking of debt retirement and austerity.

We need to start going there. This shouldn’t be swept under the rug. I can’t recommend this highly enough. Take an hour out of your day and watch Kerry’s speech. He really hits hard on the cost of NOT investing in the country and how it puts us behind on a global basis every single day.

Check out this headline from January 26, 2000, just 11 years ago:

Consumer Confidence Hits an All-Time High; Jobs Called ‘Plentiful’ : Clinton Sees An Early Payoff of U.S. Debt

Compare it to today’s headlines (this one, from the Wall Street Journal, one of the biggest tax-cut pimps):

U.S. Ran $80 Billion Budget Deficit in December

I think we need to give Republicans full credit for everything they did for to us. We should be at least as loud as the anti-hcr folks are, and we should repeat it every single day in public, especially to anyone who still thinks Republicans are fiscally responsible.

On almost every front that I can think of Republicans have just plain old out-marketed Democrats and Liberals. They have a great talented team working on their messaging we know that. Frank Luntz* was the architect of the Republican talking points and language regarding global warming and the Frank Luntz term "Climate Change" and he most recently worked with them on their demonization of health care reform. From the Wikipedia article on Luntz:

"Luntz was awarded the 2010 PolitiFact Lie of the Year award for his promotion of the phrase ‘government takeover‘ to refer to healthcare reform, starting in the spring of 2009. "’Takeovers are like coups,’ Luntz wrote in a 28-page memo. ‘They both lead to dictators and a loss of freedom.’" — (PolitiFact’s Lie of the Year: ‘A government takeover of health care’)

Will Republicans now recruit him to work on their economic propaganda babble now too?

The Republican/Conservative trickle down economic meme that with tax cuts the rich will invest in business and create new jobs is just a discredited joke and Democrats and Progressives need to get that message out.

The key to our future is economic truths and embracing the a new age of not just energy independence but energy leadership and that means a better consistent and persistent marketing message from Democrats and Progressives.

(*— While yes Frank Luntz was the architect of the Republican message on global warming he later recanted and changed his position in 2006 FRANK LUNTZ RECANTS: Changes Position on Global Warming: Framing Science. Given that and what I wrote earlier about Wendell Potter I have to wonder will Frank Luntz again recant and change his position on health care and maybe even work for the "good guys" on the economy? Don’t count on it.)

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Tripled? Usally the figure I hear cited by the right wing ideologues is quadrupled and they very often cite this chart from an article entitled Bush Deficit vs. Obama Deficit in Pictures found on the website belonging to the conservative think tank Heritage Foundation to make their point! The Heritage Foundation is quick to point out that “The Washington Post has a great graphic which helps put President Obama’s budget deficits in context of President Bush’s.”

“…in context of President Bush’s.“????

Not really. The graph represents and uneven tilted playing field.

Quoting from reporting done by Lori Montgomery and Ceci Connolly for that same Washington Post:

In addition to the substantive proposals, Obama’s team boasts of improving the budget process itself. For years, budget analysts complained that former president George W. Bush tried to make his deficits look smaller by excluding cost estimates for the war in Iraq and domestic disasters, minimizing the cost of payments to Medicare doctors and assuming that millions more families would pay the costly alternative minimum tax. Obama has banned those techniques, the senior official said.

Take 2005 for instance. If you include just the excluded cost at the time for the Iraq War the REAL deficit figure for fiscal 2005 would be $427 billion* not the $317 billion the CBO used in it’s figures.

So where did this swollen bloated deficit we face really come from? This past week the the NYTimes’ gave us this chart in the David Leonhardt article Sea of Red Ink Was Years in the Making that gives us a far better more accurate look at just where Obama’s record deficit came from:

How Trillion-Dollar Deficits Were Created

Quoting from the mid-section of the Sea of Red Ink Was Years in the Making article:

[…]

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

How can that be? Some of his proposals, like a plan to put a price on carbon emissions, don’t cost the government any money. Others would be partly offset by proposed tax increases on the affluent and spending cuts. Congressional and White House aides agree that no large new programs, like an expansion of health insurance, are likely to pass unless they are paid for. (JJH- Yes and on the day this article came out Obama proposes making ‘pay-as-you-go’ the law)

Alan Auerbach, an economist at the University of California, Berkeley, and an author of a widely cited study on the dangers of the current deficits, describes the situation like so: “Bush behaved incredibly irresponsibly for eight years. On the one hand, it might seem unfair for people to blame Obama for not fixing it. On the other hand, he’s not fixing it.”

“And,” he added, “not fixing it is, in a “sense”, making it worse.”

When challenged about the deficit, Mr. Obama and his advisers generally start talking about health care. “There is no way you can put the nation on a sound fiscal course without wringing inefficiencies out of health care,” Peter Orszag, the White House budget director, told me.

Outside economists agree. The Medicare budget really is the linchpin of deficit reduction. But there are two problems with leaving the discussion there.

[…]

Looking at the analysis another way courtesy of Matt Yglesias here’s how it looks as a pie chart:

Months ago when I first learned that Obama wasn’t going to be playing around with budget language tricks I made the claim that if you took away the cost of the Iraq War and the Bush Tax Cuts the deficit would be a quarter of what it was and people (my Conservative & Republican friends) scoffed and dismissed what I was saying. It certainly looks now like I wasn’t that far off in my own analysis at the time.

Don’t believe the numbers? Check out the methodology in How We Crunched the Deficit Numbers.

I really don’t expect the Republican, Conservative, and NeoCon right to change their rhetorical denials and really ever own up to responsibility for the deficit, in fact just yesterday Karl Rove flat out refused to accept any responsibility for the deficit and spun his administrations record continuing the deceit (watch it):

ROVE: This guy is going to run up a $1.8 trillion deficit. That’s what it’s projected to be this year,”

VAN SUSTEREN: Do you take some responsibility, meaning you, the Bush eight years, for this…

ROVE: No.

VAN SUSTEREN: You take absolutely no responsibility? Because…

ROVE: No, lets put it this way, look look we had a deficit that ran 2% of GDP and we were fighting a war [Rove carefully avoids saying that the cost of the Iraq War was not included in the deficit] and trying to grow the economy. He planning a 4% of GDP…

VAN SUSTEREN: So that twice?

ROVE: Twice. He’s going to…his smallest deficit is 200 billion dollars larger than Bush’s largest deficit [the cost of the Iraq war, around 200 billion]. Think about that.

….but I think it’s very important for everyone to know that Obama and the Obama administration are standing up and taking responsibility for hundreds of millions , billions of dollars lost, squandered, misspent, and hidden by the last administration. Remember that the next time you hear someone on the far right rant hysterically about Obama running up the largest deficit in history. It is Obama’s deficit, he’s stood up and claimed it, but it is very certainly a gift he received from the last administration.

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“If one benefits tangibly from the exploitation of others who are weak, is one morally implicated in their predicament? Or are basic rights of human existence confined to the civilized societies that are wealthy enough to afford them? Our values are defined by what we will tolerate when it is done to others.”

“The great, unreported story in globalization is about power, not ideology. It’s about how finance and business regularly, continuously insert their own self-interested deals and exceptions into rules and agreements that are then announced to the public as “free trade.”

“The US financial position is rapidly deteriorating, due mainly to America’s persistent and growing trade deficit. US ambitions to run the world, in other words, are heavily mortgaged. Like any debtor who borrows more year after year with no plausible way to reverse the trend, a nation sinking deeper into debt enters into an adverse power relationship with its creditors — greater and greater dependency.”

“The juggernaut — the best and biggest military force in the world — lumbers on, doing what it knows how to do best. It is unwilling to rethink its future, unable to let go of the past. Like the shark, it must keep feeding, only now it is feeding on itself.”

“Modern Americans are remarkably capable people, skillful and inventive in many ways, but they are not so good at talking to one another across their vast differences of social class and economic status.”

“Americans cannot teach democracy to the world until they restore their own.”

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