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Dean Baker discusses the economy

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Pelosi fucks over the ‘lesser people’

What would a despicable coward do?

Jane Hamsher of Fire Dog Lake tells us what Polosi wanted to do and explains how she did it:

FDL has learned that in a last minute move, Nancy Pelosi sneaked language into the rule that the House is voting on tonight regarding war funding.

Embedded in the rule is the requirement that the House will vote on the deficit commission's recommendations in the lame duck session if they pass the Senate.

The commission, co-chaired by Erskine Bowles and Alan Simpson, is packed with members who favor the raising the retirement age to 70, means testing, and private accounts. Many also support investing 20% of the Social Security trust fund in the stock market.

It's ironic that yesterday Pelosi sent out press releases criticizing John Boehner for expressing the very same positions on cutting Social Security benefits that Jim Clyburn, Joe Biden and Steny Hoyer have. She's putting this language into the rule in order to deflect responsibility from herself when it comes to the floor for a vote during a lame duck session, since without her approval that could never happen.

Pelosi knows full well what the committee wants to do. The fix is in.

Do you feel depressed?

If you do, it's not you…

A worried Paul Krugman issues a warning to his readers and the public at large:

We are now, I fear, in the early stages of a third depression [the two past depressions were the "Great Depression" of the 1930s and the "Long Depression" of the late 1800s]. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend's deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

Krugman thus believes the actual cause of this potential depression is the political supremacy of fiscal conservative dogma over all efforts to support demand during a time of massive and unemployment, unemployment that may be chronic. In other words, Krugman believes the deficit hawks have defeated the proponents of stimuli in their political battle over economic policy. This, he believes, is a disaster that stands as a precondition for the next global depression.

Update

Chris Hayes and Dean Baker discuss Krugman's take on the current situation:

Last updated on June 29, 2010 at 12:02 pm

Alan Simpson talks about the “lesser people”

Former Senator Alan Simpson (R-WY), who is now a co-chairman of Barack Obama's National Commission on Fiscal Responsibility and Reform, recently and frankly discussed Social Security reform:

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Alan Simpson talks about the people lesser

Cutting big government down to size

Socializing costs, privatizing profits

It appears that Congressional Republicans are showing their true face yet again. As Talking Points Memo reports:

Congressional Democrats and the White House are toying with different ways to force BP to cover the costs of damages from the Gulf oil spill. But they face stiff opposition from industry...and it seems leading Republicans. In response to a question from TPMDC, House Minority Leader John Boehner said he believes taxpayers should help pick up the tab for the clean up.

"I think the people responsible in the oil spill — BP and the federal government — should take full responsibility for what's happening there," Boehner said at his weekly press conference this morning.

Does it matter when the federal government chooses to add another massive bailout to the deficit when said deficit can be used by fiscal conservatives in both parties as a compelling reason to demolish the remainder of America's anemic welfare state? I bet it does not matter at all. This situation, as ripe as it is with hypocrisy and greed, is common enough these days; it expresses the essence of James Galbraith's predator state — the use of governmental institutions and power to extract value from the weak and underrepresented, much as a "protection racket" would (p. 147).

John Boehner has, as one would expect, choice company in this most recently noticeable effort to loot the commons. His is not a lonely fight:

Boehner's statement followed comments last Friday by US Chamber of Commerce CEO Tom Donohue who said he opposes efforts to stick BP, a member of the Chamber, with the bill. "It is generally not the practice of this country to change the laws after the game," he said. "Everybody is going to contribute to this clean up. We are all going to have to do it. We are going to have to get the money from the government and from the companies and we will figure out a way to do that."

Shamelessness is too mild a word to describe work of this sort. The remorseless looting by America's elite indicates one thing above all else, namely, that the country's 'leaders' are, to put it charitably, hardened sociopaths.

Update

Boehner and the Chamber of Commerce clarified their already stated positions on the role of the federal government in the cleaning up the Gulf disaster (see here and here). Their clarification: They do not support the use of government money (tax revenue both present and future) to pay to clean up the Gulf. But, what about the damages which Gulf residents would have the courts impose on BP?

Last updated on June 12, 2010 at 3:14PM

Guns and butter

As of May 30, 2010, the cost of the wars in Iraq and Afghanistan passed the one-trillion dollar threshold, according to the National Priorities Project:

To date, the total cost of war that has been allocated by Congress is $1.05 trillion, with $747.3 to Iraq and $299 to Afghanistan. The numbers include both military and non-military spending such as reconstruction. Spending includes only incremental costs, those additional funds that are expended due to the war. For example, soldiers' regular pay is not included but combat pay is included. Potential future costs, such as future medical care for soldiers and veterans wounded in the war, are not included. These numbers do not account for the wars being deficit-financed or that taxpayers will need to make additional interest payments on the national debt due to these deficits.

In other words, this estimate might be a soft and forgiving one since it includes just a part of the cost of these wars to date. And, as of this moment, these wars look to be interminable.

In related news, the Associated Press recently reported that:

Laid off workers would lose subsidies to help buy health insurance and states would be denied billions in federal aid under a plan by House leaders Thursday to trim a bill extending jobless benefits.

Democrats struggled to extend jobless benefits for people who have been out of work for long stretches as lawmakers worried about the growing budget deficit balked at the price tag of the package.

The cuts would reduce the package by about $31 billion, to about $112 billion. Business tax increases would pay for some of the bill, which would still add more than $50 billion to the deficit.

For the reader to consider this information in its proper context, she would need to consider the current unemployment rate. Shadow Stats pegs it at 22%.

As of April, the official rate has sat at 9.9%.

The bill, the American Jobs and Closing Tax Loopholes Act of 2010 (H.R.4213), did pass from the House to the Senate. However, as Donny Shaw notes in his comments on the bill:

But they [the House were] a day late. The Senate adjourned this afternoon and won't be back to vote on the bill until Monday, June 7. The current unemployment benefits extension that was approved by Congress in April is set to expire on June 2. According to the Department of Labor, more than 300,000 unemployed people will exhaust their current tier of benefits and be left without a lifeline by the time the Senate gets back to take up the bill.

So, the long-term unemployed were again made to wait on a Congress that could not enact clearly needed legislation and to pass it in a timely manner, that balked at the cost of the bill, cut its healthcare provisions and managed to ensure that the benefit-eligible unemployed must wait for the Senate to return from vacation before it votes on the bill.

* * * * * *

Fiscal conservatism has long been a part of America's Civil Religion — the prudent use of money and the keeping of a balanced ledger being parts of a single cardinal virtue since Colonial times. This ethos has been so deeply entrenched in the United States that its fiscal conservatives could even find a home within the "bastard Keynesian" (Joan Robinson) consensus which dominated economic policy throughout the postwar era. They were the keepers of the sound budget after the Second World War. They even had a place among the builders and maintainers of America's welfare state, including Lyndon Johnson's Great Society programs, the postwar Social Security system, Medicare and Medicaid. But bastard Keynesianism as a theory and practice crashed hard during the interregnum of the 1970s, which were given their economic identity by the Stagflation and Oil Shock episodes which marked the decade and beyond. Fiscal conservatism, though, survived the decade. The imperatives it sponsored intensified when they were coupled to the race and status resentments which defined the emerging reactionary right. Market fundamentalism quickly took bastard Keynesianism's place as America's guiding economic paradigm.

It should come as no surprise that today fiscal conservatism provides coverage for an eccentric and brutal form of capitalism. It most notably does not have a place for the reticent welfare state project which Johnson and, surprisingly, Richard Nixon pursued according to their inclinations and interests. This is the capitalism which grew from the grand political choice which defined the Right Turn among America's elite and the appearance of a reactionary core at the base of the Republican Party. This has been a predatory capitalism with a predatory state (Galbraith, 208, pp. 130-132), a system which could not tolerate the cross-class compromise that marked the New Deal. After it had taken the executive office in 1980, the right quickly and emphatically chose empire and war, finance capital and a declining standard of living. (One even could argue that Jimmy Carter had already selected these paths.) The victory of the right has meant that Uncle Sam would always spare a trillion or two to make mindless and vile war and accumulate ostentatious weapons while the coarser citizens of America would always have an opportunity to learn that only achieving would entail having.

It seems as though Reagan's baser instincts have been liberated by his successors as the years have passed.

Update

Derrick Crowe affirms conclusions akin to mine:

One trillion dollars, gone. And we're just getting warmed up…there are trillions more in future direct and indirect costs coming.

These two wars mutilated our economy. There's no other way to say it. We've taken a huge amount of wealth and done things with it that damaged the economy. People are out of work and hurting today because we chose to launch two wars that aren't worth the cost.

Last updated on May 31, 2010 at 1:31PM

Kalecki on labor under capitalism

MRZine published online by Monthly Review now has a version of economist Michal Kalecki's great "Political Aspects of Full Employment" on its site. For me the highlight of the essay is this gem:

We have considered the political reasons for the opposition to the policy of creating employment by government spending. But even if this opposition were overcome — as it may well be under the pressure of the masses — the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a 'disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.

I believe this short paragraph neatly captures the essence of America's post-golden age political development. Labor, youth, blacks — each would be brought to heel by a political alliance between capital and government that imposed market discipline on them.

Some folk are just plain lucky…

With his tongue in his cheek, Lambert of Corrente asks:

126 riggers were on the Deepwater Horizon when it blew; 11 died. 7 BP executives were also on the rig; all lived. WaPo interviewed riggers on Friday; AP interviewed riggers today. Neither AP nor WaPo explains how the executives escaped the rig; nor does NOLA's Times-Picayune.

Yet surely it's important to know why all the executives lived, even though eleven workers died? If only so the same procedures that the executives followed can be generalized to make the odds better for everyone?

The failed center-left in the United States

Chris Hedges confronts reality:

It’s worth over-quoting at length

Joe Bageant addresses the plight of the Middle Class in the modern western countries:

Class solidarity was such a good idea. It really was. Obviously, most of the people who need solidarity are in the world's laboring classes. After all, the rich have more than enough solidarity already, as was recently demonstrated by their successful execution of the greatest global financial heist in history. Oh sure, we'll see some state sponsored mock show trials of a few of them — they always throw a few of their own out of the sleigh to the wolves during their escapes. The big heist was big news. Working Americans will be applying Preparation H to their keisters for a long time to come.

But the ultimate accomplishment of the already rich, the newly rich and the corporate rich, has been their global solidarity on the corporate/financial front. It's been a long run up to globalism, but the rich have great patience. As an American, all my life I've heard their chief mouthpiece, the president of the United States, beginning with Eisenhower, right on up through Kennedy, Reagan, Ford, Carter and Bush, and now Obama, sing the same song. Which goes moreover like this:

"Trade is the road to peace. Commerce and business know no national boundaries. They link nations together on productivity, creating jobs and peace across the world."

It sounded good at the time. Who would have thought that the people enjoying all this harmony and peace brought about through globalization would be enjoying it in a one big happy planetary work gulag? And if they are not doing so at the moment, they will be as soon global capitalism, under the watchful solidarity of the rich, bears full fruit.

Thanks to globalization, the American, Australian and European working classes are on their way to extinction, in terms of their traditional rights, and quality of life. Just like the workers being poisoned to death by circuit board toxins in Guiyu, China, their fates will be determined by global capital, either by default or by bitter struggle against it. We are not seeing much of the latter and are not likely to, until it is too late, which it may already be. After all, you cannot put up much of a struggle against global capital when you worship it a creed and are addicted to commodities too.

The remedy, according to Bageant:

There is no way the world's working people can win in the long run, which is getting pretty damned short, or even survive, except by joining the worker struggles, of China, Asia and Africa and India. The idea that American workers are the same as the Asian and Latin American and African working people goes down hard in American gullets. (I'm no expert, but it looks to me like the Euros and the Aussies and the Canadians are snotty that way too. In fact, now that I am meeting dozens upon dozens of Canadians from all walks of life, they are looking worse than Americans.)

But for Americans, it does not go down at all. As a people, they'll never ever accept that fact, because they'll never know it for at least two reasons. (1) They are too over worked and undereducated to find out for themselves, and (2) American corporate media machinery will never let them hear of it. Americans are screwed, blued and tattooed.

As always, a mix of education, autonomy and solidarity provide the means for a cure to what ails the lower orders.

Chomsky on America’s political crisis

 
Update I

Chris Hedges wrote a laudatio Chomsky because of this interview. It can be found here. Hedge also fears a fall into dictatorship.

Last modified 4.19.2010 at 6:26 PM

Is a populist moment emerging?

The AP discovers an example of America's democratic class struggle:

When it comes to paying for health overhaul, Americans see just one way to go: Tax the rich.

That finding from a new Associated Press poll will be welcome news for House Democrats, who proposed doing just that in their sweeping remake of the U.S. medical system, which passed earlier this month and would extend coverage to millions of uninsured Americans.

The poll found participants sour on other ways of paying for the health overhaul that is being considered in Congress, including taxing insurers on high-value coverage packages derided by President Barack Obama and Democrats as "Cadillac plans."

That approach is being weighed in the Senate. It is one of the few proposals in any congressional legislation that analysts say would help reduce the nation's health expenditures, but it has come under fire from organized labor and has little support in the House.

What makes this case interesting is the "make the rich pay" sentiment present among Americans today. Decades of GOP-led welfare state retrenchment, deindustrialization, anti-labor reaction, race-baiting, etc. have dulled the sense that wealth is a social product, not a consequence of an individual's good work.

Entitled to loot

This is one to savor as the world plunges into the abyss

One may find this sentiment expressed in the Guardian:

One of the City's leading figures has suggested that inequality created by bankers' huge salaries is a price worth paying for greater prosperity.

In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff.

Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all".

Pittsburgh

A stop on the road to dictatorship in America

While addressing the G-20 Summit along with the protests meant to challenge the Summit and what it represents, Chris Hedges recently characterized the repression implemented by the federal government and the local governments in the Pittsburgh region as follows:

The draconian security measures put in place to silence dissent in Pittsburgh are disproportionate to any actual security concern. They are a response not to a real threat, but to the fear gripping the established centers of power.

A quibble: I would say that the threat is real and that the elite rightly believe their position to be insecure. But the actual threat posed by the G-20 demonstrators gathering now in Pittsburgh will not be in any way related to whatever violent acts they might commit during their demonstrations. The actual threat which motivates this kind of fear among the elite is political in nature. It takes the form of a politics meant to represent the interests, identities and lives of those largely excluded or ignored by America's compromised political institutions. This political exclusion supports and reflects the economic dispossession that is now operative in an economy teetering on the brink.

Additionally, the repression is future-directed, as Hedges recognizes:

The power elite grasps, even if we do not, the massive fraud and theft being undertaken to save a criminal class on Wall Street and international speculators of the kinds who were executed in other periods of human history. They know the awful cost this plundering of state treasuries will impose on workers, who will become a permanent underclass. And they also know that once this is clear to the rest of us, rebellion will no longer be a foreign concept.

How, indeed, will the dispossessed respond to their knowing that their lives were sacrificed so that the finance capital might thrive in the difficult future now coming into being? To whom will they attribute their suffering? Will they have the cultural and social resources they will need if they are to survive the global system coming into being? How will they survive the slums they will inhabit when they know so little of solidarity and political communication?

The American political system, tenuously democratic and corrupted as it has been by the militarism and market fundamentalism of the last decades, can produce only one response to this threat, which is, to be sure, a threat generated by its growing illegitimacy and the inadequacy of contemporary capitalism:

The delegates to the G-20, the gathering of the world's wealthiest nations, will consequently be protected by a National Guard combat battalion, recently returned from Iraq. The battalion will shut down the area around the city center, man checkpoints and patrol the streets in combat gear. Pittsburgh has augmented the city's police force of 1,000 with an additional 3,000 officers. Helicopters have begun to buzz gatherings in city parks, buses driven to Pittsburgh to provide food to protesters have been impounded, activists have been detained, and permits to camp in the city parks have been denied. Web sites belonging to resistance groups have been hacked and trashed, and many groups suspect that they have been infiltrated and that their phones and e-mail accounts are being monitored.

In other words, "Force is all the elite have left," as Hedges succinctly states. The elite have no other response to these protests because they lack a reform politics that points to a possible world that exists beyond the crises of the present and which resolves these crises in a manner that can be judged legitimate. Force — the 'reasoning' and 'communicative' technique used by the stupid to address problems they do not understand and cannot resolve.

Obamanomics…

The New York Times reports that:

President Obama on Tuesday will nominate Ben S. Bernanke to a second term as chairman of the Federal Reserve, administration officials said.

State budget crises killing off summer school

A recent New York Times report begins with:

A year ago, the Brevard County Schools ran a robust summer program here, with dozens of schools bustling with teachers and some 14,000 children practicing multiplication, reading Harry Potter and studying Spanish verbs, all at no cost to parents.

But this year Florida's budget crisis has gutted summer school. Brevard classrooms are shuttered, and students like 11-year-old Uvenka Jean-Baptiste, whose mother works in a nursing home, are spending their summer days at home, surfing television channels or loitering at a mall.

Unfortunately, these summer school closings are all but as common as state and local budget crises. According to the Center on Budget Policy and Priorities:

The ongoing decline in tax receipts has worsened state budget problems. At least 48 states addressed or are facing shortfalls in their budgets for the upcoming year totaling $166 billion or 24 percent of state budgets. New data show a majority of states expect shortfalls in 2011 as well. Aggregate gaps through 2011 likely will exceed $350 billion.

Revenue shortfall of this magnitude have a negative multiplier effect which would, if it appears, likely aggravate the recession, tax revenue shortfalls and thus the governmental provision of essential social services like education. Unsurprisingly, the poor and the on-the-fast track-to-the-poorhouse are affected the most by this situation since they not only intensively use summer schools and other government provided social services, they also lack the wherewithal to acquire these goods when the public cannot or will not provide them.

Thus does the society allegedly beyond class conflict reproduce and deepen class differences and class domination.

More labor unrest in France

Amid plant closings and layoffs, some French workers have occupied their workplace, took a boss as a hostage while others took to the streets to display the anger with the current economic situation, according to reports (see, for instance, this).

Another pundit jumps on the populist bandwagon

E.J. Dionne writes:

We are at the beginning of a great popular rebellion against those who showed no self-restraint when it came to lining their own pockets. Their entitlement mentality arose from an inflated sense of their own value and of how much smarter they were than everyone else.

The sound you are hearing in response to the AIG payoffs — excuse me, bonuses — is the rancorous noise of their arrogance crashing to earth.

Yet there is much hand-wringing that this populist fury is terribly perilous, that the highfliers who could not control their avaricious urges have skills essential to repairing the damage they caused in the first place.

Beware populism, we are told. Honor those AIG contracts. Forget about any moral reckoning and just fix the economy.

This view is wrong on almost every level, especially about populism. Of course not all forms of populism are attractive. But as historian Michael Kazin argued in "The Populist Persuasion," the "language of populism in the United States expressed a kind of idealistic discontent" and "a profound outrage with elites who ignored, corrupted and/or betrayed the core ideal of American democracy."

Is this not an entirely appropriate reaction to elite decisions dating to the 1980s that ultimately ran our economy into the ground?

Catching up

With the many links I failed to note over the past week

Christopher Ketcham believes the economic crisis will cleanse the land of kitsch, crap and the pimps who market the stuff. This is his silver lining and he considers it a praiseworthy endgame to America's binge-driven consumer culture.

A grim assessment can be found in Michael Hudson's latest essay:

The financial "wealth creation" game is over. Economies emerged from World War II relatively free of debt, but the 60-year global run-up has run its course. Finance capitalism is in a state of collapse, and marginal palliatives cannot revive it. The U.S. economy cannot "inflate its way out of debt," because this would collapse the dollar and end its dreams of global empire by forcing foreign countries to go their own way. There is too little manufacturing to make the economy more "competitive," given its high housing costs, transportation, debt and tax overhead. A quarter to a third of U.S. real estate has fallen into negative equity, so no banks will lend to them. The economy has hit a debt wall and is falling into negative equity, where it may remain for as far as the eye can see until there is a debt write-down.

Mr. Obama's "recovery" plan, based on infrastructure spending, will make real estate fortunes for well-situated properties along the new public transport routes, but there is no sign of cities levying a windfall property tax to save their finances. Their mayors would rather keep the cities broke than to tax real estate and finance. The aim is to re-inflate property markets to enable owners to pay the banks, not to help the public sector break even. So state and local pension plans will remain underfunded while more corporate pension plans go broke.

Mike Whitney argues that:

Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions.

Peter Phillips argues that the Obama administration has not abandoned the neoconservativism of the recent past; it has only softened or 'humanized' this strategic focus so that a fragmented world might accept it as legitimate. Yet, continuing to rely upon this strategy would spell misfortune for more than the non-Americans killed, maimed or jailed by the American security and war apparatus. In fact, militarism has already thoroughly corrupted America's national politics, according to Phillips. The developmental path that would lead the country away from this political impasse begins with an active and self-sustaining anti-war movement.

Chris Hedges warns that the economic crisis, not the "terrorist threat" abroad, might bring down America's democratic republic. The penultimate situation: The economic crisis motivates Americans to take to the streets in defense of their interests and the federal government responds to this "provocation" by declaring martial law, thus abolishing the democratic-popular threat to the security apparatus and the economic sectors that depend on this apparatus.

Tom Englehardt wonders if the current economic crisis will endure until that time when it can meld with the pending ecological catastrophe.

Benjamin Netanyahu will attempt to form the next Israeli government, according to the New York Times. If Netanyahu is successful, the new government will sit on the far right and will not likely include the moderate Kadima party or its leader Tzipi Livni who are expected to join the opposition.

And Rick Santelli's now infamous rant: