"Obama basically gave up" Ezra Klein

[hfojvt]

via Somerby

http://www.dailyhowler.com/

"In a recession, individuals and businesses tend to stop spending. This produces a self-propelling downward spiral; to overcome this “vicious cycle,” government should step in and spend more. Almost everyone understands this theory—a theory which is generally referred to as “Keynesian.” Well—everyone understands it except the public, as Ezra quickly noted. In the process, he noted the way Obama bowed to widely-held, bad economic theory with his recent proposed spending freeze:

KLEIN (continuing directly): Students in macroeconomics classes learn all this in the first week of September. After a year of trying to explain it to an economically distressed nation, however, Obama basically gave up. Instead, he bowed before the entrenched, incorrect, conventional wisdom. “Families across the country are tightening their belts and making tough decisions,” he said. “The federal government should do the same.”

Well, no. It shouldn't. The government should not tighten its belt until the people can loosen theirs. That's why the stimulus was a good idea, and why Obama is asking Congress for another stimulus, although this one's being called a "jobs bill." But the stimulus proved almost impossible to explain, and it was far too small, given the size of the recession. As a result, people are very worried about jobs, and they're very worried about deficits, and instead of trying to convince them that deficits make good sense until job growth is back to normal, the administration is trying to appease those fears so it can get on with the rest of its agenda."


Except that Somerby feels that Obama didn't try very hard to explain the stimulus. It is also worse than that. Because of bi-partisanship and Obama's campaign rhetoric, a good part of the stimulus was Reaganomics rather than Keynesian. It was tax cuts and the big portion of taxes was "AMT relief" which provided relief mostly for people with higher incomes.

Besides pushing the ideas of spending freezes and spending cuts in the SOTU, and also bragging about all the tas cuts that Democrats have passed, Obama also proposed mostly more Reaganomics

"I'm also proposing a new small business tax credit
-– one that will go to over one million small businesses who hire new workers or raise wages. (Applause.) While we're at it, let's also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment."

"and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs."

This so much reminds me of what Bill Scher wrote about Clinton.

"In 1992, Clinton didn't defy the (Republican) frame. He just turned it around, having been served up a huge opening on a silver platter - after President George H. W. Bush broke his 'Read my lips. No new taxes' pledge. Clinton campaigned on a 'middle class tax cut' amd attackd Bush as a tax raiser. Bush, sans moral authority, had no escape.

Clinton won, but the Republican frame was still in place: tax cuts always good, tax increases always bad."

Obama seems to continue to push a good slice of Reaganomics, although his signature tax credit was refundable, but it also added ANOTHER FORM to this years taxes (WTF?). Scher suggests that the Democratic frame on taxes should be "that Democrats support levels of taxation that are fair to people at all income levels and adequate enough to carry out the responsibilities that people ask of their government." ("Wait, don't move to Canada" p. 43)

But such a Democratic frame seems to be missing in action.

[Skittles]

1. it's dismal

fucking dismal

[democracy1st]

2. that piece was right on ! thanks

[eridani]

3. Obams is sending our economy straight to hell

With inadeqate fixes, the Repukes will run on "change," and get us there ten times faster.

[4lbs]

4. Uh, the spending freeze is for the 2011-2013 budgets and won't take effect until NEXT YEAR.

Even then, all it means is that some of the discretionary spending programs won't see increases for 3 years.

The EPA is budgeted $10.5 billion for 2010. So, it will get this same amount each year, or a little less for 2011-2013.

A spending freeze doesn't mean "don't spend anything" or a $0 2011 federal budget. It just means you don't spend any more on some programs than you have already done in previous years.

In addition, it is only freezing most discretionary spending. Mandatory spending isn't affected by this freeze. Mandatory spending is Social Security, Medicare, Medicaid, Federal Deficit interest, TARP, and ARRA. That amounts to $2.2 trillion this year. Discretionary spending not affected by the freeze is defense spending, homeland security, veterans administration, and foreign aid.

So in actuality, of the $3.6 trillion budget, only about $700 billion, or around 20% of the overall federal budget, will fall under the spending freeze, and that just means that those programs in that $700 billion won't see increases for 3 years, and after that, increases to match inflation.

If you look at the current 2010 federal budget, some of these programs that would be affected by the spending freeze have already had their funding vastly increased from what they were getting under the Bush administration.

http://en.wikipedia.org/wiki/2010_United_States_federal_budget

For example, the EPA is getting almost 35% more this year than last year's budget (which was developed under Bush). The State Department is getting 40% more. HUD is getting 18% more. Commerce is getting 48% more. Department of Education is getting 13% more. CNCS (aka AmeriCorps) (concerned with communities, poverty, environment, education) is getting 22% more.

So, a lot of programs have already had their funding significantly increased and should be able to withstand zero increases in their budgets for 3 years.

I don't see what everyone is crying about.

[hfojvt]

5. well I was talking more about the tax side

tax cuts, tax credits, eliminate capital gains taxes, etc., etc.,

That will show those Republicans with all their "cut taxes to create jobs" nonsense.

Plus, like the whole "the era of big government is over" what it does is put a supposed Democrat on TV repeating a Republican talking point - spending is the problem. Plus two more Republican talking points - tax cuts are good, tax cuts create jobs.

[spanone]

11. uh, next year is 2011.

[jeanpalmer]

6. The whole spending freeze issue

is a lot to do about nothing. What does it mean to "freeze spending" when we're running a $1.4 trillion deficit, and deficits of ~$4.2 trillion over three years? If you freeze your personal entertainment budget so that you save $300, while at the same time you put an extra $14,000 on your credit card to sustain other spending, how ridiculous is it to say you've initiated a "spending freeze"?

[cilla4progress]

7. I agree, I think it is a PR gimmick

Freezing 20% of the economy sounds like a lot to me; esp. when we should be INCREASING not DECREASING our investment in our economy. We need bold, fearless, intelligent leadership. He's got the intelligent down - needs to up the bold and fearless a bit (more than empty "threats,") IMHO.

[Selatius]

8. Is it that hard to try to emulate FDR in today's environment? He was so pro-worker.

It is hard to imagine copying FDR would not enlist popular support from millions of workers employed and unemployed who need some help and some opportunity. Shift the resources towards research/development, infrastructure repair/upgrade, health care, education, jobs programs like the old-fashioned CCC or WPA. It's FDR's way, and it used to be the Democratic Party's way. We have sworn off the economic wisdom of our greater leaders in favor of mediocrity.

[HughBeaumont]

9. Not to mention he's NEVER going to get help from the large scale Private Sector . .

. . . who, and you can call me "conspiratorial" all you please, WANT him to fail and ARE sabotaging economic progress until they get a true aider/abettor in the form of another Republican sock puppet.

Is it any coincidence that banks aren't lending to small businesses, stifling new hiring and expansion? Is it any coincidence that Republicans (and RepubliDems) are stalling ANY sort of progressive measure in the health care bill, because they know it will do exactly what they DON'T want: help entreprenuership flourish and release the employer's handcuffed grip to their overworked and underpaid workers?

He's giving up because he realizes it's sabotage. They hold all the gold. They make all the rules.

[hfojvt]

12. actually for banks not to lend in a downturn is pretty typical

they did the same thing under Hoover, according to Galbraith's book on the Great Depression. Republicans and conservadems are fighting progressive measures in health care reform because that is what conservative (and ignorant and duped) people want. See, for example, the US chamber of commerce's ads on health care reform which had Ike Skelton's office swamped with calls.

[spanone]

10. oh really?

:thumbsdown:

[Echo In Light]

13. Didn't give up - is merely doing what he was installed for