I don't remember whether I've directed you to this column by Paul Krugman, but if not, you should read it. If so, you should read it again. It's pretty tough. Here's the conclusion:
For what it’s worth, polls suggest that the public’s priorities are nothing like those embodied in the Republican budget. Large majorities support higher, not lower, taxes on the wealthy. Large majorities — including a majority of Republicans — also oppose major changes to Medicare. Of course, the poll that matters is the one on Election Day. But that’s all the more reason to make the 2012 election a clear choice between visions.
Which brings me to those calls for a bipartisan solution. Sorry to be cynical, but right now “bipartisan” is usually code for assembling some conservative Democrats and ultraconservative Republicans — all of them with close ties to the wealthy, and many who are wealthy themselves — and having them proclaim that low taxes on high incomes and drastic cuts in social insurance are the only possible solution.
This would be a corrupt, undemocratic way to make decisions about the shape of our society even if those involved really were wise men with a deep grasp of the issues. It’s much worse when many of those at the table are the sort of people who solicit and believe the kind of policy analyses that the Heritage Foundation supplies.
So let’s not be civil. Instead, let’s have a frank discussion of our differences. In particular, if Democrats believe that Republicans are talking cruel nonsense, they should say so — and take their case to the voters.
Events have gone a long way toward quenching my normally unquenchable optimism: the system's gotten corrupted. I say it that way because I still think the system -- the basic system of our society as it was cast by the Founders and shaped by the 230 years of our history since -- is still valid. But we have political parties that have lost sight of their ideologies -- which once upon a time really did embody different visions of achieving the greatest good for the greatest number -- and become completely focused on gaining and maintaining power. They are both in the service of those whose sole interest is in gaining and maintaining wealth. And they're aided and abetted by a press that is also more concerned with maintaining its position than doing its job -- and that position is dependent on the goodwill of those it should be confronting.
One of the most visible symptoms is the way in which reality has been warped and how that warped reality affects the flow of information. I got an e-mail from my junior senator the other day that typifies the nonsense:
S&P Issued a Pessimistic Outlook for the Value of U.S. Debt
We Have Been Warned
S&P Today: “if an agreement is not reached and meaningful implementation is not begun by then (2013), this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”
The Case of Canada
The Case of the United States
For what it’s worth, polls suggest that the public’s priorities are nothing like those embodied in the Republican budget. Large majorities support higher, not lower, taxes on the wealthy. Large majorities — including a majority of Republicans — also oppose major changes to Medicare. Of course, the poll that matters is the one on Election Day. But that’s all the more reason to make the 2012 election a clear choice between visions.
Which brings me to those calls for a bipartisan solution. Sorry to be cynical, but right now “bipartisan” is usually code for assembling some conservative Democrats and ultraconservative Republicans — all of them with close ties to the wealthy, and many who are wealthy themselves — and having them proclaim that low taxes on high incomes and drastic cuts in social insurance are the only possible solution.
This would be a corrupt, undemocratic way to make decisions about the shape of our society even if those involved really were wise men with a deep grasp of the issues. It’s much worse when many of those at the table are the sort of people who solicit and believe the kind of policy analyses that the Heritage Foundation supplies.
So let’s not be civil. Instead, let’s have a frank discussion of our differences. In particular, if Democrats believe that Republicans are talking cruel nonsense, they should say so — and take their case to the voters.
Events have gone a long way toward quenching my normally unquenchable optimism: the system's gotten corrupted. I say it that way because I still think the system -- the basic system of our society as it was cast by the Founders and shaped by the 230 years of our history since -- is still valid. But we have political parties that have lost sight of their ideologies -- which once upon a time really did embody different visions of achieving the greatest good for the greatest number -- and become completely focused on gaining and maintaining power. They are both in the service of those whose sole interest is in gaining and maintaining wealth. And they're aided and abetted by a press that is also more concerned with maintaining its position than doing its job -- and that position is dependent on the goodwill of those it should be confronting.
One of the most visible symptoms is the way in which reality has been warped and how that warped reality affects the flow of information. I got an e-mail from my junior senator the other day that typifies the nonsense:
S&P Issued a Pessimistic Outlook for the Value of U.S. Debt
We Have Been Warned
S&P Today: “if an agreement is not reached and meaningful implementation is not begun by then (2013), this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”
Dear Friends:
S&P just announced a negative outlook for the future of U.S. debt – a warning that if we do not stop spending, a crisis could come.
The rate of U.S. spending and debt is unsustainable -- our economy is on a dangerous course. We are borrowing $4 billion a day and will pay our creditors over $200 billion just in interest payments this year.
In times of crisis, we face a choice: 1) raise taxes and provide government bailouts, or 2) cut spending and enact pro-growth policies. I strongly support cutting spending.
The Case of Ireland
If we do not change course, we face the fate of many European debtors. Take the case of Ireland. During the economic downturn, Ireland guaranteed the debts of its banks – essentially a bailout. Ireland increased spending and borrowing while its tax revenues shrunk. In response, Moody’s cut Ireland’s debt rating.
The price of Ireland’s bad government was paid by the people of Ireland. In August 2010, Ireland issued 40% fewer mortgages than before. Residential and commercial lending fell so fast that Ireland’s state-run National Asset Management Agency stepped in to find a way lend something to someone.
Lenders charged the Irish taxpayer more and more for the privilege of spending other people’s money.
The Case of Canada
Compare this to Canada. When faced with the same dilemma, Canada cut spending during its 1990s economic crisis. After Moody’s downgraded Canada’s foreign debt rating in 1994, the Canadian government cut 20% of federal spending. Because Canadian leaders waited until after their debt situation reached a crisis, they had to eliminate 40,000 public sector jobs.
Canada’s tough choices lowered borrowing costs and strengthened the country as the government sought pro-growth solutions. In fact, Canada came out of the recent financial crisis healthier than most other countries – lenders charged less and less, with new confidence that Canada had its act together.
The Case of the United States
We now face similar choices. To protect you and your income, I think we should follow Canada’s fiscally responsible path and avoid the drop in incomes suffered by the Irish people. If the government makes hard choices now, you will be protected from hard choices later.
In Ireland, the government said ‘yes’ to everyone and ‘no’ to its economic future. In Canada, the government learned that restraint and responsibility led to a very bright future.
With today’s report from S&P, we Americans have been warned.
Thank you for your continued interest in these important issues. As always, please feel free to contact me at (312) 886-3506 or online at kirk.senate.gov if you have any questions or comments, or should issues of concern to you come before the Congress.
It is an honor to serve you in the U.S. Senate.
Very truly yours,
Mark Kirk
U.S. Senate
Now, for Standard & Poor, see this post from Dave Dayen at Firedoglake, which I think contains a dose of healthy scepticism:
The Dow is down 2% today on the news. Incidentally, this is not the first US credit downgrade threat that I recall; Moody’s threatened this in March 2010. The difference is that we’re in the throes of deficit fever now.
It seems like a rather convenient announcement, no? We’re right at the start of a discussion on the federal budget, and here comes S&P, which derives most of its revenue from the financial industry, warning that if the parties don’t come together on a deficit reduction scheme, they’ll downgrade debt. Of course, since the Republicans are more inflexible, Democrats will be persuaded by serious people to do the responsible thing and drop the revenue increases for the sake of protecting the AAA rating. And this would have wide-ranging effects: practically every other bond sold in this country that’s rated AAA, such as municipal bonds, would be downgraded as well.
I think at this point it’s prudent to call everyone’s attention to the Senate Permanent Subcommittee on Investigations report on the financial crisis, and its ample section on the rating agencies, and their complete failure to accurately rate mortgage bond products that were obviously unstable. In fact, Standard & Poor’s is specifically targeted in that report. Why rating agencies still exist is a pertinent question, given their contribution to the near-ruination of the global economy. In particular, the report hones in on the inaccurate models of the rating agencies:
In another post, Dayen comments further on the threat and the reactions:
The reaction to S&P’s warning of a debt downgrade has been as predictable as it was swift. Paul Ryan responded that the debt “threatens not only the livelihoods of future generations, but also the economic security of American families today.” Eric Cantor described the S&P action as “a wake-up call.” House Majority Whip Kevin McCarthy, another “Young Gun,” said pretty much the same thing. It’s all very precious. An entity funded by the big banks makes a judgment (which shouldn’t be seen apart from their other discredited judgments) about the debt. The party most allied with the big banks uses that judgment to demand that their preferred policy, which doesn’t reduce the national debt for THIRTY YEARS, must be enacted immediately. Incidentally, that preferred policy reduces taxes on the rich, including the rich executives at the big banks.
Here's Krugman on Standard & Poor.
Now, Kirk's heart is sometimes in the right place, but as far as the economic picture goes, he seems to be less savvy than I am, and that's pretty unsavvy. (Or he thinks his constituents are gullible fools. He may have a point there -- he got elected.)
There's an underlying point here, and one that Kirk's staffers know, because I bring it up every time I contact him: where are the jobs? We're not going to solve the deficit until we have a working economy, and, in contravention to the Truth as promulgated by the Villagers, we're not going to have a working economy until there are workers pumping money into it. It's not the bankers that drive the economy -- in fact, they are part of the problem -- it's us working stiffs.
Note that Kirk does not bring up Germany in his little scare memo: Germany regulates banks pretty closely, it has strong unions, and a strong safety net, so that even when people are out of work, they are still able to participate in the economy.
And yet someone like Paul Ryan comes out with this crap that he calls "Path to Prosperity" or "Roadmap to America's Future" or some such shit that is just a corporate minion's wet dream and everyone in Washington is awed by the audacity of his vision. Gods save us.
Gah! That's all I can stand this morning. The reason I've been commenting so much on gay news is that that's the only place where anything good is happening, believe it or not.
I'm going to spend the rest of the day reading real fantasy -- the kind with real heroes.
Update: It's not like nobody saw this coming:
Our story was a newspaper series and then a bestselling book, America: What Went Wrong? that caused a sensation in the early 1990s by explaining to millions of middle-class Americans why they were losing ground, and why it wasn’t their fault. A:WWW pinned the blame squarely on an alliance between Washington and Wall Street that was implementing policies that were destroying good-paying jobs and eroding hard-earned benefits.
America: What Went Wrong? was controversial. We took plenty of heat from some economists and others who claimed that the agony millions were experiencing had nothing to do with policy, but was just one of those rough patches America had to go through as our economy reinvented itself.
But to thousands of Americans who wrote to us, America: What Went Wrong? explained what had happened to them — and why things might get even worse.
Now, for Standard & Poor, see this post from Dave Dayen at Firedoglake, which I think contains a dose of healthy scepticism:
The Dow is down 2% today on the news. Incidentally, this is not the first US credit downgrade threat that I recall; Moody’s threatened this in March 2010. The difference is that we’re in the throes of deficit fever now.
It seems like a rather convenient announcement, no? We’re right at the start of a discussion on the federal budget, and here comes S&P, which derives most of its revenue from the financial industry, warning that if the parties don’t come together on a deficit reduction scheme, they’ll downgrade debt. Of course, since the Republicans are more inflexible, Democrats will be persuaded by serious people to do the responsible thing and drop the revenue increases for the sake of protecting the AAA rating. And this would have wide-ranging effects: practically every other bond sold in this country that’s rated AAA, such as municipal bonds, would be downgraded as well.
I think at this point it’s prudent to call everyone’s attention to the Senate Permanent Subcommittee on Investigations report on the financial crisis, and its ample section on the rating agencies, and their complete failure to accurately rate mortgage bond products that were obviously unstable. In fact, Standard & Poor’s is specifically targeted in that report. Why rating agencies still exist is a pertinent question, given their contribution to the near-ruination of the global economy. In particular, the report hones in on the inaccurate models of the rating agencies:
The conflict of interest problem was not the only reason that Moody’s and S&P issued inaccurate RMBS and CDO credit ratings. Another problem was that the credit rating models they used were flawed. Over time, from 2004 to 2006, S&P and Moody’s revised their rating models, but never enough to produce accurate forecasts of the coming wave of mortgage delinquencies and defaults.
In another post, Dayen comments further on the threat and the reactions:
The reaction to S&P’s warning of a debt downgrade has been as predictable as it was swift. Paul Ryan responded that the debt “threatens not only the livelihoods of future generations, but also the economic security of American families today.” Eric Cantor described the S&P action as “a wake-up call.” House Majority Whip Kevin McCarthy, another “Young Gun,” said pretty much the same thing. It’s all very precious. An entity funded by the big banks makes a judgment (which shouldn’t be seen apart from their other discredited judgments) about the debt. The party most allied with the big banks uses that judgment to demand that their preferred policy, which doesn’t reduce the national debt for THIRTY YEARS, must be enacted immediately. Incidentally, that preferred policy reduces taxes on the rich, including the rich executives at the big banks.
Here's Krugman on Standard & Poor.
Now, Kirk's heart is sometimes in the right place, but as far as the economic picture goes, he seems to be less savvy than I am, and that's pretty unsavvy. (Or he thinks his constituents are gullible fools. He may have a point there -- he got elected.)
There's an underlying point here, and one that Kirk's staffers know, because I bring it up every time I contact him: where are the jobs? We're not going to solve the deficit until we have a working economy, and, in contravention to the Truth as promulgated by the Villagers, we're not going to have a working economy until there are workers pumping money into it. It's not the bankers that drive the economy -- in fact, they are part of the problem -- it's us working stiffs.
Note that Kirk does not bring up Germany in his little scare memo: Germany regulates banks pretty closely, it has strong unions, and a strong safety net, so that even when people are out of work, they are still able to participate in the economy.
And yet someone like Paul Ryan comes out with this crap that he calls "Path to Prosperity" or "Roadmap to America's Future" or some such shit that is just a corporate minion's wet dream and everyone in Washington is awed by the audacity of his vision. Gods save us.
Gah! That's all I can stand this morning. The reason I've been commenting so much on gay news is that that's the only place where anything good is happening, believe it or not.
I'm going to spend the rest of the day reading real fantasy -- the kind with real heroes.
Update: It's not like nobody saw this coming:
Our story was a newspaper series and then a bestselling book, America: What Went Wrong? that caused a sensation in the early 1990s by explaining to millions of middle-class Americans why they were losing ground, and why it wasn’t their fault. A:WWW pinned the blame squarely on an alliance between Washington and Wall Street that was implementing policies that were destroying good-paying jobs and eroding hard-earned benefits.
America: What Went Wrong? was controversial. We took plenty of heat from some economists and others who claimed that the agony millions were experiencing had nothing to do with policy, but was just one of those rough patches America had to go through as our economy reinvented itself.
But to thousands of Americans who wrote to us, America: What Went Wrong? explained what had happened to them — and why things might get even worse.
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