Cross posted at Voices on the Square and The Stars Hollow GazetteOnce we realize there is no fiscal cliff and the whole premise is a myth, you think about why it was created. It was created so we can mop up after the 1% which owns all three branches of government including the President. Obama didn't add a raise in the debt ceiling to the Obama Bush tax cut deal he made in 2010 which created this political mess we are in right now.
Yet the poor and middle class are supposed to "stop whining and complaining" and just mop it up as if it's one of the menial 60% of low wage jobs created that were part of this "recovery" where 93% of the income it went to the top 1%? I don't think that's fair. He needs to ask his Wall St buddies in his Treasury Department to share sacrifice. We have sacrificed enough in the name of the fantasy evil deficits from the land of Mordor causing fantasy default. Think about this when Nancy Pelosi was lying to you about this sellout ultimately helping the middle class last night.
#9. Middle-Class Wealth declines by 35 percentAnd we're supposed to celebrate this?
On July 18, 2012, the U.S. Bureau of the Census made it official: The middle-class is getting poorer. The median family -- that family exactly at the mid-point of the wealth ladder --- saw its net worth collapse. (Net worth is all assets minus all liabilities.) In 2005, the median family's wealth was valued at $102,844 (in inflation adjusted dollars.) By 2010, the latest Census figures showed a drop of 35 percent to $66,740.
Like we're supposed to celebrate the 29 trillion banker bailout globally including guarantees, because Wall St bankers used control fraud to inflate the housing bubble bet on with your pension, state pensions, 401K money, and FDIC deposits? We're not in the big club. It's about time some of you woke up and realized this this is not about you, it's about Obama; the opposite of what he told you.
Congress only appropriates trillions of dollars to be created by keystrokes at the Fed for Wall St. and endless wars. Not you. So mop this crisis up and enjoy your pithy wages for good! It won't get better by design of this deal, but it could and should if our Representatives only would educate themselves or grow a conscience. UMKC economist Michael Hudson got it right on this crisis and has explained all of this in detail.
Governments need to provide the economy with money and credit to expand markets and employment. They do this by running budget deficits, and this can be done by creating their own money. That is what banks oppose, accusing it of leading to hyperinflation rather than help economies grow.By passing this deal in the House and when the POTUS signs this it will be a statement that your needs are not an emergency to use the power of the US sovereignty currency like insolvent Wall St banks were. They lied about there being a liquidity crisis because they can create loans and deposits on their balance sheets and get the reserves to service them later anytime they want. They were insolvent but were never told they had to be "responsible" to get help like the millions left behind underwater in mortgage debt the WH refused to get written down. Wall St is allowed to lie and never has to share sacrifice because the POTUS is here to keep your pitch forks away from them with their man Tim Geithner at the helm.
Their motivation for this wrong accusation is self-serving and their logic is deceptive. Bankers always have fought to block government from creating its own money – at least under normal peacetime conditions. For many centuries, government bonds were the largest and most secure investment for the financial elites that hold most savings. Investment bankers and brokers monopolized public finance, at substantial underwriting commissions. The market for stocks and corporate bonds was rife with fraud, dominated by insiders for the railroads and great trusts being organized by Wall Street, and the canal ventures organized by French and British stockbrokers.
However, there was little alternative to governments creating their own money when the costs of waging an international war far exceeded the volume of national savings or tax revenue available. This obvious need quieted the usual opposition mounted by bankers to limit the public monetary option. It shows that governments can do more under force majeur emergencies than under normal conditions. And the September 2008 financial crisis provided an opportunity for the U.S. and European governments to create new debt for bank bailouts. This turned out to be as expensive as waging a war. It was indeed a financial war. Banks already had captured the regulatory agencies to engage in reckless lending and a wave of fraud and corruption not seen since the 1920s. And now they were holding economies hostage to a break in the chain of payments if they were not bailed out for their speculative gambles, junk mortgages and fraudulent loan packaging."
The fairy tales about the dangers of our mystical fate if the magical mythical bond vigilantes and confidence fairies lose confidence are not told to Wall St bankers because they know they are false. They also know they will benefit from having their man in the Treasury Department, but not you. You and I are an unbearable financial burden in their contrived long term models. In the short run we can have some unemployment benefits extended as a "necessary evil" for us so called "lazy people" for another year as long as we buy the lie that the government can't afford to create money for us; only for the banks. Some of you believe these fairy tales, too; so what does that say about you?
A little bit of economics can be a truly terrible thing, for the introductory classes in micro and macro-economics are the most dogmatic and myth-filled part of the neo-liberal curriculum. Dogmas that have been falsified for 75 years (such as austerity) are taught as revealed truth. The poor indoctrinated student is then launched into the world “knowing” that austerity is the answer and that mass unemployment and prolonged recessions are small prices to be paid (by others) to achieve the holy grail of a balanced budget. Students are taught that national budgets are really just like household budgets. These dogmas are not simply false, they are self-destructive and cruel. Neo-liberal economics is so bad and has gone downhill at such a rapid rate that it now worships the economic analog to bleeding patients – austerity – as a response to a Great Recession. Millions of people are indoctrinated annually into believing this long-falsified nonsense, and that includes people who consider themselves progressives.It says partisanship is more important than people; that is immoral and economically stupid. Does anyone really believe you need to lower your standards of living while Wall St is not punished at all for their demonstrable fraud? I hope not, but why make excuses for all of this? Eric Holder let Goldman Sachs off the hook with in their emails calling their clients Muppets buying those shitty deals, and not even TBTF HSBC laundering drug money is punished by this DOJ but don't you dare smoke pot even from a dispensary in California. Mop this mess up and lower your standards is the message. It's not for the 99% to ask why, it's for you to mop up this mess the 1% made or die. You see, the 1% and the career politicians they own are not like you or me; they think of themselves as royalty.
The remarkable aspect of neo-liberal economics is that the power of its myth has survived for many progressives even after its failed dogmas caused massive economic destruction, massive elite fraud with impunity, and crony capitalism so corrupt that it cripples democracy. Indeed, the brainwashing they received is so effective that even after the eurozone ran a massive experiment with austerity that proved (again) to be a catastrophic failure they remain neo-liberal acolytes. This column discusses three examples that exemplify the problem.
We know this now. The President couldn't or didn't want to raise the debt ceiling like every other President since March 1962, when the debt ceiling has been raised 74 times, 10 of those times have occurred since 2001. That's embarrassing corruption or embarrassing incompetence; take your pick. And you call that "winning?"
Yeah, that's winning like Charlie Sheen was "winning." No other President has had to make deals just to raise taxes on the top brackets and then fail to really do it anyway as advertised. And to do so even when he had leverage with the Bush tax cuts expiring in 2010 before he extended them is a massive political failure of epic proportions we are dealing with right now. But dear plebians you still will be lectured on your noble responsibility to share sacrifice and mop this fiscal shit up off the floor because the POTUS couldn't do it like all the ones before. Hell, maybe he didn't want to do what every other POTUS was able to do, but now you're screwed and the bag is left to you.
It's better for these Patricians if you don't study debt and economic history particularly after Bretton Woods collapsed on 15 August 1971 when we left the gold standards; the POTUS doesn't want you to know that we don't need to worry about deficits anymore because we don't need gold in our banking reserves. Inflation is the constraint after full employment is reached, not any amount of debt. You begin to wonder whether the President knows this because he's not really worried about what money is credited and printed up for wars or bailouts. Nope. Your needs are not urgent only TBTF bankers, the MIC, and his precious national security state.
But mop this mess up, ignore the truth, and tell yourself this is pragmatic. Denial is one of the steps to overcome grief if this grieves you like it should, but knowledge is power and it will set you free. You don't have to pretend this Satan sandwich is delicious. You don't have to pretend you are in the 90s! You don't have to settle for no increase in the minimum wage or wages in general because the ruling class in Washington wants you to ignore the truth about deficits, debt, and sovereign money.
This White House only has the stomach for shitty deals regarding their deficit scare mongering hysteria along with Congress. The unemployed are not lazy; they need not be treated as people to pity and their needs being a "necessary evil." Their needs are our needs and we can afford them. The United States is not broke; not now; not ever. They would like you to believe that, because they don't have the stomach for the kinds of direct hire government jobs we need.
So instead we subsidize deficit terrorists and their sickening greed. Working people are supposed to just swallow whatever is in this grand bargain and the other big one coming in 2 months that sells out SS and Medicare because of the debt ceiling. They don't really care if you care. It's not for you to know why, it's for you to mop it all up with your low wages, declining health, and being overworked while everyone else lives on up high on the hog. So it makes no difference if you learn reality you will pay for the fiscal kabuki play as Peter Peterson and his acolytes have their way because as Rahm Emanuel said, where you gonna go?
And on that note, I think what sums up my entire problem with this grand betrayal can be summed up by this excellent piece by Dan Kervick.
What I see is that if this deal passes:That's right, the most insulting portion is one of economic illiteracy; this 600 billion in revenue will be going to pay down debt, not going into the pockets of consumers who need full employment policies not idiotic neoliberal deficit reduction. The employment situation is worse than everyone thinks and the long term unemployed need help.
1. The payroll tax is coming back right away. That’s a major recessionary blow.
2. A bunch of spending cuts are going to be implemented in a couple of months. That’s also recessionary.
3. The debt ceiling is still in place. This means Republicans will soon be able to extort more recessionary cuts in exchange for raising the debt ceiling.
4. Some rich people’s taxes are going up a little, which is more than fine with me, but the tax increases are not offset by additional spending as they should be. So the tax increases will also be recessionary.
I have been told that I should count my blessings and be grateful Obama has negotiated a deal in which we only get 60% of the austerity that he and the Republicans negotiated last year with the Budget Control Act of 2011. But that’s absurd. Obama has preached debt crisis and deficit contraction incessantly since 2009. He has actively sought a deficit destroying grand bargain and helped engineer the current crisis. He’s the anti-FDR. He doesn’t get points because he only wants to drop a Nagasaki-sized atomic austerity bomb on the United States instead of a larger hydrogen austerity bomb. Both sides in this debate are utterly MAD.
Yes, unemployment is down slightly and 146,000 new jobs were created in November. That’s some progress. But don’t be overwhelmed by the hype coming out of Wall Street and the White House, both of which would like the public to believe things are going quite well.Putting up unemployment benefits as optional while not making any speeches about how they are needed to fight back the RW meme of lazyness while spouting crap about deficits, deficits, deficits, this is the 90s, Bill Clinton, deficits, shows the disdain I speak of from the President.
The fact is some 350,000 more people stopped looking for jobs in November, and the percent of the working-age population currently employed continues to drop — now at 63.6%, almost the lowest in 30 years. Meanwhile, the average workweek is stuck at 34.4 hours.
As much as he wants this to be the 90s, the POTUS and this Democratic Congress can't even live up to the tax proposals they say they want from the 90s. Maybe they don't really want them after all and it was another campaign story? For more in depth on the tax proposals benefiting the 1% and the payroll tax cut expiration and the recessionary impact I refer to kid oakland's great piece and my friend bobswern.
Now I have to address something and that is the split being driven between the left on the payroll tax cut holiday. The positive economic impacts on the demand side are undeniable, but I also sympathize with those worried about the political impacts of the payroll tax cut holiday with regard to SS and Medicare, especially now. I am a very conflicted about this, honestly. MMT economist Warren Mosler's proposal is a bigger one for the buck and a full on 0% tax holiday on employer and employee which would be very beneficial and smart if Washington implemented it correctly and acknowledged the truth about our fiscal and monetary system.
In June 2008, Warren Mosler proposed three ‘bottom up’ policies to fix the economy. The first proposal is for a full Payroll Tax Holiday for both employees and employers. This stops the government from taking approximately $20 billion a week from people working for a living (a total of $600 per month for someone making $50,000 per year) rather than using that $20 billion to keep some bank limping along. The Government would still continue to credit the social security and the Medicare accounts, so employees and employers will never have to pay back the monies they received. The Payroll Tax Holiday would restore income to American workers (and businesses) to help make their loan payments, rents, pay bills, and sustain their households. The real economy would benefit as Americans both reduce debt and resume consumption. Banks will benefit because there will be fewer delinquencies and foreclosures in non fraudulent mortgages, which will also help limit home price declines. The Payroll Tax Holiday would also reduce corporate cost structures and help contain prices and inflation. The payroll tax is regressive (it is not graduated based on income like the income tax), so the Payroll Tax Holiday will benefit those in the lower income levels the most. This “People Power” solution will be far more effective than the Bush and Obama trickle down solution. And the Government can decide to end the Payroll Tax Holiday should the economy become too strong and inflation become a concern.It is very true that the payroll tax is regressive, we should be able to create money to fund what we need in a non regressive way like we do the military, bailouts, and everything else. The fact that we don't is a huge problem. It's also true that FDR was brilliant in how our political system works in the same way Mosler is on economics as a pioneer that knows our our economic system works. FDR knew payroll taxes protected SS politically from the Oligarchs complaining about it if it was funded from income taxes instead of payroll taxes.
We can't afford not to create and spend money on people because people are the real economy. They produce what is sold and when millions want to produce but can't find the means that means wasted utilization of resources and hurts everyone. The fact that we are having grand bargains over deficits while not even talking about full employment is also a huge political problem that causes worry. The fact that Warren Mosler wasn't elected to the Senate when he ran as a Democrat is also a political problem that we are going to have to face down because he knows how our system works and most of Congress does not and they appropriate the money. We can't live behind our means anymore just because our politics' rotten brick and their economic ignorance.
However, we are not as constrained politically as some excusing this deal would like you to believe when they disingenuously throw the 1 year of unemployment insurance extension(it's always threatened because of this) around as worth selling out on taxes in which income inequality should be the issue instead of paying down debt. That will suck income out of the economy if you know something about economist William Godley and sectoral balances.
Only in a fantasy world does one need to make grand bargains just to pass unemployment insurance, which needs a permanent extension as one of the most stimulating and moral things our government can do for its citizens in a jobs crisis. However, it's never talked about like that. It's just another bargaining chip to be put on the table like SS because this President can't raise revenue or debt ceilings or doesn't want to. It's that simple.
The excuses about how it was and is impossible to pass unemployment insurance without sellout deals, I've already proven for those that can read above that the debt ceiling was given away in 2010, because Republicans are obstructionists as they always have been has very little to back it up. In fact, unemployment insurance passed before 2010.
Sure, some might say the reason it passed is because the House was Democratically controlled back then before the House turned Republican in 2010 but that is not the reason. It's simple to see why, and It's ironic that the repeated and flawed mantra of 60 votes only applies in some circumstances. We didn't have 60 votes when unemployment insurance was passed with a Democratic house and the Senate which controls everything. It passed because Democrats wouldn't let it go or make sellout deals. It's very piss poor form to use these excuses to insulate politicians in Washington because of a perceived feeling of one belonging in the big club, but as the late great George Carlin said, "It's one big club, and you ain't in it."
We can actually look this stuff up. It's also rather hilarious to say the the START treaty being passed had anything to do with the tax cut sellout when the argument was that passing things with scary Republicans controlling the House was and is so so scawy, we have to slash our safety net and enact austerity for "the greater good?" Why do I feel that pseudo progressives and liberals are now echoing Margaret Thatcher's saying that, "There is no alternative!?" There are many making excuses for this deal and they should stop and reflect on who they sound like. Also it was the brave activists that got DADT repeal passed like Lt. Dan Choi, Scott Wooledge, and others. Selling out on taxes and the debt ceiling had nothing to do with it and it's pretty insulting to insinuate that it did instead of them.
After all, if unemployment insurance passing a Democratic House and a Senate without 60 Democratic votes in late 2009 is not a good enough example, how about SCHIP in 2007? Republicans harshly opposed it. Hell, former President George W. Bush vetoed it twice in which it needed 67 votes to override. If we were to take some people here at their word we should have given up the debt ceiling, SS, Medicare, and everything else. However, Democrats back then were strident in their opposition because only President Obama can cut SS, Medicare, and agree to crushing austerity with Democrats on board like only Nixon could go to China. We know this now.
Yes, I know some don't like it, but this is actual political reality and actual legislative history. Some of you just haven't done your homework and hope others don't. Sorry, we won't just accept this deal or your revisionist history because a politician wants you to lower the bar to excuse his and Congress's failure.
And furthermore, the reality is that it's actually those that would make excuses for putting unemployment insurance on the table as something to be bargained with, like SS recently, to protect a politician's political image, who do not care about the unemployed. It's those that prefer backroom deals to fighting for Constituents like Congress is supposed to do who care not at all about the unemployed. If you do not admit that there will always be a struggle with the political opposition whoever it may be in whatever party and demand that our Representatives fight for us, you do not really stand for anything or anyone.
When you let someone else construct your political reality for you while you close your eyes to this grand bargain, one that has turned into a grand betrayal that defies history, you don't need a finger to point at someone else, you need a mirror.