Tuesday, November 22, 2011

James K. Galbraith sees failure of the debt-deal as positive

The probable failure of a U.S. congressional committee to reach agreement on at least $1.2 trillion in deficit reductions by this week’s deadline is the “best thing” that could have happened, said economist James K. Galbraith.
Failure for the committee to reach agreement will lead to across-the-board cuts to domestic and defense programs, starting in January 2013. The lack of a deal would deprive President Barack Obama of a vehicle extending a payroll tax cut and insurance benefits for unemployed Americans, which expire at the end of the year. Lack of agreement also means tax cuts for top earners enacted under President George W. Bush may also be allowed to expire at the end of 2012, Galbraith said.
As things stand, there will be an examination of the defense budget, and a lot of wailing and gnashing of teeth over that,” Galbraith, an economics professor at the University of Texas in Austin, said in a radio interview on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “And the Bush tax cuts expire,” he said. “If you are doing honest budget accounting, that gives you all of the deficit reduction you could possibly want.
Read the rest at Bloomberg
by  Bob Willis and Tom Keene
(h/t money4nothingchicks4free in the comments)

"“If you are doing honest budget accounting, that gives you all of the deficit reduction you could possibly want," is out of paradigm wrt MMT though.


john lutz said...

yeah, Tom, but it shuts the deficit mongers up even on their own arguments

James Galbraith said...

And I didn't say it was something I wanted. Which it isn't.


beowulf said...

Very Clintonesque, bravo! :o)

Even if the deficits aren't an economic problem, they are a sociological problem ("social facts are the values, cultural norms, and social structures external to the individual and capable of exercising a constraint on that individuals").

You have to take people as they are. As missionaries have long known, its easier to adapt the locals' existing customs and beliefs than to insist they undergo a full mental reboot.

Tom Hickey said...

@ James Galbraith

Thanks for the clarification. That was actually the way I read it.

However, in comments to a recent post, there was a complaint that many MMT supporters, including yourself, have often been timid in actually stating the position openly and boldly. It was brought up that many times you have done so, but that has not always been the case. Here, for example, one could take it that you do indeed agree with those calling for deficit reduction, since you did not make it clear that you don't.

For the record, why didn't you make a stronger statement about it here? This is a question that is often asked in the comments about MMT supporters like yourself.

Keep up the good work, and fight the good fight. You are doing a great job overall. It is greatly appreciated.

Matt Franko said...


JG's use of I believe the subjunctive mood vs indicative mood has left open his true beliefs to misinterpretation by the 2 morons at Bloomberg.

If you look at how they wrote it up:

Paragraph 1 in your post of the Bloomberg thing reveals that Galbraith thinks the failure is the "best thing".

Paragraph 2 then is editorializing by the Bloomberg people, revealing how with the failure, there will still be massive automatic spending cuts and tax increases. [Which is fiscal drag under MMT, AND BAAAAAAD Professor]

Paragraph 3 then quotes Galbraith again in I believe the subjunctive mood where it is easily interpreted that he favors this fiscal drag.

1. Galbraith: Failure good
2. Failure still results in desired deficit reduction
3. Galbraith confirms!


Does Prof Galbraith not want the deficit reduction? I'm confused...

Can people at some point just state what they mean in all of this at some point? Man up!


Matt Franko said...

Why is this so hard?

Letsgetitdone said...

Because everyone wants to be viewed as a minimally serious person?

Letsgetitdone said...

Not defending it? After all, I'm the one advocating minting a $60 T coin. But my point is that all of us seem to have that concern in some contexts. We don't say what we think because we don't want other things we want to say to be dismissed as "unserious" because they come from an "unserious" person.

Having said that, I think it's time to say what we think much more often, because avoiding that has caused the Overton window to move way to the right over time. We can't keep sacrificing the educational value of what we say by refusing to talk about it! We need to balance off the long-term and the short-term far better than we are doing!

selise said...

the actual interview was, i thought, much better than the write up. for anyone who can't listen to the podcast, here are a few very rough quotes i transcribed (hope i didn't screw up too much):

"reparations for the 99%"

"population of the country has received nothing but abuse for the last three years"

"the rise of the power of the financial sector is the driving cause behind inequality… not a mystery… not something professor [larry] summers cares to dwell on"

also great comments on ows, and on protest in general (proud father -- his daughter was a librarian at ows).

but what seemed to freak out tom keene was the last bit…

"if, for example, there was a serious dept of justice strike force aimed at the vast financial frauds that brought on the crisis, i imagine that would be met with approval "

"the dept of justice has been asleep on this issue for three solid years"

"i would like the president to appoint an attorney general with a mandate to enforce the laws that actually exist."

"attorney general holder is asleep on this question"

Matt Franko said...

I see your point, sometimes I too "don't want to get into it" if the deficit issue comes up. But it is almost always that I'm "just too tired" at these moments.

That said, if I, even as an amateur economist, was invited onto a national radio show with Larry and Moe here, I would sure as hell see to it that when the interview was over they knew where I stood on the issue.


Matt Franko said...


Did you overlook his mention of the poor fiscal response? Or was it not there at all?

You can have a 'task force' and throw every employee of every bank from scum Jamie Dimon down to the 'lowliest' teller in jail and it will not help put any of the 14M+ unemployed people back in their jobs.

beowulf said...

You can have a 'task force' and throw every employee of every bank from scum Jamie Dimon down to the 'lowliest' teller in jail and it will not help put any of the 14M+ unemployed people back in their jobs.

I dunno, I imagine the Bureau of Prison would go on a hiring spree. :o)
Holder should bring back the Organized Crime Strike Force and direct it to investigate financial crime (naturally he should appoint Bill Black to run the show).