Said Milani — Donald Trump’s Pledge to Defend Spending for Old and Poor Belied by Staff Picks

The odor of bullshit is in the air. Trump is sending contradictory signals, and actions speak louder than words.

Trump’s hiring of two staunch retirement hawks into top policy jobs is not something to take lightly. “Personnel is policy. A candidate’s campaign staff is a useful clue to how that candidate will govern,” political scientist and Bloomberg View columnist Jonathan Bernstein wrote last year. “Including which party groups he or she is close to, which policies the administration would likely embrace, and which party factions may be frozen out.”

The Intercept

Donald Trump’s Pledge to Defend Spending for Old and Poor Belied by Staff Picks
Zaid Jilani

Ryan Grim — Voters Driven By Anger At Economy Reward Republicans At Polls

Democrats and the president are in a difficult political spot, getting blamed for a sagging economy that they have little power to improve without control of Congress. But it is also a problem partly of their own making. As early as May 2010, more than six months before Democrats lost control of Congress for the rest of Obama's term, the party turned its focus away from jobs and stimulus and toward deficit reduction and belt tightening. The resulting fiscal pullback slowed the economic recovery and contributed to anger at Washington, which typically gets directed at the party that controls the White House. While pundits spent the last six years warning that voters cared first and foremost about the deficit, the news that it has plummeted under Obama was nevertheless met with a rebuke from voters.

Think the Democrats will learn from this? Nah. Clueless morons. In fact, the Democrats by and large are more likely to lurch to the right, thinking that that's where the votes are.

The Huffington Post
Voters Driven By Anger At Economy Reward Republicans At Polls
Ryan Grim

Joe Conason — What Republicans Hope You Don’t Know and Never Find Out

Unsurprisingly, perhaps, it is Republican voters, misinformed by Fox News, who most fervently and consistently insist on these mistaken ideas, with 85 percent telling pollsters that the deficit has increased. Less than a third of Democrats gave that answer. But nearly 60 percent of independent voters agree with the Republicans on that question, and only 30 percent of Democrats understand the truth—an implicit repudiation, as The Huffington Post noted, of the president’s political decision to prioritize deficit reduction rather than job creation....

But not only is the good news about the shrinking deficit widely ignored; it isn’t actually good news at all. By avoiding a mostly mythical “budget crisis,” federal policy has created a very real jobs crisis that persists, with particular harm to working families. The latest Congressional Budget Office report on the fiscal outlook for the coming decade strongly suggests that the cost of reducing the deficit has been—and will continue to be—substantial losses in potential economic growth and employment.

The ironic consequence, as former White House economist Jared Bernstein recently explained, is that the fiscal outlook for the next 10 years will be somewhat dimmer than expected. In other words, we will return to higher deficits because fiscal austerity—enforced by Republicans and accepted by Obama—is still dragging the economy down. Truthdig

Truthdig

What Republicans Hope You Don’t Know and Never Find Out
Joe Conason

Brian Lucking and Daniel Wilson — Fiscal Headwinds: Is the Other Shoe About to Drop?

Federal fiscal policy during the recession was abnormally expansionary by historical standards. However, over the past 2½ years it has become unusually contractionary as a result of several deficit reduction measures passed by Congress. During the next three years, we estimate that federal budgetary policy could restrain economic growth by as much as 1 percentage point annually beyond the normal fiscal drag that occurs during recoveries.

Federal Reserve Bank Of San Francisco Economic Letter
Fiscal Headwinds: Is the Other Shoe About to Drop?
Brian Lucking and Daniel Wilson
(h/t Mark Thoma at Economist's View)

In the debate, Warren was talking about fiscal drag due to a deficit being too small.

Mark Gongloff — Bernanke Tells Congress Fighting Unemployment Is A Better Cure For Government Debt Than Austerity

"The loss of output and earnings associated with high unemployment ... reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur," Bernanke said....

Bernanke's comments draw comparison to a year-old paper, "Fiscal Policy In A Depressed Economy," by Berkeley economist Brad DeLong and Harvard's Larry Summers. The paper has received new attention lately.

A sort of antidote to the research of Harvard economists Carmen Reinhart and Kenneth Rogoff, which helped convince Congress to deliver austerity in the first place, the DeLong-Summers paper suggests that extra government stimulus spending in the short term could actually lower government debt levels in the long run.
But even after the Reinhart-Rogoff view has been discredited, the DeLong-Summers-Bernanke view can't seem to get any traction in Congress. 

The Huffington Post
Bernanke Tells Congress Fighting Unemployment Is A Better Cure For Government Debt Than Austerity
Mark Gongloff

David Ferguson — Ted Cruz: ‘I don’t trust the Republicans’

Ted Cruz: ‘I don’t trust the Republicans’ (via Raw Story )

On Wednesday afternoon, while speaking on the Senate floor, Tea Party darling and freshman Sen. Ted Cruz (R-TX) declared that he does not trust the Republican leadership to properly handle budget negotiations on the next Congressional showdown regarding the budget ceiling, nor does he trust the Democrats…

---

Bozo Watch — Bowles-Simpson go on the attack in spite of Reinhart-Rogoff debacle

On April 19, just after I had written about how the key academic research used to bolster austerity policies was exposed by a 28-year-old grad student at U Mass, Amherst, I got a surprise in my email box.

In the email, Erskine Bowles and Alan Simpson giddily announced their new deficit-reduction plan, which includes, among other things, a recommendation to increase the eligibility age for Medicare. Their plan would reduce debt as a share of GDP below 70 percent by 2023 and, as the Washington Postreports, “seeks far less in new taxes than the original, and it seeks far more in savings from federal health programs for the elderly.”

What’s incredible is that over the last week, the study by Harvard economists Carmen Reinhart and Ken Rogoff that famously warned of the dangers of government debt has been proven to be riddled with errors and questionable methodology. To recap: R&R’s paper purported to show that countries with public debt in excess of 90 percent of gross domestic product suffered negative economic growth. Austerity hawks everywhere used it to justify cuts that have cost people jobs and vital services. The original spreadsheet used by R&R was obtained by a U Mass grad student, who found that in addition to the mistakes already noted by several economists, there was a coding error in their Excel spreadsheet that significantly changed the results of their study.

As New York Magazine’s Jon Chait has pointed out, that same discredited research has been used by Bowles and Simpson to formulate their deficit-reducing austerity plans.

Let’s take a look at some ugly chronology.....

AlterNet
Unbelievable! Bowles and Simpson Release New Deficit-Reduction Plan Based on Discredited Austerity Research by Rogoff and Reinhart
Lynn Stuart Parramore

Michael Hudson — Obama’s Catfood Reform

Video and transcript.

Michael Hudson
Obama’s Catfood Reform
Paul Jay interviews Michael Hudson

Bill McBride — Jan Haztius: "The Rapidly Shrinking Federal Deficit"

Goldman research note from Jan Hatzius.

Calculated Risk
"The Rapidly Shrinking Federal Deficit"
Bill McBride

One strange quote from the note: "Partly for this reason, we expect the drag from fiscal policy on real GDP growth to decline sharply from around 2% of GDP in 2013 to around 0.5% in coming years."

Ryan Grim — Chained CPI Only Acceptable As Part Of 'Balanced Package,' White House Says

OMG. What's the superlative of moronic?

The president's move makes him the first Democratic president to propose cutting Social Security.

House Speaker John Boehner (R-Ohio) responded to the president's offer on Friday by suggesting that if he wants to cut Social Security, he should just go ahead and do it. “If the president believes these modest entitlement savings are needed to help shore up these programs, there is no reason they should be held hostage for more tax hikes. That’s no way to lead and move the country forward," he said in a statement. 

There it is, folks. President Obama has just dropped a bomb on the Democratic Party. It will be interesting to watch the fall out. This is the moment of truth for Democratic politicians.

The president knows exactly what he is doing. This is a direct strike at the left in an effort to solidify the Democratic Party as the moderate Republican Party in the belief that American politics is center right, ending the Democratic coalition built by FDR in an effort to "capture the center."

Will the base roll over again to prevent the take over of the country by right-wing extremists? I would not be putting any money on that bet. There is already a firestorm rising. Obama Budget Proposal Cuts Are 'Unconscionable,' Says AFL-CIO. Make that moronic and unconscionable.

The Huffington Post
Chained CPI Only Acceptable As Part Of 'Balanced Package,' White House Says
Ryan Grim

Jim Kuhnhenn — Obama: Proposed Budget Not His 'Ideal Plan'

President Barack Obama says his soon-to-be released budget, already criticized by friends and foes, is not his "ideal plan" but offers "tough reforms" for benefit programs and scuttles some tax breaks for the wealthy.

That's a mix, he contends, that will provide long-term deficit reduction without harming the economy. 

Nothing about harming actual people though.

With all due respect, Mr. Obama is a moron, and I don't say that lightly. It's not intended as an insult, but rather a description. This proposal would harm a great many people, and it is already doing a disservice to his party as well. For what exactly?

"Deficit reduction" is a non-issue economically. It helps no one, either now or later. It shrinks the pie for everyone, and it creates economic instability and human suffering. Moreover, it has ample precedent, e.g., in 1937, when the fragile recovery was aborted through austerity. Curtailing Social Security payments ten years out by chaining CPI has virtually nothing to do with deficit reduction. Pursuing such a policy is best characterized as moronic. 

Characteristically, Mr. Obama picked up reduction of benefit indexing from the GOP — remember The Contract with America? And, like his proposal of crafting "Romneycare" as "Obamacare, he admits that it is not an "ideal solution" and not his first choice. Sorry, Mr. President, but that's no excuse for being moronic. Indeed, it is also politically craven and cowardly to boot.

Indeed, the president might even reasonably suspect that the opposition is attempting to push him a direction designed to undermine his presidency and set the country up for regime change owing to dissatisfaction with the way the president and Democrats are handling the economy. 

Welcome to 1937, as the numbers come in from the sequester — which was the president's idea, as was Bowles-Simpson. In fact, thinking about it, "moron" may be a euphemism.

The Huffington Post
Obama: Proposed Budget Not His 'Ideal Plan'
Jim Kuhnhenn

"The president should drop these misguided cuts in benefits and focus instead on building support in Congress for investing in jobs," AFL-CIO President Richard Trumka said in a statement Friday.

Amen.

Kevin Drum — I Doubt That Obama Really Expects a Grand Bargain With Republicans

There's nothing in this proposed "deal" for the GOP, and Obama knows it. It's posturing to look "serious" about deficit reduction, which the public says it cares about.

Mother Jones
I Doubt That Obama Really Expects a Grand Bargain With Republicans
Kevin Drum

Chained CPI and the 2014 Midterms
Kevin Drum

Now that President Obama is poised to officially endorse the adoption of chained CPI in his next budget—a change that would cut the future growth of Social Security benefits—Ed Kilgore ponders the political implications:

"Could Republican congressional candidates in 2014 actually run against 'Obama's Social Security Cuts,' after decades of lusting for 'entitlement reform' and several consecutive years of demanding that Obama give Social Security benefits a haircut or worse?"

Ha ha ha! That's a knee slapper. To his credit, Ed comes up with the obvious answer: Of course they could.

Suddenly it's not looking good for Democrats in 2014.

Idiotic fixation with deficit reduction

You can't balance the budget by raising taxes and cutting spending. Reducing the government's deficit also reduces the non-government's holdings of dollars. And since the non-government needs dollars to pay taxes, it will always find a way to run a surplus with the government (by selling its products, services or labor). That means the government will always pretty much run a deficit. When it doesn't it forces the non-government into liquidation. That's why extended periods of budget balance or surplus (1920s, 1997-2000) have always preceded economic crashes. This entire fixation about deficit reduction is idiotic. It displays a complete ignorance of our monetary system.

Reuters — CEOs Slam Fiscal Cliff 'Disaster,' Call For Specific Deficit Reduction Plan

Some in the business community are calling for a change in strategy due to the meager results of the fiscal cliff deal.

"It doesn't work talking to the politicians, obviously," former Wells CEO Kovacevich said. "What we've got to do is educate the American public that our country is going to hell."

There are questions about how meaningful of a contribution Corporate America can make, especially if they do not deliver a unified voice on hard decisions such as industry-specific tax breaks.

Republican Senator Bob Corker from Tennessee said on CNBC on Wednesday morning that the business community could play a great role by pushing for concrete entitlement changes.

The business community appears reluctant to provide lawmakers with specific proposals.

Jon Romano, a spokesman for the Fix the Debt campaign, said the group has set out principles for a long-term deal, but it doesn't want to prescribe what the policy should look like.

"We're really looking to our elected leaders on both sides of Pennsylvania Avenue to come up with that solution to this issue," Romano said.

Mark Kennedy, who heads George Washington University's Graduate School of Political Management and served in Congress from 2001 to 2007, said business leaders need to do more.

He said executives should identify "sacred cows" that should no longer be protected, be more specific about how big a deficit reduction deal should be, and get specific about what they want included.

"It's more helpful to get parameters as to what should be done than to just say, do something," Kennedy said.

The Huffington Post
CEOs Slam Fiscal Cliff 'Disaster,' Call For Specific Deficit Reduction Plan
Reuters

Of course, no CEO wants to get specific and reap the whirlwind of angry customers whose benefits they want to cut, anymore than politicians want to angry voters by advocating unpopular policy. They want to force the president to do the dirty work for them and take the blame.

Paul Krugman calls this correctly in Battles of the Budget

For the reality is that our two major political parties are engaged in a fierce struggle over the future shape of American society. Democrats want to preserve the legacy of the New Deal and the Great Society — Social Security, Medicare and Medicaid — and add to them what every other advanced country has: a more or less universal guarantee of essential health care. Republicans want to roll all of that back, making room for drastically lower taxes on the wealthy. Yes, it’s essentially a class war.

Meanwhile the IMF admits, sort of, that their prescription for austerity hurt some countries in the EZ.

Eurozone Spending Cuts Hurt Economies During Height Of Financial Crisis, IMF Admits

John Harvey — Our Christmas Gift from Washington: Recession and Unemployment

At this very moment, our government is carefully selecting our present (although, strictly speaking, we won’t be receiving it until 2013). They haven’t decided on the size yet, but they know exactly what they’re getting us: recession and unemployment.

The deficit reduction talks, with or without a fiscal cliff, will absolutely lead to a decline in the level of demand for American goods and services. About this there is no controversy whatsoever. Even under the most optimistic of scenarios, wherein the President and Congress agree on some compromise level of deficit reduction, we will see a one to two percentage point reduction in real GDP growth and an increase of around one million unemployed. If we fall off the fiscal cliff, costs will be roughly double those. This is the kind of gift we need to return as soon as possible.

Forbes | Pragmatic Economist
Our Christmas Gift from Washington: Recession and Unemployment
John T. Harvey | Professor of Economics, Texas Christian University

This is about as clear and simple as one can make it. Good work, John.

CNBC Interview: Simpson-Bowles-Blankfein on Fiscal Policy

Video just in from CNBC...  we report, you decide ;)

(Updated to now include entire > 30 min segment)

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

Galbraith Says U.S. Debt-Deal Flop ‘Best Thing’ to Cut Budget

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.

Mike Bloomberg jumps on the fiscal austerity bandwagon with one horribly misguided speech

Mike Bloomberg's speech to the Center for American Progress (a liberal think tank, no less), touting his remedy of hard fiscal conservatism. Bloomberg really doesn't seem to understand much when it comes to the economy.

It's a long speech. I make comments until about halfway through. The full speech can be read here.

Bloomberg's remarks are in italics. Mine are in regular type.

Thank you, Elaine and Neera, and good morning. This happens to be Election Day, although there aren’t too many big contests today – unless you count Dancing with the Stars. I want to thank both the Center for American Progress and the American Action Forum for hosting us – who said there’s no bi-partisanship in Washington? But it’s always nice to come to DC – for a few hours anyway.

I’ve come here as a concerned citizen, like all of you, and as an entrepreneur who dedicated 20 years to building a company and as the Mayor of 8.4 million people, many of whom are deeply worried about their futures.

Nearly 40 percent of my constituents are immigrants. They came to America – and to New York – for the opportunity to work and to build better lives for themselves and their families. That’s the promise of America: a nation of dreamers and strivers; we keep our eyes on the stars and our nose to the grindstone. We understand that success requires hard work – there’s no free lunch.

That "hard work" line is becoming a worn out jingo. People have been working hard and even with two family incomes and the social dislocations associated with that, the average American's standard of living has been falling for thirty years. Wages in real terms are lower now than they were in 1968. Maybe we have more billionaires who play games of financial speculation, but those workers he's talking about have not seen real progress and many are currently out of work.

That’s true in New York City, and it’s true in towns across America, except one: Washington.

For too long, Washington has operated on the ‘something for nothing’ principle. Both parties have promised their constituents the world – and given them debt and a sluggish economy and anemic job growth. They’ve adopted ambitious programs – without any serious way of paying for them. They’ve promised to produce and protect jobs – and for the most part, the elected officials have their jobs, but right now, there are 14 million everyday Americans who can’t find work, and more who have stopped looking.

Should read: "both parties have promised their benefactors" (i.e. corporations, the rich) and they've delivered. The plight of the worker has not been the interest of Washington, nor is it the interest of Bloomberg. NYC has become a corporatist paradise.

Both parties preach fiscal responsibility, and yet the national debt stands at $10.3 trillion. That’s about $34,000 for every man, woman, and child in the country and it’s growing by $4 billion – every day. If our current tax and spending policies hold, in 10 years the national debt will be $21.5 trillion, or about $72,000 per person.

That's $34,000 in additional income and savings (in the aggregate) for every man, woman and child. Those dollars spent went to someone, right? They would have been that much poorer if the gov'ts hadn't spent that much in excess of what they took in taxes. And in 10 years it will be $72,000 to every man, woman and child.

Thanks to the ‘prudence’ of the two parties, the Federal government is running annual budget deficits of $1.3 trillion, which means it’s borrowing one of every three dollars it spends.

That's $1.3 trillion of additional income and savings to the private sector. The deficit recycles savings into higher consumption and income.

To put that in perspective: if you made $40,000 a year – would you spend $60,000? Not for long you wouldn’t – because no bank would continue lending to you.

The bank would certainly lend to you if your never missed your debt service and always had the ability to pay. It's called revolving credit. Anyway, he's comparing apples to oranges. Individuals are not currency issuers, the US Gov't is. It has no problem, ever, paying in US dollars.

But Washington doesn’t have that problem. It effectively prints money, while the rest of us have to earn it. And so even during the good times, when responsible management of the budget would’ve meant saving money, Washington was gorging itself on debt.

Saving is inapplicable to the gov't for the very reason he mentions: the gov't can "print" all of its own money it wants. And much of what we (the private sector) "earns" comes from government payments for goods and services, interest and transfer payments (SS, Medicare, Medicaid, etc.). If the gov't weren't paying for these things (yes, Mike, by printing the money), what would replace that income?

In 2000, the federal government took in $2 trillion in revenue and spent $1.9 trillion. In 2010, the federal government took in $2.3 trillion in revenue and spent $3.6 trillion. That means, over 10 years, our revenues increased by 15 percent while our expenses increased by 80 percent.

The surplus of $100 bln that he alludes to removed $100 bln of income from the public. That's his remedy??? The $1.3 trillion deficit he talks about added that much to the public's income and savings. He deems that bad???

Spending money we don’t have seems to be about the only thing the two parties can agree on, but it is threatening the very future of our country. Why? That’s what I’d like to discuss today: Why the era of ‘Something for nothing’ has to end – and end now – and what it will take to do it.

A few sentences ago he said the government doesn't have the problem of money because it can print all it wants. Now it says we're spending money we "don't have."

For the past few years, government has attempted to stimulate the economy largely by deficit spending and tax cuts – and I think it’s fair to say the results have been, at best, mixed. Even though we’re in better shape than Europe, far too many Americans are still out of work. Far too many families are still having trouble keeping up with their bills. Far too many small businesses are still struggling to keep their doors open – and they are responsible for about half of all jobs in America.

Yes, we're in better shape than Europe because Europe is imposing austerity. We haven't done that yet, but we will because of people who think like Mayor Bloomberg. And if our stimulus had been larger, the upswing in the economy from the depths experienced in 2009 would have been that much larger, too.

By now, it should be clear that more government spending and tax cuts cannot stimulate the job growth we need to regain economic stability. We’ve already crossed that bridge – and borrowed too much.

Clear? By what evidence? If you look at the rebound in the economy since the stimulus was enacted, what's clear is that we saw major turnarounds in GDP, household wealth, stock prices, even employment started to grow. There is nothing that clearly shows the stimulus was not effective. It just needed to be bigger.

Likewise, consumer spending cannot stimulate the growth we need to regain economic stability – because consumer debt remains high. Both government and consumers have balance sheets that are heavily in the red. Neither has the money to lead an economic recovery – but luckily, one group does: business.

Consumer debt has fallen considerably. It's down to where it was in 1991, way below where it was in 2007. It's probably still going down. That's precisely why gov't debt has to rise.

Unlike in the run-up to the 2008 crash, where businesses took too much risk, today they are not willing to take risks we need them to – and the result is that a lot of capital is sitting on the sidelines. Why this is happening is not something that government leaders seem to fully grasp – and as someone who has been in both business and government, I’ve seen how the two sides often talk past each other.

Yes, there is deleveraging going on. The private sector is shedding risky assets for safe assets (cash, Treasuries). The faster the gov't supplies this, the quicker we'll be out of the recession. He certainly doesn't grasp this.

Last week, at Senator Michael Bennet’s request, I convened a dinner with a bipartisan group of Senators and New York business leaders. We had a very frank discussion about the economy and how Washington is handling it. Some of the business leaders expressed the concern that they are not being heard in Washington – and they are half-right.

That's been the rally cry, however, it's a slogan and not based on any visible evidence. Business investment under the current Administration is higher than any president in the past 30 years, with the exception of Clinton. And corporate profits are at a record even as millions go unemployed and hungry. How are businesses not being heard? They're the ONLY ones being heard it seems.

They are being heard – but they are not being understood. Hopefully, this morning I can do a little translating.

More of his "translating" that we don't need.

Generally speaking, major American companies are not short on cash. But one of the big reasons they are not investing is that they are short on confidence in the Federal government’s ability to manage macro-economic policy.

Again, that's just a line of B.S. Business investment under Obama dwarfs anything seen in since 1980. Bigger than Reagan, Bush I, Bush II. Only Clinton was bigger and he had Internet and Y2K as drivers. Obama is just three years in. if he goes two terms he could even be bigger than Clinton.

Companies do not make major investments when the future of tax and regulatory policies are so up in the air. Every CEO and business leader that I speak with says virtually the same thing: They are not going to make major investment decisions until they know how Washington intends to grapple with our huge deficits. And right now, they have no idea how or if that’s going to be accomplished.

That's just a bunch of crap. Companies look at their order books to determine whether they invest or not and/or how much. Did Bloomberg look at the deficit (which was big at the time) when he started his company? It was 1981, a very scary time.

That uncertainty is a major drag on job creation – because the price of uncertainty for business is paralysis. Decision-makers abhor a lack of clarity. You can price tax increases and labor costs into your business plan and still invest and grow.

Business conditions are always uncertain. This idea of "certainty" is an illusion. It's all about making a guess about the future.

But if you don’t know what’s on the other side of the ledge – you don’t jump off it. You sit and wait – and that’s what companies are doing. Companies are expressing a vote of no confidence in Washington because of the lack of certainty they face, and we see the effects in the lack of job growth and investment.

There's no evidence that they are sitting and waiting. Investment is up. Hiring is not up because they don't need to hire. Their profits are rising without adding new employees.

When business leaders talk about uncertainty, they are often talking about how healthcare reform or financial regulatory reform will end up being implemented – and those questions are real impediments to growth.

Many more talk about something much more important: weak orders and sales.

But as important, and the subject for today, is the broader uncertainty that exists about the country’s long-term fiscal stability. There is widespread recognition in the business community that we have to make big changes – now – or risk having big changes thrust upon us in the form of further credit downgrades, high inflation, or unacceptably severe austerity that would harm the most vulnerable Americans. So – what does the business community hope to see out of Washington?

We had a credit downgrade and, so? Rates are at all-time lows. High inflation? Where? In commodities, perhaps, but that's because we let speculation run wild. Austerity? It would be self-imposed. No one but ourselves (billionaires like Bloomberg) imposing austerity on the most vulnerable. Like he said before, we have all the money we need.

Nearly every CEO I talk with says the same thing: If the Federal government passed a real deficit reduction plan – and we’ll talk about what ‘real’ means in a minute – business leaders would respond just as they did in the 1990s, when President Clinton and Congress adopted a long-term deficit reduction plan that gave businesses more certainty about the market. That sense of greater certainty – that confidence in the future of the country and the stability of markets – is worth its weight in gold.

Well then the CEOs he talks to are completely misguided. Massive deficit reduction would destroy the economy. Just look at Europe. Are they blind?

But so long as the Federal government continues running huge deficits, and engaging in kabuki dances every few months about how to fix them, business leaders will be less likely to make major long-term investments that would produce jobs.

That's another line of garbage. Moreover, all the major long-term investments of this country, like infrastructure, education, basic science, were ALL undertaken by government.

One of the reasons this message is not penetrating the Beltway is that too many elected officials have not spent enough time in the private sector to know that investment decisions are about more than dollars and cents. They are about expectations – expectations of where the market is moving, and in which ways the government will push it.

That’s a panacea that you have to work in the private sector to have an understanding of what to do. Most people in Congress are millionaires. Gov't and the private sector have different functions. Government is not a profit seeking enterprise and should not be run that way.

That’s why today, I believe the best economic stimulus is fiscally responsible, long-term deficit reduction that sends a clear signal to the private sector about Washington’s commitment to economic stability.

Fiscal responsibility and economic stability should mean running the government in a way that always sustains full employment and output.

Real deficit reduction means more jobs today and tomorrow. But real deficit reduction requires real political courage – and that, unfortunately, is the biggest deficit we face.

They are reducing deficits in Europe with austerity and it is not creating jobs. It is killing the economy for reasons mentioned earlier.

As we all know, the Super Committee on deficit reduction has until November 23rd to come up with recommendations for achieving $1.2 trillion in savings over the next ten years. To put that in perspective: that would shrink our deficit by about 13 percent. That’s it. A drop in the bucket. And the Federal debt will continue to grow.

A 13% shrinkage of the deficit means a 13% decrease in net private savings and income. Huge. That would shrink GDP by the same amount: $1.3 trillion in lower output. He wants it bigger? That's a depression.

I can't take it anymore. If you want to read his entire speech it's here.

Investigative report exposes the deficit hawks

Groups like the CRFB and the Concord Coalition, founded by former Congress members in the 1980s and ’90s, have long presented themselves as nonpartisan, penny-pinching critics of wasteful government spending, when really they are anti-government, pro-corporate ideologues whose boards are filled with K Street lobbyists and financial executives. The goal of much of the austerity class is to see government funds redirected to the private sector. (Their ideology, which accepts the accumulation of private debt but opposes government debt, explains why the austerity class ignored the massive housing and credit bubble, which more than any single factor contributed to an explosion of debt worldwide.)

(emphasis added)

Read the whole article How the Austerity Class Rules Washington by Ari Berman at The Nation

It's the economic rent, stupid.

Berman has a one-two punch in this issue. See also Occupy Wall Street Hits K Street by Ari Berman at The Nation

If you want to understand how the top 1 percent have accumulated such power in American politics, look no further than Washington’s K Street lobbying corridor. Wall Street has long been the dominant player in the capital. “The banks,” Senator Dick Durbin said in 2009, “are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

The financial sector has spent more money on campaign contributions and lobbying than any other sector of the economy—$4.6 billion on lobbying since 1998, according to Open Secrets. This year, commercial banks andsecurities and investment firms have spent over $82 million on lobbying, employing over 1,000 lobbyists.

Given these facts, it makes sense that the Occupy Wall Street movement has spread to K Street. Since October 1, demonstrators have gathered in MacPherson Square, their numbers and visibility growing in recent days....

A lot of this post is about Harvard professor Larry Lessig, "one of the pre-eminent advocates of true campaign finance reform."

“Forget the 99 percent,” Lessig said yesterday. “We are the 99.95 percent of people who have never maxed out in a Congressional election campaign by giving the maximum amount. It is .05 percent of America who have given $2500 in the last election to a Congressional candidate, .05 percent, and Congress listens to them.”

Panetta Starts Singing Contractors’ Tune After Closed-Door Meeting — Robert Greenwald and Derrick Crowe

When the cost-cutting begins in earnest, it's about whose ox is going to be gored and who have the most clout to protect their own oxen.

Well, that didn’t take very long.

Two days ago, while representatives of war profiteers were on the Hill trying to push elected officials to protect their profit margins from the deficit committee, heads of the war industry met in a closed-door meeting with Defense Secretary Panetta. The next day, the war contractors held a press conference to try to spin away the fact that military spending costs jobs compared to other ways of spending the money. And today, Panetta and his subordinates came out swinging with the same bogus spin on “jobs.” Panetta says that cuts to the Pentagon budget that would be triggered if the deficit committee doesn’t produce a plan that passes Congress could cause the jobless rate to jump 1 percent.

Why, it’s almost like they planned the whole thing.

Read it all at AlterNet, Panetta Starts Singing Contractors’ Tune After Closed-Door Meeting