Wealthfare Wednesday: Thursday Edition

It's not Wednesday night anymore, but I woke up early from a nightmare with a giant bug, which I took to be a message from my subconscious that I should post some corporate welfare links. Here are a few:

Mother Jones chips in with a nifty report on what a trillion dollars in military procurement buys you these days. Hint: taxpayers may not have gotten their money's worth. Shocking, I know. Just for good measure, Winslow Wheeler of the invaluable Center for Defense Information helpfully lobs a few incendiaries in the direction of Leon Panetta.

Meanwhile, in nuclear subsidy news, Alternet informs us that the military has outsourced the cleanup of the notorious Hanford site to the leeches at Bechtel, who are doing a crappy job for some big paychecks.

And finally, it's amusing to note that when you Google "corporate welfare" + "banks," one of the front-page hits is an ad for Bank of America. I guess no publicity is bad publicity.

I'll Pay You to Take My Money

Both Drum and Yglesias have continued to point out the singular fact that, unlike you and me, the federal government can currently borrow money at negative interest rates. This reminds me that some of my readers said that they didn't understand my previous post about negative interest rates. My response: sure you do.

Say you buy a sofa for $1000, and borrow the money to do so at 5% interest. That means buying the sofa on credit will cost you an extra fifty bucks, so you're really spending $1050.

But if you can borrow the money at negative interest rates, my friend, you've got a better deal. If that rate is negative five percent, then when you pay back the loan, you've got yourself that same sofa for $950.

In effect, the lenders are paying you to take their money! This is the situation your Uncle Sam finds himself in these days. It's a historically unique situation, but it would be bonkers not to take advantage of it, because... wait, wait. You still don't get it?

You say that nobody in their right mind would lend money at negative interest rates. Well, if you're selling a sofa, sure. Nobody's giving you that deal. But that's what kind of deal the bond market is giving Uncle Sam.

Stay with me! I know that some of you just clicked over to fluffy animal videos when I mentioned the bond market, but I know you can get this.

To borrow money, a government issues bonds, like T-bills, war bonds, savings bonds, municipal bonds, and so on. You park your money in their account, and eventually, the government will pay you back with interest.

Now, if very few people are buying bonds, then the interest rates automatically go up, to attract more buyers. So the government's cost of borrowing also goes up. But if lots of people are buying bonds, the rates go down, and so do Uncle Sam's borrowing costs. You with me so far?

Right now, so many people are buying US government bonds that the rates have gone below zero. They're negative interest rates. And people are still buying them, because they think parking their money with the US government is so safe (compared to say, the stock market) that they're willing to take a slight loss in order to do so. Maybe you don't think so, but the bond market – people who buy lots of bonds – do think so. And in a market economy, the markets set the prices.

Okay. Back to the sofa. I'm too lazy to look it up right now, but a month ago, the five-year yield on US bonds was negative 0.72 percent. The seven-year yield was negative 0.18 percent, and the ten-year yield was just barely above zero, at 0.38 percent.

What this means is that at the ten year rates, buying the sofa would cost you an extra $3.80, and at the seven-year rates, you would be saving a dollar and eighty cents. And if you borrowed money to buy the sofa at the five-year rate, you'd save seven dollars and twenty cents. So the sofa would really only cost you $992.80. And if you really really need a sofa, there is never gonna be a better time to buy, my friend.

Well right now, there are a lot of things that the government really really needs to do. There are fourteen million people out of work, and we have crumbling roads and bridges and schools and power lines, and we're killing our planet with our oil addiction. Why not borrow some money to put those people to work fixing those things?

Instead, we just spent months in a debilitating battle, inflicting considerable political damage to both sides, over how we can cut spending so we don't borrow so much and keep adding to the debt. Except that borrowing money right now adds less debt than you're borrowing! People will pay us to take their money.

Specifically, if Uncle Sam borrowed a trillion dollars to buy the world's largest sofa, he'd be saving seven point two billion dollars! That's real money, even in Washington DC! You could hire a lot of teachers with that.

So why don't we? Because our political system is completely dysfunctional, utterly broken, and batshit crazy. And everybody can understand that.

UPDATE: Edited to fix my bonehead math. 7.2 billion, not 720 billion. That's why I'm not OMB Director.

Admittedly, the Bar Was Set Pretty Low...

I said earlier that Ben Bernanke may have been George W. Bush's best appointment (though maybe that dubious honor should go to Sheila Bair). At the same time, it's painfully obvious that Ben Bernanke is also Barack Obama's single worst appointment. Go figure.

Fact-Checking the Fact-Checkers

My beloved right-wing correspondent continues to forward pieces to me, of varying quality. It's always instructive to see how the other side thinks, and what shapes their thinking. I get Erick Erickson's RedState Briefings every morning for just that reason.

I've been busier than a one-legged Riverdancer so I haven't had the time to comment on the torrent of right-wing propaganda in my Inbox, even though I wanted to. I'm up early now so I'll give it a whirl:

This Michael Reagan piece is ridiculously easy to swat down; it's ludicrous. His claim that the Demos has a "death grip" on the Congress during Bush's last years ignores the six years when the Congress gave him nearly everything he wanted in the way of tax cuts and deregulation, the principal causes (along with the housing bubble) of the crisis we're in now. As I've noted several times earlier, Bush's spending spree was far more egregious than Obama's (which is largely driven by automatic stabilizers).

Please note that when the Ds control Congress, they impose "pay-go" rules requiring new programs to be offset by comparable spending reductions or new revenues. When Rs take over the Congress, they repeal those rules.

Several of these article writers suffer from the delusion that Obama's health insurance reforms are a huge drain on the treasury. No, that would be GW Bush's Medicare "reforms," which were not paid for, and represent huge subsidies to Big Pharma and Big Insurance. Obamacare not only pays for itself, but reduces the deficit - by trillions when fully implemented. Repealing it would increase the deficit, as the CBO has repeatedly found.

Bernie Goldberg's sophistry about the tax code is a longtime rightwing trope, often debunked and never abandoned. It involves citing statistics from the income tax alone and ignoring the rest of the tax burden - or lack of same - on Americans of disparate income groups. To pick just a few examples, poor people pay far higher percentages of their income in payroll taxes, and rich people whose income derive largely from investments are paying extremely low capital gains taxes, enjoying much lower tax rates than wage-earners. This is lying with statistics, pure and simple.

Thomas Sowell seriously misstates the causes of the crisis, seemingly believing there was no financial crash at all before Obama took over and started spending like mad:

Why was there a financial crisis in the first place? Because of runaway spending that sent the national debt up against the legal limit. But when all the big spending bills were being rushed through Congress, the Democrats had such an overwhelming majority in both houses of Congress that nothing the Republicans could do made the slightest difference.

The crash came on Bush's watch, because Greenspan ignored the housing bubble and deregulated banks passed junk bonds based on inflated mortgages around the world. Obama's (partially) successful stimulus spending came later. But he and the Dems never enjoyed an "overwhelming majority" in the Senate, thanks to Ted Kennedy's brain cancer, the litigation over Al Franken's seat, and Mitch McConnell's constitutional hardball. They managed to scrape 60 votes together a few times during the few weeks after Franken was finally seated, before Kennedy was completely incapacitated. The refusal of Republicans to extend the longtime courtesy of canceling out a dying Senator's absence by having one of their own abstain (as Dems did for Strom Thurmond) is part of the hardball I refer to.

This piece by the "Fact-Checker", Glenn Kessler, is the kind of thinking I like to read, whether from the right or the left: fact-based and substantive. He quotes the president speaking to well-heeled donors at a fundraiser, then dissects the claims:

“And by the way, these choices are not radical. When it comes to getting a sustainable debt level, if we went back to the rates that existed when Bill Clinton was president and we made some modest adjustments to Medicare that preserved the integrity of the system, our long-term debt and deficit problems would go away. And most people here wouldn’t notice those changes.”
— President Obama, August 8, 2011

I don't have time to fact-check all his fact-checking myself, but I will say this: I assume that Obama's audience at that fundraiser understood, as I do, that simply allowing Bush tax cuts to sunset in their entirety - as the original law passed by the GOP Congress (with help from Dems) and signed by Bush was designed to do - would, indeed, almost completely erase our projected long-term deficit.

I also understand, as his audience no doubt did, that Obama's stated policy and campaign promise was to raise taxes back to Clinton-era rates only for those making over a quarter million a year, and allowing the rest of us to stay at our current marginal rates. This move would only eliminate about 40% of projected long-term deficits, which is still far more than any GOP-proposed spending cuts.

But Obama was saying, correctly, that if we "do nothing" and no additional tax legislation is passed and signed, our deficit (not our debt) will more or less disappear - even without any spending cuts (which Obama is also calling for).

Finally, this Walter Williams piece was both dishonest and despicable. More on that later.

Some Splainin' To Do

I continue to try to patiently make the case for progressive economic policies in correspondence with a conservative who is dear to my heart. He takes affront at the notion that everything is "Bush's fault," and repeats discredited talking points that Obama has "made things worse." It seems to me that these are actually extremely crucial matters. It makes a great deal of difference how we affix blame for the crisis, and why.

I am not arguing that everything is Bush's fault. I will argue that he was the most economically disastrous president since Herbert Hoover. The statistics bear me out on this, however you want to measure "disaster."

I will argue against anybody who says Obama has "made it worse." Obama has presided over stagnation, and has singularly failed to get the economy moving at the pace necessary for a full recovery. But he inherited the most disastrous economy since Herbert Hoover's. The economy was plummeting like a bowling ball in a jell-o swimming pool, and he stopped that from getting far, far, worse. See above right (h/t Kevin Drum)::

But I don't believe that whatever anemic recovery we've had is solely because of Barack Obama.

Ben Bernanke, Hank Paulson, and, yes, the guy who appointed them, GW Bush, deserve some of the credit for averting a complete and utter catastrophe, instead of just a major disaster. Bernanke in particular, was one of Bush's best appointments, or at least one of the least horrible. But credit to those gentlemen is minimal and conditional, as they bore primary responsibility, along with Alan Greenspan, for the abyss they helped us begin to climb out of.

It's worth remembering, though, that Senator Barack Obama, as the more-or-less-obvious next President in the fall of 2008, was instrumental in the decision-making process at White House meetings with Bush and Paulson during those crucial months. Senator John McCain, as the more-or-less obvious loser of the upcoming election, was reportedly sullen and unhelpful during those same meetings - and helped cement his loss with his bizarre public statements as the crisis began to unfold.

Also, I have no doubt that Wall Street and the White House had been scrambling to keep the more-or-less-obvious impending collapse from occurring until after the November elections - which only made it that much worse when the house of cards finally did blow over.

I'm happy to give some of the blame to Bill Clinton, too – for reappointing Greenspan, and also for signing the disastrous GOP repeal of FDR's Glass-Steagel Act. If you want to blame Pelosi and Reid, I'll grant them some measure of responsibility, too, but it's beyond ludicrous to try to place the major blame on the 110th Congress. If they had been one-tenth as obstructive of Bush's policies as McConnell and Boehner have been of Obama's - during a national emergency in the latter case - we might have been stuck in a slightly shallower hole when the crash came. Instead, yes, they mostly enabled his continued recklessness.

So, no, not everything was GW Bush's fault, but he and Greenspan deserve the lion's share of the responsibility. There were historical currents at work in the global economy during those years, and we may well have had a crash in 2007-09 if Al Gore had served two terms as president - especially if he left credit default swaps unregulated and failed to address the housing bubble. Somehow I doubt he would have done the latter, and he certainly would have made better appointments at Treasury and the Fed.

The biggest problem in all this is that conservatives, with very few exceptions, have been utterly unwilling to acknowledge the enormity of the mistakes their policies represented, let alone to learn from them. So they continue to advocate the same tax-cuts-and-deregulation agenda that brought on the crash. Worse, they're leveraging their influence in the divided government and the media to advocate for austerity budgeting. That was Hoover's biggest error, and FDR's too, in 1937. It is demonstrably re-crashing economies across Europe. This goes well beyond a failure to learn from history; it amounts to an obstinate refusal to do so.

Some Folks Will Never Get It

Before I've even had my coffee, this is what Erick Erickson of RedState.com left in my inbox:

Despite being dispirited by the one-sided nature of the debt ceiling deal, most of us were looking forward to reaping the rewards from its only ancillary benefit; the impending stock market rally. Much to our chagrin, the Dow dropped precipitously, losing over 800 points since the opening bell on Monday. After the initial euphoria from the debt ceiling hangover began to subside, people have been forced to confront an inconvenient reality. The problem with the economy is not the debt ceiling; it is the debt – and all that it represents; overbearing and job-killing government.

Let me say this nice and slow: The debt "crisis" is not the cause of the jobs crisis. It is the other way around.

It. Is. The. Other. Way. Around.

The reason we have an historically high budget deficit is that we have an historically high unemployment rate. Fourteen million people are out of work, and those people are not paying taxes to the federal government. Nor are they going out to restaurants or furniture stores. As a result, businesses, with their customer base decimated, are not paying much in taxes to state and local governments, either.

So those governments, in the grip of austerity budgeting, are laying off workers by the hundreds of thousands, and all the teachers, park rangers, pothole fillers and cops who used to have jobs are also not paying much in taxes, nor visiting their local restaurants and furniture stores.

Lather, rinse, repeat.

Then we have George Will, who would make me spit up my coffee if I had any, perseverating over the number of people on government assistance:

Regarding the federal regime: Before this debate, who knew that the government sends more than 100 million checks or electronic transfers a month to employees, vendors and — much the largest group — entitlement beneficiaries, including 21 million households receiving food stamps?

 O Flying Spaghetti Monster, please grant me patience. Again, nice and slow. Why do we have record numbers of people on food stamps, forcing higher government expenditures and thus increasing the deficit? No, not because big-government liberals want to create slavish dependency so they can maintain their dictatorial grip on the nation's lifeblood.

You in the back? That's right, because conservative dogma crashed the economy. Enormous housing bubble, not only ignored but encouraged. Record income inequality, exacerbated by regressive tax policies. Businesses and households leveraged to the hilt, squeezed by anemic job growth. Reckless deregulation and lax oversight, encouraging Enron-style accounting across the financial sector. An accident waiting to happen. And then it happened.

Now, what has happened since then, we can argue about until the cows come home, and they ain't coming home for quite some time.  But the economy has not recovered and is teetering on the brink again. The initial plunge in GDP was much worse than anyone knew at the time, and hence we had inadequate stimulus, which has since petered out. Then we fell into the grip of austerity budgeting, which has only made the problem worse, a la 1937. The Europeans, too, have been in the grip of austerity budgeting, and so they, too, are teetering on the brink.

And while I was typing all this, the new jobs data came out. Once again, private sector added jobs, though not nearly enough – while public sector continues to shed jobs, creating further drag on the economy. What a surprise.

As the global markets freak out, conservative dogma doubles down, insisting that even greater austerity budgeting is the only answer, and that government must cut spending still further, thus shedding even more jobs. Makes one want to rhythmically tap one's cranium against the nearest vertical masonry edifice.

Letter to a Right-Winger

Hey, thanks so much for sending me that article. I'm always happy to read anything you'd like to forward to me.

However, I'd be happier if the articles were more fact-based than this one. I have little use for this kind of piece when it comes from the left: "Look at all the mean/outrageous things right-wingers say about us!" I could find an equal number of nasty quotes from the right, compile them, and send them to you, but it'd be a waste of both our time. If you listen to Mark Levin, read Ann Coulter, or watch Bill O'Reilly, then you get no shortage of them on a daily basis.

I'm happy to stipulate that civility is a virtue, one practiced imperfectly on both sides of our political culture, each of whom feels themselves to be the more aggrieved. Moreover, I'll agree that one needs to be careful with one's metaphors, though I also don't want to live in a world where colorful language is suppressed.

But it also seems to me that if Republicans take genuine, rather than feigned, offense at being called or compared to terrorists - you know, the way Sarah Palin and her acolytes referred to Barack Obama in 2008 - then they ought to forswear tactics such as those Mitch McConnell describes here:

"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this—it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done."

The political culture in DC is more toxic than ever, and anger at both parties, and within both parties, is at fever pitch. Part of the reason is that the GOP is, more or less unilaterally, playing a game called constitutional hardball, in which tactics not explicitly prohibited by the Constitution, but prohibited by generations of established political norms, are embraced to gain maximum leverage.

Republicans are clearly within their rights to do things like mid-decade redistricting, routine filibustering, blocking executive appointments at unprecedented levels, requiring voter ID and then closing down the offices necessary to obtain them only in Democratic districts, or threatening to shut down the government if they don't get their way. But such tactics do come at a certain price, and diminished civility is part of it.

And I'd argue that part of the reason our political culture has become so feverish is that the Democratic Party has been much more reluctant to play constitutional hardball when it's to their advantage - as in the failure to reform the filibuster, advance DC statehood, mitigate the Citizens United decision, or any number of things they (once) had the power to do. This is is part because the liberal outlook is by nature more conciliatory, and in part because the Democratic coalition is more heterogenous.

But however angry we get at Republicans for changing the rules mid-game (as in Calvinball), it's also true that the increasing polarization of our parties is a natural outgrowth of the successes of the civil rights movement. Pro-segregation politics made for strange bedfellows in both parties, and over the decades since, we've seen liberal Republicans and conservative Democrats migrating to the party that best matches their ideology. We still have more of the latter than the former, adding to the friction, but this is a process that will continue. Constitutional hardball is a part of this process, but the danger is that if pushed too far, it will lead to a constitutional crisis.

What happened last month unprecedented, but it was only the latest unprecedented outrage. The GOP went well beyond threatening to, or succeeding in, shutting down the government. They were playing chicken with the full faith and credit of our government. If the default had occurred and our credit ratings downgraded, our interest payments would have gone up, adding billions more to the deficit. But beyond that it would have created shock waves in our national and global economy, and in fact, the use of the tactic has already spooked both markets and consumers. Moreover, the success of the tactic, in cutting spending during a recession, will demonstrably slow down growth, at a time when the economy seems to already be slowing. This may well spark a double-dip recession.

Under the circumstances, it seems like the epithets Mr. Goldberg quoted were relatively mild, but in any case, a waste of everybody's time. Both sides should be concentrating their minds on the grim economic data unfolding before us and fashioning adult, responsible solutions, rather than manufactured crises that address the budgets of 2013 and beyond.

However, I will say this: any party that has employed Karl Rove as their chief political operative has forfeited the right to complain about civility for at least a generation to come.

Negative Interest Rates!

I know we're all weary... so, so weary. But just in case facts matter to the people you discuss this fiasco with, please take a moment to remind them that right now, the federal government can borrow money at negative interest rates. I know it's hard to wrap your brain around, but it's still true. This is not only not a debt crisis, it's the exact opposite of a debt crisis. Our debt service payments are much lower now than they were back before the debt "exploded" – because Uncle Sam can borrow at negative interest rates!

Under the circumstances, with fourteen million people out of work, it's nuts not to borrow and spend the money necessary to hire back all the teachers, cops, construction workers and others tossed out of work by this zombie austerity movement. Why, oh why are we ruled by such lunatics?

Oh yeah, see previous post.

Toward Better Wishing

Well, it looks like I'm about to get my wish: for this whole sordid, excruciatingly stupid ordeal to be over. But as the saying goes, be careful what you wish for. For one thing, of course, we're bound to go through this again, and fairly soon, as the GOP tests the efficacy of the Madman Theory as it applies to the Catfood Commission, as well as the next round of budget negotiations.

Moreover, of course, just having this over with is small comfort, since it's bound to be a bad deal – though the extent to which it's an evil-Spock/anti-Keynes deal remains to be seen. Whippersnapper Matt Yglesias suggests a bad deal was inevitable:

The rumored deals flying around Washington today all sound pretty bad. And how could they not be? The White House started with a position that: 

1. Failure to raise the debt ceiling is unacceptable.
2. The country should enact substantial deficit reduction in 2011.
3. Any deficit reduction package must include revenue increases. 

But (1) and (3) were in significant tension. The White House strategy for getting (3) was to persuade the public that (3) was the correct position. They did that, and all polls showed that public opinion was on their side. But then an underpants gnome problem arose. They didn’t dissolve parliament and call for a snap election. Eric Cantor said “no” and once he said “no,” (1) collided with (3) and the White House dropped (3). Once you’re there, how is the deal not going to be bad?

Meanwhile whippersnapper Ezra Klein likewise opines that failure was always an option:

It’s difficult to see how it could have ended otherwise. Virtually no Democrats are willing to go past Aug. 2 without raising the debt ceiling. Plenty of Republicans are prepared to blow through the deadline. That’s not a dynamic that lends itself to a deal. That’s a dynamic that lends itself to a ransom.

On the other hand, greybeard BooMan argues that Obama played his cards about as well as could be expected:

Let's look at where we stand this weekend. As soon as the ink was dry from the 2010 midterm elections it was clear that we would be seeing something never seen before. We would be seeing a link between raising the debt ceiling and cutting the deficit dramatically. I believe MSNBC host Lawrence O'Donnell discussed this on the air on election night, or within days of it anyway. So many new members had pledged to make this link that it was inevitable that the link would be made. 

How did the president respond? At first he made the obvious argument that such a linkage had never been made before and should not be made now. But it wasn't something the Republicans could be deterred from doing by mere rhetoric. In fact, raising the debt ceiling polls very poorly and educating the public about it would entail a months-long effort to justify the government's inability to live within its means. The president's mission wouldn't be merely to improve those poll numbers to parity, but to convince an overwhelming number of people so that immense pressure would be placed on Republicans serving in conservative districts to abandon their linkage. This would have been an impossible task, even if his own party remained united behind him. But they wouldn't have remained united; increasingly they would have become divided. 

As should be obvious by now, the new Speaker of the House never had the votes to pass a clean hike in the debt ceiling. He never had the votes to pass any reasonable or acceptable or even sane hike in the debt ceiling. And this wasn't any great secret. By no later than early spring it was clear that decoupling was impossible and that some deal must be struck. It was also clear before long that the Speaker couldn't deliver any fair or reasonable deal. What I'm saying here is that our present situation was not avoidable. We should not be debating why we're debating the debt ceiling. We're debating it because we lost the 2010 midterms, badly, to a bunch of fire-breathing debt-crusaders. It's fair to place some blame on the president for those midterm losses, but we have to keep things in context.

There's much to agree with in BooMan's defense of BHO-Man. The problem for me is the line I bolded at the end of that last paragraph. IIRC. the president was using anti-Keynesian rhetoric long before the midterm elections, and gave up on Keynesian economics well before the GOP forced his hand. Some of that was baked into the peculiar results of the '08 legislative races, with the bad luck of Al Franken's contested race and Ted Kennedy's brain cancer.

But if we're talking about how well BHO has played the cards he's been dealt, we also have to talk about how effectively he played cards available to him to influence the outcome of of the '08 and '10 legislative races. He had a tremendous war chest in '08 and a floundering opponent. There were grumblings at the time that a few cash infusions could have swung a Senate seat or two the other way (the GOP wins in Kentucky and Georgia were surprisingly close). There were grumblings as well that placing Napolitano, Sibelius, Salazar and Vilsack in the cabinet removed some formidable '10 Senate contenders from contention, as well as any incentives for John McCain or Chuck Grassley to behave themselves. (Never mind the decision by BHO and party leadership to support the Connecticut for Lieberman Party nominee in '06 instead of the Democrat.)

But the place where the grumblings were loudest, both inside and outside the White House, was the debate over the size of the stimulus. Hindsight is 20/20, but plenty of people at the time (no link required) could see both that the stimulus was too small to fully jumpstart the economy, and that consequently it was likely to affect the results of the '10 midterm elections. The way that hand was played means that the player has fewer chips to bargain with today.

Some Things Bear Repeating

It's been said before, and plenty of times, that Bush's policies are contributing far more to our so-called "debt crisis" than Obama's policies do. The New York Times lays it out for us one more time.

A couple of things stand out for me in this presentation. The first is, no matter how much rightwingers harp on "Obama's failed stimulus," you'll notice that Bush put a stimulus package together, too, in response to the global financial meltdown. That was all tax cuts, and added on top of the original tax cut bill. And that failed pretty spectacularly, too, since the economy continued to melt down, oh, until Obama's stimulus bill passed.

One could argue, I suppose, that Bush's stimulus, and Obama's, added together, were finally enough to keep the entire global economy from going over the cliff into Great Depression II. But to make such an argument, you'd have to embrace the now- quaint notion that Keynesian counter-cyclical measures are a good idea. How I miss living on that planet.

The second thing that occurs to me is that, unlike Mitch McConnell and John Boehner, Obama didn't even vote for most of the Bush policies that dug us into deeper debt. It's true that he did help whip the TARP deal, but that still leaves the GOP holding most of the shovels at the bottom of a pretty deep pit.

Also, note that this chart shows projections for two full terms in office for President Obama, based on policies implemented to date. You'll note that Obama has already cut spending, something Bush didn't do during his entire eight years. Obviously at this point we can expect further spending cuts, even if Obama never gets a second term.

Finally, this chart concerns only the policies each president put in place. It doesn't even address the main reason we have record deficits right now: the ongoing jobs recession, which deprives government of revenue – at all levels – and impels higher payments to individuals and institutions – again, at all levels.

So, just to review: on whose watch did the global economy implode?

A Better Speech

I think what I was hoping he would say was: I'm tired of dicking around with these irresponsible fools. They've already passed budgets mandating this level of spending, and if they won't do the right thing and cover their own debt obligations, I will. Pursuant to the 14th amendment, I'm directing the Treasury Secretary to ignore the debt limit and follow the spending plans Congress has already approved. If they don't like it they can sue me or impeach me, but I'm not letting them crash the global economy - AGAIN.

But that would have been quite a surprise.

Barney Frank is a National Treasure

How diminished our national discourse would be without him. He's a one-man quote factory. This is my favorite since the "dining room table" quip. Via Crooks and Liars:

I've already voted to raise the debt limit. I voted to raise it earlier this year straight forward. And by the way, it's not my debt limit. I voted against the war in Iraq and I voted against the Bush tax cuts. On my debt limit, I got a couple trillion left to go. I was very generous. I voted to raise the other people's debt.

What Digby Sez

Everything Digby writes is a JGRTWT, but she's at the top of her game here. She's built up a righteous head of steam today (which isn't hard to do) on Obama's negotiating strategies:

It's not that people don't understand that he has to compromise. It's that he puts the defining issues of the Democratic Party on the table in exchange for gimmicks and promises from the other side. It would be as if George W. Bush had offered to tax evangelical churches and ban private ownership of handguns in exchange for Democrats agreeing to raise the cap on Social Security. When you do something like that, you should expect some blowback.  

She ties this in to Krugman's recent post on what Obama was willing to be seen as willing to give away. Even if he knew that Republicans were going to turn him down no matter what, laying out these kinds of cards can't help but make it harder for the president's party to win back the House and hold the Senate next year.

However much slack one is willing to cut Barack Obama, it's getting hard to keep giving him the benefit of the doubt. BooMan runs down what may have been going through John Boehner's mind:

I don't know what Boehner may have thought was possible or what he truly wanted. Alcoholics don't think straight and are hard to decipher. But I don't think he wanted to be in the history books as making a deal with the Kenyan, Muslim, socialist president. He certainly wanted to leave the impression with his caucus that he was only humoring the president.

Referring back to my earlier post, "No, Our Side Sucks More," it's a huge mistake to assume that Republicans are willing to negotiate in good faith anymore. They've made it clear that damaging the president is their top priority – even above the national interest. Playing chicken with them, or even calling their bluff, has such enormous consequences for non-rich Americans that it's excruciating to watch.

I'd love to wrong about this, but I just want it to be over. Please let it end soon.

Congratulations, Arizona

Our state easily defeated all other contenders for the top spot in AlterNet's list of the "Ten Craziest State Legislatures in America." This is especially impressive when you consider that the competition included Wisconsin, Florida, Michigan and Texas. But in the end, it wasn't even close.

The rundown of major embarrassments and flights from sanity that have caught national attention is, of necessity, abbreviated. Left out, for instance, is the absurd refusal to accept federal funds to extend unemployment benefits, a bonehead move that costs the state millions of dollars a week.

Moreover, of strictly regional interest is the irrational hostility to Tucson and Tucsonans. The attack on our local ethnic studies program is part and parcel of that. This hostility is also manifest in the move to usurp local control over our redevelopment district and place it in the hands of appointees from the Governor and the Republican legislative leadership. This tyranny from Maricopa County has led to an active secession movement to found the state of Baja Arizona.

It's hard to pick which is the craziest law considered on the floor of of our state capitol (now leased from its private ownership). Guns in barrooms? Bans on teachers with foreign accents? ID requirements for presidential candidates? The ban on human-animal hybrids? There's no shortage, and you can be assured of future outrages in the next session.

But less amusing is the way this impacts ordinary peoples' lives - or ends them prematurely. It's a dubious honor, to be sure, but it helps to have outside confirmation that we're not imagining the extent of our nightmare here. My state is crazier than your state.

Fuzzier Than Thou

While in California, I had the opportunity to peruse an article in the Weekly Standard, entitled "The Democrats' Fuzzy Math: Yes, Paul Ryan’s Medicare Plan Would Lower Costs."

The author, Jeffrey H. Anderson, cites a number of statistics to make the case that Medicare is not such a great deal compared to private health plans – contrary to both conventional wisdom and CBO reports. And hence, he argues, the GOP's Ryancare proposal will be likely to bring down health care costs by forcing Medicare to compete with the mighty free market for its beneficiaries' (voucher) dollars.

It struck me that Anderson's argument was somewhat disingenuous, but I couldn't quite put my finger on it until I had had an opportunity to sit down and ponder it at length. The thing is, he bases his claims on his own think-tank study, which shows that the costs of Medicare, as a share of GDP, have risen much more than other health care costs over the same period.

So there are a couple of problems here. First is that he used the years 1970 through 2008 to make his comparisons. Anybody catch the weasel? That's right – there was a huge GDP contraction in the year 2008 (including a wrenching 7% drop in Q4), coinciding with the onset of the Great Recession. Not only that, but given the rate of job losses that year, more and more people were being forced into reliance on Medicare and Medicaid, even if they might have preferred to put it off a few more years. So naturally the costs of covering these people, as a share of a diminished GDP, are going to look much higher if you use that particular year as a comparison.

But the share of elderly people in the population – the people served exclusively by Medicare and in large part by Medicaid as well – increased over those years. The rate of growth of the US population as whole has barely edged above 1% in any given year since 1970 (and dropped to a low of 0.88% in guess which year... that's right, 2008). But the growth rate for the elderly population averaged 2.2% from 1970 to 1990, and then averaged 1.3% from 1990 to 2010. Not only that, but the proportion of those 85 and older has exploded (274% between 1960 and 1994).

As you might guess, these folks tend to use health care services a lot more than your average John Q. Public, and their costs are considerably higher as well. So it's doubly dishonest to claim that Medicare costs are out of control when the aging of the US population is the chief culprit. Anderson tries to weasel that as well, saying that it cost more to treat the elderly in 1970, too. But in both 1970 and 2008, private health care plans didn't need to treat very many elderly people, precisely because Medicare was available to them.

Republicans have been saying that Ryancare simply needs a better marketing job for the public to get over their overwhelmingly negative view of it. But this is straight out of How to Lie With Statistics. If they have to rely on this kind of chicanery to make their case, it doesn't inspire much confidence for its implementation. Gawd forbid.

October Surprise Redux

Robert Parry 's reporting continues to make mincemeat out of apologists for Bush the Elder. In a new article he runs down more evidence conveniently overlooked and/or covered up:

In November 1991, as Newsweek and The New Republic were ridiculing the idea that Ronald Reagan's campaign chief William Casey might have made a secret trip to meet Iranians in Madrid in 1980, a senior State Department official was informing George H.W. Bush's White House that Casey indeed had gone to Spain on a mysterious visit...

Casey’s family grudgingly turned over his personal records to congressional investigators, but Casey's 1980 passport was missing along with several pages from his personal calendar for that year... From the Bush library files, there's no indication that the White House told investigators about Williamson's information regarding a Casey trip to Madrid. Nor did anyone in power do anything to stop the Washington press corps' rush to judgment, which condemned Jamshid Hashemi as a liar and a perjurer.

It helps to keep these sorts of things in mind, apropos the kind of folks we're dealing with in Washington, and the extent to which they are capable of not just obfuscating, but obliterating, reality.

Optimists and Pessimists

On the debt limit game of chicken, BooMan represents the optimists. He basically thinks the White House has John Boehner by the short-and-curlies:

On this whole debt limit deal, the White House seems to be supremely confident that they'll get something done and that it will be the Republicans who will blink. That's not to say that there won't be some ugly concessions made, but when it comes to facing their respective bases of political support, it's the Congressional Republican leadership who will be getting the worst beating.

This was reinforced today when Senator Schumer started rhetorically jabbing his finger in Boehner's chest. Reference also the sonorous tones of Brit Hume describing the nature of the bluff.

On the pessimist's side is Digby. She, too expects the deal to come through, but fears that the White House will be giving away far too much, and that Republicans will be high-fiving Boehner when it's over:

From his press conference today, it would appear that the president's negotiating strategy really is to give Republicans huge cuts in spending (and "make his base give him a hard time") and then shame them into "meeting him halfway" by agreeing to mildly raise taxes on some luxury items like corporate jet travel. (Luckily, he reassured the nervous CEOs by saying "you'll still be able to ride on your corporate jet, you'll just have to pay a little more" so hopefully they won't have a fit.)That's what constitutes shared sacrifice and fiscal responsibility. Good to know.

I dunno who's right, but it seems like Schumer knows something we don't know. Just wish this were over already.

Flight From Empiricism, Part 26,479

As discussed in earlier posts, the right wing in this country has a serious aversion to empiricism when it comes to climate science (not to mention the Theory of Evolution). And when it comes to the dismal science, well, opinions differ. But Moynihan's Law still prevails in economic debate.

Or it should, anyway. But I expect the following will have virtually no impact on our current deficit hysteria. Nevertheless, I'm honor-bound to pass on to you this data showing that the states who cut their budgets in the face of the recession made unemployment even worse, while the states that increased spending saw their unemployment rates go down.

If this seem counter-intuitive, you may be watching too much cable news.

Nevertheless, it was reported on HuffPo this morning, under the headline "States That Cut The Most Funding Lost The Most Jobs." The article cited research from ThinkProgress, but linked to a guest post from a Center for American Progress blogger, Adam Hersh. Mr. Hersh in turn linked up to his CAP colleagues, who provide a link-happy dissection of GOP economic policies.

Just for today, Lord Keynes has stopped spinning in his grave.

No, Our Side Sucks More!

I'm glad that I read right-wing commentary as often as I do, because it helps give me a sense of perspective on a number of matters. Over in Left Blogistan, we complain about Obama, a lot. And among the most irksome things about him, according to us, are his poor negotiating skills; the way he consistently caves in to Republican demands. Via RedState this morning, righty blogger Michael Hammond, a former Senate staffer, has the mirror opposite complaint: that Republicans are regularly getting their clocks cleaned by Obama's superior negotiating tactics.

Of course, this could just be a trick! But bear with me...

Last week, Matthew Yglesias made a persuasive case that this latest hostage-taking over the debt limit was eminently foreseeable, and therefore a huge blunder on the part of Obama (and Reid):

Back last December when Democrats had a much stronger hand in Congress, they reached a deal with the GOP over tax cut extension and some additional stimulus. Since those measures all increased the deficit, many of us thought at the time that including an increase in the debt ceiling would be a smart idea. For one thing, if Congress wills an increase in debt, it ought to also will an increase in the government’s borrowing authority. For another thing, such an increase would minimize the GOP’s ability to launch a new round of hostage-taking. 

It didn’t happen. Obama said he trusted John Boehner. Harry Reid said he didn’t want the debt limit to be raised by the 111th Congress because he wanted to force the incoming 112th Congress to take ownership over it. The results of these decisions have been a disaster.

But Kevin Drum demurred, in keeping with FDR's dictum that if it happens in politics, "You can bet that it was planned that way:"

For what it's worth, I continue to think that this probably wasn't a bungle. More likely, during his first two years in office Obama had gotten enough deficit religion from the likes of Peter Orszag and Tim Geithner that he actually welcomed the opportunity to put in place some long-term spending cuts. He couldn't very well admit that publicly, of course, since his base would go bananas, so instead he punted on the debt ceiling, knowing that Republicans would then use it to "force" spending concessions out of him. Mission accomplished: long-term spending is reduced, and Republicans get all the blame.

And for what it's worth, my reaction to that was that they could both be right.  It could be that the White House anticipated the GOP use of the hostage tactic, desired them to take the blame for a spending cut deal, and yet still underestimated the depth of their intransigence and capacity for brinksmanship. But here's where Mr. Hammond has his say:

Watching House Speaker John Boehner and Senate Republican Leader Mitch McConnell negotiate with Barack Obama is like watching a drunk try to run across the Beltway. Whether it’s ObamaCare, the financial reform bill, the Kagan nomination, the disastrous Lame Duck agenda, the Senate rules battle, the pathetic “continuing resolution deal,” or the current debt limit fight, you know both of them will end up as a splotch on the road, marked by Barack Obama’s tiretracks.

Hammond seems to think that the Republicans will eventually agree to "big hidden tax increases, like a recomputation of the Consumer Price Index, a bunch of user fees, or an end to the ethanol tax credit." And in exchange they'll be getting "short-term defense cuts and a bunch of illusory domestic spending cuts that don’t kick in until 2018."

And you know what? They could all three be right – at least in part. I'm sure the cuts are going to kick in  sooner than that – against the advice of economists right and left – but Hammond is right that Obama managed to get Boehner and McConnell to agree to a bunch of illusory spending cuts in December. Drum is right that Obama leans towards a Geithnerian view of the deficit. And Yglesias is right that the result of all this 11-dimensional chess could still be a disaster – particularly if you or a family member rely on Medicaid.

But whether Obama walked into this clear-eyed or backed into it by mistake, the most nervous guy at the table has to be Boehner. BooMan points out:

As frustrating as this whole process is, it's really Boehner who has painted himself into a box. I don't know how he gets out of it with his leadership job, frankly. ... If he caves on taxes, even a little, he'll probably have to rely almost exclusively on Democratic votes to raise the ceiling. And if he does that, he probably won't be Speaker for very long. So, maybe he just lets us default?

Which brings us back to my point: they could all be right, and still Obama has underestimated just how crazy and desperate a position the GOP is in. So things could get a lot worse before they get better. Generally, I'm wrong about a lot of things, and I sure hope this is one of them.

UPDATE: Ezra Klein makes the case for keeping an eye on Mitch McConnell's poker skills.

Random Lynx

I just attended a party celebrating the 25th anniversary of Tucson's own See Sharp Press. As the proprietor told me shortly after I moved here, radical publishers need to stick together. They do good work; check them out.

I came home to find dueling statements from Wisconsin jurists. Here David Prosser claims he never laid a hand on that woman, and here that woman says oh yes he did.

Here's a statement from the Ugandan ambassador to the UN, representing the African Union's stance on the Libya situation. You don't have to agree with every word to realize this is a perspective you're not being exposed to on a daily basis.

I'm working on the Afghanistan chapter for the update of my CIA book. This article makes a really important point that I have to cover in only a few words; it deserves a fuller explanation.

I just yesterday finished a multi-year project of reading all seven Harry Potter books aloud to my kids. But wait – there's more.

The new Buddy Holly tribute album is really really good and you can stream it at NPR. It's kind of amazing that so many of his songs sound so fresh and contemporary more than 50 years later. Also: it takes nothing away from the other performers – stalwarts like Cee-Lo, Black Keys and Fiona Apple – to say that Paul McCartney steals the show.

Dave Marsh offers a heartfelt obituary for Clarence Clemons in the context of the racial politics of Springsteen's oeuvre.

Believe me, I've seen a lot of bizarre conspiracy theories in my time, but this one takes the cake. And I am not quite sure what to make of it.