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Barack Obama: Deficit Terrorist

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  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Frankly, I don't know why the president is the one doing the negotiating.
    Let the Congress debate Congressional law. Let the Democrats negotiate with Boehner, get Obama and the White House people out of the room. Obama has thrown like 16 interceptions in fiscal negotiations w/ the Republicans.

    This time it is just far too ridculous. What did the White House say a week ago? "Social Security is not on the table."

    Well, apparently it is, and grandma's getting her ass handed to her with the rather accurately named "chained CPI" index on benefits.
    Not to mention we lose the FICA 2% cut on the employee side.

    And for what? Marginal tax increases on $400k + ???

    How does that help spending????

    This is the anti-MMT compromise. And it's just hateful of the US economy and the people who make the stuff that we all use and consume.

    As Dan Lynch reminds us, the beatings will continue until morale improves.

    MMT Grand Bargain: Raise SSI Benefits and Suspend FICA

    MMT: The Last Progressive Left Standing

    How to Fight Back Against Wall Street: Starve the Beast
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    CBB --

    Thanks for again sharing the MMT perspective. As you know, I agree with the Modern Monetary Theory, but I also look at the practical reality of changing the perceptions...the enormous challenge of educating millions of Americans on MMT and how they perceive debt and deficit spending. We are discussing some of those issues in another thread, and I'll get back to the many good points you raised in your latest posts there. It does require some soak time.

    Having said that I want to highly recommend the three Warren Mosler articles you shared above. I have read a couple of them in the past, but they are always worth rereading. With the current debate on the fiscal cliff, I'll extract a couple of paragraphs from Mosler's second article above from June 2011. I added the bolding:

    Modern Monetary Theory: The Last Progressive Left Standing

    "In other words MMT teaches us there is no such thing as the U.S. Government running out of dollars, that the U.S. Government is not dependent on foreign borrowing to be able to spend, and that hyperinflation comes only from sustained over spending far beyond full employment and our capacity to produce. Nor can the U.S. government become the next Greece or Ireland. MMT teaches that financially, joining the euro zone put those nations into the positions of U.S. states. So while California or Illinois can become the next Greece or Ireland, and need a federal bailout to avoid default, just like Greece and Ireland needed a bailout from the European Central Bank, the widely proclaimed analogy of Greece and the U.S. Government is entirely false, and tragically counterproductive.

    "And as for the U.S. national debt and all the talk about borrowing from China, MMT recognizes that U.S. Treasury securities are, functionally, nothing more than savings accounts at the Fed, which the Fed in fact happens to call securities accounts. Yes, the trillions of dollars of U.S. national debt is nothing more than that many dollars in savings accounts at the Fed. So when China buys Treasury securities, which we call going into debt to China, all that happens is the dollars they got from selling things to us that went into their checking account at the Fed, get shifted to their savings account at the Fed. And when we pay back China, which happens every month as some of their Treasury securities come due, all the happens is the Fed shifts those dollars (plus interest) from China's savings account back to China's checking account, all on the Fed's books. (note: there are no grandchildren involved in this process!)"


    These points are absolutely true, and they challenge head on much of the political rhetoric and fear mongering going on about the so called fiscal cliff. I too would like to see the Democrats and Obama publicly embrace the MMT strategy as a start, but wow...the political reality is that some Republicans would be calling for Obama's impeachment, and the TV pundits would follow along. Maybe I'm being "too realistic" and not giving enough credit to the progress that Mosler and others like you have made to change perceptions. I commend those efforts.

    On your other point about the Democrats in Congress debating with Boehner on the fiscal cliff instead of Obama, you make a good legal point. That is indeed the traditional role of Congress and not the executive branch. I don't know to what extent Nancy Pelosi and Barack Obama are consulting with each other, but I hope that they are very close, and I know that John Boehner is running back and forth between his various supporters and detractors in the House. However, if you put maybe 10 of those Democrats and 10 of those Republicans (including the Tea Party) plus Bernie Sanders into a room, each representing their specific hot button issues, and ask them to formulate a plan, just how long do you think it will take? There are those on the right that see defeat if they don't get 100 percent of what they want...ditto on the left. Compromise is a dirty word...it spells defeat...and for many on both the right and the left, its all about winning...every single point. All or nothing.

    Whatever plan they ultimately come up with it will be criticized by both the left and the right...maybe not even pass muster with either caucus. And one other thing I'm pretty sure of...it will NOT embrace any of the good MMT suggestions for Social Security, Medicare, or the like. But keep trying.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Yeah, the Republicans are Nuclear Deficit Terrorists. Obama is a Clintonian Deficit Terrorist. The combination has prevented a deal to bring Austerity to America. The fact they can't compromise has stopped them. In the words of Martha Stewart, "it's a good thing."

    There's no reason to cut anything for sake of the size of numbers in the budget.


    Republicans have had an opportunity, by agreeing with Obama's Grand Bargain, to make massive cuts to the size of government.
    If they had agreed to what Obama had offered on spending, in exchange for the tax increases, Obama would not be president today. The fragile recovery would have been thrown upside down and President Romney would have rode on a white horse of tax cuts and stimulus.

    So the Republicans stupidity has cost them big time, and Obama's Grand Bargain would have cost him big time if the Republicans were not so much in the full embrace of radicals. And by rejecting it, the Republicans improved Obama's image, and made themselves look worse.


    Now going back to the summer of 2011, I gave the president high marks because I thought the WH was trying to push the cuts into the future and get stimulus today. That was part of the story, but they've still ended up conceding to and proposing their own cuts over the short term. And we have had austerity through appropriations.

    But it would have been much worse, if the Republicans had accepted the Grand Bargain.


    So this is my warning: the government's tax revenues are rising at a pace that suggest we would balance the budget before achieving near full employment (<5%).

    We are not going to have any major credit expansion any time soon. And that itself is unsustainable over the long term as the US experience of 1997-2008 demonstrates, and as Japan's experience from 88-93 shows....trade surpluses won't save an economy from the credit cycle. If lending is the driver in your economy, then to grow you need more loans each year, if this doesn't happen contraction and default is inevitable. Our credit worthiness is not infinite, and static-to-deflationary government budgeting does not help matters.

    Now, 5% deficit-to-gdp ought to be enough for us to muddle through, but that's falling with gov spending cuts, tax rate increases, and tax revenue increases as lending recovers. Lower oil prices are a major boost, but they need to fall further and stay low in order to really ramp-up anything, rather than just support spending.

    I see forecasts revised up with a fiscal cliff deal, but I think they will be tempered, lot of wait and see out this.

    But I don't see us making it the next 4 years without falling back into recession.

    If you look at credit markets, it's just student loan lending and credit cards that are driving things.

    That shows that real household wealth is weak: people have to borrow to finance their basic consumption needs. Education being one of them.
    So there's no material household deleveraging going on.

    A minor speed bump or slow down in spending over the next year or so and we end up with Republicans gaining seats in 2014, and the presidency in 2016. There will be no stimulus to save the economy, and efforts to cut off countercyclical government budget deficits will only make the problem worse.

    Balance budget or surplus budgets are not going to help lending. So you end up with the recovery thus far producing tax revenues that inevitably slow it down and send the recovery backwards as more and more dollars end up leaving the economy. If government gets in the way of the countercyclical budgets resulting from recession, expect depression.
    ...........
    We have not killed off the Republican Party. They will be back.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Well things are even worse. I was listening to the Ed Shulttz show on the radio a few minutes ago, and they were commenting that Boehner can't even sell his Plan B to the Tea Party caucus. This is the plan that raises taxes only on those making $1 million or more. So Boehner with the help of his colleagues have now revised Plan B...sweetened the deal so to speak. The new Plan B guts Obamacare and slashes food stamps in return for raising taxes on people making a $1 million. This is what the Republican House is going to vote on tonight and then go home for the holidays.

    And this is what President Obama is also trying to deal with. Tea Party Republicans who basically want no deal...or one that extracts blood from low and middle income workers...a caucus that hates Obama and the government and would be happy to default on the debt ceiling. How do you deal with these people? They are ruthless and play by different rules.

    Remember, the American people re-elected most of these crazies. This is what they campaigned on...to bring President Obama to his knees or destroy our government. And somehow Obama and Boehner have to negotiate a deal that satisfies everyone from Bernie Sanders to Paul Ryan.

    Yes...I think Obama will not let default happen. To avoid that he will have to compromise and catch the wrath of every liberal and progressive in doing so. And if the economy tanks, Obama will be blamed in the 2014 elections...and as a result Republicans will take back the Senate... and finally the presidency in 2016. It's the Grand Strategy that they have been following ever since Obama was elected. Sabotage his presidency...24/7.

    Hate does peculiar things to people. Those Americans that voted for Tea Party Republicans in 2012 will not even rue the day they put these people in power. Anything bad that happens on the economy will be blamed on the past policies of the Obama administration...blissful ignorance.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    I believe that Section 4 of the 14th Amendment makes default an unconstitutional option.

    I believe that fixed exchange, the post-Civil War gold standard, and the debt-ceiling are unconstitutional to the effect that they all rely on a question against the "validity of the public debt."

    I know most people probably don't take it that far. But that's what I believe.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Good points CBB.

    Jared Bernstein has a short piece on Congressional Cliff Theatrics, What's At Stake

    Refer to the graph in the link. The CBO has published what they see as the effect of going off that fiscal cliff and staying over. GDP growth was actually 3.1 percent in the 3rd quarter, an estimated 2 percent in the 4th quarter, and is predicted to nose dive to - 3.9 percent in the 1st quarter, 2013 if nothing can be agreed. That's a steep dive.

    If Republicans deliberately want to take our government there, does President Obama have enough basis to act unilaterally?

    For reference I have copied the 14th amendment, Section 4 below:

    Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

    It seems kind of vague on that specific topic to me. From Wikipedia: Fourteenth Amendment to the United States Constitution

    "The United States debt-ceiling crisis in 2011 raised the question of what powers Section 4 gives to the President. Legal analyst Jeffrey Rosen has argued that Section 4 gives the President unilateral authority to raise or ignore the national debt ceiling, and that if challenged the Supreme Court would likely rule in favor of expanded executive power or dismiss the case altogether for lack of standing.[49] Erwin Chemerinsky, professor and dean at University of California, Irvine School of Law, has argued that not even in a "dire financial emergency" could the President raise the debt ceiling as "there is no reasonable way to interpret the Constitution that [allows him to do so]".[50] The issue of what effect Section 4 has regarding the debt ceiling remains unsettled.[51]"

    President Obama has thus far said he does not think he has the power to act unilaterally. However, with certain segments of the Republican Party intent on sabotaging the economy, I agree that he should act.
  • Democrat
    Lawrence, MA
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    We're told that in addressing the economic mess we all must share in the pain. But why should the folks who had nothingdo with causing the destruction of the economy have to bear the pain of trying to alleviate it......especially when those who did cause the collapse seem to be getting away pain free ?
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    leftofcenter --

    I agree, those that had nothing to do with causing the destruction of the economy should not have to bear the pain of alleviating it. But that's not the reality of trying to negotiate a deal over the deficits/debt/taxes with the Tea Party Republicans. Should President Obama be held accountable if no deal is reached on January 1 or later in the month? Look, the Republicans couldn't even approve the sweetened Plan B and embarrassed Boehner in the process. So with no deal, on January 1st:

    Income taxes go up for everyone to the Clinton era rates.

    Taxes on capital gains go up from the current 15% to 20 %.

    Qualified dividend tax rates revert from the 15% rate to the ordinary income tax rate.

    Payroll taxes go up by 2%.

    Unemployment benefits expire fro 2 million unemployed Americans.

    The sequestor is initiated.

    Who should be held accountable if no deal is reached? If the Tea Party Republicans say no deal unless the Bush tax cuts are also extended for the rich, should Obama compromise? And what should be "off the table" in any compromise? Certainly we agree that any cuts to benefits in Social Security, Medicare and Medicaid should be off the table...but what else?

    On the other hand, the Tea Party House is demanding essentially 100 percent of their "wants" and not negotiating in good faith. After the new Congress is sworn in, we may have Eric Cantor to deal with instead of Boehner. Is that an improvement?

    The media are talking like Obama is in a strong position. I don't agree. How do you negotiate with a caucus whose real position is that they want to tank the economy to make Obama look bad? The elections just happened. The next elections are two years away...lots of time for spin and blame.
  • Democrat
    Lawrence, MA
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    Schmidt, I think I've lived in this country long enough to be somewhat familiar with the reality of the inequitable system we're saddled with. So I know what the deal is with what the pols are trying to negotiate. The question I asked was an attempt to have folks focus on the bull shit that is being loaded on us by both sides in this fiscal fiasco......But thanks for the lesson.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    The point that I have been making in several posts is that Obama is seemingly catching more wrath from liberals and progressives if he compromises one inch on a deal with Republicans. They want 100% and think they have earned it by Obama's victory. I would like to see that happen more than anyone. On the other hand, the Tea Party Republicans want 100 percent of their idea of a deal as well.

    You know that and I know that. That's a fact, and yes there is a lot of bullshit and political posturing being thrown out.

    However, Obama bashing or the threats of doom and gloom seems to be in vogue as I browse the internet or read stuff from Bernie Sanders and others if Obama dares even put some of these sacred cows on the table. If Obama gives just one inch on anything, there will liberals bashing him all over the internet including this website.

    I would surmise that the best deal will be one that both the left and the right will find stuff to bash Obama about...and the worst deal will be to do nothing. That's not a lesson...that's my opinion.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Ezra Klein, filling in for Rachel Maddow, had a good segment on the paralysis in Washington tonight regarding the fiscal cliff.

    Rachel Maddow Show, December 26, 2012: Stupidity of the Budget Crisis

    You have to watch a short commercial first.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    My great hope is that Obama is just doing all this to smoke out the Republicans as extremists. As such, dissent to his left only helps to bolster the president's image as a centrist. Only resolution forward (a compromise if you will) is to just freeze out tax and spending changes and just maintain the status quo, leaving in place nice sized deficits. Debt-ceiling gets raised again, and we move on avoiding austerity. Obama takes his hits to his right, so the TP mooks can keep their heads high, and SSI, Medicare, Medicaid, and Obamacare reforms are maintained, and we don't blow up the economy. With lower energy prices, demand for the dollar high, Obama-boom could set in, but the size deficits we have still leave us far too incapacitated to do what needs to be done to get a long-term economic boom going. Current sized deficits cannot erase the slack without private debt-service ratios getting out of control. Job market numbers are supported by the lack of workforce participation, which is producing lower unemployment numbers, by reducing # of job seekers to job openings.

    But I think the WH has blurry vision and I think they want deficit reduction a la Clinton. That's bad economic policy. And the last time I checked, Al Gore was not elected in 2000, on the heels of the Clinton era of prosperity, and a recession erased the Clinton surplus, just like Warren predicted and told Al Gore.

    We need an Obama boom to see a Democrat in the WH in 2016. Maybe then we can get stimulus again?
  • Democrat
    Lawrence, MA
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    Schmidt Wrote: The point that I have been making in several posts is that Obama is seemingly catching more wrath from liberals and progressives if he compromises one inch on a deal with Republicans. They want 100% and think they have earned it by Obama's victory. I would like to see that happen more than anyone. On the other hand, the Tea Party Republicans want 100 percent of their idea of a deal as well.

    You know that and I know that. That's a fact, and yes there is a lot of bullshit and political posturing being thrown out.

    However, Obama bashing or the threats of doom and gloom seems to be in vogue as I browse the internet or read stuff from Bernie Sanders and others if Obama dares even put some of these sacred cows on the table. If Obama gives just one inch on anything, there will liberals bashing him all over the internet including this website.

    I would surmise that the best deal will be one that both the left and the right will find stuff to bash Obama about...and the worst deal will be to do nothing. That's not a lesson...that's my opinion.
    .....And since 60% of all revenues collected are going to maintain the eye popping insanity of the military budget....why shouldn't liberals and progressives visit a little wrath on a supposedly Democratic President who is getting ready to weaken these traditional Democratic programs ? Not a wrd is being spoken about the cost of recreating this American version ofthe Roman Empire..... It seems that the economic crises was brought on by seniors and sick people who have the nerve to think they should have a decentstandard of living and access to health care after spending thier lives building a nation that Wall Street and the corporations are now in the process of destroying.
    ........Are you seriously saying that we should offer to slash benefits in order to placate the Tea Party ? Social Security . Medicare and Medicaid are not "sacred cows". They are programs that offer a minimum of security to the citizens the government pretends to represent. Social Security was instituted at a time when it seemd to the establisment that the peasants were getting ready to shit can capitalism.....and ever since then the principal agents of the system ( Repubs ) have been trying to destroy it. It looks like Obama is going to give them a boost in that direction.
  • Other Party
    Nebraska
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    Once again your "62% of all revenues collected are going to maintainthe eyepopping insanity of the military budget" is INCORRECT. The military gets about 20% of federal expenditures which is far too high.

    62% is about what the entitlement programs get...medicare, medicaid, social security, welfare, etc.

    I agree with you that the military gets too much but the truth is it's about 20% not 62%.

    The truth should be told.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    And demand leakages in the form of pension funds, corporate reserves, foreign central bank holdings continue to exceed all so called runaway government spending, as demonstrated by the existence of an OUTPUT gap and high unemployment.