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"Want to hear" in President Obama's State of the Union Speech

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  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Reference: Bill Moyers, Group Think: The State of Our Union

    Bill Moyers: "We asked writers, activists and academics to think big and write pie-in-the-sky parts of President Obama’s State of the Union address, which he’ll deliver on Tuesday. What would they like to hear from him about climate change, national security, education, unemployment, and more?"

    You can read the twelve varied responses quickly at the above link. I liked Jonathan Haidt's (social Psychologist) ideas on fixing our dysfunctional Congress, although some of that might be wishful thinking.

    I also liked Robert Pollin's (economist) views on "Austerity is Not the Solution"." I would be interested how his suggestions are viewed by the Modern Monetary Theorists.

    Anyone else care to chime in? Anything missing?
  • Independent
    Ft.myers, FL
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    "scmidt" personally I'm not that optimistic that the right things will be addressed to the point; do not forget politics is not to achieve anything, but use a million words and twists to make it look interesting but "deeds" is totally something else. So I do not buy into beautiful speeches at all.

    Also the Bill Moyers group items; kind of do not impress me; the only one who's got a right subject is Bacevich; but probably any answer on that will be vage as well, because until now our policies are "whishy-washy" anyway. But we have our "drones" so we we can act like a bunch of stupid nuts; not realizing that if we use those even more people will hate our guts. I do not see anyone in this government think that, until now all our policies will eventually backfire; we always bet on the wrong horse; the more we get our noses into the middle east and into Somalia, Yemen, Pakistan, Algeria, Libyia, Niger, Mali the more terrorists we will breed. No one in this Bill Moyers group has got any idea on how far we already put ourselves up for revenge from these people.
  • Democrat
    Meridian, MS
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    I liked them all too Schmidt, and thought Pollin's input the most appropriate as he stressed the need for what I consider this country's most dire need---JOBS. While others brought different issues to the table, this unemployment thing is what is holding America back. In the past, I have heard many economists talk about the jobs lost to overseas competitors, and even that has shown the signs of some turnaround since all this downturn started, but it sure appears to me that the vast majority of those jobs will never come back. What we really need to do is to create new industry. Surely with all the think tanks in America, someone can come up with a mind-shattering idea that will not only revive our economy, but will also return America to its leading place in the rankings. It sure used to work that way, so why can't we return to those days of leadership and stature?
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Dutch -- I understand your point, but I'm a little more optimistic. And speeches are important. They provide the inspiration for action, and lay the groundwork for people like me at the grassroots level to carry out that action on his behalf.

    Michaels -- Yes I like all the "wants," but I am also realistic in expectations. I certainly understand that with our current dysfunctional Congress achieving any of his goals might be a big stretch. The Tea Party is united against everything that President Obama puts on his "want list" and if Boehner keeps yielding to them instead of moderate Republicans, then nothing will get achieved. And the media pundits will blame Obama...saying he makes beautiful speeches but cannot achieve anything. Yet they also criticize every compromise.

    That's why I put Jonathan Haidt's "wants" on the top of the list. Unless you can fix or find a way to by-pass Congress, then nothing on the list is achievable.

    I note from the Washington Post this morning, that he plans to focus more on jobs:

    Washington Post, February 9, 2013: In State of the Union, Obama to return to jobs and the economy

    "President Obama will concentrate his State of the Union speech Tuesday on the economy, shifting the emphasis away from the broad social agenda of his second inaugural address to refocus attention on a set of problems that vexed his first term.

    "He told lawmakers at a Thursday policy retreat in Virginia that his second-term priority “starts with an economy that works for everybody,” adding that “our economy succeeds and our economy grows when everybody is getting a fair shot.”

    "“That is a growth agenda — not just an equity agenda, not just a fairness agenda,” Obama said, adding that on Tuesday “I’m going to be talking about job creation right here in the United States of America.”"


    I am happy to hear that he will press the jobs issue, but as Republicans have blocked all versions of his American Jobs Act in the past, I expect that he will have to take his message to the road again, by-passing the Republicans in Congress that whine every time he does it. I am looking for Obama to be a real road warrior in his second term...and I'll do whatever it takes to help him in that regard.

    “A change is brought about because ordinary people do extraordinary things.” ― Barack Obama
  • Democrat
    Meridian, MS
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    Great job of explaining all your thoughts Schmidt, and you are so right. It is this do-nothing House (Senate partially too) that has things back logged and will not change. Boehner may be "speaker" BUT he speaks for no one. The Tea Party have him by the you-know-whats and they surely won't let go for at least 2 more years. So sad.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    On Robert Pollin's comments:

    This is typical Deficit Dove logic. Close but no cigar. And there are no points for trying. Altogether, mainstream economics is utterly worthless. It's so devoid of the real world it's beyond saving. That goes for left and right-wing economists; the latter of whom are total opportunists and wouldn't give a shit about the truth even if they understood it. Unfortunately, the former group has better intentions but is misinformed and afraid of challenging "conventional wisdom." Not only does this make them p###### but complicit in intellectual frauds that dominate the field.

    Ok, tirade over.

    It's interesting that Pollin didn't make the direct connection between interest payments on the national debt and FED policy. Failure to do so will get us into trouble with the deficit hawks. The argument to be made is not rates are low so we can deficit spend with no problem of paying bond holders. IT DOES NOT MATTER IF RATES ARE 1,000%. There is never a problem with SOLVENCY. The issue then would be inflation, as higher interest rates raise net-interest payments to the non government, and raise the costs of lending. So you got more incomes chasing higher costs, and the price level rises as a consequence. Lower rates are deflationary and the FED's zero percent policies and QE monetary stimulus are stepping on the brakes, and not the gas. This is blatantly evidenced by the $90 billion in profits that the FED recently turned over to the Treasury. That's incomes that would have otherwise been earned by the non-government. QE is helping to support financial markets, and the FED erroneously believes that that will stimulate wealth-expectations and reduce fears, which will encourage more aggregate demand spending. In reality, it's creating a price bubble, shifting where capital gains are earned, and doing nothing to support aggregate demand, and everything to reduce it.

    Okay, FED rant over (mostly).

    Rates are on federal deficits because the FED makes them low. Treasury borrowing operations are just a reserve drain. This is literally staring us in the face, so to speak.

    Here's an image of 6-month Treasuries vs. the fed funds rate. http://www.frbsf.org/education/activities/drecon/2006/0608a.jpg

    Notice that they move in tandem. That band gets even tighter w/ 3-month Treasuries. Longer term Treasuries reflect expected changes in the fed funds rate. The decision to issue longer term Treasuries is a policy choice, and the only reason to do so would be to support higher interest rates.

    Taxing excess reserves would raise Treasury interest payments. It's the reserves that bid down the price the government pays on government securities. It would also raise the costs of bank lending.

    Banks don't lend reserves. They don't borrow "free money" from the FED to hoard. Those reserves are sitting on their books because of FED operations. Reserve operations are not bailouts for banks, per se. They are about liquidity. There's a discussion to be had there about the role of the FED in providing support to "shadow banks", but for another time. Here's the short but sweet: TARP and FED liquidity policies did nothing to save the banks, and more to support bank bonus payouts to managers. Regulatory forebearance saved the banks.

    Reserves are the funds in the banks' checking accounts at the FED. They are the final form of payment in the banking system.
    Minimum reserve requirements are like minimum checking account balances. Government securities are functionally the same as savings accounts. When a government security comes due, the FED marks down the savings account, and marks up the checking account. It does this all day long, and over $400 trillion in government securities have been redeemed in the last 10 years.

    Lending is capital and regulatory constrained, not reserve constrained. Banking is a public-private partnership. Banks put up the required capital. Government gives them a license. Banks make loans on honest credit analysis (not). The loans create deposits. Government supplies the insurance, regulations, and then the necessary funding (reserves) for banks to clear the transactions of their deposit holders.

    Anyways, Deficit Doves and Deficit Owls have a mutual enemy in the Deficit Hawks, but the Doves will eventualy turn on us and then advocate policies that will cause the next recession. They have the same goal in mind as the Hawks, the difference is speed and method.

    OWLS CAN SEE IN THE DARK!
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    CBB -- Thanks for your comments...it's even more than I asked for. It doesn't sound like you have anything good to say about Pollin, but I wasn't sure if you disagreed on some things or everything. Getting back to Pollin's actual statements:

    "The federal government must continue to aggressively fight mass unemployment created by Wall Street hyper-speculation and promote recovery through both spending measures and credit market interventions. Austerity is not a solution."

    Do the MMTers agree?

    "The federal government is not in a fiscal crisis. Interest payments on the federal debt are at a near-historic low of 7.7 percent of total spending. Under Ronald Reagan and George H.W. Bush, interest payments averaged more than 16 percent of total spending. Government can and should expand spending on education, health care, public safety, family support, traditional infrastructure and the green economy, as well as unemployment insurance."

    Do the MMTers agree?

    "Credit must also be channeled to small business. Credit markets remain locked up, while banks are holding an unprecedented $1.4 trillion in cash reserves. These are cash hoards which the banks built up mainly through the Federal Reserve’s zero interest rate policy for banks."

    Do the MMTers disagree?

    "Two initiatives — one carrot and one stick — can deliver lower rates and risks to businesses. The carrot is an expansion of existing federal loan guarantees, focused on benefiting small businesses. The stick is a 1 to 2 percent tax on the excess cash reserves now held by banks, to push them to become more bullish on loans for job-creating investments."

    Do the MMTers agree?

    "If Congress won’t pass such a tax on banks’ cash hoards, then the Fed can establish a maximum requirement on banks’ cash holdings to achieve the same end. If banks want to hoard free money, they will have to pay a fee."

    Do the MMTers agree?

    I happen to like the Political Economy Research Institute PERI website and much of what they stand for. Take a look at the articles in the link. Pollin writes for them, and I wouldn't necessarily call their message "utterly worthless" and "devoid of the real world." The reality from my perspective is that perhaps 99.9 percent of the population (my guess) does worry about the debt and deficits, and that's the game that politicians have to play. The difference between the "mainstream economists" like Pollin and Krugman and the MMTers may be in the tactics on how to achieve much the same goals. But slamming their views doesn't necessarily get you there faster. You both have the Tea Party "austerity champion" Republicans to contend with first.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Okay, let me break down the points by numbering them.

    1. Yes 2. Yes 3. Error-Out of paradigm. 4. Error-Out of paradigm. 5. Error-Out of paradigm.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    My point about the Doves is that they are making an argument for deficit spending based on "credit conditions."

    What happens if the FED decides to raise rates? Or if expectations for a FED rate increase set in?

    Their argument evaporates.

    Look, we're not getting out of this rut without a full throttle confrontation with the Deficit Myths.

    Policies of appeasement with the Deficit Terrorists will only prolong the agony by way of counterproductive compromises.

    Deficit Owls recommend no negotiations with Deficit Terrorists.
  • Liberal Democrat
    Democrat
    Colorado Springs, CO
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    Okay CBB...I understand where you are going. But suppose you are one of the respondents to Bill Moyers request. Or better yet, suppose you were asked by President Obama to provide him with a very short two or three sentence paragraph that he could insert into his State of the Union speech that would have understanding and acceptability by the populace?

    This is tough challenge I know...more difficult than climate change.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Here's what Obama should say: "The Tea Party says we are overtaxed, I agree. That's why I am proposing an immediate tax cut for working people, which will be the largest tax cut in American history: a full FICA payroll tax suspension. This will provide immediate tax relief to working folks, and, ironically, help to restore some progressivity to the federal tax code. All Social Security and Medicare payments will be made timely, and my administration will also be looking to increase benefits. These two steps will help to restore equity in the private sector and turn on the engines of market capitalism that drive our economy. In 90 days, we will be back on track for record output and much lower unemployment. Some say we can't afford this, that it will add to our deficit; well, the federal government is the issuer of the currency. Since 1972, the federal government has faced no operational constraints on spending; and, as a matter of accounting, the federal government's deficit is directly equal to non government US dollar savings. My administration intends to recognize these operational realities and adapt federal policy. We will put our people back to work, and let the federal government's deficit float per the savings demands of the non government."
  • Democrat
    Lawrence, MA
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    As long as we're dreaming....My fellow Americans. This morning I dispatched several battalions of army personel to shut down the stock market as a prelude to destroying Wall Street. They are also taking control of all large corporations such as the oil companies, G.E. , Monsanto, etc. A full list will be available on the White House web site immediately following this address. All national banks are now under complete control of the Federal government. .....I realize this program will come as a shock to many, but it's time for a new New Deal and since we were'nt about to get one from these pirates I determined that it was past time to act. God Bless America.