Folks say, "We balance our budgets. Why can't Washington?"
It's worth noting that the question isn't just flawed -- the federal government of the world's largest economy and military superpower has to operate differently -- it's also based on a false assumption.
That's from Steve Benen. He's calm and polite about the con game that's pulling us down. Others ( Prairie Weather included) tend to think there isn't a word for how stupid we're being and how stupid one of our political parties is counting on our remaining.
Republicans are depending on our failure to understand how government debt works. That makes it a good deal easier for them to convince us that we need to bail our economy out. That way, friend, they can redirect our money away from investing in ourselves and our futures and into their own "special interests."
We've done very well when we've worked, worked hard, and had enough money to live well in the present while investing, at the same time, in our the nation's future and our own. It's possible for a government to help send your kids to college as well as pay interest on its bonds and invest in infrastructure just the way it was once possible for you to take the family out to dinner, invest in a new car, and take a vacation all in the same year. Your family and the government are both using debt to do this, but your debt and the government's debt are very different. And that's the part people don't understand and Republicans don't want them to understand.
One caveat: we need to get our health care costs under control -- but under our own control, not under the control of corporate insurers. We have that legislation in place thank to Obama. But we have a opposition party determined to destroy anything that puts a leash on the health care profiteering we've been victims of for decades.
Here's the problem: the moment economists try to explain how it is that we are not in the kind of trouble politicians tell us we are, they lapse into econospeak. Tried and true economists haven't done any better than we have at competing with politicians on the right, their talking points, and (worse) finding a media group that's willing to lift the level of the discussion and engage in a real debate. Their audiences remain bewildered and uninformed.
Benen writes:
The comparison between families and governments "living within their means" tends to annoy me because of the lack of parallels, but I'm wondering if I should just embrace it and turn it around. If Mr. and Ms. America take on debts they can afford to improve their position in life, why is it outrageous for their government to do the same thing?
The answer from Republicans, I suspect, is that we can't afford this much debt. (They weren't thinking this way when they inherited a national debt that was $5 trillion and shrinking, and turned into a debt that was $10 trillion and growing, but let's put that aside.) But we can afford it; that's the point. Like a family making its monthly payments, the government is doing the same. Indeed, we're doing so well on this front that others keep loaning us money at low interest rates, confident that we're good for it.
Meanwhile, we keep winding up at that "kitchen table" where American families pay their bills and blaming the government for not sitting down at its "kitchen table" and paying its bills. Cute metaphor but a killer.
The point is, there is no debt crisis. We owe a lot, but we've owed more before, and we can [get] back on track without resorting to extremist tactics like the GOP budget plan.
Economist James Galbraith has been telling us this for years now. He's not sanguine about the future. He goes after the faulty Bowles-Simpson report on "fiscal responsibility and reform" and dismisses them as liars. Which they are.
"Throughout our nation's history, Americans have found the courage to do right by our children's future. Deep down, every American knows that we face a moment of truth once again."
These sentences set the tone. The first is a bald-faced lie, as a Westerner like Senator Simpson knows perfectly well. To the contrary, we have often fallen under the sway of robber barons, water barons, oil barons, bison-killers, clear-cutters and strip-miners, hell-bent on maximum pillage in the shortest time. Only occasionally have a few heroes like Teddy and Franklin Roosevelt, Gifford Pinchot and Harold Ickes Sr. emerged to battle for the most precious physical elements of our heritage -- and then only with limited success. In the next paragraph, the Commission states the threat: "Our challenge is clear and inescapable. America cannot be great if we go broke."
Exactly what it might mean for America to "go broke" is not explained. Nor is it anywhere in the report.
Galbraith's conclusion should open some eyes to the kind of future towards which a very naive group of tea-party-Republicans would like to lead us.
... The Commission reverts to the great bogeyman of 1993, President Clinton's first year: The bond market. "If we do not act soon to reassure the markets," they write, "the risk of crisis will increase..." Oh really? You can look up the interest rates in the paper, any day.
The old Soviet Union had two newspapers, Pravda and Izvestia -- Truth and Light -- and the saying in Moscow was, "Where there is Truth, there's no Light. And where there is Light, there's no Truth." It's clear now that the Soviet Union didn't really end.
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Paul Krugman weighs in with "a major proposal" coming from the Progressive Caucus -- suggestions that are considerably more practical than Paul Ryan's proposal. They offer a fair way to divvy up the "shared burden."
True, it increases revenue partly by imposing substantially higher taxes on the wealthy, which is popular everywhere except inside the Beltway. But it also calls for a rise in the Social Security cap, significantly raising taxes on around 6 percent of workers. And, by rescinding many of the Bush tax cuts, not just those affecting top incomes, it would modestly raise taxes even on middle-income families.
All of this, combined with spending cuts mostly focused on defense, is projected to yield a balanced budget by 2021. And the proposal achieves this without dismantling the legacy of the New Deal, which gave us Social Security, and the Great Society, which gave us Medicare and Medicaid.
But if the progressive proposal has all these virtues, why isn’t it getting anywhere near as much attention as the much less serious Ryan proposal? It’s true that it has no chance of becoming law anytime soon. But that’s equally true of the Ryan proposal.
Why? Where's the stalemate?
The answer, I’m sorry to say, is the insincerity of many if not most self-proclaimed deficit hawks. To the extent that they care about the deficit at all, it takes second place to their desire to do precisely what the People’s Budget avoids doing, namely, tear up our current social contract, turning the clock back 80 years under the guise of necessity. They don’t want to be told that such a radical turn to the right is not, in fact, necessary.
But, it isn’t, as the progressive budget proposal shows. We do need to bring the deficit down, although we aren’t facing an immediate crisis. How we go about stemming the tide of red ink is, however, a choice — and by making tax increases part of the solution, we can avoid savaging the poor and undermining the security of the middle class.
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Added 4/26/11
More from Galbraith -- and Keynes.
... In truth, the deficit/debt uproar is a deliberate effort to sidetrack attention, to defeat the will of the electorates in the United States, as well as Greece among others, who stubbornly insist on effective action, economic recovery and financial reform. Those behind the uproar never foresaw the financial crisis. They never warned against the dangers of excessive private debt. Their interest is plain: they profit from private debts! So it pays to make believe that private is productive and public is sterile, that private is stable and public is not, when the reality is the other way around.
A final word from Keynes: “It may seem very wise to sit back and wag the head. But while we wait, the unused labor of the workless is not piling up to our credit in a bank, ready to be used at some later time. It is running irrevocably to waste; it is irretrievably lost. Every puff of Mr Baldwin’s pipe costs us thousands of pounds.”
