I’ve held back on some potentially fiery polemics recently as I have no desire to be known for invective. Recent events have led me to believe it would be a disservice to the things I believe in to continue to temper my words. I apologize if I offend anyone.
I don’t make a dime for these efforts. I do it because I care deeply about social and environmental justice and I want to make a positive contribution to the common good. I try to do this by asking my readers to join me in a bit of navel-gazing, by questioning their assumptions and motivations. In doing so, I hope they will end up aiming higher with both their thoughts and actions. Please hold on to that thought.
A “compromise” has been reached
It’s been a tough day for those of us with progressive leanings. The widely praised compromise tastes like mighty thin gruel. I have a fair amount to say about it, but I’ll ask you to check out Keith Olbermann’s fine commentary first.
Digby, one of my favorite bloggers, had the following to say about Treasury Secretary Geithner’s post-deal comments:
Ok, let’s just stop right there. Is he really trying to sell the absurd idea that the private sector has had no room to grow because of government spending? Really? Companies are rolling in profits, sitting on piles of cash. The problem is they don’t have customers.
Before all political discourse was hijacked by the debt ceiling debate, the focus was on jobs as it should have been. A few voices tried to keep the discussion on track, but they were drowned out by the cacophony of “debtageddon” alarmism. Dave Roberts of Grist fired a poignant missive through the resultant clatter with the following Twitter post:
Shared sacrifice…or ritual sacrifice? RT @thinkprogress: REPORT: Debt deal will cost 1.8M jobs in 2012 http://j.mp/qPv6wF
— David Roberts (@drgrist) August 2, 2011
Here is the predicted job loss breakdown:
(This image was removed from the original post.)
If the folks at the Economic Policy Institute are right, we’ve been hoodwinked in grand fashion. Not only have we taken attention away from unemployment, we’ve legislated an increase in it. Worse yet, we’ve loaded the dice against ourselves by mandating a balanced budget regardless of the circumstances. The increased unemployment mandated by this deal will be met with a chorus of, “We’d like to do something, but we’re hamstrung by the deal.” Or, as Keith Olbermann suggested, until we’ve paid off our national debt, we’ve no wiggle room to respond to natural disasters without making equal cuts elsewhere.
Wall Street seems unimpressed as J.P. Morgan released statement with the following commentary: (Emphasis mine)
We see four main economic implications of this deal1) No default. This had always been a low probability (<1%) very high cost outcome, which now seems off the table.2) An eventual S&P downgrade is still more likely than not, though we think this would occur after the fiscal commission completes its task later this year. We don’t think a downgrade is of first-order importance for economic growth: conditional on fiscal metrics such as debt-to-GDP ratios, we see no major implications for borrowing costs due to the actions of one or more rating agencies.3) No stabilization in longer-run fiscal outlook. A stable debt-to-GDP ratio, commonly associated with sustainable fiscal policy, is not achieved within the ten -year horizon. Thus, this agreement should be seen more of a first step toward sustainability.4) Impending fiscal drag for 2012 remains intact. The deal does nothing to extend the various stimulus measure which will expire next year: we continue to believe federal fiscal policy will subtract around 1.5%-points from GDP growth in 2012. Its possible the fiscal commission could do something to extend some measure such as the one-year 2% payroll tax holiday, though we think unlikely, as it would need to be paid for, which would be tough. If anything, the debt deal may add modestly to the fiscal drag we have penciled in for next year.On points 3) and 4) we will have a better sense of the magnitudes when CBO completes its score of the deal, which should occur sometime today.
I’ve said this many times, but believe it bears repeating, government spending must run counter-cyclical to the economy. Otherwise, you grow unwieldy excesses in the good times and punish the least fortunate during the lows. We allowed our government to piss away our recent surplus on largesse including tax cuts and unfunded and unfounded wars. Now it is time to own up to our culpability in the process. We allowed this to happen and We have to share the burden going forward. That does not mean it’s time to turn our backs on those with the greatest need of assistance. There’s been a bit of revisionist history on this, so please take a look at this graph from the NYT which reminds us exactly who added what to the deficit with recent decisions.
Now take a look at this wonderfully informative infographic from the Milwaukee-Wisconsin Journal Sentinel, which reminds us that we had a pretty good run from the time of the New Deal, up until the Reagan inauguration, a time when the top 10% of earners were held to a measly 33% or so of all income. As you can see in this graph the only thing that “trickled down” in the past thirty years was the collective income of the bottom 90%.
In the run up to the agreement, I had the word compromise rolling around in the back of my head for days. It struck me that we were almost certain to get a compromise, but not in the form of the word that was expected. I posted the following on Google Plus during lunch today:
A settlement of differences by mutual concessions; an agreement reached by adjustment of conflicting or opposing claims, principles, etc., by reciprocal modification of demands.
–verb (used with object)
To expose or make vulnerable to danger, suspicion, scandal, etc.; jeopardize: a military oversight that compromised the nation’s defenses.
–verb (used without object)
To make a dishonorable or shameful concession: He is too honorable to compromise with his principles
Yes, I’d say we’ve got ourselves a pretty good compromise…
I think we missed out on the opportunity for the noun, had the verb (used with object) done to us and the verb (used with object) done for us.
Senate Budget Committee member Bill Nelson (D-FL) seems to think we’ve made lemonade out of lemons, but his hopes are pinned on getting a Republican member of the new Super Committee to vote with the Democrats. He shared his thoughts today on the Dylan Ratigan show.
With this committee apparently set to hold six members from each of the two major parties, one has to wonder what this means for citizens who are not members of either party? Will their concerns be accounted for? Will this not become another bargaining chip for an inwardly focused congressmen?