I've pointed out before that main reason the deficit has gone up is not because "spending has expoloded"--it has gone up some, as it always does during a recession--but because government revenues have dropped so much:
People being out of work is not only bad for them, it's bad for the economy and bad for the government, too, especially the federal deficit. If we want to cut the deficit, the most effective tthing we can do, it turns out, is to also handle our most pressing problem: putting people back to work!
The current downturn had led to the worst period of sustained unemployment since the Great Depression. This suffering is especially tragic because, like the Great Depression, it is entirely the result of misguided economic policy.
Unemployment corresponds to lost production of goods and services. Construction workers could have been providing safe and energy efficient housing to people who lack adequate shelter, but instead they were left sitting idle. Manufacturing workers, who could have been producing more fuel-efficient cars and appliances, are instead getting unemployment checks. Health care workers who could have been ensuring that people received adequate care and teachers who could have been in classrooms, helping educate our children, are instead spending their time looking for work.
This is an incredible loss not only for these workers who must struggle to make ends meet, but also for our economy and society. The CEPR Recession Waste Clock allows people to see the value of the goods and services that we have lost in this downturn. It measures the gap between potential GDP (as calculated by the Congressional Budget Office) and actual GDP.
Given the current unemployment rate of 9.6 percent, the amount of lost GDP as measured by this gap increases at the rate of $2.873 billion per day. This comes to $120 million an hour, $2 million a minute or $33 thousand a second.
You can also see the amount of lost output measured in units of houses, college educations, or personal mp3 players.
The calculation of lost output is based on the gap between potential GDP as estimated by the Congressional Budget Office and actual GDP. The projection going forward assumes the same quarterly output gap as the last quarter for which data are available.
In part 1, I looked at how Obama profundly misunderstands FDR, building on Thomas Furgeson's explication of of the background behind his remark in a recent meeting with bloggers in which he called FDR "irresponsible". In fact, it's safe to say we've never had a Democratic President who so completely misunderstands the greatest Democratic President of all time. And it's safe to say that that alone goes a long, long way to explaining what's wrong with Obama. Put simply, he does not instinctively see the general welfare of the country as residing in the well-being of the common man and woman. Up until now, that would have automatically made him a Republican. Perhaps someone should have told him that a long, long time ago. But better late than never, I suppose.
But it's not just FDR he doesn't understand. It's politics in general. Oh, there's no denying he knows how to run for office. He's clearly one of the best ever at that. But that's only half the deal. And 50% is an "F", no matter what the subject is. Take his monomaniacal fixation of "bipartisanship," for example. Probably everyone in America except for him can see what a total catastrophe his obsession with "bipartisanship" has been. Even the folks who work for him who are paid not to see it must know. And here again, he is as far from FDR as one could possibly get. As it happens, there's a new book out about FDR's attempt to do exactly the opposite of Obama--to make the Democratic Party more ideologically coherent in the face of Congressional obstructionism: Roosevelt's Purge: How FDR Fought To Change the Democratic Party, by Susan Dunn. There's a review of it at American Prospect by Sam Rosenfeld, who writes:
Liberals currently experiencing an unhappy education in the frustrations of presidential leadership might take comfort in knowing that even the greatest Democratic president of all confronted the same problem and was unable to overcome it. But he tried what Obama does not dare attempt -- to defeat more conservative Democrats in their home states.
Franklin D. Roosevelt began his "fireside chat" on June 24, 1938, as he had begun others, recounting New Deal battles won and lost during the most recent congressional session. But he ended the broadcast with a surprise. "And now," the president intoned, "I want to say a few words about the coming political primaries." In this midterm primary season, he said, "there will be many clashes between two schools of thought, generally classified as liberal and conservative." Roosevelt insisted that, as "head of the Democratic Party," charged with carrying out "the definitely liberal declaration of principles set forth in the 1936 Democratic platform," he had an obligation to speak out about primary contests involving such a clash. Thus did Roosevelt announce a political gambit not attempted by any president since: active and personal intervention in key primary contests, not only to protect liberals but to replace conservatives. The press branded the effort a "purge," and the name stuck.
As Susan Dunn emphasizes in Roosevelt's Purge, her lively narrative of that vexed campaign, FDR was motivated not merely by personal pique and short-term legislative goals but by a vision of a refashioned party system. He explained in that extraordinary fireside chat that primaries should facilitate a "healthy choice" between the two parties in November, for "an election cannot give the country a firm sense of direction if it has two or more national parties which merely have different names but are as alike in their principles and aims as peas in the same pod." According to Dunn, Roosevelt "believed that the nation should have two effective and responsible parties, one liberal and the other conservative." Since the president attempted to accomplish in one frenzied summer what six decades of subsequent developments only haltingly produced, it's perhaps no surprise that the effort failed. But what an exciting failure!
I'd like to make two main points. First is that FDR knew a good deal more about politics and history than Barack Obama does, and he had a very good point about the political usefulness of giving the American people a clear choice of direction. The conventional wisdom of our time has turned against Roosevelt's view, but given how rarely the conventional wisdom is right, that's points in Roosevelt's favor, not against. Any historian worth their salt would have no trouble at all ranking FDR's accomplishments against those of the de-aligned "bipartisan" era: FDR saved the country from a devastating Depression and built it into the dominant world power. Presidents of the past 40 years have collectively frittered those accomplishments away.
The second is that the realignment since FDR's time has only been partial and one-sided. Conservatives have engaged in long-term hegemonic warfare to advance their cause, and to take over and remake the Republican Party in their image as part of that process. Liberals have done nothing comparable, and, indeed, while the Republican Party may have the ideological coherence that FDR thought both parties should have, the Democratic Party does not, and thus FDR's vision has not been achieved by history over time. Indeed, if anything, with Obama at the Democratic Party's helm, the Democrats are now firmly committed to the exact opposite of FDR's vision: they are committed to standing for nothing at all. And as a result, the party is probably as close to being destroyed as it has ever been.
If Obama is not quite Hebert Hoover, he is most definitely the anti-FDR.
Last week, I wrote a diary, "Obama and oligarchy" that was inspired by Obama's blogger conference--particularly his statement:
This notion that somehow I could have gone and made the case around the country for a far bigger stimulus because of the magnitude of the crisis, well, we understood the magnitude of the crisis. We didn't actually, I think, do what Franklin Delano Roosevelt did, which was basically wait for six months until the thing had gotten so bad that it became an easier sell politically because we thought that was irresponsible. We had to act quickly.
I took this to be a particular statement, given that FDR's first "100 Days" is easily the most famous legislative period in American history. But today, Thomas Ferguson (father of the "investment theory of political parties") has piece "The Story Behind Obama's Remarks on FDR" cross-posted at New Deal 2.0 and Huffington Post that first explains Obama was referring to the period between the election and the inauguration--a period of four months, not six, and then discusses what actually happened during this time.
Referring to Obama's statement, Ferguson writes:
Perhaps it was just a slip. But in 2010, even slips can be revealing -- and this one comes from a definite part of the political spectrum. The president was repeating a canard that goes back to the circle of die hards around President Herbert Hoover as he exited the White House in a cloud of bitterness in 1933. In recent years, as a vast campaign against the memory of the New Deal has gathered steam, such claims have gone mainstream. For example, take the carefully hedged version recently put forward by Amity Shlaes in her study of the New Deal, "The Forgotten Man": "But Roosevelt was not interested in cooperation. We will never know all his motives, but it was clear that a crisis now could only strengthen his mandate for action come inauguration in March."
We are unlikely ever to know for sure. But as President Obama took office, the Council on Foreign Relations was cranking up a remarkably one-sided conference purporting to be a "Second Look at the Great Depression and the New Deal." Ms. Shlaes was a prominent participant, as was the Council's co-chair, one Robert Rubin, whose myriad protégés thronged the Obama Treasury and economic councils.
Whether our highly intellectual president picked up the idea by reading it or hearing somebody else say it, it was, and is, in the air. And you can be sure that his words will now be rattling around for years to come and likely cited as proof of Franklin D. Roosevelt's "irresponsibility."
Now this strikes me as truly remarkable. It suggests that Obama has been far closer all along to his rabid rightwing critics in his mis-understanding of economics and economic history than anyone could possibly imagine--not to mention his views of FDR as a remarkably cynical political actor. (Not like him!)
As I read around the list of Senators and House members that teabaggers and their allies want to primary, I find myself raising eyebrows at nearly every one besides Snowe. Kay Bailey Hutchison? Orrin Hatch? These people aren't hard-right?
Then I realize that policy is only one measurement, and maybe not the most important one, to these folks (and the same is true on the left, to some extent). If Sen. Bob Bennett went on FOX and Limbaugh and breathed a little fire now and then, I'd bet my Reagan bobblehead he would have survived. Orrin Hatch's sin isn't being hard-right, it's collaborating with Democrats and his long-noted friendship with Ted Kennedy. Here's Atrios:
One point I haven't seen made anywhere is that the teabaggers have made any Republican cooperation with Democrats impossible. The teabagger policy agenda is mostly incoherent, but what really pisses them off is any perception of cooperation with that man in the White House or his allies. It's why Orrin Hatch is probably going to get teabagged in 2012. It isn't because he isn't conservative enough, it's because he occasionally does (or at least did) work with Dems on things and he was Ted Kennedy's buddy.
It will be interesting to see whether the media equivalent of moving the way McCain did over the past two years will save some incumbents' rears, and be a measuring stick for those up-and-coming, too.
Note: I've been on post-election family vacation/recharging, which is why I've been absent the last week or so, but now I'm back to writing.
If you haven't seen the news last night, Sen. Reid committed to moving DADT repeal via the defense authorization bill to the floor after the Thanksgiving recess. There are still a number of problems, one being that Sen.-elect Mark Kirk is set to take his seat on Monday, November 29th, depriving our side of one vote (Kirk voted against the successful amendment to attach repeal while in the House). If you're thinking he may now change his position based on the Pentagon report set to show that repeal will not affect unit cohesion, military readiness or the like; or that his new representation of the entire state of Illinois will move him, his spokeswoman poured cold water on that idea.
The second is whether or not we will have a bill the accords Republicans no excuses. Meaning, the bill was filibustered before the election, with not a single Republican voting aye and two Dems (Lincoln and Pryor) voting nay over Reid's refusal to allow amendments. If he backs down from that refusal and/or allows what some Republicans are demanding- a week or two of debate- then it is likely, but not certain, that the bill will pass cloture overwhelmingly. And such debate stretches out a lame duck session, which already includes planned hearings in the Senate Armed Services Committee on the Pentagon report. So basically, we may have yet another extended debate.
Chairman Levin also offered the idea that repeal of the statute pass stand-alone, something which is less likely to work, as getting 60 votes on that is very difficult, plus it would need to go back to the House.
All in all, it means it's time to pick up the phone. 202-224-3121 is the Capitol switchboard. Especially important those with uncommitted Senators, particularly those in Arkansas, Massachusetts, Ohio, Indiana, Alaska, New Hampshire, and Maine.
Update: At a Capitol Hill press conference with a posse of supportive Senators and pro-repeal organizations, via Twitter, evidently Sen. Lieberman told the room Collins and Lugar will vote for cloture "if debate is fair". This is in line with reports of the request for floor debate and open amendments, the latter of which I know is what moved Collins to a no on the vote before the holiday.
Instead of opining on just how totally out of touch with budgetary and financial reality our Secretary of Defense really is, I'll just put the argument about our nearly $1 trillion-a-year Pentagon budget in a very succinct form.
CLAIM:
"When it comes to the deficit, the Department of Defense is not the problem," (Secretary of Defense Robert) Gates told attendees at the Wall Street Journal CEO Council here.
This latest group hails from the Bipartisan Policy Center, and its signature proposal may end up being a whopping 6.5 percent national "Deficit Reduction Sales Tax" -- just the sort of thing that is devastating to people who live on a budget while not really mattering so much to the rich.
In its quest to control health care costs, the group also recommends significant increases in Medicare premiums in the short term. And after 2018, Medicare beneficiaries would either be forced to pay out of pocket for any and all cost increases more than one percent greater than the growth rate of the economy -- or they would be invited to leave the government program entirely and find private insurance instead. That would no longer be Medicare as we know it -- or as future retirees expect it.
Once again, it bears repeating that the current deficit really is all Bush's fault. Clinton left office with a surplus--and trillions of dollars of surplus as far as the eye could see. Bush destroyed all that in record time:
The breakdown of costs from the Center on Budget and Policy Priorities:
The logical response, of course, would be to undo the damage by undoing the policies. First law of holes: stop digging. But that's not the "logic" of the Shock Doctrine, which says, "No, make things 10 times worse by following these simple percriptions we just happen to have lying around." And that's what this would do. In fact, it's a direct result of now-widespread "philosophy" of financial punishment that Paul Krugman has been writing about for months now--a philosophy that has no foundations at all in economic models that would explain how it is supposed to bring about economic recovery.
Since I brought up Hyman Minsky again earlier today, I thought it would be a good idea to share this concise video introduction to a grand overview of his work:
Of course, what this means is frighteningly clear: If, as Minsky warned, we wouldn't learn from the little crises, because we were able to weather them too easily, we're now in the position where we can't even learn from the enormous crisis, because those who could weather it by hook or by crook now hold all the reins of power.
And thus we're headed to an even worse crisis, by the same logic that Minsky was able to foresee the last one over 50 years in advance.
