Administration Hints At Tax Increases, Spending Cuts - Just Like FDR Did In 1937, Making Unemployment Worse
By Susie Madrak Sunday Nov 01, 2009 7:00amI can draw only one of two conclusions: Either the Obama administration's economic advisers and their Congressional enablers are as dumb as a box of hammers and completely oblivious to the history of the first Great Depression, or they do know and are gambling with the nation's economy anyway - because they're afraid the Republicans might draw blood in the next election cycle:
WASHINGTON — Faced with anxiety in financial markets about the huge federal deficit and the potential for it to become an electoral liability for Democrats, the White House and Congressional leaders are weighing options for narrowing the gap, including a bipartisan commission that could force tax increases and spending cuts.
But even the idea of a panel to bridge the partisan divide has run into partisan objections. Many Democrats, including in the White House, are loath to cede such far-reaching decisions to a commission and doubt Republicans’ willingness to compromise. And most Republicans remain adamantly opposed to tax increases, leaving the prospects for any bipartisan approach limited at best.
The proponents, however, are pressing for a Senate vote this month. “If we have the same process and the same people, we are going to get the same results,” said Senator Evan Bayh, Democrat of Indiana, who recently met with Mr. Obama to discuss the idea. “The Democratic Party wants to spend more than we can afford, the Republican Party tends to want to cut taxes more than we can afford. So we are stuck.”
And of course, the grandstanding Mr. Bayh is the man who loves to agree with the Republicans.
Concerns about the deficit are building even as the White House and Congress continue to add to it with tax cuts and spending to stimulate a still-fragile economy. Yet those one-time costs do not trouble most economists and market analysts.
The main driver of long-term deficits is the chasm between the benefit programs Medicare and Medicaid, which are growing faster than the economy, and federal tax collections, which are at one of their lowest levels in many decades relative to the size of the economy.
Mr. Obama’s budget director, Peter R. Orszag, now at work on the president’s next budget, due in February for the 2011 fiscal year, declined to comment about a bipartisan commission and instead promised that the coming budget would propose additional ways to reduce the deficit beyond next year, when the economy is fully recovered.
Paul Krugman referred us to this just the other day:
Matt Yglesias makes a good point:
A lot of politicians and political operatives in DC are very impressed by polling that shows people concerned about the budget deficit. I think it would be really politically insane for people to take that too literally. If congress makes the deficit even bigger in a way that helps spur recovery, then come election day people will notice the recovery and be happy. If, by contrast, the labor market is still a disaster then people will be pissed off. It’s true that they might say they’re pissed off at the deficit, but the underlying source of anger is the objective bad conditions.
But the political argument against focusing on the deficit is even stronger than he realizes — because there are very good odds that even if Obama exhibited iron fiscal discipline, voters wouldn’t notice. There’s a remarkable, depressing paper by Achen and Bartels that includes an analysis of voter views of the deficit in 1996 — by which time the huge deficit that Bill Clinton inherited had been drastically reduced.
Here’s what voters thought they knew... Yep: after one of the biggest moves toward budget balance in history, a majority of Republicans, and a plurality of all voters, believed that deficits had increased.
Not to put too fine a point on it: if Obama succeeded in reducing the deficit, would Fox News or the Washington Times report it?
The truth is that the truth about budgets plays almost no role in real politics. Right now, Meg Whitman is campaigning for Governor of California on the claim that state spending has exploded over the last decade — when the fact is that it has fallen drastically in real per capita terms. Will she pay a price for this? Probably not.
So if I were a politician, I’d focus on providing real improvements in peoples’ lives, rather than seeking deficit reductions the public won’t even hear about.
Not to mention that in 1937, when FDR, under pressure from the Blue Dogs of his time, cut taxes and spending, it deepened and prolonged the Depression by driving unemployment back into double digits - and led to a major defeat in the 1938 mid-terms for the Democrats.
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Robin Hood, who stole from the poor to give to rich. Isn't that the way the story went?
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The Banksters got their trillions. No investigation, no prosecutions, no problems…
No Banksters in jail, the Wall Street Mafia is happy.
The Troika of the Medical Mobsters have their sham reform bill in the pipeline…
It guarantees millions of new subsidized suckers for their defective products…
They're happy.
The Congressional Military Industrial Complex has their ever ballooning war budget passed, and the perpetual war continues unabated…
They're happy.
There is the problem of all those pesky unemployed peasants. Wait long enough and they will fall off the labor rolls entirely.
Voilá, FULL EMPLOYMENT.
Everyone is happy so long as we ignore the folks camped under the bridge.
The Corporate Media is happy.
But there is that astonishing debt…
Time to worry about getting re-elected. The Corporate Crooks will be sending in the campaign contributions forthwith…
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Did not the Pope of Hope promise to allow the Bush tax cuts to lapse, but later change his tune? Or was I listening to someone else.
Who did those tax cuts benefit? Interesting charts here
The top 1% got FAR AND AWAY the greatest benefit.
For you Alice.
http://www.commondreams.org/headline/2009/10/...
Maybe they have their own agenda which doesn't include our needs?
Maybe they are plutocratic oligarchs that have billions for defense and Wall
Street but not a dime for the little guy?
Maybe?
Brand Obama
John Pilger: Obama Is A Corporate Marketing Creation -
http://www.youtube.com/watch?v=C62KAmMzu0E
John Pilger - Obama and Empire:
http://www.viddler.com/explore/ConspiracyFact...
Author, journalist, film maker John Pilger of "The War on Democracy" fame speaks at Socialism 2009
Excellent piece, thank you!
The first link piece is a segment of the longer second link piece.
Socialist Worker is here
Alice X - Choms...,
I am glad you found it useful.....
Remember Dennis Kucinich....lmao...lol
I think there's a big difference betwixt now and '37 - in '37 they had actually passed legislation clamping down on the excesses that led to the depression, today, well, not so much.
I frankly think it's about time our glorious leaders have the guts to use the "t" word again. Some taxes ARE good (the ones which would put a lid on outrageous bonusii for example). The sooner we rid ourselves of the Reagan-era "Taxes are bad, mmmkay" mindset, the sooner we're going to dig ourselves out of this mess.
Oh, and I can think of a way to save over $10,000,000,000 a month - anybody want to try floating THAT balloon?
was the key to our prosperity, leisure and comfort at one time, technology promises an even more prosperous future of leisure and comfort.
I can't wait till the day when machines do everything and reach our highest potential for us.
Oh wait I won't be here.
But they need to be levied solely on the super-rich; the beneficiaries of the "Bush tax cuts".
But knowing these corporate Democrats (and that certainly includes Obama), I expect that's off the table.
The Fed's can’t expand its balance sheet another Trillion dollars to bail out state, county, and municipal governments.
Speaking of hammers, how dumb are they. Let us not forget that it was Bush with his go along acquiesers both republican and spineless dems who initially got us in this financial quandry. who can forget his statement to sacrifice, "go Shopping. " That was his answer along with his Duke mentality, Bring 'em on. What an idiot. Though i don't now agree with Obama's moves, not that he does too much, he doesn't and won't do enough. His policial aspirations for a second term get in the way. Who is advising him??? Personally, i'm sick of them all. Dennis really should have won, he would have cleaned house.
Evan Bayh is an IDIOT!
Barack Obama (R-lite) is not far behind. This DLC Clinton flunky lover just doesn't get it. In an era were we need another FDR, he is giving us republican-lite.
Everyday I look at unemployed friends and relatives who have an ever increasing look of terror on their faces. They are in a living hell!
And this morons biggest worry is whether or not Olympia Snowe will support him.
But they would be right about taxes, if they only TAXED THE RICH! 95% marginal rates, that would stop those obsecene CEO bonuses, a wealth tax, and time to start taxing the corporations again too. But no, I doubt that will happen. Instead, this idiot and Rahm will tax people who have had wage reductions over the last 30 years, and benefit losses that are gone for good.
I hope a REAL Democrat primaries this DLC loser in 2012. I voted to end RADICAL rightwing corporate fascism, which is why I voted against Hillary, Not to continue the Clinton-Rahm version of it.
Here is a little insight into Bayh and Lieberman's motives.
http://www.salon.com/news/opinion/joe_conason...
Forget the Democrats, they are a lost cause.
Agreed.
to do things you are not used to---paraprasing Michelle Obama's speech at UCLA last year.
You all wonder and laugh at why I left the
Democratic Partyto join the Green Party...Want to know why? So, I can sleep better at night and so that I am not fooled again by these pitiful Democrats. When will the Democrats cut military spending and foreign aid? It is okay for the USA to build new bridges in other countries as the ones here fall apart. Both political parties are the problem here.
Yes, the Republicans are evil, so, why do the
Democratscare about these Repukes?People need to go and read Bruce Bartlett's new book: "The New American Economy: The Failure of Reaganomics and a New Way Forward."
Description: As a domestic policy advisor to Ronald Reagan, Bartlett was one of the originators of Reaganomics. In his latest work, Bartlett abandons the conservative dogma he espoused in "Impostor" in favor of a policy strongly based on what's worked in the past.
See, Bartlett disavows these same insane things which are still being proposed as unworkable.
I suggest you all go and buy this book. I seldom urge people to do such things but I doubt Bartlett places trust in the billionaires at this point.
All of these Biscuits That Stand Upright can just try to live broke. Been doing it for years. This country is too broke to occupy foreign countries. Too broke for a mammoth space program. Too broke to allow overseas tax havens for wealthy corporations.
We are broke as a joke.
Rise heroic American consumers!
Mike Papantonio is a great leader of the Progressive (not Democrat) movement.
I wish that he and RFKjr would post Ring of Fire on I-Tunes again.
Everyone who voted to take BUSH's war of choice OFF THE BOOKS back in 2003, should now be tar and feathered, and hung. The DEFICIT is because Obama was forced by REALITY to FINALLY put BUSH's war of choice back on the books. At $200 Billion per year, for 6 years, well you do the math. It is 1.2 Trillion. ANd exaclty how much is the deficit????? 1.4 Trillion, so the country itself has only gone into to the deficit by 200 Billion, but BUSH's war of choice put us $1.2 TRILLION into debt. Track that motherf ucker down along with Cheney and HANG THESE F UCKERS FOR TREASON!
Still not dealing with the facts, I guess this Moron stations credibility is so bad that they have to use other radio TALK SHOW HOSTS, to discuss the economy. DUH! and these nit wits wonder why they have no credibility. here is a example last night for the news I asked my daughter if she wanted to see what was on, as I had been on the net, she said Dad the only thing on is fox and that isn't news just blathering and nonsense. Hmm, maybe I didn't do such a bad job rearing her.
TAX THE CORPORATIONS AND THE SUPER-RICH
.. there .. problem solved
Dickhead Cheney said " Deficits don't matter. Reagan proved that..........."
a few banks and turned them into super-banks/casinos. Doesn't that count for something? [/sarcasm]
As Clinton showed, taxing the rich lowers unemployment.
The rich's decision to hire or not hire depends on the economy and profits. It has nothing to do with their taxes. If the rich were taxed at Nixon levels, we could have had single payer and a huge stimulus and paid down the national debt at the same time.
Of course this won't be bipartisan. So we need to ask if anyone on the "I care about costs" committee is willing to slash defense. There -- no more committee.
Unless of course the tax increases are on the obscenely wealthy and the spending cuts are on defense and corporate welfare.
FDR cut taxes and you're bitching about tax increases in the header?! What?
As Clinton showed, taxing the rich lowers unemployment.
Well, actually, no, what the Clinton's tax increase showed was that the economy grows (or doesn't) pretty much independent of tax policy. The GwB's tax cuts, despite numerous claims to the contrary, did not result in economic growth different from that of the 1990s.
If the question is federal revenues, then raising tax rates increases revenue while the converse is also true.
From the CBPP: The claim that tax cuts pay for themselves also is contradicted by the historical record. In 1981, Congress substantially lowered marginal income-tax rates on the well off, while in 1990 and 1993, Congress raised marginal rates on the well off. The economy grew at virtually the same rate in the 1990s as in the 1980s (adjusted for inflation and population growth)
The major problem with giving the rich large tax cuts is that it eventually leads to excessive speculation which leads to depression. The other problem is that the rich become richer and richer and gain greater and greater power. Some of them will use this power to impose their views on the rest of the population. They will corrupt politicans, control the press and polarize the population. This will either lead to fascism if they win or communism if those who arise to oppose them win.
American Experience/crash
http://www.pbs.org/wgbh/americanexperience/cr...
'I can draw only one of two conclusions: Either the Obama administration's economic advisers and their Congressional enablers are as dumb as a box of hammers and completely oblivious to the history of the first Great Depression, or they do know and are gambling with the nation's economy anyway - because they're afraid the Republicans might draw blood in the next election cycle:'
How about a third conclusion...that the executive branch is not dumb, not oblivious to history, not concerned with republicans drawing blood; rather, they are corportists who are purposefully, knowingly, and willingly allowing the depression to continue and worsen because it will break what's left of the workforce while allowing their handlers to continue to amass obscene fortunes for themselves.
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