"I feel stupid," someone said the other day. "I consider myself well-informed, but I have no idea what the term 'austerity economics' really means."

Actually it's not that complicated, and most of the lesson plan can be found in today's headlines.

We'll explain austerity to you in six steps, and we promise it it won't take more than 900 words. Since adults read an average of 250-300 words per minute - and we know all of you are above average - our little course shouldn't take more than three minutes.

It's certainly worth knowing. Despite its many failures, "austerity economics" keeps remaking - and unmaking - the global economy. The only disagreement at this weekend's Republican debate was over which candidate would push austerity more aggressively. And austerity dominated the political agenda last year - "Deficit Commission," anyone? - until Occupy came along.

Merriam-Webster named "austerity" the "Word of the Year" for 2010. But like the monster from a 1950's science-fiction movie, it just keeps on growing. This week alone the name was invoked in government houses from Athens to Lagos.

What is this creature called "austerity," and why does it still hold so much power? If you've got three minutes, let's get started.

1. What is it?

The Longman Dictionary of Contemporary English defines "austerity" as "when a government has a deliberate policy of trying to reduce the amount of money it spends."

Wikipedia calls it "a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided," adding that it's "sometimes coupled with increases in taxes to pay back creditors to reduce debt."

Got that? Austerity backers want government to spend less on benefits and public services, and to pay back its creditors more quickly. Higher taxes aren't part of the plan and they're strictly optional.

2. What's austerity supposed to accomplish?

Austerity advocates don't just see lower deficits and reduced debt as tools to promote long-term economic health. They consider them ends in themselves - sometimes even as moral values.

Many austerity advocates see government spending as inherently evil. That goes for all government spending, including police, teachers, nurses, and firefighters.

Sure, some of them will admit there can be necessary evils or useful evils - usually weapons procurement or law enforcement. But spending is always evil.

Other people aren't philosophically opposed to government spending, but have been convinced that it has become unaffordable today.

3. What's the theory behind austerity economics?

To answer that, it's important to understand that the economics profession has been systematically taken over by well-funded conservative academics. They've created elaborate theoretical constructs to prove that government spending is economically destructive.

These include theories like 'Barro-Ricardo equivalence,' which says people won't spend money when they know their government's incurring debts they'll have to pay someday. Conservative economists like Robert Barro insist this is true even in times of widespread unemployement, like now, and argue against stimulus spending to create jobs.

Oddly, they find this theory more compelling than the idea that people aren't spending money because they don't have jobs.

Then there's supply-side economics, which argues that the best way to grow the economy is by cutting taxes. That means smaller government. Supply-siders also rely on the "Laffer curve," which says people will stop investing, producing, and creating jobs if taxes are too high.

Austerity advocates also argue that international markets will lose confidence in governments if they don't curb spending and will charge them higher interest. So they even push cuts in Social Security, which doesn't even add to the deficit, because macroeconomists consider it 'government spending.'

Continue reading »

People are openly using the "D" word, yet the president and his pal Tim Geithner still seem to think there's going to be a second Obama term if they only make the bankers happy. Go figure:

Some economists might be worried about a double-dip recession, but a large number of Americans have an even worse scenario in mind.

Approximately 48 percent of Americans say they think that a Great Depression is either very or somewhat likely to occur within the year, according to a CNN Opinion Research Poll, the highest percentage of respondents that have stated that level of certainty since CNN first started asking the question in October 2008.

Respondents' fear that they would soon become unemployed also spiked to an all-time high of 30 percent. That stands in contrast another post-recession low: the 18 percent that said they either recently became unemployed or are related to someone who recently became unemployed. The seeming contradiction might be explained by the average length of unemployment now hitting an all-time high, as The New York Times recently reported.

Robert Reich says there's no truth to the idea of a double-dip recession, because most people never recovered from the first one:

More people are out of work today than were last year, counting everyone too discouraged even to look for work. The number of workers filing new claims for jobless benefits rose last week to the highest level since February. Not counting temporary census workers, a total of only 12,000 net new private and public jobs were created in July -- when 125,000 are needed each month just to keep up with growth in the population of people who want and need to work.

Not since the government began to measure the ups and downs of the business cycle has such a deep recession been followed by such anemic job growth. Jobs came back at a faster pace even in March 1933 after the economy started to "recover" from the depths of the Great Depression. Of course, that job growth didn't last long. That recovery wasn't really a recovery at all. The Great Depression continued. And that's exactly my point. The Great Recession continues.

Even investors are beginning to see reality. Starting in February the stock market rallied because corporate profits were rising briskly. Investors didn't mind that profits were coming from payroll cuts, foreign sales, and gimmicks like share buy-backs -- none of which could be sustained over the long term. But the rally died in April when investors began to see how paper-thin these profits actually were. And now the stock market is back to where it was at the start of the year.

[...] Forget the Neo-Hoover deficit hawks who say we have to cut government spending and trim upcoming deficits. We didn't get into this mess and aren't remaining in it because of budget deficits. In fact, the only way to reduce long-term deficits is to restore jobs and growth so government revenues rise and expenses like unemployment insurance drop.

[...] The central problem is lack of demand -- and that's what has to be tackled.

Admittedly, it's a little hard to see, but you can see the full thing here at GOP.gov (.pdf).

And again, I must ponder whether the Republican Party is truly this clueless when they opt to illustrate their booklet of summer activities for Republican members of Congress with photos of Denis and Margaret Thatcher, Lech Walesa, Ike and Mamie Eisenhower, Ronald and Nancy Reagan, Winston Churchill and Jack Kemp. Let's see--they've used three foreign leaders (including one fervent labor organizer and Iraq War critic) and three (four, if you count Teddy Roosevelt bringing up the rear at the bottom of the page) American Republican politicians who have all long since passed away. This is "treading boldly"? They can't even find a living Republican to hold up? And really, Jack Kemp? What's that about? A fairly undistinguished House career, two failed presidential campaigns and then finally Secretary of Housing and Urban Development--this is the coverboy for the Republican Party's plan to sway those all important "independent" voters for the mid-term elections?

Brilliant.

But wait, it gets better. Take a look at page 6, where they outline a typical August calendar: it is literally re-tweeting the RNC talking points. That's it. The booklet recommends holding town halls and setting up media interviews...but never forgetting their daily re-tweet.

Amazing. We're in the midst of two wars, the most severe economic dire straits since the Great Depression, and we have lunatics of the right wing noise machine all but directly calling for armed revolution and the GOP's answer is for its members to log on to Twitter.

The second half of the booklet is ostensibly the GOP's platform. Are you surprised to learn that it's heavy on spin and provable falsehoods: "Most Americans do not want a government takeover of health care that was forced upon them and would like to see it replaced with common sense solutions that lower costs and protect jobs." and light on actual solutions (lower taxes! less regulation! repeal health care! That's it in a nutshell.). Energy is barely mentioned except as a way to point out those mean old Democrats' onerous regulations on energy is a job killer.

In fact, there's a distinct lack of anything of substance in the kit. No discussion of immigration reform, other than the meaningless "secure the borders." Calls to reduce the size of government without the honesty to admit that it grew under their majority during Bush. Calls to stop runaway spending without acknowledging their own profligate ways.

There's enough cognitive dissonance in that kit to keep an analyst busy for years.

You know what drives me nuts? When bureaucrats talk about "the economy" as if one portion is separate from (and more important than) what affects ordinary people. It's as if a doctor told a patient, "Well, you still have malignant cancer cells spreading in all your major organs -- but look how nicely your sprained ankle is healing!"

If people don't have jobs, are losing their homes and can't afford to feed their families, and the numbers of people in those straits continue to grow, the economy is not recovering. Can we please cut the crap? If you shove a pile of dirt under the rug, you didn't "clean" -- you simply moved the problem to a different location. When are we going to stop pretending that the banking system isn't still a house of cards?

Saying the economic outlook was "unusually uncertain," Federal Reserve Chairman Ben S. Bernanke predicted that unemployment was likely to remain stubbornly high for several years, straining families and endangering the nation's economic stability and competitiveness.

"Long-term unemployment not only imposes exceptional near-term hardships on workers and their families; it also erodes skills and may have long-lasting effects on workers' employment and earnings prospects," he said Wednesday in his semiannual testimony to Congress.

"This is the worst labor market, the worst episode, since the Great Depression," Bernanke said of long-term unemployment. "Not only for the sake of the unemployed and for the short-term strength of the economy but also for a long-term viability in international competitiveness, I think we need to be very seriously concerned."

Though Bernanke painted a bleak picture for the millions of jobless workers, he said the U.S. economy was continuing to recover at a moderate pace. And for now, he said, the central bank was holding off on taking further actions to stimulate the economy.

A series of economic data in recent weeks have pointed to slowing economic growth, fanning fears of a return to recession and prompting speculation that the central bank may be gearing up to buy more securities or initiate other moves in an effort to spur lending by pushing already low long-term interest rates even lower.

I've been working on an action called "Don't Get Fooled again," which would feature George W. Bush and his cohorts over his presidential reign to remind America that it was his morally corrupt administration that led our country into the abyss. Who could have predicted that the GOP would kick-start it for me? Really, thanks guys and Bachmanns.

Back in January, I wrote a post called The Big Conservative Con Begins in 2010...."Don't Get Fooled Again" to point this out.

Typically con men feed on dishonest people, but in politics they focus on the unsuspecting. What we've learned from the previous decade is that conservatism is a total failure when it comes to governance. Under Bush and Cheney we've had a massive terrorist attack, two wars, torture and a global financial meltdown. We've had Hurricane Katrina expose how conservatives respond to Americans after a natural disaster hits two states. We've had government corruption at the highest order, which resulted in Cheney's chief of staff being convicted of multiple felonies. We had the horrendous Terry Schiavo affair. We had a news network actively become a propaganda arm of the GOP. We had Wall Street inflate a mortgage bubble that almost turned into another Great Depression.

I can go on and on, but because of a timid media, they will be allowed to perpetrate their newest con. "Only conservatism can save America," will be their motto. If the media actually acted like an independent monitor of the news, we might stand a chance against the new scam, but we know better. Drudge rules their world.

The GOP is brilliant at one thing, and that is tearing people down. Because they left this country in such tatters it's an easy scam to pull off, because hard-working Americans are vulnerable pickings. They have to try and survive in a world destroyed by conservative values. The con is easy. Just blame everything on President Barack Obama. All your job woes, all your fears about how your life will recover and the future that it holds for your children. If we had a real media that would expose the Bush regime for the manifest failure it was, it would be a much harder task, but we don't, and instead news programming has turned more into endless right/left opinion discussions.

"Don't Get Fooled Again" should be our national slogan, because even if we disagree as liberals in the way our president has handled the situation he was elected into, we are engaged enough to know what conservatism has done to this country...read on

Bush's conservative ideology, and the right-wing propagandists planted in D.C. who enabled him led us into two wars. We attacked a country named Iraq who posed no threat to us at all after a terrorist attack on our soil. Under his leadership -- with all the tax cuts he could deliver to the rich, and all the deregulation of every financial institution in sight -- he helped create a near-catastrophic economic depression which spread globally. Let's face it, his policies were totally awesome for the uber-wealthy and they milked it for all it was worth. But ironically, it was those same grand poobahs have who have tried to banish Bush into the cellar for the last few years so America wouldn't have to see his face or hear his voice, which frees conservatives up to blame Obama for all the problems we face now, including unemployment.

Because Bush is so reviled by America, I've pitched it a number of times within our Blue America PAC, but we haven't had a chance to fully explore it. And then, a gift comes along: Republicans chose to remind America for me. It was almost as if John Cornyn was caught shopping at Tiffany's and sending me an early Christmas gift.

Here's what Cornyn said:

But look, I think President Bush's stock has gone up a lot since he left office. People appreciate his resolve and commitment in the face of a national security threat like 9/11. He had his challenges, no doubt. We have, I think, learned a lot about things we could have done better as Republicans in terms of fiscal responsibility, but when he left office, the deficit was 3.2% of the gross domestic product, today it's about 10%. We've added $2.3 trillion to the national debt since President Obama got there. I think a lot of the people are looking back with a little, with more fondness on President Bush's administration and I think history will treat him well.

Continue reading »

So I was watching a CNN panel today and the subject up for debate was something along the lines of, "Is Obama shedding constituents? Critics say he's abandoned Wall Street."

My first reaction was, "Wait, critics are saying this? Are you sure that wasn't what his allies said?" But no -- I actually had to listen to a debate over whether Obama was making a huge political mistake by "abandoning" his bestest pals in the world at the megabanks.* You know, the guys whose greed and irresponsibility caused the worst financial collapse since the Great Depression.

(*Obama hasn't actually "abandoned" the banks in the least, but that's a story for another post.)

And then I thought, "Why the hell are we the only culture in the whole goldurned world where it's seen as a political risk to abandon the people who are responsible for causing widespread economic hardship?" And all this got me thinking about the super-weird "We-Must-Be-Nice-to-Rich-People" doctrine that has run through our national discourse since the 1980s.

You see, there was a time when American politicians could say things such as "It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes" (Andrew Jackson) and "Too much cannot be said against the men of wealth who sacrifice everything to getting wealth" (Teddy Roosevelt) and "We had to struggle with the old enemies of peace — business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering... They are unanimous in their hate for me — and I welcome their hatred" (FDR) and no one thought anything of it. Indeed, as Simon Johnson and James Kwak show in their excellent book 13 Bankers, hating on financial oligarchs is as American as hating on soccer, dating all the way back to Thomas Jefferson.

But starting in the 1980s, Ronald Reagan began popularizing Randroid mythology about how rich people were necessarily our betters because they were the only ones capable of "creating wealth" in the economy.

(For some reason, Big Ron forgot to mention they were also capable of creating multi-trillion-dollar housing bubbles, overpriced Pets.com stock certificates and made-to-fail synthetic interest rate swaps that bankrupt entire counties.)

And ever since then, every Democratic president and politician has had to reassure members of our elite media that he's just as capable of kissing rich-guy keisters as the Republicans. If you want a prime example of this dynamic at work, check out this Washington Post piece (via Harper's) that places giant red warning lights over Paul Krugman's views but that quotes some sleazeball Wall Streeter as though he were a perfectly objective analyst. First, his take on Krugman:

When you read Krugman on economics, you need to read him through a filter. He believes that the $787 billion government stimulus approved last year was not enough to really kick-start the economy and that much more is needed. You can correctly read many of his columns -- including this one -- as arguments for more taxpayer-funded stimulus. So just know that.

And now, the equity strategist:

I started with Peter Boockvar, equity strategist at Miller Tabak.

My e-mail was short: "Double-dip or slowdown?"

His response was equally abrupt: "Depends on who wins Nov. elections and what taxes get hiked in 2011."

The tax cuts enacted by President George W. Bush expire at the end of this year. President Obama has proposed extending those cuts -- except for families that make more than $250,000 a year. If Republicans win Congress in November, it's a good bet that the wealthiest Americans will keep their tax cuts. If the Democrats hold the Hill, it's unlikely.

"Our fragile economy CANNOT handle any tax hikes whatsoever, particularly on capital and the income of those who invest, save and spend the most," Boockvar wrote, meaning those American families that make more than $250,000 a year. The all-caps are his, but the feeling is shared by many.

Now, I'm of the general mindset that it's daft to raise taxes or cut spending in the middle of a severe economic downturn. But at the same time, note Boockvar's emphasis on whose taxes we should really be opposed to raising: "Those who invest, save and spend the most." In other words, people like Peter Boockvar.

I personally find it highly unlikely that if Mr. Boockvar's taxes were to rise back to the level of the 1990s that he'd suddenly lose all will to work and would instead spend his remaining days sipping Purple Drank outside his local 7-11. People like this are generally addicted to making money and they'd sell penny stocks and junk bonds to special needs children if they thought they could get away with it. What Mr. Boockvar would have written if he were being honest was, "I've already put off buying cocaine and pricey call girls enough during this recession and I CANNOT handle any tax hikes whatsoever."

And that's where we are. Despite the fact that our banking oligarchs destroyed the entire financial system and were only saved from homelessness by the United States government, they still must be treated as "special" people who are "the only ones" capable of creating new jobs for the lesser people. It'd be nice if this particularly insidious piece of mythology were to be sent to the ashcan of history, but methinks it's going to take some time...

DOWNLOADS: (864)

PLAYS: (2342)

Embed

Desperate to change their miserable present, Republicans are traveling back in time to rewrite the past. And so it is with President Franklin Roosevelt and the New Deal. Hoping to block President Obama's stimulus program designed to prevent the next Great Depression, right-wing authors, pundits, and politicians insisted FDR failed to cure the first one. Now, Glenn Beck tells us, Americans reacted to the death of the man who led America back from economic collapse to victory in World War II by claiming with relief, "I'm glad he's dead."

On his Friday show, Beck featured regular guest Burton Folsom Jr. to peddle his book proclaiming the New Deal a failure. (Citing the thoroughly debunked work of Amity Shlaes, GOP leaders like John McCain and Mitch McConnell in 2009 similarly called he New Deal a bust, while Ohio Rep. Steve Austria amazingly declared that FDR "put our country into a Great Depression") After Folsom praised the Republican Roaring Twenties for producing Scotch Tape and zippers, Beck summed up his feelings for Roosevelt:

BECK: Roosevelt...Am I wrong by saying there was a good portion of people that thought, "Holy cow, I'm glad he's dead. He was turning into a dictator."

FOLSOM: Well, there were a lot of people who thought that. As you pointed out, we immediately had a constitutional amendment to prevent any other president from serving longer than two terms...It had not worked well with four terms under Franklin Roosevelt.

Of course, Roosevelt's death on April 12, 1945 brought shock, disbelief and national mourning. And he was wildly popular. His approval rating, which reached 84% in 1942, never dipped below 48% (in 1938). His passing on the eve of victory in Europe stunned Americans, whose approval of him topped 70%.

And with good reason. He had been overwhelmingly elected in 1932, 1936, 1940 and 1944. (He never won less than 36 states and 432 electoral votes.) Even before the onset of World War II, FDR slashed unemployment by more than half and largely restored industrial production and GDP growth. (Only when Roosevelt wavered in the face of conservative pressure in 1937 did his New Deal temporarily falter.)

Among FDR's ardent backers were the Schecter brothers, whose 1935 Supreme Court challenge to his National Recovery Administration struck down much of his New Deal regulatory program. As David Leonhardt wrote in the New York Times review of Amity Shlaes' book:

Among Roosevelt's supporters, evidently, were a family of chicken butchers in Brooklyn named the Schechters. "Their major political concern in the 1930s was anti-Semitism," Shlaes's appendix quotes one of their descendants as saying. "They believed that if Roosevelt had not solved the problems of the Depression, the U.S. could have gone the way of Nazi Germany." The Schechters apparently voted for Roosevelt every time he ran.

(This piece also appears at Perrspectives.)

DOWNLOADS: (577)

PLAYS: (2411)

Embed

Over the weekend, Steven Thomma at McClatchy News had a terrific piece that was a decent corrective to some of the bad history that's being bandied about by right-wingers like Glenn Beck these days:

In articles and speeches, on radio and TV, conservatives are working to redefine major turning points and influential figures in American history, often to slam liberals, promote Republicans and reinforce their positions in today's politics.

The Jamestown settlers? Socialists. Founding Father Alexander Hamilton? Ill-informed professors made up all that bunk about him advocating a strong central government.

Theodore Roosevelt? Another socialist. Franklin D. Roosevelt? Not only did he not end the Great Depression, he also created it.

Joe McCarthy? Liberals lied about him. He was a hero.

Some conservatives say it's a long-overdue swing of the pendulum after years of liberal efforts to define history on their terms in classrooms and in popular culture.

"We are adding balance," Texas school board member Don McLeroy said. "History has already been skewed. Academia is skewed too far to the left."

The upshot of this wave of historical revisionism -- which was kicked off, in many regards, with the publication of Jonah Goldberg's fraudulent rewrite of history, Liberal Fascism -- is to depict the progressive movement as the source of all evils that have befallen America since the dawn of time. That's why Glenn Beck has embarked on a campaign of eliminationism against progressives.

Beck provided a splendid example of this miscarriage of history last month when he ran a segment claiming that FDR actually admired Mussolini by citing a selective quote. (In fact, many people were enamored of Mussolini's words, early on, and then were disabused by his actions.) Somehow left out of the discussion: The fact that FDR declared war on Mussolini and effectively drove him from power. Yeah, that's some admiration society.

But really, the entire enterprise is utter bosh. As we've pointed, at least in respect to middle- and working-class economics, and civil rights, there's a whole bunch of things Beck and his cohorts are omitting from the picture.

Let's just talk, for a moment, about the many things Americans enjoy -- and largely take for granted -- that were the product of the progressive movement. Here, just off the top of my head, are my Top 12:

• The 40-hour work week.
• Weekends.
• Vacations.
• The right of women to vote.
• The right of people of all colors to vote.
• The right of people of all colors to use public schools and facilities.
• Public schools.
• Child-labor laws.
• The right to unionize.
• Health-care benefits.
• National Parks.
• National Forests.

Those are just for starters. I bet you can come up with some of your own.

Saying you believe the progressive movement has brought evil on the nation should logically suggest that you want to reverse the reforms that it has produced. That is, you're saying you want to take these 12 things away, too.

That might not be such a popular thing to do, ya know?

Tea Party Rally in Searchlight, Nevada, hometown of Harry Reid

Read this NY Times article and just take it all in. Here's a sample

With No Jobs, Plenty of Time for Tea Party

Mr. Grimes is one of many Tea Party members jolted into action by economic distress. At rallies, gatherings and training sessions in recent months, activists often tell a similar story in interviews: they had lost their jobs, or perhaps watched their homes plummet in value, and they found common cause in the Tea Party’s fight for lower taxes and smaller government.

The Great Depression, too, mobilized many middle-class people who had fallen on hard times. Though, as Michael Kazin, the author of “The Populist Persuasion,” notes, they tended to push for more government involvement. The Tea Party vehemently wants less — though a number of its members acknowledge that they are relying on government programs for help.

Mr. Grimes, who receives Social Security, has filled the back seat of his Mercury Grand Marquis with the literature of the movement, including Glenn Beck’s “Arguing With Idiots” and Frederic Bastiat’s “The Law,” which denounces public benefits as “false philanthropy.”

“If you quit giving people that stuff, they would figure out how to do it on their own,” Mr. Grimes said.

The fact that many of them joined the Tea Party after losing their jobs raises questions of whether the movement can survive an improvement in the economy, with people trading protest signs for paychecks...read on

It explains a lot. Ignorance is bliss. The right has done masterful job in developing an anti-government message. A bad economy does create anger throughout the country, but it's directed at the government in a way that was alien during the Great Depression. Government intervention saved America and FDR was a real leader who spit in the face of the oligarchy of which he was actually part. They excommunicated him because as we've seen, the rich stick together. It took a strong man to realize that the country and its people needed real help, not just the super rich. Lucky for us, FDR was up to the challenge.

For more on the Searchlight Tea Party Rally, see here.