When, oh when will Democrats realize that once they move away from job creation to deficit reduction, they are playing right into the right wing agenda? On Meet The Press, President Obama told Dancing Dave Gregory this when asked about going over the proverbial fiscal cliff:

Obama: What I said was is that we should keep taxes where they are for 98 percent of Americans, 97 percent of small businesses. But if we're serious about deficit reduction we should make sure that the wealthier are paying a little bit more and combine that with spending cuts to reduce our deficit and put our economy on a long-term trajectory of growth.

I understand the president is in the process of getting Republicans to vote for raising taxes (which has become something of a crisis for them ever since President Clinton came out of his eight years with a budget surplus), but if he's going to be strong on deficit reduction, the solution should be job creation and not draconian spending cuts, including entitlements. Remember this: When it comes to the federal budget---Republicans are great at one thing, which is smashing sh*t on the floor.

DeLong:

Remember the context: Mankiw loved the Bush-era fiscal policies to create long-run structural budget deficits, and worked hard to implement them--the unfunded war and unfunded tax cut and unfunded entitlement policies that did so much to create our structural deficit. Mankiw did his best to join in the process of taking the work that we in the Clinton administration had done in the 1990s to restore America's fiscal balance--work that was very well done, very important, and work that we were and are very proud of--and casually smashing it on the floor.

But Republicans will inevitably see a balanced budget as an opportunity to give money to rich people (tax cuts and crony capitalism). The reward to liberals for this well done very important work? Tax cuts for rich people and unpaid, disastrous wars.

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Ten years ago today on December 6, 2002, the Bush Administration fired its top two economic advisers: Treasury Secretary Paul O'Neill and White House economic adviser Lawrence Lindsey due to the continuing lagging economy (when Bush took office, unemployment was 4.2%. In Dec of 2002... more than a year after 9/11... the rate jumped from 5.7% to 6.0% in one month). In November of 2002, when O'Neill, a "deficit hawk", tried to warn Vice President Dick Cheney that growing budget deficits... expected to top $500 billion that fiscal year alone... posed a threat to the economy. Cheney cut him off, saying, "You know, Paul, Reagan proved deficits don't matter."

O'Neill was replaced with CSX (the freight train company) CEO John Snow, also a "deficit hawk", yet appointed the unenviable task of convincing the public (ie: Wall Street) that "deficits don't matter".

It is worth remembering on this tenth anniversary just how we got here. When the Bush Administration took office 22 months earlier, they were handed a balanced budget in which the government was actually collecting more in taxes than it needed to run the federal government. Less than two years later, O'Neill was warning of a HALF-TRILLION DOLLAR deficit for 2003. The surplus revenue under Clinton was used to start paying off our Debt which had exploded under Reagan and the first President Bush. Presidential candidate George W. Bush actually campaigned on the fact that because we were collecting more in taxes than it takes to run the government, that means we were being "overtaxed", telling cheering crowds, "It's not the government's money, it's YOUR money!", and therefore deserved a "tax cut"... the much heralded "Bush Tax Cut" that we are fighting over today, despite the fact that the original premise in support of them... a budget surplus... hasn't existed in over 12 years.

Think about this: How do we EVER pay off the Debt if the moment we take in enough in taxes to start paying it off, Republicans use it as an excuse for tax cuts?

Blast from the past: July 2006

Paul Krugman is doing the rounds on his book tour (I saw him here in Philadelphia Tuesday night—yeah, I'm a dork, I got him to autograph my copy) and here he is on Democracy Now! to pound the drum for government spending. Oddly enough, Krugman's been accused of supporting austerity cuts, which just isn't true. For an hour, all he did was talk about how the government needed to spend our way out of this.

AMY GOODMAN: Well, for the remainder of the hour, we’re joined now by one of the world’s leading economists, Paul Krugman. He is a Nobel Prize-winning economist, an op-ed columnist for the New York Times, also professor of economics at Princeton University and centenary professor at the London School of Economics. His latest book is End This Depression Now!

Paul Krugman, welcome back to Democracy Now!

PAUL KRUGMAN: Good morning.

AMY GOODMAN: How do we end this depression now?

PAUL KRUGMAN: Spend. I mean, it’s really—it’s actually—the economics is really easy. If we were to spend more money at the government level, and actually, at this point, largely, just rehire the schoolteachers, firefighters, police officers who have been laid off in the last several years because of cutbacks at the state and local level, we would be a long way back towards full employment. Other things to do, we could talk about monetary policy, debt relief for homeowners and students. But the core of it is, right now, there just is not enough spending, and we need the government, which can do it, to step in and provide the demand we need.

AMY GOODMAN: To say the least, you’re going against the accepted dogma on all television among the so-called leaders of our country. Spend? In a time when the government has the debt the size it has?

PAUL KRUGMAN: Right. So you can always say, "Oh, you know, $14 trillion." Everything about the U.S. economy is huge. Investors don’t think it’s a problem. Investors are willing to lend the U.S. government money at 1.8 percent interest. This is not the time. I’ll be all for worrying about the budget deficit once the—once the economy is off the bottom. But it is not off the bottom. We are in a depression. This is the time to spend.

AMY GOODMAN: Where do you get the money?

PAUL KRUGMAN: Borrow it, and then repay it later in better times, which is not at all—that may sound funny, but that’s exactly what we’ve done in the past. That’s exactly—how did we get out of the Great Depression? We got out of it by—actually, we got out of it before World War II, but thanks to the spending that preceded World War II, thanks to the military buildup. A little factoid people may not know, just this morning: Which of the major economies in the advanced world grew fastest in the first quarter of 2012? The surprise answer is Japan. Why is that happening? It’s because Japan is now spending a lot of money reconstructing after the tsunami. And that spending is driving rapid growth in Japan right now. We could all be doing that.

AMY GOODMAN: Let’s go to Mitt Romney for a moment, the presidential candidate’s economic plans and his critique of the Obama White House. This is what he said Wednesday at a campaign stop in Iowa.

MITT ROMNEY: President Obama is an old-school liberal whose first instinct is to see free enterprise as the villain and government as the hero. America counted on President Obama to rescue the economy, to tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of your dollars to companies of his friends, and added almost as much debt to this country as all the prior presidents combined. The consequence is that we are now enduring the most tepid recovery in modern history.

AMY GOODMAN: Your response to Mitt Romney, Paul Krugman?

PAUL KRUGMAN: Boy, you know, don’t even know where to start. I mean, Romney’s technique is that—since basically every word he says is a lie, including "a," "and" and "the," you never know where to start. But this is—the idea that the—first of all, that Obama is responsible for the large deficits is just not true. It’s overwhelmingly the result of the Bush tax cuts, unfunded wars and a terrible economic crisis that began, of course, under Bush. The idea that the deficits are what’s holding us back is all wrong. The deficits are in fact what’s keeping us afloat. If we had tried to balance the budget, we would now be in a full, full-on replay of the Great Depression. So it’s all nonsense. It’s—and, by the way, the idea of Obama as somebody who governs from the left, I mean, Obama is—Obama’s positions are those of a moderate Republican circa 1992. It’s not—he’s not a leftist. What’s happening now is you have a radical-right Republic Party.

AMY GOODMAN: Well, let’s talk about the Republicans, to House Speaker John Boehner, recently addressed the Peter G. Peterson Foundation’s 2012 Fiscal Summit.

SPEAKER JOHN BOEHNER: The failure of stimulus, a word people in Washington refuse to say anymore, has sparked a rebellion against overspending, overtaxation and overregulation. Americans who take pride in living on a budget recognize that we can’t go on spending money that we don’t have. And our economy is stuck in large part because it is stuck with debt.

AMY GOODMAN: House Speaker Boehner also advocated making long-term changes to programs such as Social Security.

SPEAKER JOHN BOEHNER: We can eliminate all the unfunded liabilities in Social Security, Medicare and Medicaid tomorrow, and the effect on the congressional budget 10-year window could be minimal. That’s because changes to these programs take time and need to be phased in slowly.

AMY GOODMAN: That’s House Speaker Boehner, who has also just revived the debt ceiling—the debt ceiling threat.

PAUL KRUGMAN: Yeah, so—boy, again, let’s leave aside the long-run budget stuff for the moment, and let’s just talk about—the idea that stimulus failed, it was never tried. Take a look at the actual track of government spending in the United States, and take into account the state and local governments as well as the federal, and what you see is, far from actually having a big increase in spending, we’ve actually had much lower. We’ve had austerity in the face of a recession, in a way that we have never had before since the 1930s. So it’s actually been the reverse.

And look, we’ve just done an experiment with what happens if you cut government spending sharply in the face of a depressed economy. That’s what’s been going on in Europe. It’s been going on in an extreme form. I’ve been saying, actually, we’ve basically had a large-scale human experiment, the kind that is banned under Princeton University rules, going on on the people of Greece, Spain, Portugal and Ireland. And the results are clear: it’s disastrous. It leads to very, very sharp economic contractions. Here, we’re having a minor version, though still terrible, of the Great Depression; there, they’re having a full-on replay of the Great Depression.

AMY GOODMAN: Contrast it with Argentina.

PAUL KRUGMAN: Ah, Argentina is an interesting story, because they broke all the rules. There are two countries that we talk about now, actually, people like me. One is Argentina. Argentina had something that was a little bit like the euro. They had a supposedly permanent commitment: one peso, one dollar. Became impossible, fell apart. There was a period of about six months of economic chaos, following, to be honest, then a rapid recovery. Argentina bounced back strongly because they were competitive again. The weaker peso made them able to export. You know, and they defied all the predictions of ruin.

The other story, which is more contemporary, is Iceland, which, in effect, did the same thing. Iceland, because of—the funny thing is, Iceland, the sheer scale of the financial disaster meant that they could not be orthodox. It was not possible. So they were forced to allow a devaluation, have some temporary controls on capital, repudiate some of the debt their bankers ran up. Iceland has a lower unemployment rate than we do right now. So, those are the stories that we should be looking to as examples that say this does not have to be happening.

AMY GOODMAN: So, right now, President Krugman—and that’s not making a mistake—what do you do starting today?

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It can't be repeated enough: Republicans really don't care about debt or deficits. Case in point, Mittens gave a big speech on Tuesday in Iowa attacking the President over the national debt -- and yet, he wants to make it $2.6T larger in 10 years. And on Wednesday's Morning Joe, Scarborough put this very simple, direct question to Paul Ryan:

SCARBOROUGH: You're talking about how Mitt Romney's going to be responsible. You look at Mitt Romney's plans, though -- you add them all up -- the deficit goes up just as much as it does under Barack Obama. You know, if you look at their plans, there's not a big difference. [...] At the end of the day, Paul, how much is the national debt going to be reduced under Mitt Romney's tax plans and spending plans?

Ryan's response? He huffily protests that Romney's plan is very different from Obama's because it cuts "entitlements." But did you hear him ever say how much the deficit will actually come down under Mitt Romney? Me neither.

Also, Scarborough is wrong -- Romney would actually increase the deficit much more than Obama.

So why is Ryan praising Romney's plans? Because they reflect Republican values: cutting taxes even lower for rich people, while slashing services for the elderly and poor.

But this has absolutely nothing to do with debt and deficits, and Republicans should be called out on this little con game they've been playing every time.

I'm getting really tired of hearing Republicans complain about the debt, especially certain senators named after the President of the Confederacy.

Does anyone remember Jefferson Sessions filibustering or even voting against a single spending bill or budget when the national debt doubled under George W. Bush?

Anyone?

Also, if the debt is truly is the Gravest Threat to Our Future Evah, then tax increases of all kinds, shapes and sizes would be on the table. So let's just return tax rates to Eisenhower-era levels, or hell, even Nixon-era levels and go from there.

Can't have it both ways, Jefferson.

It's impossible to take the efforts seriously of negotiating any kind of deficit deal in context between the two parties when one side -- Republicans -- refuses to include the key component of tax increases, which would guarantee raising real revenues for the government in the discussion.

Republican leaders in the Congress said on Wednesday they would not support tax increases as part of a deficit-reduction plan.

Now Republicans compound that problem by not even sending a worthy negotiating team to the table:

The White House's proposed deficit talks with Congress appear to be unraveling before they've even begun.

House and Senate Republican leaders announced Tuesday that their sole appointees to the May 5th meeting would be House Majority Leader Eric Cantor (R-Va.) and Senate Minority Whip Jon Kyl (R-Ariz.)--neither of whom are budget leaders and both of whom function largely as political mouthpieces for their party. GOP leaders also each opted to send only one appointee, instead of the requested four, to the meeting.

The Democrats also sent in their B team to the table, but with Republicans (except, of all people, Tom Coburn) pledging to never increase taxes under any circumstances, it's hard to see the point of this exercise.

Matt Yglesias writes:

You have a government set to steadily increase spending on autopilot as a result of demographic change and rising health care costs. And you have a Democratic President urging congress to enact spending cuts. But you have conservative politicians refusing to make a serious effort to reach an agreement out of some blend of taxophobia and fear of giving the President a win. The result, again, whether the right realizes it or not, is a gift to the wing of the Democratic Party that disagrees with Obama about the desirability of enacting spending cuts.

It's still early in the game, but I'd rather do nothing at this point than give away the store to appease the Beltway media and deficit hawks who are crying for cuts in all our programs that we pay into which are our safety net as we get older. We are entitled to Social Security, we pay for it. And if being serious about the reducing the deficit is what Republicans are all about, then they should come to the table willing to actually make a bargain instead of only caring what Grover Norquist believes.

Washington Monthly:

For a bunch of conservatives who claim to be obsessed with debt reduction, far-right GOP leaders don't seem especially interested in actually working on the issue.

There's probably a good reason for this. As Matt Yglesias noted this morning, we have "conservative politicians refusing to make a serious effort to reach an agreement out of some blend of taxophobia and fear of giving the President a win." That sounds about right.

But whatever the motivation, the notion of Republicans agreeing to any kind of sensible compromise seems remote, if not ridiculous.

Durbin's Gang of Six has no real authority once they come out with their center-right plan, so I see as many Republicans as Democrats voting against their proposal anyway. When Bob Schieffer asks Paul Ryan to justify why he's against raising taxes for the rich to get a deal, you start to see the Beltway at least waking up incrementally.

Schieffer: I guess the question I would have, congressman, why do these rich people need another tax cut? I mean they’re already rich. They seem to be doing pretty well as it is now. Why cut their taxes some more?

Former OMB Director and current Indiana Governor Mitch Daniels would appreciate it very much if you didn't remind him of the things he said regarding budgets and the deficit back when he was part of the infrastructure that put us in this mess and listen to him now, thankyouverymuch.

Back then, Daniels cajoled Congress into avoiding making the debt ceiling a political game. Nowadays, he's just too busy union-busting to pay attention, doncha know...but then later in the conversation says that he hopes that the Republicans use the leverage they have now (holding the threat of a government shutdown over the Democrats) to effect *real* change. Funny, that, how he changes his tune.

Daniels (ever enabled by the ineffectual Chuck Todd, who never met a conservative meme he didn't snuggle up to) loves to make the distinction between the puny, miniscule little deficit he had to deal with under Bush and the huge monstrosity that the Obama administration is responsible for, ignoring the fact that the reason that Obama's is so much larger is that his budget office much more honestly added the costs for the ongoing actions in the Middle East that were completely off the books during Daniels' tenure. Nor was there any attempt to pay for the tax cuts for the very wealthy. It's stupid and disingenuous for Republicans to pretend that the economic uncertainty only mattered after 1/20/09 and it's pathetic and evil for the media to continue to let them do so.

Transcripts (courtesy of MSNBC) below the fold

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The Democrats still haven't figured out that legislating as if their only priority is to keep their jobs is what makes so many voters want them gone:

The problem for Democrats is that voters have given them virtually no credit for these ambitious projects. The 111th Congress has the lowest average approval rating (19 percent) of any Congress heading into a midterm election since Gallup started tracking the measure in 1974. On key agenda items, Obama receives failing grades, with 38 percent of voters approving of his handling of the economy and 40 percent approving of his health-care approach, according to Gallup.

"They have the same problem as Republicans, which is, we're just trying to make it about Democrats," GOP pollster David Winston said. "And the public is saying, 'When is someone going to tell me what they're going to do?' The onus on both parties is: What is their plan to grow the economy and create jobs?"

Republicans have said they will not have a plan until late September, when they hope to unveil an agenda tentatively called a "Commitment With America."

And I'll bet it's just as awesome as the Contract On America!

Some endangered Democrats are thankful that there is no broad national agenda to answer for, preferring to run on local issues.

"We actually don't sit around talking about the national agenda," said Rep. Gabrielle Giffords (Ariz.), a second-term lawmaker whose election could turn almost entirely on the issue of border security. "A lot of the messaging that takes place in Washington doesn't make it 2,000 miles to Arizona."

Most Democrats want to focus the rest of this year and next on the economy, setting aside other issues, such as immigration reform, until job creation rebounds.

"Other major initiatives are in second place, need to stay on the sideline, until we get the economy back fully in gear," said Rep. Chris Van Hollen (Md.), chairman of the Democratic Congressional Campaign Committee.

But Democrats find themselves in a box. Soaring annual deficits have made it fiscally and politically treacherous to propose another huge stimulus, leaving limited options for job creation.

Unless, of course, you saw it as part of your job to explain and lead... hah hah, just kidding!

So House Democrats are proposing less-ambitious proposals: a "Make It in America" plan, which closes tax benefits for businesses shipping jobs overseas and provides new hiring credits to local small businesses, and a proposal that would impose penalties on China for currency manipulation, the sort of measure that has often fallen flat in the free-trading Senate.

Obama and some Democrats also want to end the Bush-era tax cuts for the top 2 percent of income earners, which would save more than $600 billion over 10 years. But some senior Democrats, led by the Budget Committee chairman, Sen. Kent Conrad (N.D.), argue against raising any taxes while the economy is teetering on the brink of a double-dip recession. And the Democrats' plan to extend the middle-class portion of those tax cuts would increase deficits by around $3 trillion over the next decade.

I swear to God, their messaging on the subject of the deficit is abysmal. For instance: If you lost your job, would your family stop eating food to save money? How sensible would that be?

Deficit spending is a good idea when it's the right kind of spending. Chocolate bars and video games? Wrong kind. Gas in the tank to get to work? Right kind! Stimulus spending is gas in the tank.

It's really not that difficult -- assuming you're not an idiot, I mean.

Crooked Timber: Plucky King Leopold.

Angry Bear: What caused the budget deficit before the financial crisis?

The Aristocrats: Come see our beautiful beaches!

Steve Audio: "Battle-Tested" Meg Whitman.

Morialekafa: The disappearance of the concept of "doing the right thing."

The Satirical Political Report: The GOP plan on unemployment.

Guest post by Batocchio. Temporarily e-mail tips to batocchio9 AT yahoo DOT com.

It's crazy, isn't it? It happens like clockwork the minute a Democrat's in the White House. Mike Lux on the Democratic deficit talk that's all the rage these days (as pointed out by Atrios the other day). Which once again raises the question: What, exactly, do Democrats stand for?

So just to summarize here: the deficit is caused by tax cuts for the rich, an economic collapse caused by wealthy bankers which resulted in bailouts for those wealthy bankers plus massive pain for middle income and poor people, tax loopholes and corporate subsidies designed to help the wealthy, plus two wars and wasteful defense spending (much of which goes into the pockets of wealthy defense contractors). And the solution for the deficit hawks: target middle class and lower seniors for social security cuts, and put in a regressive tax that is a burden to low and middle income people.

Justice: American style.

Elites are selling this as a grand compromise: Conservatives get Social Security cuts, and liberals get a tax increase. Oh, boy. My question is: what do regular folks get out of the deal besides screwed?

Progressives ought to be screaming bloody murder at this phony compromise, but we also ought to have a constructive alternative on how we end the budget deficit. There are plenty of budget cuts we can live with: ending wasteful defense spending, take away subsidies to the big corporate farms, put a strong public option in health care reform, have the federal government negotiate drug prices, end the wars in Iraq and Afghanistan. There are plenty of taxes we can raise that wouldn't soak the people who have been most hurt by the economy of the last decade, including a financial transactions tax on the big banking speculators, an end to the corporate tax loopholes and offshore tax avoidance, bringing taxes on the wealthy back to the level they were before the Reagan tax cuts.

If you did all that, even waiting another year or two to let the economy get on a firmer footing, you could easily balance the budget before the 2010 decade is out and have plenty of money left over to invest in the infrastructure and schools that we so desperately need.

If you want to solve the deficit, target the folks whose time at the money trough caused it in the first place: the big banks, the defense contractors, the drug and insurance companies, the agribusiness giants, and the super wealthy that got all of those huge tax cuts in the first place.