If you haven’t had a chance to watch this speech, please do, I’ll wait…otherwise, the transcript is here, helpfully provided by the LA Times. By way of background, the location of the speech today was a city in Kansas where, 101 years ago, President Theodore Roosevelt gave a speech famously calling for a “New Nationalism” and proposing his “Square Deal” to the American people. Was President Obama being slightly ambitious in his choice of historical contextualization? Perhaps, but to my mind it was well worth the risk.
Now then. While this speech was touted as an “economic” speech, the tenor and content ranged far more widely than simple concepts of supply and demand. President Obama laid out a new framework for the American economy, with the explicit goal being to rebuild and expand the middle class. He made the argument that government should not try to “fix” all the problems of society, but that government should work on behalf of the people’s interests.
With a forcefulness that has been heretofore lacking in most of his presidential speeches, President Obama called out greed, irresponsibility, and the continuing fallacy that is “trickle-down economics.” He called for new rules of the road that apply to everyone, not just to Main Street, but to Wall Street as well. He defended the Dodd-Frank financial reform bill, and made a stirring statement about the importance of the Consumer Financial Protection Bureau and its soon-to-be-blocked Director nominee, former Ohio Attorney General Richard Cordray.
One of the more memorable phrases to come out of the speech is President Obama’s term “you’re on your own economics” to characterize the preferred economic plan of the GOP. The contrast came with President Obama’s insistence that American prosperity, long-term prosperity, is gained together, in contrast to the “YoYo” economic ideas of the GOP.
But President Obama’s speech led up to what I felt was the culminating point: illustrating for the American people that there is a different form of capitalism available; one that is more responsible and ultimately self-sustaining than the winner-take-all capitalism we’ve endured the past 30 years. The President spoke of Marvin Windows, of Warroad, Minnesota, and described (skip to the last 7 or so minutes of the video clip to catch it) how the company has never laid off a single worker in its 100+ year history, despite enduring the Great Depression and the ongoing Great Recession. How did Marvin achieve that feat? Simple; through shared sacrifice from both the workforce and the management when times have been tough. The President didn’t get into details, obviously, but his simple illustration of what could be summed up for the audience that change, true change, is within our grasp if we see each other as fellow citizens, and recognize that prosperity will be gained through helping each other out, rather than shorting each other constantly. Responsible capitalism is what we ought to strive for, rather than a corporate ethos solely driven by the fiduciary responsibility to shareholders.
The President attacked inequality sharply, broadly, and directly, and proposed some new/old ideas to guide us out of the predicament we find ourselves in as a nation. If it was a speech somewhat lacking in the soaring rhetoric of campaign Obama of 2008, the sober tone reflected the weighty concerns facing the man as President. In time, I believe this speech will be seen to be a major one, where he describes the economic goalposts as they have been set for the past number of decades, and proposes that we, as a nation, make the effort to shift them back so that the goal is within the majority’s reach once again. This speech sets the stage for the 2012 campaign, surely, but it also challenges Americans to greater collective achievements.
I don’t normally watch presidential speeches, but this one had me riveted from the start. I’ll give Greg Sargent the last word on this topic, the final paragraph of a typically insightful blog post on the speech:
Political scientists will tell you that individual speeches don’t matter; and that grand themes are very unlikely to supplant the direct experience of the economy as a motivator of voters. But we’ll be hearing these themes countless times between now and election day. And anyone who had hoped that Obama and Dems would make an unapologetically populist and moral case against inequality and economic injustice central to Campaign 2012 should be pretty pleased with what they heard today.
Chris Hayes has been the Editor at Large for The Nation magazine for a few years now, among numerous other gigs, and now has his own show on MSNBC on Saturday and Sunday mornings. It’s a brilliant re-envisioning of the stale weekly public affairs shows dominated by the same rotating cast of characters, in part because of the sheer diversity of the guests Hayes features. Sunday’s program had 3 women at the table along with Hayes and another male guest, for example. Try finding that sort of gender-ratio on “Meet the Nation News Sunday.” Beyond the guests, however, the show strives to offer a diversity of opinions on a multitude of topical stories, and to dig into the details of what’s happening and why in a way the typical news program is simply unable to. As a perfect example and segway into my point, in the video above, Hayes lays out an argument as to why the Supercommittee’s failure this past week is in fact a good thing for America; his sentiments are ones that I have been mulling over recently myself. Do watch it.
Hayes mentions the recent ascensions to the top leadership posts of two technocrats in Greece and Italy, noting that their jobs, their mandates upon entering office, are to push through deeply unpopular austerity packages over the will of the majority of their supposed constituents.
Technocracy has suddenly become all the rage amidst the debt crisis of the eurozone. In Greece, prime minister George Papandreou was ousted in favour of the unelected former central banker Lucas Papademos, after he had the effrontery to call the referendum that never was. In Italy, Mario Monti, the unelected former EU commissioner, has anointed a cabinet of academics, bankers and an admiral, without a single representative of Italy’s political parties. This novel step is designed to reassure international bond markets, which have recently pushed Italy’s yields to perilous levels. (emphasis added)
Key takeaway: the political process is anathema to international finance.
Consider a few short weeks ago when then-Greek Prime Minister George Papandreou had (shockingly!) called for a national referendum to be held on the terms of an European Union/International Monetary Fund bailout plan that would have included harsh austerity measures to be imposed on the Greek people. The markets crashed, and the two biggest European economies’ leaders reacted with scorn:
At a bruising meeting in Cannes on Wednesday night, French President Nicolas Sarkozy and German Chancellor Angela Merkel warned [Papandreou] that Athens would not receive a cent more in aid until it met its commitments to the euro zone.
Greece was due to get a vital 8 billion euro installment this month and says it will run out of money in mid-December if it does not get the loan.
Despite the turmoil in Athens and uncertainty over the euro zone, European stock markets and the euro rallied in volatile trading as the likelihood grew that Greece would not hold the highly risky referendum.
Note that opening the decision-making process up to those who will bear the brunt of any economic decisions made by the powers-that-be, the citizenry, is tantamount, in this calculation, to introducing high risk into the equation. The cold logic of finance, of interest rates and debt-to-GDP ratios, does not comport well with the warm inefficient fuzziness of the electorate, with their myriad voices and parochial/familial concerns. How are the financiers supposed to get their bailouts when the poor rubes paying for it demand something more than the simple extraction of wealth from their country?
The power relationships on evidence in the foregoing snippet of the Greek referendum situation are revealing: the larger “creditor” economies of France and Germany here acted as front-line enforcers with the wayward Greek leader Papandreou; the EU, a supra-national body of European nations acted in concert with the IMF, another supra-national body representing the strictly monetary interests of client nations, to craft a bailout package for Greece that brings great pain to the Greek people; meanwhile, the Greek people are demonstrating and rioting in the streets by the tens or hundreds of thousands to show their disapproval, and yet, they are pawns in the grand scheme. What are the Greek people supposed to do when it seems the entire world (particularly the sanctimonious Germans) is blaming them as a people for being profligate – where are they to turn to voice their opinions democratically when the one opportunity they would have had to do so is brutally snatched away from them by shadowy international forces?
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This sordid and ongoing tale of crisis in Europe reveals the flipside to the ethos of globalization that has dominated international politics since the early days of the “Washington Consensus”. In order to govern worldwide flows of goods, services and capital, world-bestriding structures of governance must be created. To the extent that those structures are endowed with the authority to act in crises, those actions are by nature going to be out of the direct control of the citizenry of the nations affected, thus denying the citizens of the world recourse to shape the responses of those supra-national institutions. The structures of these institutions ensure that their responsiveness will be primarily directed towards the largest stakeholders – the largest economies and the largest private financial institutions – thus making the decisions made representative of the policy prescriptions of an even more rarefied status of elites. Power is thus concentrated further, with the results trickling down upon the rest of us. And again, we have effectively no recourse to change much at all.
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The notion that centralization=efficiency, related to the economic concept of “economies of scale,” has reigned supreme in much of the modern industrialized world. We see these tenets manifested in the superstores we shop at, the industrially-produced agriculture we purchase, and the (public) school systems we send our children to be educated at, for just a few examples. Our governmental policies, and indeed, the growth of the federal government itself in the past century, has reflected the notion that centralized governance is necessarily better for all due to greater standardization of outputs and efficiencies gained.
And yet, centralization creates with it a certain culture as well, an elite culture where those well-versed in the human power relationships and bureaucratic operations of the institutions influence the direction of decision-making to their own ends. Centralization creates, not only an institution’s set of substantive actions with which it operates in society, but an entire class of administrators devoted to the upkeep and promulgation of the institution itself through budgeting, revenue collection, inter-institutional lobbying, and so forth. Institutions, first and foremost, desire to keep existing, thus creating a tension with their public service functions.
I would argue that much of the Occupy-inspired debate currently ongoing in our society is at least in part related to the discussion of how much the public interest is served by various institutions of government versus how much those institutions merely serve as vehicles for particular interests to enact their wills. The public wants accountability for the financial sector, but the relevant regulators have shown themselves to be rather more beholden to the interests of Big Finance than the public interest (see my posts on housing for more on that). The public wants more investment in clean energy, yet there is an institutional structure within our government dedicated to fossil fuels, from the military fighting wars that just happen to be in oil-rich regions, to the massive tax breaks and other indirect subsidies for fossil fuels baked into our tax code. How do we get the changes the populace wants enacted into law? We have to rely on elected representatives with a slew of other institutional and professional competing interests to act on our behalf – not an easy thing to do, apparently!
The clear answer to these problems appears to be decentralization – a reduction of the scale of decision-making to a more manageable, democratic, and community-oriented size. The General Assemblies occurring at the Occupy encampments around the country have represented that trend most vividly, as Chris Hayes highlighted in the clip above. While some efficiency may certainly be lost along the way, democracy and true representation can be gained, ensuring that the rule of an unaccountable elite, such as we are witnessing today, is significantly more difficult to achieve. Consider the supra-national institutions I’ve noted above – they are, if anything, abstractions of representative government; meta-representative democracies, if you will. Who are their constituents but other client states and their assorted national economic interests? Who are their leaders but those who have been most agreeable to said client states and economic interests? How have you been personally helped by the IMF lately?
I hope to pick up further threads of this discussion in a future post, as there’s a lot to the topic of decentralization to discuss. As always, your comments are welcomed and appreciated in the comments area below.
Just a short note of gratitude and no small amount of incredulity at the cross-generational dialogues that have been fostered through and around the Occupy movement, which I and others view as largely a Millenial generation-driven thing. I was just reading a well-done post by Charles B. Pierce at Esquire’s Politics Blog and noting his tone lamenting the political fecklessness of many of those from his generation now holding the reins of power:
How hard can this be? How hard is it to tell people to get angry at the people who really are making off with their country's wealth and their personal futures, especially when it's the god's honest truth? How hard is it to tell people that they are not the enemy, that to shoot pepper spray into the eyes of a college student is to spit in the eye of everyone else? Please do not hand me concerns for your "political viability." That makes you cowards. The protesters are doing the hard work. They're the ones living in a dozen tiny Argentinas all around this country. They're the ones getting beaten up and tortured, on TV, with chemical agents. They're the ones going to jail. All I'm asking is that you all have their backs, and all you have to do is get up and give a whole bunch of speeches saying so. Right now, they're pretty much out their on an island while empty charlatans like Newt Gingrich and prissy little shmoes like David Brooks are beating them over the head rhetorically, while the cops are more than happy — indeed, damned near gleeful — to do it in person.
Barney Frank wonders where the Occupiers were during the elections of 2010? Give them a politics worthy of their courage and they'll show up. This does not seem to me to be a difficult problem, but it does appear possibly to be the last chance for progressive politics for an awfully long time. You don't need an $850,000 contract to see that.
That second bolded sentence “Give them a politics worthy of their courage and they’ll show up” sounds like one of the best lines I’ve heard this year, for both its succinct razor-edge of truth, to its political astuteness. This generation out protesting, my generation, is the one that greatly helped President Obama get elected. We came out of the Bush era scarred (as I’ve noted previously) and looking for a change that Obama appeared to represent. But more than that, he represented prudent judgment in correctly sizing up many of the true threats to our country (the undercutting of civil liberties domestically and human rights abroad, being cogent for me in particular) and, yes, a courage in his opposition to the Iraq War that was greatly lacking in the politics of those days, and even moreso today. The reality of President Obama has been drastically different from the representation of Candidate Obama, but at the time, he showed a side of politics that people yearned for. Show us courageous politicians taking stands that put them on the right side of popular sentiment, particularly in the face of a potential loss of big money campaign donors, and I bet my generation will show up.
So it is with that background in mind that I have been considering the amount of support I see and hear from older generations for the movement now sweeping America. A close family member informed me that on her recent trip to New York she happened upon an Occupy Wall Street group at a public park (not Zuccotti, mind you) and was very impressed with the “human microphone” and the positive, steadfast energy the group displayed, despite it being an awful, rainy NYC November day. The Facebook posts I see from Gen-Xers, Baby Boomers, and on up regarding the Occupy Movement evince a strong bond between the generations that I don’t think I’ve ever seen as clearly in my life.
I had always feared that the elites’ plan to divide the entitlement program pie, and to set those of us in younger generations on a different retirement plan than our parents, threatened to separate the generations (which is probably the point!) and why you still hear many GOP candidates discussing giving young people the “option” of purchasing health savings accounts and the like. The fact that we’re all working and saving towards a common fund, a common vision, means we’re all in it together, to some extent, despite the fact that the powers-that-be want all that locked-up Social Security and Medicare money to be released to the predations and speculations of Wall Street.
But now, the elites have played their hand too far. They’ve effectively united a strong bloc of people across the generations because, let’s face it, we’ve all been looted in some way or another. We recognize a common enemy: the collusion between big business and big government that works to undercut our rights and to separate an already economically-stratified society into one where you have vastly different justice systems, depending on your standing and net worth (witness this egregious hit-and-run case from Colorado last year involving a “wealth manager” and a cyclist for a great/horrifying example). There’s no justice for those on the top, but a harsh and exacting justice for those of us not at the top. Witness the UC Davis pepper-spraying last Friday:
Glenn Greenwald’s take on the UC Davis situation adroitly points towards the larger issue at play in our society:
The UC-Davis Chancellor responsible for the pepper-spraying of her students, Linda Katehi, today went on Good Morning America and explained why she should not resign or otherwise be held accountable: “we really need to start the healing process and move forward.” On a radio programin the afternoon, she expanded on this view by saying: “We need to move on.” So apparently — yet again — the only way everyone can begin to “heal” and “move forward” is if everyone agrees that those in power with the greatest responsibility be fully shielded from any consequences and that their bad acts be simply forgotten. I wonder whereshe learnedthatjustifying rationale?
We yearn for justice as a society. The concept of justice embedded in the Constitution argues that those at the top and those at the bottom ought to be equal in the eyes of the law, and yet, the past decade has clearly shown how far our society has gotten from those founding principles. Occupy, for all of its media-unfriendliness and potential to turn off the “median voter,” is a nascent attempt at reclaiming that original concept of justice. Justice is anathema to the powers-that-be, as their gains are largely ill-gotten and their positions in society often depend on their being the the best operators within a system of legalized corruption. The moment their hold on power slips, and they no longer control the levers of power and the judiciary, they will be subject to the comeuppance that has been long in coming, and much delayed.
Greenwald quotes Rosa Luxemburg’s epic comment to wonderful effect:
“Those who do not move, do not notice their chains.”
If you look askance at the Occupy movement, and you see nothing but a bunch of rowdy young people lacking drive and ambition, ask yourself how you’re constrained in your own life. What cutbacks have you had to make to your hopes and dreams, let alone your financial position? How many of those setbacks are due entirely to your own poor judgment or over-extension, rather than being at least in part the shock wave from a system of willfully-created asset bubbles and legislatively-endorsed corruption imploding upon itself? If you trace the origins of your own problems back to their logical starting points, do they solely originate from your decisions? That is the line of thinking the powers-that-be hope you’ll take away. Heaven forbid you should look up the food chain to discover how usury has been made legal and how student loans are no longer discharged in bankruptcy; how insolvent banks are allowed to claim the full face value of toxic assets to bolster their bottom lines, and yet how lying to get food stamps to feed one’s two children can net you 3 years in federal prison. “Justice,” these days, comes at the expense of the rest of us. We can see this fact in all its harsh reality and find a unity in it, or we can deny deny deny that the mirror the Occupy movement is holding up to our society reflects far more of our collective life experiences of brokenness and unnecessary misery than we’d care to admit.
Thank you to those of the older generations who see the Occupy movement not as a threat, but as the opportunity for a rebirth. We need you, and you need us. We ARE in this together.
As a follow-up to my post from last week regarding polling on the question of whether the GOP is purposely sabotaging economic recovery in order to defeat President Obama next year, I thought I’d bring my dear readers’ attentions to the results of two new polls released today that cover similar territory. I had mentioned that the Suffolk University poll from last week was just crying out for additional data to help discern a trend or not, and it appears we have some further data to work with now.
First off, a Washington Post/ABC News poll of 1,004 adults, with a 3.5% margin of error asked the following question:
Which of the following statements comes closest to your point of view? Statement A: (President Obama is making a good faith effort to deal with the country's economic problems, but the Republicans in Congress are playing politics by blocking his proposals and programs.) Or Statement B: (President Obama has not provided leadership on the economy, and he is just blaming the Republicans in Congress as an excuse for not doing his job.)
Compare the wording to that of last week’s Suffolk University poll:
Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?
The WaPo/ABC poll is not as clear with respondents about the political intent of any perceived economic sabotage on the GOP’s part – referring to “playing politics” rather than “to insure that Barack Obama is not reelected” – but the underlying message is essentially the same: do you think the GOP is purposely making the economy worse for political purposes? The results:
Which of the following statements comes closest to your point of view? Statement A: (President Obama is making a good faith effort to deal with the country's economic problems, but the Republicans in Congress are playing politics by blocking his proposals and programs.) Or Statement B: (President Obama has not provided leadership on the economy, and he is just blaming the Republicans in Congress as an excuse for not doing his job.)
Obama making a good effort: 50 Obama has not provided leadership: 44 Both (vol.): 2 Neither (vol.): 2 No opinion: 1
And once again, the results of the Suffolk poll:
Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?
Yes 49 No 39 Undecided 12
Okay then! Seems like there could be something more to this meme now. Greg Sargent pulls out the internals of the WaPo poll, providing more points of interest:
The toplines: Americans agree with the first statement over the second one, 50-44. According to numbers sent my way by the Post polling team, this is more pronounced among moderates and independents:
* Independents favor statement one over statement two by 54-40.
* Moderates favor statement one over statement two by 57-37.
The overall number is lower, at 50 percent, because a hilariously meager nine percent of Republicans believe this to be the case.
Who likes to have their side accused of “playing politics” with anything? It just sounds offensive when we’re talking about real peoples’ lives and the overall economy, no wonder only 9% of Republicans agree with statement #1.
Our third poll of the day, which Talking Points Memo’s Brian Beutler argues constitutes a “trend,” (I would agree) is one commissioned by the liberal blog DailyKos:
Also on Monday, liberal blogger Markos Moulitsas publicized the top lines of a PPP poll he commissioned, which closely mimic the the Post/ABC survey: “50% think GOP intentionally stalling economy, incl 51% of Indies, & 15% of GOPers. Details Tuesday.”
So here we have three polls showing broadly similar results to similarly-worded questions (although the exact wording of the DailyKos poll will be out tomorrow) and which also show that a majority of independents ascribe to some version of the notion that the GOP is deliberately sabotaging the economy. As we are all surely aware now, the vast and growing “middle” of the electorate is where the true electoral battleground lies for 2012 (and virtually every modern election) so it would appear that President Obama has the upper hand with this crucial slice of the populace, no? Steve Benen, echoing Greg Sargent, notes the inherent danger of the polls’ findings for the President:
Though in theory, it should, this won’t necessarily give President Obama a boost. The degree of national cynicism is so intense, many Americans may simply assume Republicans are sabotaging the national economy, but take their frustrations out on the president anyway. As Greg noted, “The number who see Obama as a strong leader is now upside down (48-51), suggesting yet again that even if Americans understand that Republicans are deliberately blocking Obama’s policies,they may conclude that his failure to get around them just shows he’s weak or ineffectual.”
Voters’ understanding of the political process is severely limited, and many Americans likely fail to appreciate the role Congress must play in policymaking. There are no doubt plenty of voters thinking, “Sure, Republicans are sabotaging the economy, but why can’t Obama just go around them?” unaware of the fact that, on a grand scale, this isn’t an option. (emphasis added)
Indeed, President Obama’s failure to “get around” Congress is the true reason why he’s embarked on his “jobs tour” the past couple months – taking his message directly to the people of America, urging them to contact their Congressmember and tell them to act on jobs and the economy. In a broad sense, it appears the efforts are paying off, according to Josh Marshall. Furthermore, the amount of braying from the GOP about “class warfare” from the President has increased proportionally as his jobs message has caught on. Witness Rep. Eric Cantor’s aborted speech about “income inequality” (note: he canceled the speech when it was revealed that Occupy protesters planned to respond to him by exercising their free speech rights) and Rep. Paul Ryan’s speech to the conservative Heritage Foundation largely predicated on the notion that America needs to preserve its heritage of economic mobility through surprise! not raising taxes on the wealthiest among us. (Note: he’s wrong about our economic mobility rates compared to other countries.)
So where does all of this data leave us now? Well it would seem that President Obama needs to work closely with the Democrats in Congress to present a focused message (not easy with Democrats, ever) regarding the GOP’s obstructionism. Pushing the “sabotage” message, in concert with more polling data showing similar results to those presented here, will force the media to cover the sabotage meme more widely and thus put the Republicans on defense on job creation – exactly the situation they hope not to find themselves in heading into a still-very-unsettled GOP presidential primary season and an election year. President Obama’s rather limited moves last week on student loan reform, homeowner relief and jobs proposals for veterans might represent a good-faith show of effort for those skeptical independents and moderates doubting his leadership, and they could marginally influence his standing with those key constituencies. But overall, those moves show the Presidency’s economic weakness vis-à-vis Congress, and the relative ineffectiveness of the Executive branch’s sprawling bureaucracy to help improve peoples’ lives in a truly meaningful way. Coordinated actions between the Executive and Legislative branches are what is needed, but until Obama and the Democrats can find leverage points to force the Congressional GOP’s hands on job creating legislation, it is unlikely the President will be able to do much more than chip away at the margins of the economic problems facing this country, winning message or not.
Congressional leaders jump in to save 'super committee'
In an effort to end the deadlock on deficit reductions, party leaders, especially on the Republican side, are meeting behind closed doors with members of the panel.
Okay, so perhaps we’re talking more about a legislative bailout of sorts, but is it not a perfect microcosm of the depravity of American politics that a panel convened due to the failure in leadership on the part of our “leaders” to figure out “responsible” ways to rein in fiscal deficits over the summer (“responsible” in Washington-speak meaning “measures that maximally shift any deficit-reduction burden onto the backs of the coddled lower and middle classes so as to spare the overburdened upper classes from having to pony up anything further in the way of taxes”) and which is now faced with “failure” (here meaning an automatic triggering of across-the-board cuts to the sacred cows of both left and right, in this case the entitlement and defense spending, respectively) due to fundamental disagreements on how much and how best to stick it to the lower and middle classes, is now being furiously “saved” by leadership so as to continue its “noble” work of further impoverishing millions who are already struggling. Note the journalist’s framing of the issue at stake here:
Failure to reach a compromise by Thanksgiving to slash $1.5 trillion from the nation's deficits over the next decade could send shock waves through the fragile economy, as happened during the summer debt ceiling standoff. Failure would also trigger automatic budget cuts that both parties want to avoid. (emphasis added)
The implicit assumption in the highlighted sentence is that the economy could be roiled by the “failure” of the Super Committee to reach agreement on deficit reduction measures other than those mandated in the trigger agreement. To be more specific, in this framing, the markets will react negatively if deficit reduction agreements of sufficient size and scope are not reached by the Super Committee. Indeed, I agree with this analysis, but for reasons other than those the journalist implies.
The markets may well face turmoil whatever the outcome of the Super Committee, because whether the Super Committee is “successful” or not, the vast majority of Americans lose in some way or another, facing elite-imposed austerity for what is a manifestly elite-generated economic crisis. Austerity, as has been witnessed in Europe the past few years, may work to reduce budget deficits in the short run, but in the longer term, as government spending is reduced, that compounds with reduced recessionary spending by consumers as well as businesses, thus leading to less consumer demand, hence more layoffs, hence lower tax revenues, which leads to calls for further austerity…the cycle is virtually endless. You then may get calls for a government to sell off or privatize public assets in order to create revenue, which ultimately reduces public wealth and resources in the long run. Counter-cyclical government spending is designed to stimulate demand in the short-term, in order to create positive spillover effects for the private sector and to avoid demand slackening to the point that you have a wave of business closures with the attendant layoffs and structural deformations of local/regional/national economies. The counter-cyclical government spending notion is the linchpin of Keynesian economic theory, and despite their professed love of free markets, many Republicans tend to like the Keynesian view of government spending policies as a remedy for a sick economy, at least when it comes to defense spending
Representative Chris Van Hollen, Democrat of Maryland and a member of the panel, said the attempt to undo the triggers “reflects a total lack of seriousness.” Adding that such efforts would not be successful, he said they were “the result of people trying to escape the fundamental choices before us, and one of those choices is whether or not we are willing to end special interest tax breaks to pay for defense.” The White House is also highly unlikely to approve such actions. The president is averse to the military cuts, but saw the threat of them as a way to pressure Republicans to reach a deal. “There is more fear this time,” Representative Mo Brooks, Republican of Alabama, said about the anxiety being expressed by military contractors in his district. Mr. Brooks said he voted against the debt-ceiling legislation because of the possibility of deep Pentagon cuts.
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Republicans have expressed more alarm about possible across-the-board cuts in Pentagon spending than Democrats have voiced about cuts in domestic programs that would also occur. Many safety-net programs for low-income people, like Medicaid and food stamps, would be exempt from automatic cuts. And Medicare payments to health care providers could not be reduced by more than 2 percent. (emphases added)
Yes yes, make sure to protect the all-important “job creating,” “100% private-sector” defense contractors, and pay no attention to the mewling from the general public about the austerity they must contend with. We must ensure the revenue stream for government to the contractors is uninterrupted, lest their fraudulent schemes for bilking taxpayers out of their hard-earned money are subjected to closer public scrutiny!
At least 91 contractors holding contracts worth $270 billion were the subjects of civil fraud judgments -- and in some cases criminal fraud convictions as well, many of which resulted in fines, suspensions or debarments. Even so, Defense Department contracting officers still assigned $4.9 billion worth of work with these companies after the fraud was uncovered, the report said.
The contractors identified in the report include such blue-chip entities as Boeing, Lockheed Martin, General Dynamics, Pratt & Whitney, IBM and even the Yale medical school.
All this to say that the markets will likely react poorly to any austerity measures in the US beyond what has already been enacted, because corporations and the markets recognize that consumer demand is the weak link in the American economy at this time, not the impending threat of governmental default due to an overly burdensome public debt load (unless it is a default threat created out of Congressional dysfunction, as it was this past summer).
“You’ve got to stimulate demand growth,” said Indra Nooyi, CEO of Purchase, New York-based PepsiCo, in an interview. “Until we stimulate primary consumption, the cash will continue to sit on the sidelines.”
The companies’ warnings follow a cut to the U.S. credit rating on Aug. 5 and a two-week rout in global equity markets as investors dumped stocks in favor of gold and Treasuries. With three European countries having required bailouts, concern over weakening demand and rising unemployment is spreading. A report yesterday said confidence among small businesses fell in July for the fifth consecutive month as the sales outlook dimmed.
The quotations above are from August, but we find ourselves in virtually the same situation today (check the report headlines for the past number of months) with weak consumer confidence and corollary spending levels.
So here we witness a massive effort by our top elected officials to save a budget-cutting process that will likely impoverish our nation and citizens still further in order to spare from cuts one of the more fraudulent, yet highly-entrenched sectors of the national economy, while managing to simultaneously increase future budget deficits due to reduced tax revenues (driven by weak consumer spending, once again). These are the priorities and policy solutions of our elected officials these days. Tell me that isn’t a chilling thought. Once again, on whose behalf do they truly work?
