Dark age of economics, catfood edition

Why is this so hard to understand?

This is important background—because the economy’s current problem has nothing, zero, nada to do with deficits. Its problem is a lack of demand. If there were more demand, more people would be employed. The government is the only force capable of creating demand right now, since the housing bubble wealth that had been fueling the economy has largely disappeared. This means that if our commission co-chairs had ever bothered to look at the current deficit in the context of the economic crisis, they would be complaining that the deficit is too small rather than too large.

Their ignorance of basic economics also leads them to hype unfounded fears about the longer-term picture. If they understood the fact that the current deficit is a support for the economy, rather than a drain on the economy, they would not be concerned about the buildup of debt taking place at the moment. There is no reason that the Fed can’t just buy this debt (as it is largely doing) and hold it indefinitely. (The Fed has other tools to ensure that this expansion of the monetary base does not lead to inflation.)

That way, the debt creates no interest burden for the country, since the Fed refunds the interest to the Treasury every year. Last year the Fed refunded almost $80 billion in interest to the Treasury, nearly 40 percent of the country’s net interest burden. This means that the fears raised by Simpson and Bowles of an exploding debt reaching 90 percent of GDP by the end of the decade have no foundation in reality.

 Neither Simpson nor Bowles are economists.  But even if they were, and even if they understood these facts, they'd find a way to unknow them.  If you're trying to mug an old lady for catfood, and lavish a rich lady with pearls, then it's very inconvenient knowing all this.

But economists who should know better don't know better. Or pretend not to.  As Paul Krugman said last year, we really are entering a dark age of economics. But sadly, economics is not the only discipline under attack.  From science to history to the Constitution, Americans no longer hold a common set of beliefs based on evidence and truth.  Instead, their beliefs are divorced from fact, floating along unbuoyed and unburdened by anything real or true. This, of course, is no accident.  It is a by-product of our "Thank You for Smoking" culture that allows corporate interests to fake facts and blur debate -- or buy politicians or reporters to do it for them -- to obscure information that could hurt their bottom lines. Just free-associating here, but I'm thinking Koch brothers, give people more of their own money, you gotta fight 'em over there to fight 'em here, climate change, "deficits don't matter" ... Yes, of course, Cheney -- that human fog machine. In case it's not obvious, almost all this smoke emanates from conservatives.

What's most maddening is when people, especially so-called experts, unlearn things they once knew.  As in many fields, economists live in their own narrow realms studying arcane areas their whole careers and -- hard to believe -- forget the basic facts they learned as freshmen.  As Brad DeLong said:

Given their understanding of macroeconomics, and I mean the basics not the hard stuff, it's becoming a lot easier to understand how financial economists missed the developing bubble and the effect it would have on the macroeconomy. We specialize mightily in academic economics ... (s)o we rely and depend upon the expertise of others to inform us about areas in which we don't normally work. One thing I've learned from the current episode is not to automatically trust that the most well-known economists in the field have done due diligence before speaking out on an issue, even when that issue is of great public importance, or even to trust that they've thought very hard about the problems they are speaking to. I used to think that, for the most part, the name brands in the field would live up to their reputations, that they would think hard about problems before speaking out in public, that they would provide clarity and insight, but they haven't. In fact, in many cases they have undermined their reputations and confused the issues. People have been deferential in the past, myself included, and these people have been given authority in the public discourse - even when they are demonstrably wrong their arguments show up in the press as a "he said, she said" presentation. But, unfortunately for the economics profession and for the public generally, the so called best and brightest among us have not lived up to the responsibilities that come with the prominent positions that they hold.

But sometimes it's willful ignorance, making the dark ages even darker. Krugman:

Remember, what defined the Dark Ages wasn’t the fact that they were primitive — the Bronze Age was primitive, too. What made the Dark Ages dark was the fact that so much knowledge had been lost, that so much known to the Greeks and Romans had been forgotten by the barbarian kingdoms that followed.

And that’s what seems to have happened to macroeconomics in much of the economics profession. The knowledge that S=I doesn’t imply the Treasury view — the general understanding that macroeconomics is more than supply and demand plus the quantity equation — somehow got lost in much of the profession. I’m tempted to go on and say something about being overrun by barbarians in the grip of an obscurantist faith, but I guess I won’t. Oh wait, I guess I just did.

In a letter delivered to Pelosi on Tuesday, Boehner identified the tactic Pelosi might use. "Using the suspension process - which requires a two-third vote in the House to pass legislation instead of a simple majority vote - as the vehicle for a vote on legislation that would stop President Obama's tax hike on all tax-paying Americans would be an obvious attempt to circumvent the will of the House by denying Republican and many Democratic members their right to offer an alternative proposal," Boehner wrote.

For health's sake, ditch bipartisanship

 Progressives aren't making it up when they say Republicans keep moving the goalposts rightward.  Every time Democrats try to meet them half way on an issue, they end up going the whole way, as the policy at hand, and the country as a whole, shift further down a conservative path.  Yet, somehow, the issue remains unresolved.  Hmmm, see a pattern here? Ezra Klein does on health care policy over the past 60 years:

The original idea, of course, was a national health service run by the government. Harry Truman proposed it and fell short. Lyndon Johnson got it for seniors and some groups of the very poor. But Republicans said that was too much government, and it was unacceptable for the whole country. They proposed, through President Richard Nixon, an employer-based, pay-or-play system in which the government would set rules and private insurers would compete for business.

That didn't go anywhere, because Democrats, led by Sen. Ted Kennedy, weren't ready to give up on a national health service. By the 1990s, they were. President Bill Clinton proposed an employer-based, pay-or-play system in which the government would set rules and private insurers would compete for business. Republicans killed it. Government shouldn't be telling businesses what to do, they said, and it shouldn't be restructuring the whole health-care market. Better to center policy around personal responsibility and use an individual mandate combined with subsidies and rules making sure insurers couldn't turn people away...

I think we know how that turned out.  Obama and the Democrats did, in fact, propose that last plan, and pass it, but, true to form, Republicans still wouldn't go along with it.  In the process, they managed to turn Mitt's Romney's mild little plan into StalinCare. 

It stumps me how a Harvard guy like Obama doesn't detect a trend here, or, if he does, refuses to change his tactics in response.   I always hated his bipartisan spiel and hoped it was just that, a political song and dance  he would abandon as mere campaign blather. He did that with so many of the progressive issues I care about, but the bipartisanship? That he clings to.

All the talk about Axelrod's "We have to deal with the world as we find it" quote has missed the point:  Obama was elected to change "the world as we find it," not learn to live with it.  That, more than anything else, shows how little Obama & Co. believed the "change" message they evangelized in 2008. You pick Rahm to deal with the world as you find it.  You pick Larry Summers to deal with the world as you find it.  You pick Tim Geithner and court Wall Street and dine lobbyists to deal with the world as you find it.  But you don't change it. Unfortunately, the world as we find it may be this: Obama is a conventional politician surrounded by conventional people with conventional ideas.  How you escape a near-depression that way escapes me.

In a letter delivered to Pelosi on Tuesday, Boehner identified the tactic Pelosi might use. "Using the suspension process - which requires a two-third vote in the House to pass legislation instead of a simple majority vote - as the vehicle for a vote on legislation that would stop President Obama's tax hike on all tax-paying Americans would be an obvious attempt to circumvent the will of the House by denying Republican and many Democratic members their right to offer an alternative proposal," Boehner wrote.

In a letter delivered to Pelosi on Tuesday, Boehner identified the tactic Pelosi might use. "Using the suspension process - which requires a two-third vote in the House to pass legislation instead of a simple majority vote - as the vehicle for a vote on legislation that would stop President Obama's tax hike on all tax-paying Americans would be an obvious attempt to circumvent the will of the House by denying Republican and many Democratic members their right to offer an alternative proposal," Boehner wrote.

Progressives: Vote only on middle class tax cuts

Three organizations that support Democrats are among those calling for the House to hold a vote on extending the middle class tax cuts only -- and not tax cuts for the rich -- before Republicans take over in January.

The AFL-CIO, Democracy for America and the Progressive Change Campaign Committee see mostly gain, little downside to putting Republicans on the spot. Voting down the middle class tax cuts on "principle" -- the principle that the rich need a tax cut more than average Joes -- could be perilous for the GOP.  Of course, this assumes they face an opponent that knows how to cash in their political chips  -- a very large assumption with Democrats.

Another pitfall: Republicans could counter with a procedure called a "motion to recommit," which could force  a vote on the upper-end tax cuts that just might pass, given the political incompetence referred to herein.

To prevent this, Democrats could use the "suspension process," which would require a two-thirds majority to pass. Given the stakes, the cowardly lions in the House just might find "the noive" to vote for it. Then there's the Senate, where good legislation goes to die. Republicans and Conservadems will threaten to filibuster, but, again, Dems should say: Dare 'ya.  See who blinks first. (Um, Democrats?) As Greg Sargent says:

Proponents of this argument point out that Republicans have struggled to respond in the past when faced with a possible vote on just the middle class cuts. Recall, for instance, that John Boehner signaled openness to supporting such a move, if it came to it, before quickly walking it back.

 It should come as no surprise that Nancy Pelosi may be the one behind this idea in the House.  That's why John Boner really really really hoped Wolf Blitzer and his Beltway conventionistas would spread the word that Pelosi was a washed-up loser who should take her ball and go home to gaytown.  But it looks like the only balls she'll be taking anywhere are Boner's, judging by this letter he sent her on Tuesday:

"Using the suspension process - which requires a two-third vote in the House to pass legislation instead of a simple majority vote - as the vehicle for a vote on legislation that would stop President Obama's tax hike on all tax-paying Americans would be an obvious attempt to circumvent the will of the House by denying Republican and many Democratic members their right to offer an alternative proposal."

Take a breath, boner.  That is rich, though:  "An obvious attempt to circumvent the will of the House." Pretty much describes the last two years of his life.

Hardball tactics like this are the reason Nancy Pelosi is the only woman for the job of minority leader, and why Republicans and Conservadems are fighting so hard to keep her from it.  But unlike most Democrats, including our president, Pelosi believes in standing and fighting.  And, though Boner/Blitzer - a new talk show on CNN? -- will never tell you this, she's the person most responsible for passing much of the 2008 Democratic agenda closest to it's original form. Or, if they did tell you, they'd say that's why she's no longer House speaker. But progressives know the real reason: The Senate bungled the ball she passed them, and Obama stood and watched.

Here's what DFA had to say about a vote on just the middle class tax cuts:

"It's hard to imagine a smarter fight for Democrats to pick at this moment than forcing every Republican to vote up-or-down on a clean middle-class tax cut that benefits 98% of Americans. Force them to vote, dare them to vote no, and the end result will be good policy and good politics for Democrats. Saying 'We don't have the votes' and never forcing people to show their cards is how leaders in Washington often avoid doing the will of the people. If Speaker Pelosi announced this strategy, it would change the entire debate and finally put Democrats on offense."

Meanwhile, more than 100,000 liberals have signed a petition at the PCCC asking -- begging! -- Obama not to extend the tax cuts for the rich.  It says:

"President Obama, ARE YOU KIDDING?  Democrats lost in 2010 because they caved instead of fighting on popular progressive issues. Americans strongly oppose more tax cuts for millionaires and nearly a trillion in new debt. If you don't fight on this issue, Democrats may lose even more seats in 2012 - and possibly even the White House."

That's right, hit him where he lives -- or won't, if he doesn't fight for the things he says he believes in.

Yoo hoo, John, call your wife

With John McCain for a husband, I'm not sure I'd be such a huge fan of marriage. But unlike her rudderless partner, Cindy McCain has held firm to the principal of marriage equality for everyone, straight or gay.  Still, if anyone has reason to waver, it's her.

Now she is lending her voice to an anti-bulllying video that is part of the "it gets better" movement aimed at stemming the rash of gay teen suicides that has spread across the country.  Woven among other celebrity cameos, McCain chastises the government -- if not her husband himself -- for failing to repeal Don't Ask, Don't Tell, making it clear that if the government will discriminate, so will bullies.

The video is sponsored by NOH8, whose last campaign featured Cindy McCain and daughter Meghan, among others, in ads protesting California's Prop 8 ban on gay marriage.

The stars, in staccato fashion, lay out the grim statistics:  Nine out of 10 LGBT students have reported being bullied in school, and two-thirds say they feel unsafe.  Of these, 28 percent have dropped out.  According to the video, LGBT youth are six to nine time more likely to attempt suicide than straight teens, with more than 25 percent of transgender and a third of lesbian, gay and bisexual teens saying they have tried to kill themselves.

 "What's convincing these kids things won't get better?" asks Gene Simmons of the heavy-metal band KISS.

McCain, in a line sure to infuriate many Republicans, responds: "Our political and religious leaders tell LGBT youth that they have no future."

• "They can't get married"
• "They can't donate blood"
• "They can't serve our country openly," adds McCain, taking aim at DADT a second time. 
• "They can't adopt."

Then, she hammers home her point: "Our government treats the LGBT community like second-class citizens, why shouldn't they?"

Any one of these celebrities, who also include Denise Richards, Dave Navarro and Dr. Drew Pinsky, could have read these words. But to have them come from Cindy McCain -- whose husband is leading the fight in the Senate against DADT repeal -- adds fire and credence to the charge of government failure on this issue.

The clear message is that if the government can't get it's act together, kids won't, either.  It's saying adults need to start acting like adults, and learn to get along, and work problems out, and be kind to each other, and accept differences, because lives are at stake. It could be any one of our kids.

There's another clear message in there, but I'm not sure John McCain will get it.

Olbermann: You rock, progressives

In his just-released statement to viewers, Keith Olbermann takes a swipe at his MSNBC colleague, Joe Scarborough, who gave campaign funds to several friends but apparently tried to hide one of them under his wife's name. He also attended a Republican fund-raiser, um, retirement party. Or something.

You should also know that I did not attempt to keep any of these political contributions secret; I knew they would be known to you and the rest of the public. I did not make them through a relative, friend, corporation, PAC, or any other intermediary, and I did not blame them on some kind of convenient "mistake" by their recipients.

In the letter, Olberman explains that he wasn't aware of NBC's prohibition against political donations and assumed when he made his three donations they would become public at some point.

He acknowledges the power of the progressive community in coming together, separately yet in unison, "to correct injustices great and small."  From Twitter to Facebook to the liberal blogosphere, progressives made enough noise apparently to catch the attention of NBC executives and spur them to reinstate Olbermann quicker than many expected.
,
When Olbermann's donations became public, Scarborough's own contributions came to light, causing his sidekick and chief enabler, Mika Brzezinski, to try to deflect the heat.  She defended Joe's $5,000 donation to his friend, John Merrill, who was running for a seat in the state legislature in Alabama, saying, yeah, Joe made the donation, biiiitches, but it should have been in his wife's name. Subtle, Mika. About as subtle as a triple espresso mocha soy latte -- with a caramel swirl -- sashayed to the set by a Chippendale's dancer.

According to Politico:

That contribution should have been in the name of Scarborough’s wife, Susan Scarborough, according to Scarborough’s co-host on MSNBC’s Morning Joe, Mika Brzezinski, as well as John R. McGregor III, a representative from the Scarboroughs' Pensacola, Fla., bank. POLITICO was provided a copy of the bank transfer, which was dated April 9 and signed by Susan Scarborough.

“The Scarboroughs expect John Merrill will amend his campaign report to accurately reflect that reality,” said Brzezinski. “If he does not, I will recommend they file an ethics complaint against him.”

Brzezinski also challenged Merrill’s recollection of having brought Scarborough to Tuscaloosa for an August 2009 fundraiser for the county Republican Party, which Merrill said “was unbelievably successful. We raised a ton of money that we used to help local candidates.”

That event was “was billed as a tribute to Gov. Bob Riley on his retirement from politics,” said Brzezinski, noting that Riley and Scarborough served together in Congress and asserting, “Any suggestion that Joe Scarborough went to the University event to raise money for a political party is false. Sadly, many politicians try to elevate their standing by exaggerating their connection to Joe. This is one of those cases.” 

Friday evening, Merrill issued a chastened statement to POLITICO asserting that the $5,000 donation — his biggest individual donation of the campaign — was “from Susan Scarborough ... I am very appreciative of her support.”

 So sad. Even Joe's friends have become mini-Mikas to him, willing to do anything just to shine in his halo. As for Mika herself, she's just Alan Colmes in a skirt -- spineless "liberal," insipid suck-up artist. She looks a little like him, too.

Welcome back, Keith.

UPDATE:  Jon Stewart had a funny line Monday night that sums up the whole silly affair:  "It was a stupid rule, but at least it was enforced poorly."

Google maps an invasion

I'm no general or anything, but I wouldn't rely on Google Maps to get me to Grandma's house, no less dredge a river without checking my borders first:

Google officials have apologized and promised to fix a flaw in a map that exacerbated a territorial dispute and triggered a Central American invasion. "We determined that there was indeed an error," said a statement from Google after a Nicaraguan commander used the flawed map as justification for last week's incursion into Costa Rica. The erroneous map showed more territory belonging to Nicaragua than actually exists, according to US State Department maps of the area. When Costa Rica complained that Nicaraguan troops were encamped in their nation, Nicaragua's commander pointed to Google's map during a newspaper interview to prove he had done nothing wrong, and refused to move the soldiers.

 Of course, this was a very convenient mistake for Nicaragua, involving a border they have been fighting over for at least 150 years. Most of us, though, are not as grateful when Google trips us up.  I can't tell you how many times I've mapped a route to a new location and found Google directing me the wrong way down a one-way street, to a road that's no longer there, or showing an arrow several blocks from the correct spot.

The lesson is: only use Google to show what you already know. Like Nicaragua?

NBC's rules don't rule

Josh Marshall makes an interesting point about MSNBC's Olbermann fiasco.  If NBC has a policy against hosts giving to political candidates, why grant permission on a case-by-case basis?

...MSNBC's policy forbids employees from making donations to political candidates, unless they ask for permission to do so, in which (case) it seems usually to be granted. That seems to me to undercut the principle behind the policy. 

...Olbermann's job at MSNBC is to be an extremely opinionated commentator on politics. And he's the centerpiece (along with Maddow and more equivocally, Matthews) behind the business strategy of making MSNBC the liberal cable news/chat network. (How they square that with simultaneously having a more traditional and by the books NBC News is something they clearly have yet to work out.) But when you take that all into account, seeing him now all but canned over a handful of individual political contributions because he's compromised the objectivity he's supposed to bring to the job sounds like a bit of a joke.

This doesn't mean I don't see the point of rules barring people in the news business from giving money to politicians. I do. I think they usually make sense. And whatever the rules, organizations have the right to their rules and if you want to work there you need to follow them. But against the canvass of the media and political world we're living in and everything that's happening in it, the scale of MSNBC's response this seems bizarre, arbitrary and excessive. 

A reader amplified Marshall's point that a waiver undermines the original rule:

 "The strangest thing about MSNBC policy is the asking for permission part. Either you can give or you can't. Requiring permission implies that certain candidates or parties are acceptable and certain candidates or parties are unacceptable to management. Isn't it illegal for employers to go down that road?"

As the reader suggested, this exposes NBC executives to the charge that it may favor one kind of donation over another.  Either have a rule, or don't, or at least differentiate between employees, i.e., news and opinion anchors or contributors.  This way it's open and shut, not equivocal.

As in most things, I tend to be fairly liberal on this.  Let opinion journalists contribute, but require that they disclose it, particularly when interviewing that candidate. Open advocacy for a candidate may be less acceptable, but, in general, it's not unreasonable to assume that a liberal appearing on Maddow or Olbermann has at least their tacit support, so overt support is just a little further along the spectrum. Straight news reporters perhaps should be able to contribute as well, following the same guidelines about disclosure and, obviously, advocacy.  We "let" them vote, and we assume that, if they're doing their jobs, it won't get in the way of their reporting.  Why not let them contribute as well? Disclosure would make this transparent.  Of course, this is less clear-cut than allowing opinion hosts to contribute, but a case can be made for it.  Media companies have the right to determine these policies, but they should be clear, coherent and fair.