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Austerity 101: The Three Reasons Republican Deficit Hawks Are Wrong


#1

Austerity 101: The Three Reasons Republican Deficit Hawks Are Wrong

Robert Reich

Congress is heading into another big brawl over the federal budget deficit, the national debt, and the debt ceiling.

Republicans are already talking about holding Social Security and Medicare “hostage” during negotiations—hell-bent on getting cuts in exchange for a debt limit hike.

Days ago, U.S. Treasury Secretary Jacob Lew asked whether our nation would “muster the political will to avoid the self-inflicted wounds that come from a political stalemate.”


#2

Prof. Reich, I do believe that your heart is in the right place,
HOWEVER, THIS IS A FINITE PLANET!
Your economic model is flawed by its ecological ignorance.


#3

If most of our nation (along with that of too much of the rest of the world) wasn't beholden to Big Money, the indictments would not aim at Social Security and programs of social betterment for the majority. Instead, they'd pivot on the ridiculous bailouts to corporations and banks, the trillions wasted on wars, and billions "invested" in the Homeland Security operations (and numerous armed agencies). NEVER are these ridiculous wastes of money factored into the budget or any reputable fiscal calculus.

The bastards will gut this Republic as Rome did its own... in delusional pursuit of foreign wars and whatever spoils they bring--exclusively--to the 1%.

Who isn't tired of this insanity? And insanity it is.

And while I agree with Mr. Reich, I would not cast police into the category of sound investments, either. Not with the brutality shown to Black citizens and the poor; and not with a Draconian prison-industrial system in search of warm bodies to incarcerate in the same way that the U.S. War Machine looks for warm bodies to target as purported terrorists.

These paradigms are based on destruction, Disaster Capitalism's bastard child. It's time that things of a CONSTRUCTIVE nature took precedence; and that includes investments in what is creative and what benefits living persons!

Building mountains of the dead to bury, and destroying the same infrastructure that robbed Earth Mother to initially construct is a paradigm based on criminal disregard and depraved indifference to life on all levels!

Cease and desist!


#4

Mr. Reich's points are all good, and I would like to add the deficit is simply a matter of a data entry; it's an accounting tool that creates assets by loaning money. The loans are connected to contracts, banks, and governments backed finally, by "the full faith and credit" of the people of the origionating country. Investing in good stuff like people and infrastructure, avoiding the bad such as military purchases that have very little residual value after they are destroyed, lost, left, or old, are part of the audacity of modern finance. We can control our prosperity on the macro level without depending on finding sufficient amounts of gold and silver to cover the expenditures. We can create and spread the wealth.


#5

You are like a kid always trying to be first but the problem with doing that besides the obvious vanity is that you make these quickie one (or two) liners that sound pithy but are too short to helpful.

Here you say Reich's

Sounds deep? Ooh the ecology! Yeah man - a finite planet! Deep!

What a crock and an ego.

Are you saying new economic growth shouldn't happen? What about the people being born and those who need jobs and a future?

Are you even suggesting that economic growth should be concentrated in ecologically sound projects since if we are to switch to alternatives it means economic growth in the infrastructure sector at the very least. No you ran out of room on the page before then I guess?

Are you suggesting that we simply stand still economically? How will that work btw?

You say stuff just to be first and I guess that is your idea of being a progressive and part of this community.

My point is that maybe you could put more thought in your posts instead of these short burps and hurrying from one article to the next just to burp first. You influence people by writing what amounts to a slanted brief headline and like in this instance it creates the wrong impression because it is too brief to be as deep as you want to think they are.

If you care that much to be first, how about caring that much to write something worth saying.


#6

Are you volunteering to pick through New Delhi's landfills or sieve the Pacific gyre? Do you have a pavement that is carbon neutral? Please save the world using the current economic paradigm.


#7

Oh like your comment speaks to that? Was he saying the world's economy or was he talking about America's deficit spending? Do you even finish reading these articles before you write?

Seriously man, this is a progressive community, so how about showing some progressive attitude. I'm not saying you shouldn't always be first (even you haven't managed that as yet although on some days you get pretty close) but you write these short one line things just to be first. How old are you? That's kid's stuff and I am beginning to feel embarrassed for CD because if I were new here and saw the same person always posting first, I'd think it meant that only the same few people post to the site.

Secondly, like now. You don't put much thought into what you write. It has become a 'me first' game with you. That's kid stuff. Here you respond to me and it shows that you really didn't take the time to really read the article.

How about joining the community and putting out your best instead of your quickest. You have good points to make but not when you hurry from one article to the next just trying to be first.


#8

You asked >>>
Please save the world using the current economic paradigm.

Okay my answer >>>

Please switch to alternative infrastructure without economic growth in that sector? New factories to build solar and wind. New innovation for better solar and wind generation. New jobs using those new innovations like maybe that solar road pavement and induction roads (charging your electric car as you drive on them).


#9

Please explain to me how the continued finicalization-based economy can be used to solve the impending ecological disasters that loom large. Finding meaningful purpose in life is great and is a noble cause for anyone seeking it. Until the economic model is turned upon its head (which is far, far beyond what Prof. Reich proposes), no real progress can be made. The externalities of rent extraction via financialization, pollution, and poverty (gross inequality) must be addressed. TPTB work continually and assiduously to ossify their power no matter the cost to life on earth. The deficit discussion as posed by Prof. Reich is a shell game. Its distracting to understanding what is wrong.


#11

Read the darn article. Reich isn't talking about years and years in the future or other parts of the globe but the current economic situation in America (right now). He contrasts the repubs and their deficit hawk extortion tactics as per soc sec and medicare cuts. You are talking about what? A long term 'overturning' of capitalism or what?

What the hell does that even mean? How is that supposed to be accomplished btw? You don't explain the how part.

Nevertheless Reich is talking about right now and the federal budget and the debt ceiling. What the hell are you talking about anyway.

The economy we have had better solve the impending ecological disaster because it is the only economy we have. What is needed is a change in policy i. e. a purposeful shift to get off fossil fuels and foster reliance on alternatives which would produce jobs (installing solar roofs on 25 million rooftops will create a lot of localized jobs plus factory jobs etc.). That is how the current economy can at least slow the pace of global warming and eventually solve the problem of it increasing at least once we no longer rely on fossil fuels.


#12

You say all these things but not once do you explain why you think these economic policies don't work. You say they don't but thats it. You don't show why they don't. We get it that you don't trust post Clinton figures but

Is that right? Did you read the article? So when the republicans start demanding cuts in Soc Sec and Medicare and probably other social services like food stamps your answer will be WHAT?

What is your answer to them?


#14

It is really bizarre that people don't actually read the articles. You and another poster read the word economics and off you go debating economic theory. I read an article about the repubs getting ready for another hold the government or social programs hostage because the debt (that Bush republicans set into motion with two trillion in tax cuts - remember them?) is so much a burden to republicans that another round of austerity measures for older and poor Americans (as well as the middle class too) is needed.

You want to talk about Nafta et al? Oh you recognize the name Robert Reich as once having been with Bill Clinton's team. Yeah and? Did you bother to read what the article was even about or did merely name recognition do it for you?

Was it good for you?

Oh as an aside (sarcasm intended) maybe you might explain how you feel about what the republicans intend to do about the debt and whether they even need do it too as Reich said.


#16

Yeah sure. I read it and commented that you talk and talk but not about the point of the article and you certainly do not address how your name dropping from Nafta to Glass- Steagal applies to the debt crisis ala republicans. Nor do you explain or suggest a solution to what the repubs intend. In effect all you said is based on the Clinton days. Whoopie do. How about right now?


#18

Once again you want to argue economics as opposed to addressing the specific point of the article. Okay you don't like Reich. You should also grow up and stop insulting people. Your drama is not appreciated and in short... who gives a ___!


#20

Wow that was really a pathetic comment. Lol. I'd respond but the truth is that I really don't have to. You embarrass yourself well enough as it is.


#22

This isn't mainstream neoclassical economics though. It's basically Post-Keynesianism/MMT: deficits and debts don't matter to a nation that issues its own currency, and public deficit spending should be directed towards things that directly help the people. The deficit is merely a gauge of the health of the economy, since it isn't actually the difference between tax 'revenue' and federal government spending because federal taxes don't fund anything. A low public deficit merely means welfare programs are being starved and public debt will balloon as citizens attempt to make up the shortfall through borrowing.

None of this is what is taught in most economics classes. Mainstream economics can't even correctly explain what money is, much less where it comes from.

You are right that Reich gets far too much publicity, considering his shameful role as part of the neoliberal Clinton administration and his advocacy for 'free trade'. He says he's changed. Maybe he has. Regardless, he's fundamentally correct on this particular issue.


#24

Yes, let's nationalize something that's already publicly run. Also I guess you can't follow a certain idea if you haven't been to a certain school. Might want to tell the Bank of England that: http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx


#26

No, it isn't. The Federal Reserve is an independent agency within the US government. Its Chairman and members of the Board of Governors are appointed by the US President and confirmed by the Senate. Their salaries are decided by Congress. The sole private bank involvement is that member banks are allowed to own non-controlling stock in each of the 12 regional Federal Reserve banks. The members of the Board of Directors elected by member banks "May not play a role in appointment of presidents or regulatory decisions". And the only reason these fig-leafs of private involvement exist at all was to create the illusion of a public-private partnership and ward off accusations of socialism in 1913. Fiscal policy is supposed to be set by Congress (but they haven't bothered doing that much in about 30 years), then the instructions pass to the Treasury and on to the Federal Reserve. Any profit generated by the Fed is returned to the Treasury.

Cognitive capture is a whole different story, however. There's not so much a revolving door nowadays as no door at all.

And fractional reserve banking doesn't exist. It hasn't existed for a very long time. It's an idea that is a relic of when we operated on a gold standard. Banks create money as needed when people apply for loans, they never even bother to look at their reserves. The idea that they do is in fact one of the many incorrect things they teach in mainstream economics courses.


#28

No, I'm sick and tired of the Creature from Jekyll Island-style conspiracy nonsense. The Fed is currently run by and for the rich because of rampant corruption, not because it was designed that way. The Aldrich Plan, which Griffins stupid book is based on, died in Congress twice in 1912 and 1913.


#31

Yes, I have, actually. Including Hudson's academic works like Debt and Economic Renewal in the Ancient Near East. I also read naked capitalism every day. I also bothered to actually read this article and see what Reich was proposing, which is proper deficit spending to directly aid the real economy.