For the first part of New Year’s Day, I thought the far-left “Obama caved” crowd would take the prize for the most insane political faction of the day considering how, as soon as a deal was reached, they accused the president of capitulating to the Republicans, even though the deal was quite good given the alternatives. But then the House Republicans stepped onto the stage and posed a serious challenge to the insanity on the far-left by engaging in further sabotage and brinksmanship before finally voting to pass the deal.

So no, the “Obama caved” left wasn’t responsible for the only infuriating responses to the deal, but they were infuriating nevertheless because, after all, liberals are supposed to be the smart, rational ones. Sadly, that wasn’t the case. Again.

As soon as the deal was announced on New Year’s Eve, the far-left kneejerked into its predictable boilerplate apoplexy: calling for the president’s head with the scripted refrains of “He betrayed the left! IEEEEEE!” even though the fiscal cliff deal is mostly composed of a 4.6 percent tax hike on the top tax bracket returning it to the Clinton-era level, along with an extension of unemployment benefits for long-term jobless Americans, and $15 billion in spending cuts. $600 billion in revenue versus $15 billion in cuts. By the way, the $30 billion in unemployment benefits will result in $48.6 billion in economic growth, per Moody’s calculations. Good news and a good investment in the economy.

In addition, the payroll tax holiday will expire, and the estate tax will increase to 40 percent from the Bush-era 35 percent. This, evidently, is the president “caving” to the Republicans — the reversal of 20 years of Republican tax policy. The party that pledged to never raise taxes voted for a nearly 5 percent tax hike on the rich, while extending an import section of the social safety net for another year.

Now, I have a sense of what some on the left would’ve preferred, but, as usual, what the left wants and what’s politically achievable are often two different things, considering the intransigent congressional Republicans. It’s clear the Republicans would never have voted for the ideal liberal package. They came closer than ever before, but they’ll never break the zero barrier. Not these Republicans. They wanted Social Security and Medicare cuts. They wanted to renew all of the Bush tax cuts. They wanted severe spending cuts to everything except defense. Instead, the Republicans voted for practically no cuts at all, and a tax hike on earners who George W. Bush famously referred to as his “base.” $41 in revenue for every $1 in spending cuts. That’s exceptional.

Given the contentious eleventh-hour outcome, it’s safe to assume the Republicans wouldn’t accept any further demands, and we can assume that if the president had held out for the most liberal version of a deal, there wouldn’t have been a deal at all. Consequently we’d risk a recession; a Wall Street sell-off today; the loss of unemployment benefits for millions of Americans; and a 50% tax hike on the lowest bracket — workers earning $0-$8,700 per year. For reasonable liberals, this is totally unacceptable. Coincidentally this is exactly what the House Republicans were willing to risk. Once again, as with the Affordable Care Act, the characters farthest to the left have somehow met up with the characters farthest to the right. I joked on Twitter that perhaps the usual liberal suspects would revive the effort to team up with Grover Norquist to kill the bill.

Throughout the day, the same phrase popped up: the president continuously moved his “line in the sand.” Paul Krugman, who I generally admire, wrote, “He kept drawing lines in the sand, then erasing them and retreating to a new position.”

Two things about this. First, drawing a line in the sand is a negotiation tactic and not the ultimate expectation for a deal. Unless you’re a dictator. Negotiators draw a line in the sand in order to get their enemies as close to their position as possible, though obviously the Republicans, and especially the House variety, would never agree to everything the president or the left were demanding on that side of the line. Never. Second, Krugman also admitted that the president basically won the negotiation with many of the things he wanted. In response, John Aravosis wrote:

We got what you wanted, but you [Krugman] still feel we lost because you don’t like the way the President got what we wanted. What was wrong with the President’s approach, I ask? He caved on his promises, you say. But if the President caved on his promises, then how did we end up with what you wanted?

Negotiations are fluid affairs: chess-matches with fake-outs, gambits and uncertainty. If the president had drawn a line in the sand, the only thing left at the end would’ve been a really, really principled line in the sand. Everything else would’ve disintegrated.

This is one of the reasons why I strongly believe there are those on the left who would’ve screeched the same “Obama caved” gripe no matter what. Why? Peer-pressure and liberal cred. Because if they were to ever full-throatedly praise an Obama accomplishment, other liberals would shout them down as Obama-apologists and capitulators. Resistance is futile, and so forth. Admittedly, though, if the deal had included chained CPI on Social Security or cuts to Medicare, or an across-the-board renewal of the Bush tax cuts I probably would’ve lined up against the deal. But it turned out to be a far better result than I thought, and I honestly don’t care how the president got there at this point.

In the real world where there are real people coping with real problems, a deal was mandatory, as was a few concessions to the Republicans since they happen to control the House and nearly half of the Senate. If there was a whip count for everything the “Obama caved” liberals wanted, I’m happy to hear about it, but I don’t think it existed. It’s fine to try to push the president towards your personal legislative priorities, and the elimination of the chained CPI idea is probably a result of that effort, but liberal advocacy and activism shouldn’t include risking damage to the incomes and lives of the people who liberals are otherwise trying to help. That’s the same kind of sabotage and hostage-taking used by the congressional Republicans, and I don’t want any part of it.

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Paul Krugman on the deficit reduction plan that is widely regarded by serious economists as, well, frankly ridiculous:

So, a public service reminder: Simpson-Bowles is terrible. It mucks around with taxes, but is obsessed with lowering marginal rates despite a complete absence of evidence that this is important. It offers nothing on Medicare that isn’t already in the Affordable Care Act. And it raises the Social Security retirement age because life expectancy has risen — completely ignoring the fact that life expectancy has only gone up for the well-off and well-educated, while stagnating or even declining among the people who need the program most.

Yes, I know, inside the Beltway Simpson and Bowles have become sacred figures. But the people doing that elevation are the same people who told us that Paul Ryan was the answer to our fiscal prayers.

Deficits, deficits, deficits. It is literally all the Right can talk about, and their only solution to it is to take an axe to public services while cutting taxes. Again, it’s worth repeating (for the billionth time) that there is no evidence tax cuts and spending cuts during bad economic times results in anything other than more economic pain. Case study in point: The whole of Europe.

Case closed.

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Paul Krugman sums up the German economic policy of austerity that is causing immense misery throughout Europe:

Why do it, then? Partly it’s because Europe is still operating on the false theory that this is essentially a fiscal issue; partly it’s to assuage the Germans, who remain convinced that those lazy Southern Europeans are getting away with something. In effect, the policy is to inflict pain for the sake of inflicting pain.

Which brings us to the question: can this go on? When do the people of the afflicted economies say that they can bear no more?

And as Krugman notes, the protests erupting in Greece and Spain show that that time is coming very quickly.

It is easy for bureaucrats and bankers to speak about economic policy in terms of numbers and financial equations. They do not have to live under the brutality of their own policies, so are removed from the human impact of it. Austerity as a philosophy is applied to ‘cleanse’ markets of their sins, to restore balance to its function and work by itself. Outside help is not accepted because markets, in the eyes of the austerity advocates, are perfect. If there is disharmony, they must be allowed to heal by themselves, even if there is enormous pain because of it.

As Keynesian economics shows though, that pain is not necessary. Debt can be accrued in the short term while growth is secured making recovery far less damaging and lengthy. Government spending provides the groundwork for sustained growth and job security. Without it, there is just pain and more austerity. That is until people won’t accept it any more and they demand their governments take action rather than leave them to the dictatorship of the market.

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Ayn Rand: Not an economist by any stretch of the imagination (Photo credit: Wikipedia)

Paul Krugman makes a good point:

Ask yourself: when was the last time a Republican leader made a point of praising hard-working, ordinary families — as opposed to “job creators”? Think about what happened on Labor Day: on a day dedicated to celebrating workers, House majority leader Eric Cantor sent out a tweet praising … business owners:

“Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.”

This all makes sense in the Ayn Rand intellectual universe, where a handful of heroically greedy entrepreneurs are responsible for all that is good. And if you live in that universe, your dividing line between makers and takers isn’t drawn at the point where people make enough to pay income taxes; everyone who isn’t John Galt should be grateful for what the Galts do, and we’re all takers by asking those heroes to pay any taxes at all.

We really are seeing the outcome of a fantasy novel being taken as the foundation for the Republican economic platform, and it’s very scary. If you take the Randian philosophy seriously, it follows that the ability to make money is the only real virtue worth having in society. If that is true, then the richer you are, the better you are, and vice versa. Republicans, as we have seen with Mitt Romney, have disdain for the poor because they see them as immoral freeloaders incapable of generating lots of money for themselves. Incredibly, these same Republicans have tied this philosophy up with Christianity, which quite literally preaches the complete opposite. As Jesus himself said, “It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God”.

It really was an amazing trick pulled off by Ayn Rand to cast the wealthy as the oppressed and the poor as the oppressors, and it has managed to completely neuter labor movements in the US. Randian philosophy has immeasurably helped siphon off lower middle and working class people away from unions into bonkers organizations like the Tea Party, where members routinely demand policies directly harmful to them and their families.

Organized labor has a lot of catching up to do when it comes to capturing the public’s imagination, but if a fourth-rate, intellectually lazy book like ‘Atlas Shrugged’ can inspire an entire intellectual movement, there’s no reason why the Left can’t come up with one too. We’re seeing Randian philosophy falling flat on its face during this election, so now’s the time to replace it with something a little more sane.

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The Romney/Ryan Agenda: Boom goes the economy.

Mitt Romney’s choice for his VP running mate really tells you all you need to know about the choice this year for the Presidency. Paul Ryan is about as far right as you can possibly get on the economic spectrum – a hardcore Ayn Rand ideologue who’s policy proposals consist of stripping away what is left of government and leaving the country to the ravages of the free market.The ‘Ryan Plan’ was touted as the boldest conservative economic proposal in the history of the Republican Party, meaning it was in reality, completely insane.

But not only is Ryan a militant libertarian, he’s also a lazy one who doesn’t actually bother to check whether his sums add up. Writes Paul Krugman of Ryan’s  lauded economic proposal:

Ryan hasn’t “crunched the numbers”; he has just scribbled some stuff down, without checking at all to see if it makes sense. He asserts that he can cut taxes without net loss of revenue by closing unspecified loopholes; he asserts that he can cut discretionary spending to levels not seen since Calvin Coolidge, without saying how; he asserts that he can convert Medicare to a voucher system, with much lower spending than now projected, without even a hint of how this is supposed to work. This is just a fantasy, not a serious policy proposal.

Vice Presidents don’t have much say over actual policy when in office, but Romney’s pick was designed to be symbolic. He’s reaching out to the hard right this election and clearly aims to draw a stark contrast between himself and Obama in economic terms. Given Obama is pretty centrist when it comes to policy (at least in international terms), this is actually pretty scary.

George Bush’s Presidency was extremely militant from a foreign policy perspective, and a Mitt Romney/Paul Ryan Presidential ticket would equal that from an economic point of view. They would make Bush look like a socialist if they enacted even a fraction of the proposals in Ryan’s plan for the country.  As Nate Silver writes:

Various statistical measures of Mr. Ryan peg him as being quite conservative. Based on his Congressional voting record, for instance, the statistical system DW-Nominate evaluates him as being roughly as conservative as Representative Michele Bachmann of Minnesota.

By this measure, in fact, which rates members of the House and Senate throughout different time periods on a common ideology scale, Mr. Ryan is the most conservative Republican member of Congress to be picked for the vice-presidential slot since at least 1900. He is also more conservative than any Democratic nominee was liberal, meaning that he is the furthest from the center.

If you needed another reason to get out and vote for Obama this November, this is a pretty damn big one.

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In the latest episode of Aaron Sorkin’s ‘The Newsroom’ on HBO, presenter Will McAvoy continues his noble fight to dispel Right wing myths and civilize discourse in America. We learn in the episode that McAvoy is a registered Republican, but is so distressed by the grotesque distortions coming out of the GOP that he has no choice but to spend his programming time hammering away at the misinformation. In one segment, McAvoy skewers Sarah Palin, Glenn Beck and the NRA for perpetuating the myth that President Obama is trying to take Americas guns away, laying out the facts and proving that Obama is, in his words, the best friend the NRA ever had. McAvoy points out that the lies coming out of the GOP propaganda machine are cynically designed to boost political donations and support from the misinformed base. Every time Sarah Palin claims Barack Obama wants to take away Americas guns, Republican donations go up and Obama’s popularity decreases despite Obama passing some of the most pro gun legislation in history.

Taking his cues from the fictional (but entirely accurate) portrayal of his party, Mitt Romney is continuing to make stuff up in order to get elected. This week, Romney will push the lie that although he is proposing large tax cuts that would disproportionately benefit the ultra wealthy, he would offset those cuts by broadening the tax base and eliminating deductions and loopholes. Paul Krugman debunks this pretty quickly:

I think it’s obvious that the base-broadening stuff is just a smokescreen, that he has no intention of doing anything along those lines. Still, it’s worth asking whether such a thing is feasible. And the Tax Policy Center has an answer (pdf): No way.

Of course, they can’t just put it that way. But they show two things. First, it would require extreme, implausible cuts in tax preferences to make up for the revenue losses from the Romney plan (which they refer to as “current policy with reduced rates”). Second, even if you assume that such cuts somehow become possible, anything remotely plausible even given that assumption ends up raising taxes on the middle class while cutting taxes on the very rich.

In a better world, Romney’s tax claims would be laughed out of the debate.

Sadly, the Republican base doesn’t care too much about reality – they react to soundbytes and catch phrases, and as long as they have a bogeyman to hate (the evil Barack Obama) they’re happy with whatever nonsense their candidate decides to come up with. It’s hard to say who is to blame here – the GOP for pumping out the disinformation, or the base for believing it. Either way, there needs to be a substantial counter attack to this nonsense, starting at the very least with the facts.

And the facts are pretty clear: Mitt Romney’s numbers don’t add up, so he’s either stupid or lying.

My take? I don’t think Romney is stupid….

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This argument deserves to be made over and over again to counter the ridiculous assumption that being successful in business means you know how to run an economy. Here’s Obama on the difference:

When some people question why I would challenge his Bain record, the point I’ve made there in the past is, if you’re a head of a large private equity firm or hedge fund, your job is to make money. It’s not to create jobs. It’s not even to create a successful business – it’s to make sure that you’re maximizing returns for your investor. Now that’s appropriate. That’s part of the American way. That’s part of the system. But that doesn’t necessarily make you qualified to think about the economy as a whole, because as president, my job is to think about the workers. My job is to think about communities, where jobs have been outsourced.

Paul Krugman chimes in:

A country is not a company — and it’s definitely not a private equity firm.

And here’s the thing: Romney is running for president entirely on the basis of his business success. In a better world he could be running on the basis of his successful health reform, but now he’s condemning that very achievement. In a better world he could actually be running on the basis of some kind of coherent policy ideas, but instead he’s offering nothing but a mix of tax cuts for the rich and benefit cuts for the middle class so extreme that focus groups refuse to believe that this is his actual proposal.

Once the Bain record becomes a liability instead of a strength, there’s nothing there.

I think the Democrats are absolutely right to hammer Romney on his Bain record and draw a contrast between his ability to get rich and his ability to create jobs. This myth has gone on for far too long and has given the rich a mythical status in American culture as the all-knowing, all-seeing benefactors of the country and all of its prosperity.

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A heads up to our readers, every Friday we'll be doing a brief roundup of the best stories here at The Daily Banter. This week we profiled arch conservative Grover Norquist's psychopathic view of society, and argued that Scott Walker's win in Wisconsin only proved that money can buy elections.  Chez Pazienza engaged in a highly entertaining debate with a weed smoker about the relative importance of legalizing marijuana, and assessed the reason as to why everyone in Mitt Romney's campaign videos are white. Bob Cesca dug into the Republican attacks on pensioners and the end of the American Dream, and worried that Americans would fall for Romney's propaganda, and finally, we profiled Paul Krugman and explained why he is such an important voice in America today.

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Paul Krugman: Lone voice of sanity (Photo credit: Wikipedia)

By Ben Cohen: Nobel prize winning economist Paul Krugman has been getting a huge amount of media attention over the past few weeks, in part due to a book he has written ‘End This Depression Now!’, but mostly because his message of economic sanity is resonating with the American public.

Krugman is an unassuming figure – he’s not exactly telegenic, he’s not the best public speaker, and he tends to perform awkwardly when debating. But Krugman’s common sense solutions to America’s deep economic problems are finding a massive audience of people sick to death of the status quo. More than ever, his voice represents sanity amidst a cacophony of nonsense – a clarion call to restore decency in public policy and prevent the further corruption of the country’s monetary system.

For years, the Left in America has been afraid of its own shadow. The Democrats have been systematically emasculated by the Republicans and have given up on virtually all their core beliefs – Bill Clinton passed more Right wing economic legislation than any Republican could have dreamed of, and Barack Obama’s boldest redistributive economic proposal was to return the top rate of tax to that just under Ronald Reagan’s. This was a direct result of the influence of big money in politics, but also a sad reflection of the intellectual bankruptcy pervading the Left in America. The Democrats stopped believing in their own principles, and gave up on having their own ideas. As Bill Maher said on his show last Friday, the Democrat’s pledge to the electorate is this, “Vote for us, we’re lame, but the other guys are nuts”.

The Republicans are now so far out of the mainstream that it would be criminal not to vote for the Democrats. They are the only entity standing in the way of the complete disintegration of government and the economy. We saw what happened under George Bush, and there’s absolutely no need for a repeat.

But for Krugman, this is not good enough, and he is pushing an agenda to reverse 30 years of Republican economics that has created gigantic wealth disparity, huge amounts of poverty, and massive financial instability. In his critically acclaimed book ‘The Conscience of a Liberal’ Krugman wrote:

I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty. I believe in democracy, civil liberties, and the rule of law. That makes me a liberal, and I’m proud of it.

Krugman sees no need to be ashamed of his liberalness – instead, he flaunts it and goes to great lengths to disprove Republican economics in his daily writing and media appearances. While the media treats both side’s policy proposals with equal respect in an attempt to be ‘balanced’, Krugman looks at actual facts says it how it is. In a recent appearance on ABC news, Krugman stated the following about Republican Paul Ryan’s budget plan:

The plan’s a fraud. The plan is a big bunch of tax cuts, some specified spending cuts, basically for poor people, and then a huge magic asterisk which is supposed to turn into a deficit reduction plan, but, in fact, if you look what’s actually in it, it’s a deficit-increasing plan…..There is really no plan there, neither from Ryan, nor from Governor Romney, is just the truth … if that’s being harsh and partisan, gosh, then I guess the truth is anti-bipartisanship.

This type of straight talk is refreshing to hear, particularly to liberals who are not ashamed of being liberal. Krugman is pointing out that the emperor has no clothes, and it seems people are finally waking up to it. Krugman’s solutions to the current economic crisis are equally straightforward. He wants to stop self imposed austerity, pump lots of money into infrastructure spending to create jobs, then pay the deficit down once the economy has stabilized. As he told the Guardian:

These are not hard concepts, actually. It’s not hard to get it across to an audience. But it doesn’t seem to play in the political sphere. What’s fascinating is his historical analysis of why policy-makers, who once understood these principles, collectively decided to forget them.
In the years following the Great Depression, governments imposed regulatory rules upon the banking system to ensure that we could never again become indebted enough to make us vulnerable to a crisis. But if it’s been a long time since the last major economic crisis, people get careless about debt; they forget the risks. Bankers go to politicians and say: ‘We don’t need these pesky regulations,’ and the politicians say: ‘You’re right – nothing bad has happened for a while.

While Krugman’s concepts have been ignored in the political sphere, there are signs that people high up the food chain are starting to catch on. As President Obama told Rolling Stone:

I read all of the New York Times columnists. Krugman’s obviously one of the smartest economic reporters out there.

High praise indeed – and maybe an indication that the Democrats might actually start implementing his ideas. Obama’s Presidency is largely staked on the well being of the economy, and given Krugman has been right about virtually everything thus far, it would be smart to listen. And that is why Krugman is so important right now.

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Francois Hollande: Voted in to stop austerity

By Paul R. Pillar: The commonly accepted story line about the French and Greek elections on Sunday is that the outcome is a rejection by voters of the austerity that Merkozy-dominated European decision-makers have been imposing on the eurozone. The result, as some critics might put it more bluntly and negatively, is a defeat of disciplined economic policy by short-sighted populist sentiment.

In general, displacement of disciplined decision-making by raw popular anger is not good. But from the standpoint of Europe’s economic health and its effect on the health of the global economy, backing away from austerity is the main thing needed right now. To understand why, read any of Paul Krugman‘s frequent forays into the subject.

The idea that austerity breeds confidence which in turn breeds private sector initiative and prosperity simply hasn’t proven valid where it has been tried. Stimulation of demand is needed to keep Europe from dropping into a deep double-dip recession.

The election results do give reason for concern. Parts of François Hollande’s platform look ill-conceived. The beneficiaries of Greek voters’ rejection of the mainstream parties that had signed on to austerity are the far-left and far-right fringes; in this respect the Greek result is a disturbing move toward extremism. On the basic dimension of austerity vs. stimulation, however, voters have moved the European economic debate in the correct direction, even if most of them did so for the wrong reasons.

A general lesson to extract from this is that just because a political leader’s position may conform with some of the ignoble desires of the populace does not ipso facto mean it is bad policy. What constitutes good or bad policy is often a matter of debate even among people of goodwill — as it is regarding economic policy today in Europe, although I am more persuaded by those arguing for the need to stimulate demand than by the pro-austerity camp.

Moreover, it is rare that one side has a monopoly on positions that could be seen as a pandering to short-sighted popular desires. German positions are rooted in immediate German self-interests that, as Andrew Moravcsik explains in the current Foreign Affairs, are no better for the economic health of the continent than is the southern European profligacy that German banks and investors have helped to finance. Germany has benefited from imbalances that make it, in Moravcsik’s term, the “China of Europe,” even though its membership in the eurozone insulates it from the sort of criticism that is regularly directed against China about currency exchange rates and trade surpluses.

Similar principles apply to debate about economic policy in the United States. Over the weekend I attended an event at the University of Chicago at which the thinking of the Chicago school of economics pervaded discussions. It was the sort of environment in which people conversed about whether Barack Obama’s economic policies mean he doesn’t understand how economies work or — probably the dominant view — that he understands but has subordinated his understanding to a populist political agenda.

The main problem I had with what I was hearing is that — although I am as much a believer as anyone else in the effectiveness of free markets — some of the economic structures and practices I heard being defended (such as those involving corporate governance) differ substantially from a free market, and differ for reasons that have nothing to do with governmental interference.

More to the present point, that a position of Obama might appeal to some of the baser emotions of the voting public does not keep if from being good economic policy — as measured by standards, such as macroeconomic growth, that would be as important to adherents of the Chicago school as to anyone else. And also as in Europe, a populist tendency to sway in whatever direction the voters want to go is no more characteristic of Obama than it is of his opponent.

Pandering to the crowd is indeed a common and unworthy political pattern, and it often does encourage lousy policy. But the pandering and the policy-making are distinct dimensions. Determining the extent to which the two intersect in any one case requires closer examination of the policy in question.

This article was originally published on ConsortiumNews.com

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