Solvency Deniers 2

When I drive long distances I amuse myself by listening to podcasts sandwiched between thick slices of jazz. My favorite podcasts are mostly audio theater (Selected Shorts, New Yorker Fiction, and Pseudopod) and nonfiction stories (The Moth, This American Life, etc). I listen to some intellectual content podcasts (All in the Mind, Philosophers Zone, etc.) and a number of Buddhist podcasts (Buddhist Geeks, Zencast, San Francisco Zen Center).

I include a few political podcasts like Ricochet and The New Yorker Political Scene. The latter provides a good sample of what left leaning journalist say to each other when they are the only ones in the room. Today I listened to John Cassidy and Ryan Lizza converse about the current financial turbulence.

I was not surprised that they considered the Republicans to be solely to blame for the recent debt ceiling problem. I was mildly surprised by their honesty about the President. Like a lot of the pundit left, they are clearly suffering from a confidence deficit. They implicitly recognized what I last blogged about: that the President is thinking a lot about the campaign and little if anything about anything else.

I was taken aback, however, by their studious avoidance of the issue of sovereign debt. It is one thing to discuss the Republicans and the Tea Party movement without mentioning the fact that, as a result of the lifting of the debt ceiling, U.S. debt has reached 100% of the GDP. To also discuss the European financial crisis without mentioning the issue of sovereign debt suggests a pathological avoidance of reality.

The New York Times has its own version of blindness. In an editorial posted yesterday, the Times complained that "austerity" was the wrong idea on both sides of the Atlantic. Now I understand the Keynesian argument that government spending is sometimes (meaning always) necessary to stimulate economic growth. It takes a remarkable blindness to call what the U.S. and Europe are doing austerity. Trying to cut the rate of debt growth at a time when governments are spending billions and trillions of dollars that they do not have is austerity on no logical planet.

Excessive indebtedness is a real, long-term problem. But Europe's broad downward trajectory can only be turned around if governments — both those of lenders and debtors — spend more in the near term to put people back to work and get consumers back to spending.

The Times appears to acknowledge that "excessive [government] debt is a real problem," but that acknowledgment is negated by the phrase "long-term". What they mean by "long-term" is that we should ignore it altogether at present. Unfortunately, as Keynes himself pointed out, in the long run we are all dead. Very unfortunately, the long-term may have arrived.

What the Times wants is for the U.S. and Europe to borrow and spend a lot more, in the short-term. It is self-deceit to press that position without laying out some realistic numbers and projections. If trillion dollar deficits we are running right now are not sufficient, what would do the trick? To see the problem, consider the familiar thought experiment: why not just give every U.S. citizen (and hey, why not the Greeks as well) a hundred thousand dollars each. That should stimulate the damned economy! Almost anyone can see that that would be madness. Okay, then at what point between that degree of largess and borrowing %100 of GDP does borrowing become unsustainable?

The Times won't attempt any such calculation because it would reveal the fact that our current rate of borrowing and spending is unsustainable. There is simply no realistic possibility of new, massive stimulus spending on either side of the pond. It doesn't matter how necessary it is or how much the Times or anyone else wants it.

Likewise, the Times ignores its own reporting when it seriously questions whether government spending can effectively create jobs. Consider the President's green jobs agenda. It doesn't seem to be working very well in California.

A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.

Federal and state efforts to stimulate creation of green jobs have largely failed, government records show. Two years after it was awarded $186 million in federal stimulus money to weatherize drafty homes, California has spent only a little over half that sum and has so far created the equivalent of just 538 full-time jobs in the last quarter, according to the State Department of Community Services and Development.

Byron York notes that key Democrats are losing confidence in the green jobs agenda.

Instead of explaining how government spending can effectively create jobs and how it can be fiscally possible, the Times simply calls for more and more spending. That is the Times' blindside, and it is apparently ubiquitous on the left.

ps.  As I was listening to the New Yorker Political Scene, I happened to pass a wind farm in Western Iowa.  Not a single blade on the dozens of towers was toiling or spinning.  Metaphor?

Comments

[Donald Pay]

This is what passes for the wisdom of the conservative movement these days. It's really sad. Looking backward to the 19th century in fiscal and energy matters isn't going help our country move through the 21st century. Unfortunately too many Democrats

Regarding debt, the fiscal approach of Republicans is a demonstrated failure. From the Republican approach of kowtowing to the wealthy and corporate interests we got foolish tax cuts, unpaid wars, decaying infrastructure, and deregulation which causes massive spills, bubbles and financial meltdowns. Been there, done that, piled up debt and hollowed out the middle class. No, thanks.

[George Mason]

Once again we are witness to the sad tediousness of Donald's life. It leaves him so angry his only resort is to cast insults at his perceived enemies. As usual he provides no evidence or substance just the same repetitious tripe. Donald, perhaps the time has come for you to turn off MSNBC, stop listening to WPR and move out of your parents basement. Some time in the real world might expand your horizons, improve your attitude and perhaps lead to a "road to Damascus moment." If you don't know what that is you can always google it. Just don't expect to hear about it on pbs.

[Donald Pay]

In the year 2000 the US government had a budget surplus. What happened? Oh, that's right Bush and the Republicans happened. Thing the Republicans did was get rid of pay-go so they could provide tax cuts to the rich. Then they didn't pay for their drug plan to benefit Big Pharma. That's when the debt exploded. The facts are well known, but Republicans don't deal in facts, so why bother. Well, here goes anyway. Watch the Republican idiots heads explode over this one.

http://www.whitehouse.gov/infographics/us-national-debt

Now, I grant that the Clinton administration went along with bad Republican ideas like trade deals and deregulation schemes, and that Fed policies helped produce the bubble economy of the 2000s, but when are Republicans going to admit their part in this mess.

[Stace Nelson]

Scary times. In all my years, this is the first that I am seriously afraid for the future of our country. 942 days since this country had an actual budget, defending this administration or the Democrats control of Congress for the previous 4 years and blaming such things on Republicans is just simple ignorant politics. Especially when this country is headed for a cliff while people scream to speed up the causes that are sending us in that direction.

Well, back to the grind of kowtowing to those pesky rich people who so blithely ignore my campaign coffers...

[duggersd]

As a student of History, I find it fascinating to look at things that have occurred in the past and see how we fail to look at lessons we should have learned from past mistakes. It has been a while, but as I recall the kings of Europe after the Renaissance got into a lot of trouble due to debt. They wound up losing a lot of their power. As I recall, they also tried raising taxes, but things just did not work out so well. It would be nice to apply some of those lessons from the past.
As for the drug benefit that Donald so likes to point out, in that vote in the Senate, there were 11 Democrats out of 54 who voted for the drug benefit. There were 8 Republicans who voted no. I believe the Democrats had a hand in voting that in. And I am willing to bet many of those Democrats who voted nay did so because it did not go far enough, not because of fiscal responsibility. And yes, that is legislation that should not have happened. Oh, and if the debt exploded after 2003, then what did it do after The One took office?