Budget

The Ties That Blind

A belief in American pull-yourself-up-by-your-bootstraps mythology lies at the heart of conservative attacks on the 99 percent.

Flickr/LianaAn
When the Canadian activist magazine AdBusters issued a call on its listserv to start the Occupy Wall Street demonstrations in New York and other cities, a couple of like-minded protesters created a companion blog on Tumblr called “We are the 99 percent.” The purpose of both the protests and the blog was to point out that the bottom 99 percent have been subsidizing the very rich and their wealth-multiplying experiments for decades. But the blog did something the protests didn’t: It allowed folks who couldn’t camp out in Lower Manhattan and risk arrest to participate. Contributors upload pictures of themselves holding handwritten notes that tell their stories of disenfranchisement, insolvency, and unfair workplace practices. Each note varies, but overall, the blog depicts an economy in decline and the people pushed down to the bottom as a result. Not to be outdone, conservatives launched their own Tumblr with the same aesthetic. “We are the 53 percent” co-creator Erick Erickson, a CNN...

For Europe, High Stakes in Greece

Stabilizing one teetering economy won't end the eurozone's dance of death.

(Flickr/Oscar Alexander)
T he problems of the euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among nations that use the euro, and a cumbersome decision-making structure all made the euro-area economy vulnerable. The crisis, which still bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece. The euro was created for normal times, but the EU lacked good mechanisms for crisis management. At every step of the Greek drama, policy-maker responses have remained behind the curve of economic deterioration. Slowly but surely, this erosion of confidence ensnared other countries, such as Ireland and Portugal, then spread to Spain and Italy, both perceived to be...

Europe Buys Some Time

The stock market liked the European deal that was announced in the wee hours of Thursday morning. At this writing, the Dow is up 268 points. But the market, as is so often the case, could well be wrong. For starters, this is not yet a done deal. The European leaders agreed that the banks will take "voluntary" losses of about 50 percent on their holding of Greek bonds, so that the Greek economy can gain some room to breathe—but the banks did not agree. Charles Dallara, who heads the international bankers' lobby, the misnamed Institute for International Finance, was quoted by The Wall Street Journal as saying that "there is no agreement on any element of a deal." He later told CNBC that the deal was "voluntary," permitting issuers of credit-default swaps (mostly banks) to avoid payments they would have to make in the case of a formal restructuring or a default. But never underestimate the ability of banks to impose their losses on somebody else. Under the proposed deal, the banks also...

Doomed to Fail

Once again, the Obama administration has announced a plan to shore up housing prices and underwater homeowners—and once again the plan is very likely to fail. This latest effort will try to use Fannie Mae and Freddie Mac, now wards of the government, to help homeowners refinance mortgages at lower interest rates. The premise is that with interest rates at record lows, homeowners can save hundreds of dollars a month in their mortgage payments by refinancing. For example, by refinancing a 5.5 percent mortgage to a 4.5 percent mortgage, a homeowner with a $300,000 loan could save about $250 a month. In theory, as many as 1.6 million people could qualify for this kind of refinancing, putting more money in their pockets. So this new program would be a source of economic stimulus as well as housing relief. But the devil is in the details. Fannie and Freddie lost a ton of money in the subprime disaster. That’s why the government had to take them over. So the last thing they want to do is...

"The Romney Rule"

Priorities USA, the Democratic consulting firm backed by former Clinton staffer Paul Begala, is out with its first ad attacking former Massachusetts governor Mitt Romney. It’s a good one: Like the The Washington Post ’s Greg Sargent , I think that this will be a potent line of attack should Romney become the Republican nominee for president. As the wealthiest GOP candidate for president, Romney is uniquely ill-suited to press against higher taxes for the richest Americans, and for an overall low tax burden on the wealthy. Indeed, given the current popularity of higher taxes on the rich – and the growing popularity of Occupy Wall Street – an election fought on these grounds is bad territory for the Romney campaign. I should say that there is a practical policy danger in devoting so much attention to taxes for the rich. In the medium-term, middle-class taxes will have to go up. Unless we return to Clinton-era rates, there is no way – other than new taxes on consumption or carbon – to...

Blame and How to Give It

That Senate Republicans used the filibuster to kill a Democratic stimulus bill isn’t a surprise – at this point, Republicans have all but announced their plan to keep the economy from significantly improving, and as a result, slash the tires on President Obama’s bid for re-election. What comes as a surprise is the extent to which the press isn’t playing along. In the past, reporters would describe yesterday's event with “balanced” language that obscured Republican responsibility for the obstruction. For example, here’s how The New York Times described last week’s failed vote on the full American Jobs Act: In a major setback for President Obama, the Senate on Tuesday blocked consideration of his $447 billion jobs bill, forcing the White House and Congressional Democrats to scramble to salvage parts of the plan, the centerpiece of Mr. Obama’s push to revive a listless economy. The legislation, announced with fanfare by the president at a joint session of Congress last month, fell short...

Occupy the Rules Committee

For last two months, we’ve been engaged in something of a natural experiment to see if presidential speechifying—in this case, a consistent focus on jobs—is enough to move public opinion in a progressive direction and create avenues for legislative success. So far, that hasn’t been the case. Instead, Republicans have taken their usual position of staunch opposition, and moderate Democrats have given them cover by opposing the administration’s modest efforts to raise taxes and offset the costs of new stimulus. What has changed the direction of public opinion is Occupy Wall Street, so much so that majorities of Americans agree with the goals of the movement, and conservative figures like House Majority Leader Eric Cantor are driven to acknowledge America’s extreme inequality. Of course, even if Occupy Wall Street grows in size and influence, there’s still the question of institutional barriers. As long as a political incentive for the filibuster exists, for example, there’s a real limit...

The NYPD: A Movement's Best Friend

Occupy Wall Street's confrontations with police and politicians have only fueled the protest's growth.

NYPD clashes with Occupy Wall Street protesters have made the demonstration a national story. AP Photo/Mary Altaffer
Tensions at Zuccotti Park in lower Manhattan mounted last week after New York City Mayor Michael Bloomberg announced that Occupy Wall Street activists would need to vacate the premises temporarily for cleaning. In response to the threat, occupiers cleaned the park themselves and said that, come morning, they would hold brooms, link arms, and peacefully refuse to leave. Bloomberg backed down, and once more, Occupy Wall Street confirmed that it could endure in the face of resistance from politicians and police. A better question is whether the movement could have endured without the attention and momentum it's gained from confrontation. “Seeing what happened at the Brooklyn Bridge ... that was a wake-up call," says Armando Serrano, referring to the arrest of 700 protesters on the bridge earlier this month. The number of arrests, and allegations that police lured protesters to the area where they took place, inspired a new wave of activists and catapaulted the movement to the forefront...

One out of Five Ain't Bad

AP Photo/Chris Carlson Texas Gov. Rick Perry didn't win the G.O.P. debate Tuesday but he managed to rattle frontrunner Mitt Romney. Rick Perry is still a bad debater. At last night's Republican presidential debate in Las Vegas, Nevada, he hemmed, hawed and stammered his way through policy statements and attack lines. But for the first time since entering the race, that wasn't a detriment to his overall performance. Perry didn't win the debate, but he didn't lose it either. More importantly, he achieved his main goal: throwing Mitt Romney off of his game. From the beginning, Perry went after Romney's credentials as a conservative. "I'm Texas Governor Rick Perry, a proven job-creator and a man who is about economic growth, an authentic conservative, not a conservative of convenience," he said, introducing himself to the crowd. Later, Perry joined Rick Santorum's attacks on Romney's former support for Massachusetts's health-care reform, and in the most explosive exchange of the evening,...

The Medicare Bind

M edicare now faces a more uncertain future than at any time in its history. That’s not because it has lost popularity or failed to control costs as effectively as private insurance has. On the contrary, the program continues to enjoy overwhelming public support, and since the late 1990s, its costs per beneficiary have grown more slowly than those of private insurers. Nor does Medicare confront an imminent crisis; in fact, its costs have decelerated in the past year. But with the aging of the baby-boom generation and the general trend toward higher health expenditures, federal spending on Medicare is set to increase sharply over the next decade, making it a prime target for deficit reduction. Seizing on projected deficits as their rationale, Republicans have called for a drastic solution: eliminating the traditional, public Medicare program in favor of a voucher for private insurance, which would save the government money by paying a diminished share of health costs and shifting...

History's Missed Moment

Why did the greatest failure of laissez-faire capitalism since the Great Depression lead to a turn to the right rather than the left in both Europe and the U.S.?

(Sipa via AP Images) President of France's far-right National Front party Marine Le Pen gives a press conference after protesting a French National Assembly vote that authorized a 15 billion euro aid package for Greece.
The epic financial crash of 2007–2008 should have produced a massive political defeat for the conservative ideology whose resurgence began three decades ago. Its signal achievement, liberated finance, did not reward innovation, enhance economic efficiency, or produce broad prosperity. Rather, the result was a speculative bubble followed by a severe crash. Along the way, the super-rich captured a disproportionate share of the economy’s gains, while other incomes stagnated. In the aftermath, ordinary people have suffered large losses of earnings, assets, social protections, and hopes for their children. By any measure, therefore, 2008 was primed to be a political watershed on a par with 1932. History delivered a profound teachable moment for American progressives and European social democrats. But, to borrow from T.S. Eliot, between the idea and the reality fell the shadow. Three years after the financial dominoes toppled, right-wing ideas are ascendant and right-wing policies reign...

Forget the Super Congress

A lot of punditry today is being directed at the super-committee of 12 that the debt-ceiling deal establishes, ostensibly to bring our fiscal house in order. But God knows why. The idea that the Republicans on the committee will accede to any tax increases -- after House Republicans read John Boehner the riot act for talking tax increases with President Obama, and after Republicans in both houses unanimously rejected Harry Reid's bill that included tax increases as part of the mix -- couldn't pass muster with Dr. Pangloss. And even if, through acts of divine intervention and outright bribery, Republicans were persuaded to accept some tax hikes, the price they'd exact in return -- raising the eligibility age on Medicare, reducing Social Security benefits -- would be too high for congressional Democrats to accept, even if Obama has already signed off on them. Far more likely, as Ezra opined today, that Democrats will simply accept the cuts put in place by the trigger, which exempt...

I Ruined the Economy and All I Got Were These Lousy Tax Cuts

Will the GOP's budget plan spark a double-dip recession?

(Flickr/Medill DC)
Last week, Ben Bernanke delivered a speech in which he agreed that the government should reduce the deficit. However, he cautioned, "a sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery." In economist speak, that's a warning to Vice President Joe Biden and the handful of congressional leaders he has assembled to tackle the deficit: Don't cut spending too fast or you'll kill the economy. Already, the federal government's limit on the amount it can borrow has been reached, and Treasury Secretary Tim Geithner has warned that the government is now taking "extraordinary measures" to meet its obligations. Yet Republicans refuse to raise the limit without big cuts to government spending. Also last week, Sen. Jon Kyl, a Republican from Arizona and a member of the Biden negotiating team, reiterated his party's demand : Every dollar the debt ceiling is increased must be accompanied by at least a dollar in spending...

On Again, Off Again

The growing rift between Republicans and Wall Street.

(Flickr/pinksherbert)
Do Republican leaders in Congress answer to Tea Party activists or to Wall Street? That question will be answered in the next few weeks as the debt-ceiling fight comes to a head. The choice that GOP leaders make will influence more than fiscal policy or the financial markets; it will also shape the 2012 election and reveal the true identity of today's Republican Party. Wall Street has been urging Republicans to approve more government borrowing for months, arguing that it is too risky to use the debt-ceiling cap as a hostage in the budget battle. That message was delivered during a series of meetings in April between GOP leaders and top Wall Street executives and has been repeated often by the finance sector's ubiquitous lobbyists on Capitol Hill. As Rep. Michael Grimm, a Republican from Staten Island told The Wall Street Journal : "Wall Street understands that if we default on our obligations, our markets are going to crash. ... They're doing their job and talking to a lot of members...

Governing Beyond His Means

Rep. Paul Ryan's foreign policy ideas are sensible, but his budget would make implementing them impossible.

(Flickr/Gage Skidmore)
When I saw that Rep. Paul Ryan, the GOP budget guru who's led the charge for Medicare repeal, was planning a major address on foreign policy, my hopes were not high. Indeed, the speech he delivered last Thursday offered its fair share of nonsense, partisanship, and ideological ax-grinding. But in some respects, Ryan's core ideas about international relations were refreshingly sensible. For all his repeated claims that American international decline "is a choice" that policy-makers must resist, however, his speech also doubled down on budget ideas that make decline inevitable. Under the guise of preserving America's military strength, Ryan would gut our economy over the long run by weakening our physical infrastructure and disinvesting in the human beings who are our greatest asset. Consequently, even as Ryan, who has emerged as the new intellectual leader of the Republican Party, is pushing the GOP in a sensible direction on international relations, he's seeking to force the country...

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