Robert Kuttner

Fix the Debt, Destroy the Recovery

(AP Photo/Jim Cole)
David Walker announced his endorsement of Mitt Romney this week. The name might not ring a bell, but Walker was head of the Peter G. Peterson Foundation, the number one funder of deficit-hawkery in the United States. Walker, a former Comptroller General, has described himself and his crusade as bipartisan, and it is actually helpful that he has come out of the closet as a Republican. Lately, Walker has been deeply involved with the efforts to levitate the late Bowles-Simpson Commission as a template for deficit-reduction, and has been working closely with the corporate-funded “Fix the Debt” campaign of more than 100 CEOs lobbying for an austerity grand bargain. It’s worth unpacking the economics and the politics of the austerity lobby. The Fix the Debt campaign, much like the Bowles-Simpson Commission and the propaganda of the Peterson Foundation generally, contends that the projected national debt is depressing business willingness to invest now. Presumably, businesses are worried...

Turning the Cliff into a Launch Pad

One part of the dreaded fiscal cliff actually presents an opportunity that could be good politics and good economics. The temporary two-point cut in the payroll tax expires January 1 (along with the Bush tax cuts). The $1.2 billion sequester also kicks in. Deficit hawks of both parties have been saying that it’s irresponsible to extend the payroll tax cut, while defenders of Social Security like the American Association of Retired Persons (AARP) are opposed to an extension for fear of diverting revenue from the Social Security trust fundsand adding ammo to the crusade for cutting back the system’s benefits. But there is a nice opportunity here to turn a lemon into lemonade. The economy is hardly robust enough to inflict a two-point tax increase on working people. For two-income households, that’s a four-point increase. That means, say, a $2,400 tax hike on a $60,000 family income. Nobody is going to remember that this was temporary; they will simply experience it as a tax increase on...

A Good Debate, But Will Voters Notice?

(AP Photo/David Goldman)
(AP Photo/David Goldman) President Barack Obama and Republican presidential nominee Mitt Romney shake hands following their third presidential debate in Boca Raton, Florida. Obama did very well in the foreign-policy debate, but it remains to be seen if his success will change the trajectory of the race, which has been trending toward Romney. Several things about this debate were a surprise. The most surprising thing was the emergence of Mild Mitt. Romney sounded almost as if he were on downers. His campaign must have decided that he was coming across as too ferocious or two bellicose. But his performance tonight was underwhelming. Obama, by contrast, took the debate to Romney right from the first exchange. He was almost too aggressive, calling the former Massachusetts governor on his inconsistencies and policy recommendations that would have backfired. “Every time you’ve offered an opinion, you’ve been wrong,” the president said. But Romney did not take the bait. The other odd thing...

Too Close for Comfort

This was supposed to be about a six-point race in Obama's favor. That's sure how it looked on the eve of the first debate. But now it's dead even. What happened? First, of course, Romney cleaned Obama's clock in the first debate. Obama came back strong in debate number two, but evidently a lot of swing voters formed their impressions in that deadly first encounter. But there is a more fundamental problem here. The narrative of the past four years should have revolved around free-market ideology, Wall Street plunder, Republican rule, and the fact that Republicans first crashed the economy and then blocked a recovery. Obama did not hit any of those themes as forcefully as he needed to. The Tea Partiers, despite their billionaire backers, became agents of populist backlash. Obama was too conciliatory for far too long. The Republican Congress was able to persuade public opinion that the failure to make progress on everything from jobs to the budget was a symmetrical failure rather than...

Game, Set, Obama

(AP Photo/David Goldman) President Barack Obama laughs as he talks with audience members after the second presidential debate at Hofstra University. President Obama did what he needed to do tonight. He took the debate to Mitt Romney. He was relaxed, even jaunty, as he scored one point after another. He seemed to be enjoying himself at Romney’s expense. He looked more comfortable and commanding as the debate wore on, while Romney looked more stiff, edgy, and salesman-like. Obama needed to remind voters that Romney is a very rich man out of touch with regular people, and he did that well. He got in Romney’s face and he got under his skin, but stopped just short of being overly aggressive. You could tell right from the beginning that this was a very different Obama. When Romney touted his five-point plan to fix the economy, Obama responded scornfully, “Governor Romney doesn’t have a five-point plan, he has a one-point plan” and that plan is more tax breaks for the very rich who are...

Obama's Town Hall To-Do List

Here’s what President Obama needs to do tonight: Show leadership, resolve, and toughness Directly call Romney on his evasions and deceptions Demolish several of Romney’s outright lies Not pass up several opportunities to make points, as he did in the first debate Not make any major mistakes Take advantage of any Romney blunders Specifically: Refute Romney's claims that the Benghazi attack was Obama’s failure, and shame Romney for trying to make political hay of it Destroy Romney’s credibility on the budget, tax cuts for the wealthy, and Social Security Press Romney directly on which tax loopholes he’d close Remind voters that Romney is an out-of-touch rich guy, whose new-found identification with regular working people is a sham Associate Romney with Republican blockage of Obama’s efforts to promote a stronger economic recovery Push Romney hard on issues where he has changed his position or denies his real current position, such as abortion rights Demolish Republican talking points...

(Fiscal) Cliffs Notes

(Flickr/Matthew Wilkinson)
The most bizarre thing about the deficit and the campaign is the fact that the risk of a fiscal cliff—which everyone agrees will crash the economy—is being used to justify a slightly smaller fiscal cliff. There are several players here, so the arguments are worth sorting out. Herewith, some Cliffs Notes: What is the fiscal cliff? It comes in three parts. On January 1, the Bush tax cuts expire. This means that in the first pay period of the new year, more taxes are taken out of everyone’s withholding. Second, the temporary two-point cuts in payroll taxes expire too, so everyone’s Social Security and Medicare taxes go up as well. Third, the dreaded “sequester” of automatic budget cuts, the toxic fruit of the Republican blockade of a normal budget deal back in 2011, kick in. Oh, and extended unemployment benefits expire, too. What would all this fiscal tightening do to the recovery? It would create a new recession, according to the Congressional Budget Office (CBO), Fed Chairman Ben...

Nailing Jell-O to the Wall

Biden did a lot better than his president did in the first debate. But Obama still needs to hammer home all of the inconsistencies and evasions in the Romney-Ryan positions on such key issues as Social Security, Medicare, and taxation. Between moderator Martha Raddatz’s questioning and the vice-president’s persistence, the viewer just about grasped that the Romney-Ryan arithmetic was entirely bogus when the Republicans claim that there were $5 trillion worth of loopholes that can be closed to pay for new tax cuts without cutting programs, giving further breaks to the rich, or increasing the deficit. But Biden did not quite demand in so many words: Which loopholes would you close? What would they add up to? And (since the Republicans have no plausible answer) why aren’t you telling us? The Romney-Ryan position that these details would be worked out with Congress is, in Biden’s term, malarkey. But the viewer had to be paying careful attention to appreciate the full phoniness of the...

Obama: Giving Away Social Security

(AP/Rex Features)
Here is Mitt Romney’s proposal to cut Social Security benefits, from the Romney campaign website : First, for future generations of seniors, Mitt believes that the retirement age should be slowly increased to account for increases in longevity. Second, for future generations of seniors, Mitt believes that benefits should continue to grow but that the growth rate should be lower for those with higher incomes. In other words, cuts in benefits. In the first debate, I was waiting for President Obama to go to town on this. Instead, Obama had this to say: LEHRER: "Mr. President. Do you see a major difference between the two of you on Social Security?" OBAMA: "You know, I suspect that, on Social Security, we’ve got a somewhat similar position. Social Security is structurally sound. It’s going to have to be tweaked the way it was by Ronald Reagan and Speaker — Democratic Speaker Tip O’Neill." He’s got a similar position to Mitt Romney’s? On Social Security? Does this man just want to hand the...

Those Unemployment Numbers

President Obama gets a lift from a relatively positive employment report for September. The nation gained 114,000 jobs, and the unemployment rate declined to 7.8 percent, the lowest since Obama took office. Earlier disappointing figures were revised upwards, by 40,000 for July and 45,000 for August. All this gives Obama some bragging rights, and heads off what would have been a withering attack had the news been bad. But Obama makes a mistake by emphasizing what the progress the economy is making. Median household incomes are down, young people face rough going as they enter the job market, and the elderly have dwindling pension coverage and almost no returns on their savings in a zero interest rate environment. It would be much better to emphasize the mess that he inherited from the Republicans, the fact that every effort he has made to produce a stronger recovery has been blocked by the opposition, and the dismal 30-year trend of worsening inequality and rising insecurity. The...

Crying Fraud, Then Creating It

(AP Photo/The The Hutchinson News, Travis Morisse, File)
For once, the Republicans were right. They have been obsessively claiming that voter-suppression measures are necessary because of widespread “ballot fraud.” However extensive investigations by the mainstream media have shown that ballot-fraud is a convenient myth . Even the Bush administration, in an extensive five-year search, turned up no evidence of the kind of voting fraud—fake IDs, voting in the name of dead people, folks being bribed to vote—that the Republicans routinely allege. Republicans, evoking the tactics of the pre-civil rights segregationist South, simply want to make it more difficult for people who might support Democrats to exercise their right to vote. Some five million people, mostly minorities and the poor, are at risk of being denied their right to vote in 19 states controlled by Republican governors and legislatures, according to a report from the Brennan Center. Happily, the courts have struck down the most extreme of these measures, in Texas, Ohio, Wisconsin...

Good News, Bad News on the Economy

The Obama administration got good news and bad news on the economy Thursday. The bad news: The Commerce Department revised the economic growth rate downward, to just 1.3 percent in the second quarter of 2012, down from an earlier estimate of 1.7 percent. That’s close to stall speed, not nearly enough to generate enough jobs or income growth. To add to the administration’s bad day, durable-goods orders dropped 13.2 percent in August. The good news: The Labor Department revised the job-creation numbers upward, including an impressive 386,000 in March. (But March was a long time ago.) Housing prices finally hit bottom, according to several reports, and have started to rebound. Still, these are not good numbers. If the government doesn’t radically change its economic policy, we will face a protracted slump for years to come. The only thing that could alter the trajectory is fiscal policy—not the grand bargain to cut the deficit that Messrs. Bowles, Simpson, and a platoon of corporate CEOs...

Pain in Spain

(AP Photo/Andres Kudacki)
The European authorities seem determined to drive the continent into a repeat of the Great Depression. The European Central Bank keeps playing a cute game designed more to impress the Germans than the financial markets or to provide real relief. Mario Draghi, ECB president, offers to buy unlimited amounts of the bonds of states that are being pummeled by speculators, but then undercuts his own offer by conditioning it on punishing austerity. In Spain, in the days after Draghi’s latest pronouncement, the rate on government bonds briefly fell, but is now rising again as markets realize that Draghi’s conditions make it impossible for any elected government to accept the offer. Meanwhile, unemployment is rising to record levels and Spain’s depression keeps feeding on itself. Draghi’s game reminds me of a battery-operated novelty toy I had when I was a kid. It was a mysterious box with a switch. When you turned on the switch, the lid opened, a mechanical hand came out of the box, and...

The Party That Can't Shoot Straight

(Flickr/PBS Newshour)
By all accounts, this was the Republicans’ election to win: an economy stuck at a level insufficient to generate enough jobs or income gains; a somewhat disillusioned Democratic base; and a stunted generation of young adults who supported Barack Obama last time by a margin of 71-29 and are unlikely to do it again. Yet Obama’s lead keeps widening. It’s worth unpacking why. The most obvious reason, of course, is the sheer clumsiness of Mitt Romney, God’s gift to the Democrats. If a computer had been asked to generate a candidate guaranteed to alienate independents and divide his own base, it could not have done better. The far right’s effort to “let Ryan be Ryan” only shines a spotlight on the unpopularity of the GOP’s designs for Medicare and Social Security, while Romney’s serial gaffes lead Senate candidates in swing states to disparage their party’s nominee and right-wing commentators to weep. Another reason is that demographic trends are relentlessly moving in the Democrats’...

Romney's Negative Coattails

Former governor Mitt Romney’s serial gaffes seem to be doing cumulative damage not just to his own campaign, but to Senate and even House races. In the days since Romney’s clumsy attempt to make political gain from the murder of Ambassador Chris Stevens, Politico’s piece revealing ineptitude and finger-pointing at the Republican National Convention, and the leak of the infamous “47-Percent” video, Democratic Senate candidates in most contested seats have opened up leads, according to usually trustworthy polls. In Massachusetts, Elizabeth Warren is up by six points over Scott Brown. Tim Kaine leads George Allen by seven or eight points in Virginia. Tammy Baldwin is at least even with Tommy Thompson in Wisconsin. And in Florida and Ohio, incumbents Ben Nelson and Sherrod Brown have benefitted from the swing of support to Obama and are holding solid leads. Once long shot Democratic senate candidates in Missouri and North Dakota now seem competitive, partly due to local gaffes by their...

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