James K. Galbraith: "What fiscal crisis? The claim we face a fiscal crisis is a big untruth"

[Better Believe It]

Hawk Nation: A Guide to the Catastrophic Debt Ceiling Debate
by James K. Galbraith
July 12, 2011

Today this bad-faith law (debt ceiling) is pressed to its absurd extreme, to force massive cuts in public programs as the price of not-reneging on the public debts of the United States. Never mind that to force default on the public obligations of the United States is plainly unconstitutional. Section 4 of the 14th amendment says in simple language that public debts, once duly authorized by law and including pensions, by the way, “shall not be questioned.” The purpose of this language was to foreclose, to put beyond politics, any possibility that the Union would renege on debts and pensions and bounties incurred to win the Civil War. But the application is very general and the courts have ruled that the principle extends to the present day.

The President, though supposedly a constitutional expert and though sworn to “preserve, protect and defend” the Constitution, will not say this. Instead he appears to treat the Constitution as an optional matter, to which he will not resort, in the hope that by negotiating with the hostage- takers he can reach some reasonable outcome that will preserve everyone’s good name. (The great Harvard legal scholar Laurence Tribe recently argued that the President cannot defy the debt ceiling on his own. That’s a debatable point.) It is as though Lincoln in 1861 faced with the siege of Sumter had sat down with Confederate commissioners to see what could be worked out.

What fiscal crisis? The great unasked question in this summer of sound-and-fury is “why?” The United States has many problems at the moment: a high-and-stubborn unemployment rate, a foreclosure catastrophe, a slowing economy that has not recovered and will not recover from the Great Crisis, and the ongoing challenges of infrastructure, energy and climate change. Fiscal crisis? The entire thing is a figment, made up of wise-men’s warnings repeated endlessly and linked to the projections of technicians at the Congressional Budget Office and elsewhere.

Instead of this, what do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds.

Please read the full article at:

http://www.newdeal20.org/2011/07/11/hawk-nation-a-guide-to-the-catastrophic-debt-ceiling-debate-51211/

And read:

There Is No Economic Justification for Deficit Reduction
by James K. Galbraith

Statement to the Commission on Deficit Reduction
by James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Government/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, and Vice President, Americans for Democratic Action, June 30, 2010

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1469619

[msongs]

1. deficit scam supports the view that democratic party policies are no better than republican ones nt

[emilyg]

18. +1

[defendandprotect]

29. Obama should be disbanding this Commision right now -- !!!

Is he capable of being embarrased -- not sure after Simpson's comments

and yet he was permitted to remain on the Commission!!

[defendandprotect]

30. Galbraith: "practices of banks/investment banks worked to destroy the financial system" --

As a former top adviser in the Clinton White House, co-chairman Bowles no doubt knows that privately-funded economic growth produced the boom years of the late 1990s and the associated surplus in the federal budget. He must also know that the practices of banks and investment banks with which they were closely associated worked to destroy the financial system a decade later.

and ...


But I would wager that the Commission has spent no time, so far, on a discussion of the relationship between deficit reduction and financial reform.


Thus until the private financial sector is fully reformed --


I'm sure that Obama and Dems will get right to that!!



RE-REGULATION

**************

[xchrom]

2. Recommend

[chill_wind]

3. "An abritrary cruelty."

"If you wanted to build on that, the right steps would be to lower – not raise – the Social Security early retirement age, permitting for a few years older workers to exit the labor force permanently on better terms than are available to them today. This together with a lower age of access to Medicare would work quickly to rebalance the labor force, reducing unemployment and futile job search among older workers while increasing job openings for the young. It is the application of plain common sense. And unlike all the pressures to enact long-term cuts in these programs, it would help solve one of today’s important problems right away.

Instead of this, what do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds."


(extra emphasis mine)

[indepat]

10. Damning, not with faint praise, but scathing rebuke

:patriot:

[Gabi Hayes]

19. pretty sad the dems aren't offering solutions like that, or simply raising the SS cap

KR

[StarsInHerHair]

21. they are, just not our leader...yet..?

[chervilant]

32. Yet?!?

Oh, puh-leeeeze, don't hold your breath!

[defendandprotect]

31. Agree -- obvious common snse suggestion -- lower retirement age -- for Medicare, as well...

[amborin]

4. kr

[amborin]

5. kr

[bvar22]

6. K&R

..but aside from all that,
are you enjoying the Kabuki Theater?
The Timing & Choreography have been spot on!
Sometimes, it looks like they actually disagree!
But we've all seen this play and these actors before,
and the Final Scene is always very bad for the Working Class & The Poor.




Who will STAND and FIGHT for THIS American Majority?
You will know them by their WORKS,
not by their excuses.

[chervilant]

33. Too true!

The first time the Galbraith statement was posted, only 11 DUers had commented by the end of that day! This time, again, too few of us have read and/or commented on this vital information!

Hasn't the time come for us to throw off the oppressive shackles forged by the Corporate Megalomaniacs who've usurped our media, our politics, and our global economy?!

[mmonk]

7. Implementation of the shock doctrine requires a crisis scenario.

[paparush]

16. Exactly this.

The poor and elderly are on the brink of getting Shock Doctrined so billionaires can keep their corporate jet tax loopholes.

[nc4bo]

8. That was certainly an eye opening read. nt

:kick:

[chill_wind]

9. Recent interview:

"Galbraith: The danger posed by the deficit ‘is zero’

James Galbraith is an economist and the Lloyd M. Bentsen Jr. chair in government and business relations at the University of Texas at Austin. He's also a skeptic of the prevailing concern over America's long-term deficit. With many people now comparing America's fiscal condition to Greece, I spoke with Galbraith to get the other side of the argument. An edited transcript of our conversation follows.

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It's not overstated. It's completely misstated."

transcript:
http://voices.washingtonpost.com/ezra-klein/2010/05/galbraith_the_danger_posed_by.html

[Kaleko]

11. What's "a big untruth" other than a big, fat stinking lie?

[FedUp_Queer]

14. you beat me to it. Let's call it what it is...a LIE.

[lunasun]

17. is it better or worse than that WMD thing?

[girl gone mad]

12. Galbraith is exactly right. We need to be GROWING our deficit right now,

not shrinking it.

[fascisthunter]

13. What does he know?!?!?!!?

Obama's economic team is top-notch!!!!!

[FedUp_Queer]

15. you forgot your parenthetical

(for Wall Street).

[fascisthunter]

24. I forgot the sarcasm thingie

[R. P. McMurphy]

20. K & R (n/t)

[truedelphi]

22. Thank you for posting this and a big k & R. n/t

[Jim Warren]

23. Must read!

thanks

[hifiguy]

25. There is a time-tested way to reduce the defecit

and that is increase the number of people working and paying taxes. They also spend money to increase demand.

But apparently this simplest of all concepts is beyond the grasp of any repig.

[Broderick]

26. I can't imagine that 9.2% unemployment or

16 plus percent underemployed helps the deficit - which I feel are low estimates because people drop off the roles when no longer eligible for unemployment. I think Gallop's 10 plus percent unemployed is closer to the truth. Where are the jobs? Meanwhile China GDP grows an average 9 percent a year for many of the previous years... sigh.

[defendandprotect]

27. Of course it's a scam -- but how else can Obama scam the public re Social Security/Medicare?

Instead of this, what do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds.

[defendandprotect]

28. An illegitimate and prejudiced Commission with conflicts of interest-- !!!

And here's that infamous name again -- Peter G. Peterson -- !!

The fact that the Commission has accepted support from Peter G. Peterson, a man who has for decades conducted a relentless campaign to cut Social Security and Medicare, raises the most serious questions. Quite apart from the merits of Mr. Peterson's arguments, this act must be condemned. A Commission serving public purpose cannot accept funds or other help from a private party with a strong interest in the outcome of that Commission's work. Your having done so is a disgrace.


Clouds over the Work of the Commission.

Your proceedings are clouded by illegitimacy. In this respect, there are four major issues.

Secrecy

Leadership -- i.e., Alan Simpson --

Third, most members of the Commission are political leaders, not economists.

Conflicts of interest constitute the fourth major problem -- i.e, Peter G. Peterson


So Galbraith is making clear that the panel has been used to scam the public --

A prejudiced and ill qualified panel -- dead set on attacking Social Security/Medicare


The only way to reduce a deficit caused by unemployment is to reduce unemployment.



As a former top adviser in the Clinton White House, co-chairman Bowles no doubt knows that privately-funded economic growth produced the boom years of the late 1990s and the associated surplus in the federal budget.

He must also know that the practices of banks and investment banks with which they were closely associated worked to destroy the financial system a decade later.

But I would wager that the Commission has spent no time, so far, on a discussion of the relationship between deficit reduction and financial reform.

Thus until the private financial sector is fully reformed --

For this reason, a Commission report focused on "entitlement reform" rather than "financial reform" would be entirely beside the point. Entitlement cuts, no matter how severe, cannot and will not achieve deficit reduction. They cannot "meaningfully improve the long-term fiscal outlook," as required by your charter. All they will accomplish is to impoverish vulnerable Americans, impairing the functioning of the private economy and the taxing capacity of the government.

Social Security and Medicare "Solvency" Is Not Part of the Commission's Mandate.

As a Transfer Program, Social Security Is Also Irrelevant to Deficit Economics.


The Best Place in History (for This Commission) Would Be No Place At All.

You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO's unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It's a lose-lose proposition, with no gainers except a few predatory funds, insurance companies, and such who would profit, for some time, from a chaotic private marketplace.

Thus the interesting twist in your situation is that the Republic would be better served by advancing no proposals at all.



The above statement is not copyrighted material. BBI

[Overseas]

34. So sad that all my Democratic President isn't saying this.

He has called the Republicans' bluff in some ways but I wish all my Democrats would go all the way and stand up for revenue increases to put our people back to work.

So sad they feel compelled to go Hooverian when we know what happened last time that was done.