EMAIL SIGN UP!
Most Popular This Week
- Rise Up or Die
- Rallying Cry: Citizens Worldwide to Unite in 'March Against Monsanto'
- A 'Nonviolent Army of Love' Rises in North Carolina to Face Down Rightwing's Assault on Progress
- The Latest Lie: IRS Targeted Conservatives
- Genetically Modified Democracy: Monsanto and Congress Move to Stomp on Your Rights
Popular content
Today's Top News
What Everyone Should Know About the “Debt Crisis” in the U.S.
Since the U.S. “Debt Crisis” has been a big international story for the last few weeks, it is worth clarifying what is real and what is not. First, the U.S. government does not have a “debt crisis.” The U.S. government is paying net interest of just 1.4 percent of GDP on its public debt – this is not much by any historical or international comparison. The relatively large annual deficit at present (9.3 percent of GDP) is overwhelmingly the result of the recession and weak recovery. The long-term deficit projections are driven by health care costs in the private sector. These spill over into public spending because the U.S. government pays for almost half of health care spending, at a rate that is twice as high as other developed countries – and rising fast.
There was never any chance that the U.S. would actually default on its debt. The whole “crisis” was manufactured from the beginning, with Republicans in the House of Representatives using a technicality to win unpopular spending cuts that they could not win at the ballot box. It worked: They got an agreement that promises large spending cuts without any tax increases on America’s rich or super-rich, who have vastly increased their share of the national income over the past three decades.
The right won because President Obama chose to collaborate with them, also seeking to take advantage of the manufactured “crisis” to implement cuts that offended and hurt the people who voted for him. Of course he also wanted to increase taxes on the rich, but because he had accepted the legitimacy of the Republicans’ extortion, he lost that too.
The worst damage from this “weapon of mass distraction” – and President Obama’s capitulation to it -- is that the policy debate in the United States has been sharply altered. The phony “debt crisis” is seen as the main problem; and even more absurdly, a cause of the economy’s weakness. The U.S. economy barely grew in the first half of this year, and we have 25 million people unemployed, involuntarily working part time, or having dropped out of the labor force. We are more than one-third of the way into a “lost decade,” and the shift of the policy debate toward deficit reduction will increase the probability that we will experience the whole thing.
If President Obama loses both houses of Congress and/or the presidency in the next election, it will be the result of a weak economy and high unemployment, and because he let his opponents not only sabotage the economy – which they are all too happy to do – but also to redefine the economic debate so that the president and his party will get blamed for the mess.
So the next time someone complains that most of South America is governed by left-populist presidents who fight too much with their countries’ traditional elite, remember there are worse kinds of leadership: the kind that commit political suicide for the sake of “bipartisanship.”
Comments
Note: Disqus 2012 is best viewed on an up to date browser. Click here for information. Instructions for how to sign up to comment can be viewed here. Our Comment Policy can be viewed here. Please follow the guidelines. Note to Readers: Spam Filter May Capture Legitimate Comments...
44 Comments so far
Show AllYes, when the whole country was enraged by Paul Ryan and the Republican House about the Medicare Voucher program, Obama jumped in front of Ryan and took the bullet! Now that Obama has opened the Pandora's Box of cutting entitlements, we haven't heard anything about the Ryan Budget.
I would call it much more than collaborating, he is working hand-in-glove with the Republicans to take down the Democratic Party. That would make him a Trojan Horse for the Republicans who is able to stop any investigation of the former administration which was sorely needed, stop any investigation of the CIA, continue, intact, the Bush administrations excesses, start the destruction of the social safety net(something a Republican hasn't been able to do) and to undermine the Democrats in any further elections.
Obama is not this nation's friend.
Yes, it's completely obvious that we are now a one-party system!
Unfortunately, 90% of the US electorate is afflicted with terminal denial syndrome and will never acknowledge the one party syetm. Even after they are forced out of their homes and living under a bridge they will still be blaming the other party for their plight.
What rats scurrying by? The rats are doing just fine thank you. Of course they have plenty of vacant houses within which to dwell, thanks to the banksters. the robo-signing of forclosure documents, and "our" government bailing the very same banksters out of the mess they created with OUR money so they could pay better bonuses. I suppose nowadays, the banksters who are able to boot the most people out of their homes are the ones who reap the biggest bonuses?
Nope, no more rats in the streets or sewers...just plain ol middle class and working class humans.
Vacant houses? Do not be too sure.
This speaks to the insanity of an economic system that has people living under bridges.
The Banks can not unload all the homes they have foreclosed on. It is cheaper for them to bulldoze the homes under then it is to maintain them as empty shells.
The Rubble from said homes , many of which are only a few years old, is hauled to a landfill. No doubt, when and if ever rebuilt, more forests will need to be logged.
It is a stupid system. Yet people continue to cling to it as the only system that can produce wealth.
"It is a stupid system."
And I'm afraid we'll have to continue to live with it until socialism becomes an acceptable element of political discourse outside the hallowed halls of progressive websites.
"Of course [Obama] also wanted to increase taxes on the rich, but because he had accepted the legitimacy of the Republicans’ extortion, he lost that too."
The Daily Show after all this was over had a montage of clips of Obama insisting that we had to have revenue increases and then had Stewart react with his "huh expression" as Obama accepted the final deal without revenue increase.
As I watched that I realized his constant litany of insisting on revenue increases reminded me of something, his constant litany of insisting on a public option almost two years ago.
But I remember something about that which the media keeps ignoring. A lot of that litany was AFTER he'd already promised in secret deals that there would be NO public option. The man was LYING in his litany.
I also remembered his constant litany of ending the Bush Tax cuts for the wealthy.
I've concluded that he was lying about the Bush Tax cuts and he was lying about the revenue. The man is a LIAR. Why do we keep forgetting that?
Just like Obama kept telling us that " a public option is needed to keep insurance companies honest".
Nearly 1 1/2 years after he signed Obamacare into law ith NO PUBLIC OPTION, Obama has yet to tell us what will keep insurance companies honest now that there is an individual mandate enforced by the IRS, while the bankrupt states will be responsible for keeping insurance companies honest...if they can find any money for that.
Obama broke more campaign promises than any of his 43 predecessors and did it within 2 years of being elected..."change you can believe in"?
Americans sure do like their presidents to lie--the only thing we don't like is when they let themselves get caught lying. No we want, demand, someone who can convince us that sh*t is ice cream so that we not only eat it, we say it tastes good. What would be the alternative? Reality? Truth? Actually dealing with our country's actual problems? Not much chance of that happening.
Can we spell "primary"? If we can elect a progressive Congress, it won't matter whether the greater or lesser evil is in the White House. A vote for Obama is a vote for Wall Street, so dump him and elect progressive congress people.
That is one valid option. The primaries become the real battle where all is won or lost. The question then is; are the citizens up to the task? It would require a tremendous amount of energetic activism 24/7/365, and patient perseverance, hard knocks, and real team effort, to win that battle. It would almost take an exhaustive "siege mentality". I'm not sure we are that kind of people. This is something that should have been started 20 years ago, to begin to see results now. I'm beginning to think the "plan B" people now have the winning strategy: cooperative localism for self/family/community survival, through the coming storms. They will at least be the "seed crop" for the future of humanity.
When I think of trying to live in, or retreating into, some system operated as a form of cooperative localism, I think of those driving the bulldozers from "The Grapes of Wrath" that come to claim all the property for the banks, backed up by armed law enforcement officers. I believe that the plutocrats will order their minions to take everything by force, sooner or later, until they are stopped. They will not let anyone alone, to live in peace, because virtually every piece of real estate, at least that which can support human life, has some value, and the plutocrats mean to take all of it.
That is why I am in favor of a constitutional amendment that would allow citizens of a state to secede by plebiscite. The right of secession could be the one issue on which the left and the right may agree. After the passage of the amendment, progressives could concentrate in one or more states and vote to secede and form their own government or governments. They would of course need to build their own armed forces, probably including a nuclear force, to prevent invasion and takeover by the forces of the plutocrats.
I know the odds against this are long (as they are for virtually every option left to us), but possibly it could catch the plutocrats by surprise to some extent and take advantage of all the hostility towards the federal government that the plutocrats have created in the minds of the little people on the right.
Perhaps I'm too easily frightened, but the thought of a right wing state with its own nuclear force sounds too horrible to think about. Sooner or later, some charismatic, rapture lover would gain control. Or perhaps I'm just a conservative, 'keep the devil we have' kind of guy.
Inb wrote:
I'm beginning to think the "plan B" people now have the winning strategy: cooperative localism for self/family/community survival, through the coming storms.
- - - - -
kivals wrote:
When I think of trying to live in, or retreating into, some system operated as a form of cooperative localism, I think of those driving the bulldozers from "The Grapes of Wrath" that come to claim all the property for the banks, backed up by armed law enforcement officers. I believe that the plutocrats will order their minions to take everything by force, sooner or later, until they are stopped. They will not let anyone alone, to live in peace, because virtually every piece of real estate, at least that which can support human life, has some value, and the plutocrats mean to take all of it.
* * * * *
My Comments:
Inb and kivals,
kivals comment reminds me of the Diggers. I think Inb's cooperative localism suggestion needs to be part of Plan A, which also must include intense efforts to control the abuse of power in society through the establishment of a genuine representative democracy in the United States.
- - - - -
First excerpt from Wikipedia "Diggers" page:
The Diggers were an English group of Protestant agrarian communists,[1][2] begun by Gerrard Winstanley as True Levellers in 1649, who became known as Diggers due to their activities.
Their original name came from their belief in economic equality based upon a specific passage in the Book of Acts.[3][4] The Diggers tried (by "levelling" real property) to reform the existing social order with an agrarian lifestyle based on their ideas for the creation of small egalitarian rural communities. They were one of a number of nonconformist dissenting groups that emerged around this time.
- - - - -
Second excerpt from Wikipedia "Diggers" page:
The year 1649 was a time of great social unrest in England. The Parliamentarians had won the First English Civil War but failed to negotiate a constitutional settlement with the defeated King Charles I. When members of Parliament and the Grandees in the New Model Army were faced with Charles' perceived duplicity, they tried and executed him.
Government through the King's Privy Council was replaced with a new body called the Council of State, which due to fundamental disagreements within a weakened Parliament was dominated by the Army. Many people were active in politics, suggesting alternative forms of government to replace the old order. Royalists wished to place King Charles II on the throne; men like Oliver Cromwell wished to govern with a plutocratic Parliament voted in by an electorate based on property, similar to that which was enfranchised before the civil war; agitators called Levellers, influenced by the writings of John Lilburne, wanted parliamentary government based on an electorate of every male head of a household; Fifth Monarchy Men advocated a theocracy; and the Diggers, led by Winstanley, advocated a more radical solution.
- - - - -
Third excerpt from Wikipedia "Diggers" page:
The Digger colonies, consisting in all of only about 100–200 people throughout England, were finished by 1651. The collapse of the movement was due to the efforts of local landowners backed by the Council of State to crush the Digger colonies whenever they arose.
Wikipedia URL: http://en.wikipedia.org/wiki/Diggers
"The relatively large annual deficit at present (9.3 percent of GDP) is overwhelmingly the result of the recession and weak recovery." Really? Not the wars, the bush tax cuts, the low corporate tax rate with its accompanying subsidies, not the Wall st. con game? Not the guaranteed boost of the for-profit health insurance industry? Not the name-your-price pharmaceutical costs with no collective bargaining (oops, except for Wal-mart) allowed? Not the outsourcing of jobs to other countries and the entry of 12 million new low pay workers into the American jobs market?
Nothing new to add... just nice to see, from the comments above, that everyone here gets it.
My thought exactly, rudyspeaks.
Also, it was gratifying to read Weisbrot's line: "The right won because President Obama chose to collaborate with them..."
This begs a question, insofar as it presumes that Obama himself is not therefore PART of the "right", but somehow remains apart from it.
But I'm just happy to see any writer published at CD baldly use the word "collaborate". So far, unfortunately, it remains the exception that tests the rule.
Video - Fed is selling put options on Treasuries to drive down yields
http://dailybail.com/home/fraud-has-the-fed-become-the-next-aig.html
NOTE: If you do not understand securities and derivatives this explains it perfectly.
The people who put Obama where he is are those who will decide if he stays.
Mark,
Obama is part of the scam, not a victim of it. He could easily have said at any time "there is no debt crisis". OBAMA asked for spending cuts. He didn't wait for the GOP to give him cover.
Why are we reading this Weisbrot article on a purely domestic US matter from a from a São Paulo, Brazil newspaper, presumably translated from his English to Portugese, (or is Weisbrot a Jewish-Brazilian-USAn, and wrote it in Portugese?).
I mean, I thought it was bad how we so often have to go to the London Guardian, Al Jazeera, or Russia-TV to read news and critique of US domestic issues, but this is getting ridiculous.
Did no US newspaper publish it? Did he really have to resort to place 7000 miles to the south to get published? How decrepit can the US media get?
Weisbrot is in S. America a lot so I bet he has a regular feature in this Sao Paulo paper. The real sad thing is that the average Brazilian probably knows more about the truth of what's going on in the U.S. than the average USAn.
Next it'll be Chris Hedges writing on U.S. politics for the Madagascar Morning Herald. ;)
Mark Weibrot is a gringo lives in Wash DC and co-directs CEPR, Ctr for Econ Policy n Research, which has lots of good observations and analyses on their site.
Beware anyone so misinformed or worse who spreads a rumor so totally false.
The US has media ??? I thought we just had propaganda. Learn something new
everyday.
Have US'ns got a death wish?
After all why spend so much time on this artificial crisis?
I sometimes wonder if Obama is actually trying to do the right thing for the long term. Our deficit is a problem and we do need to cut it down to size. However, now is a terrible time to start this process, but if we wait until the correct time, when the economy is humming along nicely, then no one sees any sense of urgency to deal with the problem. When it comes to politics, facts and common sense are rarely part of the equation.
The Wall St bailout was the safest and best approach. Health reform was slightly better than status quo. Extending Bush tax cuts was good, but it would have been better if the rich could have helped out a bit. There's only one new, relatively minor new war. Obama's middle name is Capitulator, isn't it? Anyway, my 'right thing' comment may have been overstatement. A better wording would be that I think he tries to do the least worst thing.
In his blog today, Krugman pointed to an article by David Frum, a Reagan economic advisor, saying that if people would look back over the last decade at the Wall Street Journal opinion page and compare it to Krugman's columns, they would see that Krugman was a much better prognosticator than the Journal.
Do you see how this disputes your previous comments' speculation as to Obama's real motivation?
All Obama had to do was read the NYT to get Krugman's advice on not worrying about the debt just now.
Can Obama not read?
He sure the hell seems to be reading that teleprompter just fine.
Maybe he is pretending?
Well, since I do not read the Journal's opinion page, I am no expert to make any factual statement, but my guess is that Obama's policies have fallen somewhere in between the Journal and Krugman. Since a very large number of highly intelligent people have often disagreed with Krugman, I certainly can not fault Obama for not using Krugman as The Oracle. Certainly, if Obama does not soon begin to at least THINK about Krugman's ideas, then he is a fool. Unfortunately for America, and to some extent the World, Obama is now rather boxed in when it comes to any stimulus spending/job creation. He can and should still do things, mortgage relief for one, but his options now seem limited. He has capitulated himself into a poor spot, and America's unemployed into a very poor spot. It's been interesting reading Krugman over the years. You know he often seems to want to tear his hair out, but life is funny (if you're not desperate).
Your apologies for Obama are almost as tired and tiring as the ones you use for Monsanto. Did they get a 2-for-1 discount when they got you to stand by in these threads, playing referee to cheer on the same status quo driving the nation (along with Life, in general) to ruin?
The whole “crisis” was manufactured from the beginning, with Republicans in the House of Representatives...
-------------------
Incorrect.
The beginning of this fake drama was Dec. 2010 when Obama extended the Bush tax cuts for billionaires and made no effort or demand that the debt ceiling legislation be part of the bill.
Remember, at this time the Democrats controlled both Houses.
Obama purposefully painted himself into this corner to enact safety-net austerity which he fully supports.
Obama went so far as to promise several popular neo-conservative columnists that he'd "tackle" the "entitlements" BEFORE being sworn in as president.
Please get your facts straight Mark.
FYI:
For a compelling analysis outside the CD editorial box that also speaks to "What Everyone Should Know About the 'Debt Crisis' in the U.S.", see "Disaster Politics" by Felice Pace*
* http://www.counterpunch.org/pace08042011.html
"So the next time someone complains that most of South America is governed by left-populist presidents who fight too much with their countries’ traditional elite," what??
You too?
I was thinking the next time somebody makes that complain to me will be the first.
Another FYI:
http://www.opednews.com/articles/Enough-Equivocation-Obama-by-Kristine-Mattis-110803-875.html
http://www.youtube.com/watch?v=mWHu5hsfuT0
Thanks for the Mattis link, pensatrice; it was indeed a good article..
Kristine Mattis was published at CD fairly frequently earlier in the year, but not lately.
I guess it's possible she hasn't been writing as much lately. Anything's possible.
I noticed something about country music fashion styles and rock fashion styles about 40 years ago and it has played out true ever since. Country music stars tend to have clothing styles, hair styles and life styles similar to what Rock music stars had ten years previously. Right now country music seems similar to the studio pop rock styles ten years ago.
I share that because I just notices something similar in politics. It seems like a lot of mainstream Democrats are about one stage behind where I am in relating to Obama.
A few years ago when I was saying he was a lousy negotiator and unable to stand up to the Republicans they were saying he was a master chess player and I should wait and see him pull it off.
By the time they were saying he was a lousy negotiator I was expressing my anger at him for being a lying shill for the corporations and I was going to vote for someone else in my caucus even if no one primaried him.
Lately I've noticed more and more Democrats saying they are angry at him and are ready to primary him. Me? I'm beyond anger now. I'm just depressed about the Democratic Party and think primarying Obama is a waste of time. I've finally come to the point so many wise commenters here at CD have been at for a long time. A pox on both mainstream parties, they're both corrupt and hopeless. Oh well.
It's time to try more radical solutions.
Phony Crisis? Its the wars stupid!!! A small part of America has been reaping frickin huge profits off the war, and the money is coming from the taxpayer.
"The U.S. government is paying net interest of just 1.4 percent of GDP on its public debt – this is not much by any historical or international comparison."
It doesn't matter what the interest rate is, if you can't pay the rate, it is a crisis.
Wall Street is not an indicator of the US economy, as a large portion of the money in wall street is not American in origin. Outside investment is going elsewhere. What does America make besides mercenaries and war equipment. America has become a services based economy. Order a pizza! America's creditors want an end to the endless printing of greenbacks with nothing to back them up.
The parasites have killed off the host.