Obama’s foolish austerity project

As Barack Obama approached the conclusion of his July 15, 2011 press conference regarding the budget negotiations, he clearly threw down the gauntlet before the left:

And I have to say this is tough on the Democratic side, too. Some of the things that I’ve talked about and said I would be willing to see happen, there are some Democrats who think that’s absolutely unacceptable. And so that’s where I’d have a selling job, Chuck, is trying to sell some of our party that if you are a progressive, you should be concerned about debt and deficit just as much as if you’re a conservative. And the reason is because if the only thing we’re talking about over the next year, two years, five years, is debt and deficits, then it’s very hard to start talking about how do we make investments in community colleges so that our kids are trained, how do we actually rebuild $2 trillion worth of crumbling infrastructure.

If you care about making investments in our kids and making investments in our infrastructure and making investments in basic research, then you should want our fiscal house in order, so that every time we propose a new initiative somebody doesn’t just throw up their hands and say, “Ah, more big spending, more government.”

It would be very helpful for us to be able to say to the American people, our fiscal house is in order. And so now the question is what should we be doing to win the future and make ourselves more competitive and create more jobs, and what aspects of what government is doing are a waste and we should eliminate. And that’s the kind of debate that I’d like to have.

Marshall Auerback happily picks up the gauntlet:

You want a debate on this, Mr. President? Consider it done. In a nutshell, your proposed cuts will NOT set the stage for a “progressive agenda” going forward. The austerity measures contemplated by your Administration will suck income and wealth out of the private sector. This will cause private spending to fall, leading to yet more downsizing and unemployment. Tax revenues will decline further as corporate profitability sags, social welfare expenditures will rise as the automatic stabilizers kick in. And before you know it, we’ll be bumping up against that troublesome debt ceiling again, experiencing the same kind of political grandstanding that is characterizing today’s conflict, sort of like a nightmare version of “Groundhog Day”. The government will, in effect, be chasing its own tail. You will not “put the nation’s fiscal house in order”, Mr. President, but tear down its foundations even further.

Auerback continues:

The debate that the President is calling for, then, should not be focused on “affordability” but on what constitutes the national priorities of our government. The political process, not a non-existent gold standard, or a foolishly imposed debt ceiling of questionable constitutionality, should determine our national priorities. Promising jam tomorrow in exchange for “eating our peas” today might make for a good sound bite, but it is predicated on a fundamentally flawed model. The whole basis of our growth over the past quarter century has been based on households borrowing and the continuation of negative saving trends. A good place to start recovery efforts, therefore, would be to change this method of economic growth toward restoring incomes and job growth, rather than propping up zombie banks and embracing “rentier economics” through this misconceived emphasis of public debt reduction. No ostensible progressive can achieve anything close to the objectives ostensibly desired by the President, if we embrace his flawed economic thinking. Concerns about government deficits and the government debt have served as a very useful way of masking the real issue, the unwillingness of conservatives to allow the government to work for the good of the population, something that a democratic government is supposed to do.

Barack Obama, Wall Street’s man in Washington.

I heard a sound of exasperation over the bleating of the sheep and the growls of the wolves

With America’s recent and dismal unemployment report in his hand, Marshall Auerback, a heterodox economist, was prompted to exclaim:

The collective embrace of fiscal austerity has gone beyond perverse. It’s as if Josef Mengele was reborn as an economist, working on some weird new social experiment to inflict the maximum amount of damage on the maximum amount of people. It’s a sick variation on that old joke:

Patient: “Doctor, it hurts when I do this.”

Doctor: “Then keep doing it.”

Famine in Africa

I believe Auerback wrote this bit of gallows humor because the deficit hysterics, market fundamentalists and con artists now holding decisive political and economic influence and power care not one bit about the misery their preferred policies will generate when implemented. And it is easy to see why a professional economist like Auerback would feel as he does when the powerful in the world appear willing to piously affirm economic orthodoxy while the republic and its political economy burn to the ground. Indeed, our elite seem to want to intensify and expand the destruction.

I, for one, wonder whether these influential and powerful men and women are just stupid and do not know what they are doing or whether they will intentionally destroy the lives of so many people, doing so just because they who have a lot will also get much more.

If I were to place a wager on these alternatives, I would choose the second option. I would feel secure when placing my bet because neoliberalism in practice has already laid waste to much of the planet. Its prescriptions have been revealed to be worthless when formed into a developmental program or a program for economic growth. They produce individual and collective suffering around the world. Who amongst the influential and powerful could now claim to be unaware of this historical failure? Anyone? Today these prescriptions are just nostrums used by a group of class warriors. They indicate an elite preference to take more of the stuff in the world when that stuff it there to be taken. And it is unfortunate that they now inform the program President Obama and his GOP stalking horse want to impose on the United States.

I cross-posted this article to Fire Dog Lake