It's Simple: Cutting the Deficit Will Kill Jobs and Hurt Growth; Taxing the Rich Won'tWith respect to Dr Reich, This is about the Republican Power Trip and Weakening Government Power to Regulate THEM at any cost.
We've got to stop obsessing about the deficit.
The economic truth with respect to the deficit is simple but not intuitive.
It is different from the reality that reporters experience in their everyday lives where an individual can not spend the same dollar twice, so marketing deficit hysteria to reporters and thus to the rest of the county is relativity easy.
BUT The government gets a percentage of each dollar back as one person pays it to another. The government CAN spend get back and spend the same dollar twice. It is called the multiplier effect, and it is strongest when the money is spent on education, Research and development, and in direct aid to the lowest income levels. Money spent on the rich, one the other hand, only seems to inflate commodity prices.
Add to that that deficit for a country that can control its own currency is pretty much optional. Lincoln monetized the debt and we could to.
We have the knowledge, the people, the factory capacity and the commodities. We are RICH is REAL terms. We are suffering only because the financial structure has been and is being manipulated. We are only as broke as we say we are, as we accept we are.
The financial rules are changed all the time. The last time was when we bailed out the Rich with DIRECT AID in the TRILLIONS the waning days of the Bush administration. The rules changed the rich were bailed out by the people. The deficit was not considered a problem when AIG, GE and Goldman Sachs CEOaristocrats were the ones looking at certain ruin.
Which is why there is so much high volume emphasis on marketing the "we're broke" meme now. They need to drown out memory. Need to keep people from asking "WHY" the bailout extended primarily to those who made millions a year when it would have cost less and been much more efficient to simply have the treasury directly aid homeowners and refinance those exploding ARM home loans at 4%. (The TARP money was injected at the top and what we have seen is of typical trickle down gross inefficiency. ) They need to bring up the specter of Greece, a country that has a different fiscal system, that does not control its currency but is like the US in one way, the rich do not pay their taxes.) Greece might default by necessity. The US which controls its currency never need default.
The Republicans manipulate with the specter of default.
We would only default if they force it.
That is the power we have given them over us.
The US can only default as a result of deliberate actions by the Republicans in the House of Representatives. The deficit does not have to be any particular number or percentage. It could be a .001% of GDP increase. As long as the deficit is going up and the debt ceiling has to be raised, the Republicans have leverage and can still force default by refusing to raise the DEBT CEILING.
the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both.Dr Reich is giving them too much credit.
Deficit reduction leads us in the opposite direction — away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know – it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy.
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected — bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink.
The real objective of the deficit ploy is to prevent DEMOCRATIC government from investing in research, education, infrastructure, and REGULATION. The Republicans want most of all to starve to government so that it is too weak help the people and too unpopular to regulate environment destruction, financial fraud in the markets, monopoly power, antitrust enforcement, pollution control (like actually testing cement used in oil wells will not fracture and will hold the pressure) , unfair labor practices, or anything else that might cut into their advantages and curb the excesses of CEO dictators.
As long as the Republicans have the House, they will use the deficit and Debt Ceiling as a weapon of mass destruction.
The problem is not the deficit it is the Republicans that prevent expenditures that could heal the economy.
We need to get them out of there.