The Five Austerities of Obama

As we enter this joyous season let us remember that austerity means stealing from the poor and the middle class so that the richest become relatively richer by comparison even though their absolute standard of living declines.

Because how can you tell who’s the King if everyone else isn’t covered in shit?

Let’s Celebrate the Failure of the July 2011 Great Betrayal

Bill Black, Naked Capitalism

Friday, December 21, 2012

On the First Try At Austerity, here’s what Obama did-

In July 2011, President Obama and Speaker Boehner reached an agreement in principle on a deal crafted to inflict $4 trillion in austerity by raising taxes modestly, slashing social spending, and beginning to unravel the safety net. The deal would have been a disaster for America. Unemployment was 9.1%. The deal would have thrown us back into a recession and caused unemployment to surge. Recessions and increased unemployment cause tax revenues to fall and increase demand for social services (e.g., for unemployment compensation) – they produce large deficits. Austerity kills jobs and frequently increases deficits. The Eurozone is the latest demonstration of this fact.

Obama is the person in the world who benefitted most from the failure of the July 2011 austerity deal he reached in principle with Boehner. If the austerity deal had been finalized the nation would have be forced back into recession. Unemployment was 9.1% in July 2011. It would have risen sharply above 10% and it would have gone up every month in 2012 as the election approached. Obama would have been crushed by Governor Romney. The irony is that Obama tried five times in 2011 to inflict austerity on America. Had he succeeded, he would have caused grave damage to our nation. Had he succeeded in inflicting austerity he would have also destroyed his re-election chances, given the Republicans control of the U.S. Senate, slashed public services when they were most needed, and begun the process of destroying the safety net. He would have gone down in history as a grotesque failure.

On the Second Try At Austerity, here’s what Obama did-

Obama’s second effort to inflict austerity was the creation of the “fiscal cliff” austerity deal in August 2011. The premise of the August deal was that austerity needed to be inflicted on America.

(T)hese statements by Obama strike many Americans as sensible, but they betray a basic misunderstanding of economics and explain why he embraces austerity. We are a nation with a sovereign currency. Our national government is nothing like a household. “Balancing the budget” (“live within our means”) in response to the Great Recession is austerity. Austerity is a disastrous policy in such circumstances because it causes nations to fall back into recession or depression.

The issue is not “fair[ness]” through joint sacrifice. If “everyone” “chip[s] in” through austerity it still produces a gratuitous recession or depression. That is not “fair” – it is insane – there is no such thing as a “fair” recession. “Fighting” for “fair” austerity so that everyone suffers equally through a “fair” recession is impossible because recessions cause increased unemployment, which is inherently unfair. But the more essential point is that it is insane to cause recessions through austerity.

On the Third Try At Austerity, here’s what Obama did-

Obama’s stated policy was to cut federal spending in 2011, but not “too abruptly.” Cutting overall spending in response to a Great Recession causes gratuitous recessions, even if you make “key investments.”

Obama intended the prospect of the fiscal cliff’s dramatic mandatory cuts in social programs to extort progressive Congressional Democrats into agreeing to inflict severe austerity by voting in favor of what Obama hoped would be massive cuts in social programs and the safety net adopted by the Congressional “super committee” created by the same bipartisan austerity deal that created the “fiscal cliff.” Obama encouraged the “super committee” to inflict massive spending cuts and tax increases (super-sized austerity).

On the Fourth Try At Austerity, here’s what Obama did-

Obama’s fourth effort occurred during the super committee negotiations. Some members of Congress opposed the imposition of the “fiscal cliff” austerity provisions and sought to remove, delay, or reduce them. Obama intervened to block any effort to avoid or reduce the austerity inflicted by the “fiscal cliff.”

Yes, President Obama “urged” the infliction of severe austerity through cuts in the safety net, massive cuts in social programs, and deliberately created and used the “fiscal cliff’s” self-destructive austerity threat to extort these betrayals of the American people. His surrogates (Erskine Bowles and Alan Simpson – the co-chairs of Obama’s austerity commission) pushed the “super committee” to “go big” and inflict $4 trillion in austerity. (Simpson predicted that the markets would “tank” absent such an austerity deal.)

Obama urged austerity under the “logic” that a national government with a sovereign currency is “just” like a household – the most basic and common economic error in this field. The President of the United States thinks that the U.S. government is “just” like a household and should try to balance the budget (“live within our means”) through austerity in response to the Great Recession. He also thinks we should seize the political opportunity, even if it had nothing to do with the budget deficit, to begin to unravel the safety net. It is this sad record that led me (and many others) to warn before the election that Obama’s effort to secure a “Grand Bargain” constituted a “Great Betrayal” motivated by his desire to create his legacy. Obama’s self-portrait is that he was willing to agree to sacrifice his Party’s greatest accomplishments (the safety net) in order to secure a bipartisan agreement imposing austerity. The actual sacrifices, however, will be made by the elderly, the poor, and the working class, the victims of his betrayal. If Obama succeeds in producing another recession through austerity you can add the nation to the list of sacrificial victims.

On the Fifth Try At Austerity, here’s what Obama did-

When the super committee failed to reach a bipartisan austerity deal in November 2011, members of Congress sought to pass legislation removing the fiscal cliff’s austerity provisions. Obama’s fifth effort to inflict austerity occurred when he threatened to veto any reduction in fiscal cliff austerity.

And a Partridge in a Pear Tree-

Fortunately for the nation (and Obama), fate conspired to cause four of Obama’s efforts to inflict austerity to fail while the fifth (the “fiscal cliff”) does not begin to kick in until 2013. For opposite reasons, the Tea Party and progressive Democrats have interacted in a manner that blocked Obama’s efforts to inflict austerity on the nation. (The Tea Party loves austerity, but hates even modest tax increases for the wealthy.)

Obama was not an outlier in repeatedly seeking to inflict austerity on the nation in 2011: “about 100 members of Congress from both parties are urging the [super committee] to go big on the reductions, to the tune of $4 trillion.”

The general media did not warn about the insanity of inflicting the “fiscal cliff” austerity program on the nation. Instead, it fed the hysteria about the deficit and urged even greater austerity. The New York Times exemplifies the general response. The title of their article about the August 2011 austerity deal that created the “fiscal cliff” set the pro-austerity tone.

The thrust of the article was that the proponents of the August 2011 bipartisan austerity deal had to defend it against charges that it imposed too little austerity. The article also claimed that while economists were divided on the issue, most economists favored austerity. Our national debt was about to cause interest rates to surge, causing a disastrous feedback loop.

All of this was economically illiterate. Interest rates fell, as my colleagues and economists like Paul Krugman predicted. Inflicting austerity in response to a Great Recession is a superb strategy for increasing unemployment, the deficit, inequality, and debt because it reduces already inadequate private and public sector demand and causes recessions and depressions. Even the modest stimulus policy the U.S. followed despite Obama’s and Boehner’s best efforts to inflict austerity, proved vastly superior to the Eurozone’s austerity policy that forced the Eurozone into recession and much of the periphery into Great Depression levels of unemployment. The U.S. budget deficit has fallen at the fastest rate in modern history due to the success of even the greatly inadequate stimulus program that Obama adopted before he turned against stimulus under Geithner and Daley’s influence. America’s problem is jobs, not the deficit.

Beware of anyone who uses phrases like “down payment” when it comes to the federal deficit for they have no meaning and are designed to mislead. Reducing social spending in response to the Great Recession is austerity – not a “down payment on … deficit reduction.” Indeed, it is likely to increase the deficit by causing a recession.

Gifts in ‘The Twelve Days of Christmas’ Cost $107,000 This Year, Thanks to Rising Feed Prices

By Nick Carbone, Time Magazine

Nov. 26, 2012

According to PNC, the past year’s underlying inflation of about two percent was only part of the price hike. The largest increase among the “12 Days” gifts was for the six geese a-laying, the price of which shot up 29.6% over the past year due to high feed costs prompted by this summer’s Midwest drought. The price of gold also rose, making those golden rings pricier; meanwhile the market for those seven swans a-swimming is considered by PNC to be “most volatile.”

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