Orszag & Gibbs Have A Bridge In Brooklyn They’d Like To Sell You- On Spec

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Peter Orszag, the former White House Director of the Office of Management and Budget (OMB), now a “Distinguished Visiting Fellow” at the   “Council of Foreign Relations,” launched his debut in the New York Times yesterday.  

Orszag’s found a cure for his personal employment prospects:  put himself out for hire to continue the Bush Years deficit spending.

In typical neocon- liberal fashion, he admits there is a problem, and them offers a “compromise” which is supposed to be a concession, which actually does not nothing but continue the current status quo, because it doesn’t really happen.  Orszag writes:


http://www.nytimes.com/2010/09…

” Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.  Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt. ”

_____

” …. extend the tax cuts for two years, and then end them altogether.  Ideally, only the middle class tax cuts would be continued for now.

Getting a deal in Congress, though, may require keeping the the high income tax cuts, too. And that would still be worth it. ”

On consumer demand, they spend on shelter/utilities and food and then transportation, clothes, and finally luxury goods.  Shelter- we have a housing glut, and don’t need to produce any in the immediate future.  Food- no shortages yet, thankfully, only HUNGER, aka “food insecurity,” whereby the millions of jobless and underemployed are relying on food stamps, food banks, and charities to feed themselves and the school lunch program to feed the kids.  Transportation, ie gasoline prices, are not spiking, but public transportation maintenance is lagging, and even the interstates are literally crumbling in hard hit states, such as CA.  Manufacturing for clothing and consumer goods for things like appliances and electronics, we outsourced overseas in the name of stockholder’s profits.  

“What firms are capable at producing full tilt… ”  what higher volume demands are the wealthiest making that they would need those extended tax cuts ?     With only 2% of the population making over $250,000 a year,  there are not enough of them by population volume to make that much of a difference.  

A deal.  What deal in Congress ? Do nothing, the tax cuts expire. Do something else, and let them extend for two more years for the wealthiest, as Orszag is pimping, creates more of a budget shortfall and doesn’t really create gobs of consumer demand-  What the hell are they actually dickering over ?

I expected no less of Orszag than to take the WH resume upgrade and run as far away from the immense crater left by the economic crash, but does anybody take the White House Press Secretary Robert Gibbs seriously when he claims that –


http://thehill.com/homenews/ad…

He made it clear the administration was surprised by Orszag, saying the White House did not see the column in advance and did not know Orszag’s opinion on the matter.

“I did not hear him making this argument,” said Gibbs, who acknowledged he hadn’t been present for every meeting with Orszag. “He may have been making this argument in some meetings.”

Curious amnesia, as Orszag has a long history as a domestic deficit hawk, as I wrote about this past March,  https://docudharma.com/diar… , as the New Yorker magazine profiled in May 2009,  http://www.newyorker.com/repor…  ,  and Eskow writes about today at the HuffPo,  http://www.huffingtonpost.com/… ,   where he reviews Orszag’s numerous books and papers.

Hey, Gibbs, did you know the Orszag guy wrote books on cutting old baby boomer folk’s Social Security ?


Orszag, like Rubin and the other DLC types that created this mess, still has his eye on Social Security too. He writes: “Even if we reform Social Security, which we should, any plausible plan would phase in benefit changes to avoid harming current beneficiaries.” Read that sentence carefully: He wants to “reform” Social Security, but his “reform” won’t help the short-term deficit because it will only “harm” (his word) future beneficiaries. That positions still rules Washington … and the Deficit Commission.  

Orszag’s anti-Social Security stance is the mirror image of his tax position. Both reflect the Rubinite premise that financial security for the middle class is a luxury we can no longer afford. It also reflects the misstatement of Social Security’s finances in the 2004 Orszag/Rubin paper: “… as the baby boomers increasingly reach retirement age and claim Social Security and Medicare benefits, government deficits and debt are likely to grow even more sharply.” (Wrong: Social Security is separately funded.) And it’s consistent with the benefit-slashing policies Orszag proposed in a 2005 Hamilton Project paper he co-authored with Peter Diamond, modestly called “Saving Social Security: The Diamond-Orszag Plan.” That plan included phased-in cuts that would reach 9% of benefits, along with tax hikes for everybody. In other words, more cost-shifting onto the middle class.

Since the election number wonk- pundits are projecting a possible loss of the Democratic Majority in the House and possibly the Senate,  the period between now and the November 2nd election, and then the lame duck session after November and before the next Congress is seated in January, is going to be a most dangerous time as the incumbent potential lame ducks grasp at whatever they can to position themselves well in “retirement.”

Back on February 18th, the President created his bipartisan Deficit Commission thru an executive order.

http://www.theatlantic.com/pol…

And the old Clintonista retreads on the Commission have been doing their job so well, when creating theories about how much the country should spend as a part of its Gross Domestic Product, and what should be cut to achieve that,  that it’s even making the established conservatives slightly nervous at the potential blowback.

   Shorter version, when you’ve exceeded St. Ronnie Raygun, you’re too far gone.  You see, the Republicans expect to be taking over again, and they don’t really want their traditional Medicare aged base to think the   cow with the 310 million tits won’t be there for them, either.  If anybody is supposed to kill the cow, or give it to McDonalds for hamburger, it is supposed to be the Democrats.

 WSJ, 7/1/10

Erskine Bowles, the Democratic co-chairman of the bipartisan White House Commission on Fiscal Responsibility and Reform, floated a long-term goal of reducing federal spending to about 21% of U.S. gross domestic product, slightly above the recent norm but significantly lower than current spending projections.

Which means absolutely nothing to the average person on the street.  I know.   The danger lies in that anyone would take any of their suggestions seriously.  

The House has scheduled a vote on the Cat Food, aka the Deficit Commission’s findings, whenever the Senate passes anything on it.  This is supposed to occur during the Lame Duck session.  Will Speaker Pelosi keep her stated promise to not enable the attempted raid on Social Security future retirees, or will another evil last minute compromise further feed the perpetual money sucking War Machine, in the name of Never Choosing The Logical Solution ?

Hamsher at FDL is agreeing with Bob Shrum that the President is undercutting the chances of the Democratic House members to get elected or re elected this fall, and expresses doubts that any factions in the Democratic caucus would actually hold the line if push came to shove.   And she links to this old 2009 piece by David Brooks in the NYTimes where the 4 Anonymous Horsemen of the WH Budget Appocalyse inform Brooks that the President is hawkish on domestic entitlement spending.  Read this and see how nothing is coming to pass.  That Budget didn’t raise taxes on energy nor on the rich. It still, incredibly, completely ignores Pentagon, War supplementals, and Homeland Security snoopy state spending as entitlements, and talks about the deficit growing because of the aging of the population. http://www.nytimes.com/2009/03…


http://fdlaction.firedoglake.c…

it is deeply, deeply cynical and unconvincing for the Democrats to be out there castigating the GOP for wanting to do the very thing that the White House is privately telling journalists they themselves plan to do by way of the Catfood Commission after the election.

The question is, why?  

 

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  1. http://www.washingtonpost.com/


    At the same time, Orszag is entirely correct that the tax cuts would remain unaffordable even if the upper-income part were allowed to expire. He doesn’t say it quite so bluntly, but I will: The president’s position that the tax cuts for those making less than $250,000 a year should be extended permanently is fiscally reckless.

    __

    Projected defense spending already includes savings from winding down operations in Iraq and Afghanistan; cutting 5 percent from the Pentagon’s base budget would be no easy feat — and would save a scant 0.2 percent of GDP.

    I have a bridge I can sell her, too.  

  2. …. insists this evening that he is not for extending the Bush tax cuts two more years.

    http://www.nytimes.com/2010/09


    It is not clear that Mr. Obama can prevail given his own diminished popularity, the tepid economic recovery and the divisions within his party. But by proposing to extend the rates for the 98 percent of households with income below $250,000 for couples and $200,000 for individuals – and insisting that federal income tax rates in 2011 go back to their pre-2001 levels for income above those cutoffs – he intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.



    In a speech in Cleveland on Wednesday, Mr. Obama will also make a case for the package of roughly $180 billion in expanded business
    tax cuts and infrastructure spending disclosed by the White House in bits and pieces over the past few days. He would offset the cost by closing other tax breaks for multinational corporations, oil and gas companies and others.

    __

    But it would provide his party with an agenda for the home stretch of the midterm campaign –  though one with a small chance of being enacted quickly or helping the economy before Election Day if it were.

    Oh.  here comes the oh, but….  part.  tax cuts to stimulate the economy, but no stimulus.

    Reuters had more on what proposals might be in the speech  9/7/10

    http://www.reuters.com/article

    Obama will propose to let businesses write off all their new investments in plant and equipment through 2011.

    The plan would be available to about 1.5 million businesses and cut tax revenues by some $200 billion over two years, the administration says.

    Obama will ask Congress to increase and permanently extend the research and development credit at a cost of $100 billion over 10 years. He proposed a permanent credit when he released his 2011 budget last winter.

    $50 billion for roads, railways, runways/air traffic control systems

    Break on payroll taxes – payments to Social Security accounts shared by workers and employees

    More Build America Bonds

    proposal to invest 20 to 30 billion in small banks

    extend the Bush era tax cuts for middle class making under $200,000 year

    None of this has much chance of going anywhere with this Senate,  but it sounds nice to propose it to some people

    • Xanthe on September 8, 2010 at 4:47 pm

    William Greider of The Nation has written that it is known in higher DC circles that Obama made a deal to cut “entitlements” in exchange for the repeal of the bush tax cuts.  

    Wouldn’t it be horrific – really I can’t think of a word – I think I have to make one up – mufletskin – if we got both no expiration of tax cuts but cuts to our social net.

    Good diary.  Nobody I know (except a few Obama worshipers) are buying what Gibbs is selling.  People who didn’t go to Ivy League universities out here occasionally have a synapse or two working.  The admin doesn’t get this.

    and – excellent essay.

     

  3. …heck of an excellent job pulling several apparently loose threads together into a coherent, informative diary.  Thanks!  

  4. What a “web” you’ve brought together.

    I called my Senator yesterday and went on a rant, even though the Senator is on the Commission, and is thoroughly against attacking Social Security and Medicare, or so I was told. (I just lost a long post on my conversation with the staffer.  Haven’t the time to recreate now.)  One thing I asked was “Why is Social Security and Medicare even part of the equation of the government’s budget and deficits?  These programs are separate and apart and the government is to as act a fiduciary over those funds that have been paid into by the many years of hard work by Americans!”  

    I was on the phone for at least ten minutes with the staffperson, who expressed his concerns, as well, but assured me of the Senator’s position.  I said, “So good, but what does that mean?  Will it stop the efforts of Simpson, goaded on by money of the Peterson foundation and Peterson?” (Apparently, Peterson has been dumping some of this foundation monies into the Commission — that is illegal, IMV.)

  5. full transcript:

    http://blogs.suntimes.com/swee

    “…I’ll be honest – I refuse to cut back on those investments that will grow our economy in the future – investments in areas like education and clean energy and technology. That’s because economic growth is the single best way to bring down the deficit – and we need these investments to grow. But I am absolutely committed to fiscal responsibility, which is why I’ve already proposed freezing all discretionary spending unrelated to national security for the next three years. And once the bipartisan fiscal commission finishes its work, I will spend the next year making the tough choices necessary to further reduce our deficit and lower our debt.”  

    – President Barack Obama, Wed. Sept 8, 2010


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