Tag Archives | debt ceiling

Public Favors Obama on Economy

Because I’m always down on how the White House get its message across, I’m humbled by the newest New York Times/CBS poll  that finds Americans trust President Obama (47%) more than Republicans in Congress (33%) to handle the economy.

Even more surprising given the all-put Republican assault on President Obama as a ‘big-spender’:

they (respondents) were still more likely to blame President George W. Bush for the bulk of the nation’s deficit: 44 percent said that the deficit was mostly caused by the Bush administration, 15 percent said it was mostly caused by the Obama administration and 15 percent blamed Congress.


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New Poll Trashes Congress

The newest  New York Times/CBS poll is a disaster for Republicans and the Tea Party and a virtual broadside against Congress as a whole.  The 80% of Americans who disapprove of Congress is the highest number since the poll began in 1977.  Given the acrimony of the past month, these figures are especially significant:

More than four out of five people surveyed said that the recent debt-ceiling debate was more about gaining political advantage than about doing what is best for the country. Nearly three-quarters said that the debate had harmed the image of the United States in the world.

All told, 72 percent disapproved of the way Republicans in Congress handled the negotiations, while 66 percent disapproved of the way Democrats in Congress handled negotiations.

Respondents split evenly on President Obama’s handling of the debt ceiling debate, 47% disapproving and 46% approving.  Tea Party unfavorables jumped from 29% to 40% in a month.  Only 20% of Americans view the Tea Party favorably.

The poll notes Republican calls for deficit reduction are resonating, yet by 2 to 1 Americans think fixing unemployment is more important.

44 percent of those polled said the cuts in the debt-ceiling agreement did not go far enough, 29 percent said they were about right and only 15 percent said they went too far. More than a quarter of the Democrats polled said that the cuts in the agreement did not go far enough.

63% of Americans agree with President Obama on “raising taxes” for those making over $250,000/year.






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Borderline Governance Disorder

That’s the name  Derek Thompson gives the debt deal charade by Congress in The Atlantic. 

I’ve been away for the past three weeks.  But there was little to write about anyway.  It would be impossible to comment real-time on someone jumping off a cliff, just as it was impossible to blog the hallucinations of Congress regarding the debt ceiling.

Floyd Norris gives a good synopsis  of how the debt-ceiling legislation could deepen the deficit by decreasing tax revenue:

I cannot imagine anyone actually thinking this deal — with its clear potential for another bruising fight and deadlock that will do more to hurt the economy — decreases uncertainty.In fact, this deal could manage to do the exact opposite of what it promises — raise the deficit.

If that happens, it will be because a major determinant of tax revenue is the health of the economy. Profits and growth bring revenues. This could damage the economy enough to send tax receipts down again.





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Chickens Come Home: Markets React to Debt Ceiling

This from Marketwatch:

“The market [is] not very impressed, as a U.S. credit rating downgrade still remains a high possibility … despite the U.S. House/Senate both voting in favor of the latest $2.4 trillion fiscal-spending cut deal.”

Not only that, but the US economy is already slowing down and budget cuts are the last thing it needs.

Does the GOP believe that budget cuts and laying off of public workers and cancelling contracts with private enterprises WON’T RESULT IN MORE UNEMPLOYMENT and therefore, further decrease consumer demand?  Does the GOP deny that a decrease in consumer demand WILL DRAG DOWN THE ALREADY FRAGILE ECONOMY?  Does the GOP really think it WAS SMART to block a ROUTINE EXTENSION OF THE DEBT CEILING?  What would the GOP think of a DOWNGRADE OF AMERICAN DEBT THAT ADDS BILLIONS TO THE DEFICIT IN THE LONG RUN?










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Fallows Nails Danger of Double-Dip

James Fallows puts economic news in order:

“…this morning’s jobs report makes me wonder whether, as a political system, we ever learn anything. Even this basic thing: That when tens of millions of people cannot find work because of an overall “failure of demand” — not enough paychecks going to not enough people who can not make enough payments to create jobs for enough other people — the main problem facing the nation is not “runaway government spending.” Any more than it was when Herbert Hoover tightened up on spending as markets crashed, in the wave of folly that Keynes and Ahamed in their different ways chronicled. A lot has changed since the 1930s, and the 1970s. But not this basic principle

Some of his readers’ responses:

From FVH, a businessman on the East Coast:
>>As an owner/manager of a small manufacturing business I suffer a combination of despair and anger each time a political animal, of whatever color, promises to “focus like a laser on job creation.” I neither need nor want Government to focus on “job creation” (as though it were in their power to do anything in that realm). I need it to focus on “customer creation”! IT’S DEMAND, STUPID!

If governments can induce demand, I will happily handle the part about “job creation.” Get me to the point where my 1.5 production workers have to be put on overtime to fill the orders and I will quickly make my part-time employee full-time. A few more customers and I’ll hire another worker. Look, guys, that’s what we do out here! Don’t worry about cutting my taxes, don’t concern yourself with over-regulating me, don’t fuss about the “death tax” depriving my progeny of the joy of running my business. That is all trivia! This is all about Demand Side Economics.

Oh, and don’t look now, but if we can get a little “demand creation” goin’ on, so I (and my ilk) can hire some folks, then maybe those folks can think about dumping their overpriced rentals and buying foreclosed homes, thus addressing the housing inventory glut and moving us toward housing recovery. And thus beginneth a Virtuous Circle.<<From JK, whereabouts unknown:
>>My greatest disappointment with Obama so far has been his inability to explain economics.

just saying ‘stimulus’ is not an explanation. And saying that the government, like a family, must balance its budget is crazy — as Krugman repeatedly points out.

Why has Obama NOT EVER tried to explain counter-cyclic government spending?
Why has he not explained the need for deficit spending?
Why has he NOT used the Great Depression as an example?
Why has he NOT taken on the inconsistent and self-serving arguments of the Republicans?

The level of discussion has been appallingly low. The points are not difficult to present. But, at some stage, a bit of economics must be presented and defended. It’s not an argument of the morality of economics — share the burden — its how a government fights a weak economy.<<

What more can you say?  In addition to his many other talents, Mr. Fallows was trained as an economist.

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Deficit Deal: Whose Country is This!

The collapse of the Boehner-Obama deficit reduction talks essentially confirms the total incapacity of Republicans to compromise in the interests of the country.  There is no rational reason:

1.  Reductions in spending (primarily discretionary spending) far outweigh ‘raising revenue’ in Obama’s $4 trillion plan.

2.  The tax breaks for oil and gas, private jets and hedge fund managers are inexcusable in this economy.  Due to a huge loophole in the tax code hedge fund managers making billions of dollars a year pay no personal income tax.  This is a clear oligarchical haven.

3.  Obama is willing to tackle the ‘sacred cows’ of Medicare and Social Security.


To make this into an ideological split between Keynesian and supply-siders, taxes vs. spending, big government vs. small, when the entire fiscal system and credit worthiness of the American economic system is on the brink, is treasonous.  If these people aren’t able to grasp the situation, they have no right to govern.

If Republicans can’t see the difference between what’s necessary for economic growth long-term and what’s necessary on an emergency basis now, they have no right to govern.

And if the Republican leadership can’t whip their base into line, then they have no right to govern.

Obama needs to be clear with the American people:  if we cut spending too much now, the economy will collapse.  If we don’t close loopholes in tax rates and repeal Bush tax breaks for wealthy people, a deficit reduction program won’t be enough to make a dent, and Republicans know that.  It’s  not a  matter of ideology, the figures don’t add up.

The surest means to raising revenue is economic growth.  A collapsed economy doesn’t grow.  Once the economy picks up and the deficit ratio drops, we can get back to retiring debt.

Republicans do not have a right to win seats to Congress and think they represent ‘the people’ more than an elected President, for goodness sake!  They don’t have the right to represent their districts in a national assembly and refuse to compromise.  Compromise is what gives American democracy the flexibility to have lasted 200-plus years.

New York Times

National Journal

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Stimulus: Did it Work? Obey’s 1% Doctrine

A great debate about if the Stimulus Bill worked, and a fine size-up by Dave Weigel in Slate.

Did the stimulus do less than President Obama said it would? Absolutely. In the first months of 2009, when the president sold the bill, got it passed, and defended it, he tossed off predictions for job growth that got progressively higher and were never matched. At his most optimistic, he said the stimulus would be a success if it “created or saved” 4 million jobs. It fell far short of that. But ambitious, expensive bills have fallen short before, and it hasn’t discredited their reasons to exist. George W. Bush’s tax cuts were supposed to balance the budget by 2010.

Weigel  does an excellent job showing how the dynamics between media, policy and politics determine public opinion and why.  It’s a ‘last hurrah’ warning to conservatives in Congress against pulling the deficit reduction reigns too tight.

The Republican leadership is being pushed into the same mistake the Roosevelt Administration made in 1937 when it was forced by Congress to cut back on stimulus and the Depression double-dipped.  Why are we repeating history?


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Obama & Boehner Go for Broke

OK, that may be an exaggeration but suddenly it seems that Boehner is warming up to ‘increasing revenue’, closing corporate tax loopholes and maybe even letting the infamous Bush tax cuts for the wealthy expire.  These would be as part of a larger 10-year budget reduction program /debt ceiling package proposed by President Obama.  Obama also put Medicare and Social Security reform/cuts on the table.

Most importantly, the President wants his $4 billion package over 10 years to be the first step in revising an outdated, unfair and impenetrable  U.S. tax code.

The budget cut and debt ceiling negotiations, with conservatives obstructing any progress that includes ‘revenue raising’, have been a farce so far.  Now it will enter the circus phase as both Party bases scream about betrayal by their leaders


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