NYC’s The Common Good asks ordinary people to give their personal opinions on America’s current major issue: prolonged unemployment

The Bible may not offer all answers to all questions, but it does offer some interesting insights. This past Sunday the priest at the Catholic Church that I attend gave a sermon which referred to King Solomon and the gift of wisdom that had been granted to him. A clear illustration of that wisdom was his resolution of the dispute between two women as to who was the actual mother of a small infant.

You will recall that King Solomon, after listening to the arguments of the two women claiming to be the child’s mother, offered a very simple solution – cut the baby in half. One contender immediately agreed to this horrific solution while the other woman, appalled beyond imagination immediately gave up her cause, granting the child to her opponent rather than risk harm to the baby in question.

In his infinite wisdom, King Solomon declared that the woman who agreed to cutting the baby in half was the impostor. His impeccable reasoning was that the true mother of the child would rather give up the child than see it harmed in any way.

And that brings us to the latest debt ceiling/budget debate. Every respected economist, every respectable business commentator and every serious financial publication has stated in the clearest possible terms that the harm of an August 2nd fiscal default by the United States government would result in a horrific impact on the global economy, on the American economy and on the lives and livelihoods of the American people.

In the event of such a default, which would be the first in the 222 year history of this country, the international marketplace would be destabilized, causing incalculable damage to the economy of countries around the world. In the event of a default the American economy, already wobbly and barely breathing the fresh air of distant recovery, would suffer setbacks ranging from higher interest rates to increased unemployment as businesses would lose much needed access to capital for their business operations.

Sadly, the American people would suffer as well. Employees of government contractors would be unpaid and furloughed, if not dismissed. Elderly citizens and children would risk missing meals and necessary medical care.

The Federal Aviation Administration is already shut down in 35 states because Congress could not overcome G.O.Tea Party obstinacy and phony fiscal pledges. As this column is being written 4000 FAA workers have been laid off and hundreds of millions of dollars of airport infrastructure repairs have been halted. Now multiply this madness throughout the entire governmental apparatus and you begin to see the potential for financial and social Armageddon.

The G.O.Tea Party has made a profession out of pseudo-patriotism. But it takes more than singing the national anthem and wearing an American flag pin to be a patriot. The cavalier fashion in which the Tea Party stalwarts and their partners in foolishness have dealt with this self-induced budget crisis is alarming and incredibly dangerous.

Just as King Solomon uncovered the phony mother by threatening to harm the child she claimed to be hers, the G.O.Tea Party is showing itself to be the fake patriots by embracing the disaster that looms over this country and its people.

The truth is that the G.O.Tea Party has no philosophy and no principle to which its followers adhere except the overwhelming desire to bring about the defeat of President Obama. There is no argument regarding fiscal probity that would support allowing the federal government to default. When Ronald Reagan, the G.O.Tea Party deity, was president, the debt ceiling was raised 18 times in a little less than 8 years! Indeed, it was President Reagan who said that allowing the United States to default would be “unthinkable”.

But now the inmates have taken over the asylum and are threatening to blow it up. The no new taxes pledge of the Tea Partiers is a fake fig leaf to cover their naked desire to fatally damage the presidency of Barack Obama. That the G.O.Tea Party would damage this country for decades to come in their frothing ambition to unseat the President of the United States is shameful and should be labeled for what it is – treasonous.

How ironic it is that Representative Michelle Bachmann, the head of the Tea Party Caucus in Congress once suggested that Barack Obama should be investigated for his “un-American views”. It turns out that the real traitors wear Tea Party hats and wave American flags to distract us from their real mission – the defeat of Barack Obama even at the risk of wrecking this country’s economy.

Source: Point of View, Wallace Ford (wallaceford.wordpress.com)

What a week it has been…..just about wherever you are in the United States it is boilingstupidhot, so try and stay cool. But it is hard to stay cool when watching the twin forces of greed and meanness surface in the debt ceiling/budget debate. Meanwhile the New York State Department of Environmental Conservation is finally going to remove the name “Nigger Lake” from its official records – that only took a few hundred years. And last, but not least, the Texas State Board of Education has renewed its efforts to introduce creationism into science courses taught in that state, presumably to make sure that Texas students get dumb and stay dumb.

For the Love of Money

Here is a brief primer on the current debt ceiling/budget debate. While there are many moving parts to this grand conflict and true philosophical battle between President Obama and the Democrats on one side and the G.O.Tea Party on the other, facts do matter:

1. Social Security and Medicare are key elements of the social services safety net in this country. Proposed cuts to these programs (cuts that have been demanded by the G.O.Tea Party as the price for raising the country’s debt ceiling and avoiding an economic Armageddon) will inflict true hardship and real pain on millions of Americans, typically men, women and children who can least afford any more pain and hardship in their lives.

2. The G.O.Tea Party has pledged to wreck this country’s international credit ratings for years to come rather than raise taxes or eliminate deductions that wealthy individuals and mammoth corporations have used to avoid paying taxes.

3. In this tax-friendly environment Google has an effective tax rate of 2.4%, Microsoft profits are up by 30% and General Electric pays no taxes on 2010 profits of $10 billion and has received a $3.2 billion tax credit. (Please note that General Electric also received a $140 billion taxpayer funded bailout.)
The presumed logic of the G.O.Tea Party is that any increase in taxes will “kill jobs”. What we know is that after over a decade of reducing corporate and personal taxes the rich are richer, the wealthy are wealthier, and the supremely profitable companies are raking in profits while creating few, if any, new jobs. And somehow the poor, the elderly, the working middle class are supposed to pay for phony wars, tax subsidies for the rich and bear the burden of reduced social services.

I doubt that many Americans actually signed up for this cruise. But right now we are on boat to Nowhere, and getting there fast.

What’s in a Name?

I read the news today…..oh boy! The New York State Department of Environmental Conservation announced that it is removing the name “Nigger Lake” from it official records. This upstate lake has been on the official records of the state of New York for decades, if not centuries.

No one knows the origins of the lake’s name, but I would hazard a guess that if someone were to dredge that lake they would find the waterlogged remains of its namesake.

This little story should serve as a reminder regarding how far this country has come – and how far it still has to go.

Visiting the Tomb of Adam and Eve

Barbara Cargill was appointed by Texas Governor Rick Perry (and soon to be G.O.Tea Party presidential candidate) as the chair of the Texas State Board of Education. She has stated that her mission is to bring “Christian values” to public education in Texas beginning with a requirement that creationism as a scientifically valid alternative to the theory of evolution.

Perhaps Ms. Cargill could better spend her time searching for the tomb of Adam and Eve or the wreckage of Noah’s Ark. Unfortunately she seems intent on seeing that the students in the Texas public school system will be ignorant of basic scientific theories and principles.

Chemistry, biology, physiology, astronomy and geology cannot be taught usefully from a curriculum based upon creationism. To ask the students in Texas, or anywhere else, to be ignorant during the most competitive economic times in the history of the planet is…..well, just ignorant.

Have a great weekend!

Source: Point of View, Wallace Ford (wallaceford.wordpress.com)

theatlantic:

canisfamiliaris:

The Power of Nouns to Increases Voter Turnout

Countries around the world have tried many tactics to encourage people to vote, from easier access to polling stations to mandatory registration. But Christopher Bryan from Stanford University has found a startlingly simple weapon for increasing voter turnout — the noun. Through a simple linguistic tweak, he managed to increase the proportion of voters in two groups of Americans by at least 10 percentage points.

During the 2008 presidential election, Bryan recruited 34 Californians who were eligible to vote but hadn’t registered yet. They all completed a survey which, among other questions, asked them either “How important is it to you to be a voter in the upcoming election?” or “How important is it to you to vote in the upcoming election?”

It was the tiniest of tweaks — the noun “voter” versus the verb “vote” — but it was a significant one. Around 88% of the noun group said they were very or extremely interested in registering to vote, compared to just 56% of the verb group.

Fascinating!

lurey:

The Stream - Online debate over Palestinian statehood
P.J. Crowley, Gil Hoffman, Hussein Ibish

• Crowley is the former US State Department Spokesperson
• Gil Hoffman is the a Chief for the Jerusalem Post
• Hussein Ibish is a Director for the American Task Force on Palestine

The Presidents Weekly Address: A Bipartisan Approach to Strengthening the Economy

Atlantis came in for the final land­ing of the 30-year space shut­tle pro­gram this morn­ing, just a minute past the sched­uled 2:56 AM Pacific at the Kennedy Space Center.

** OBAMA TODAY. Pres­i­dent Barack Obama is in Washington.

Obama and Vice Pres­i­dent Joe Biden have received the daily intel­li­gence and eco­nomic brief­ings in the Oval Office.

Obama then met with senior advi­sors in the Oval Office.

At 9:30 AM Pacific, Obama and Biden meet for lunch in the Pri­vate Din­ing Room.

At 10:45 AM Pacific, Obama meets with Marine Gen­eral James Cartwright, the out­go­ing vice chair­man of the Joint Chiefs of Staff, in the Oval Office.

Cartwright, by many accounts Obama’s favorite gen­eral, was passed over for the JCS chair­man­ship. Exten­sive oppo­si­tion emerged after he advised Obama not to go heavy in Afghanistan. Lately he’s had con­tro­ver­sial things to say about the Pentagon’s emerg­ing cyber­space defense pro­gram, as well as the need for pro­jected future fighter jets and and air­craft car­ri­ers. What does his future hold?

At 11:05 AM Pacific, Obama meets with for­mer New Orleans Mayor Marc Mor­ial, Pres­i­dent of the National Urban League (NUL), and Ben Jeal­ous, Pres­i­dent of the National Asso­ci­a­tion for the Advance­ment of Col­ored Peo­ple (NAACP) in the Oval Office.

At 11:30 AM Pacific, Obama and Biden meet with Sec­re­tary of Trea­sury Tim Gei­th­ner in the Oval Office.

We can guess what they will be talk­ing about.

There doesn’t seem to be deci­sive sup­port for any option in the present impasse on the fed­eral bud­get deficit and debt ceiling.

The Tea Party Repub­li­cans had their moment in the sun with the House pas­sage of dra­con­ian government-slashing leg­is­la­tion which goes nowhere after that. The Senate’s Gang of Six pro­posal sounds some­what appeal­ing in the­ory but wilts the more it is exposed to sun­light. Obama’s touted “Grand Bar­gain” approach was vetoed by the right but is still being dis­cussed. And the Harry Reid/Mitch McConnell plan to make it easy for Obama to raise the debt ceil­ing and punt on the rest is viewed as too lit­tle to be respectable.

Now when did that ever stop Congress?

Here’s the fact: Some agree­ment needs to be reached to extend the debt ceil­ing — which has been a mat­ter of rou­tine for pres­i­dents of both par­ties for many years, until the advent of the far right Tea Party — by August 2^nd. Though some say that far right Repub­li­cans will have to see a stock mar­ket crash for that to sink in.

For her part, Sec­re­tary of State Hillary Clin­ton wrapped up a major visit to India this week, a major ele­ment in the AfPak conun­drum, and is trav­el­ing on to Indone­sia, the world’s most pop­u­lous Mus­lim nation.

India causes para­noia in Pak­istan, which in turn leads to at least part of the AfPak miasma. Clin­ton worked with the Indi­ans on keep­ing their nuclear pro­gram rel­a­tively under wraps.

Obama is also mon­i­tor­ing a vari­ety of other geopo­lit­i­cal crises, mostly related to the Arab awak­en­ing, AfPak, and Iraq.

War Zone Times: Libya is nine hours ahead of Pacific time, Iraq and Yemen are ten hours ahead of Pacific time, and Afghanistan is eleven and a half hours ahead of Pacific time.

The Atlantis crew and NASA Admin­is­tra­tor Charles Bolden spoke on the tar­mac at the Kennedy Space Cen­ter after the final land­ing of the space shut­tle. Amer­ica will rely on Rus­sia to carry its astro­nauts into orbit for the fore­see­able future, though California’s SpaceX, about to take on the space shut­tle resup­ply mis­sion, and other firms say they will have pri­vate space­craft to do the job in a few years.

** OBAMA KABUKI: THE BUDGET AND THE POLITICS OF POSITIONING. What’s Pres­i­dent Barack Obama up to in the big fed­eral bud­get deficit/debt ceil­ing debate? After months of let­ting Vice Pres­i­dent Joe Biden carry the ball, Obama has placed him­self cen­ter stage in the midst of con­tro­versy, even as agree­ment seems to get far­ther away.

What is he really after? To solve the multi-faceted prob­lem? Well, sure, that would be nice. But what he is really after is what all first-term pres­i­dents are after. A sec­ond term.

Obama, in my opin­ion, is engaged in what for­mer Gov­er­nor Arnold Schwarzeneg­ger called polit­i­cal “kabuki.” A styl­ized dra­matic dance that draws atten­tion while obscur­ing true purpose.

And what is his true pur­pose? To appeal to mod­er­ates by occu­py­ing the cen­ter and push­ing the Repub­li­cans to the star­board side fringe. … From my July 13^th column.

** OBAMA: RIDING WITH HISTORY. (NOTE: As Barack Obama was inau­gu­rated as the 44^th pres­i­dent of the United States, this col­umn was the fea­tured col­umn on the top of the front page of the Huff­in­g­ton Post.) … From my Jan­u­ary 19^th, 2009 Huff­in­g­ton Post column.

The lights fade out on Mis­sion Con­trol in Hous­ton, long the puls­ing cen­ter of Amer­i­can spaceflight.

** 24/7 LIVE TV NEWS FEED FROM AL JAZEERA. With the US entan­gled in three wars in the region, and the Arab awak­en­ing under­way, it’s valu­able to keep up with news and per­spec­tives from the lead­ing Mid­dle Eastern-based TV news net­work. Based in the Gulf Arab state of Qatar, Al Jazeera is very influ­en­tial and more than a bit con­tro­ver­sial. Click here for a live TV news feed on your com­puter. TheNWN live link to AJ does not con­sti­tute an endorse­ment of the channel’s views. It’s pre­sented as an oth­er­wise unavail­able new media window.

** 24/7 LIVE TV NEWS FEED FROM RUSSIA TODAY. Rus­sia has re-emerged as one of the world’s great pow­ers. Click here for a live TV news feed on your com­puter, bring­ing you English-language, jargon-free, fast-paced cov­er­age of global and Russ­ian news from the Rus­sia Today chan­nel. You prob­a­bly already know about CNN Inter­na­tional, BBC World, and Al Jazeera. Rus­sia Today, which also fea­tures cul­ture, enter­tain­ment, and sports, is based in Moscow and is owned and oper­ated by the TV Novosti divi­sion of Russia’s state news agency, RIA Novosti. While it’s quite fool­ish to expect to see, say, crit­i­cism of Vladimir Putin on Rus­sia Today, the chan­nel is very inter­est­ing nonethe­less. With U.S. cable news chat­ter­ing away as it does, this sort of respite can be infor­ma­tive. The NWN live link to RT does not con­sti­tute an endorse­ment of the channel’s views. It’s pre­sented as an oth­er­wise unavail­able new media window.

** TRACK GLOBAL AND NATIONAL ENERGY PRICES IN NEAR REAL TIME VIA BLOOMBERGENERGY MARKET WATCH. Hav­ing crashed over $147 for yet another record on July 11^th, 2008, crude oil is trad­ing around $98 per bar­rel on the New York Mer­can­tile Exchange.

This is up about $64 from the low of $34 per bar­rel prior to enact­ment of the Obama eco­nomic recov­ery pro­gram, reflect­ing a low point in global eco­nomic activity.

huffingtonpost:

Space Shuttle Atlantis Makes Historic Final Landing, Ending 30-Year Era

The irony would be delicious if it wasn’t so foul.

It is generally acknowledged that the economic crisis in which we currently live was precipitated by a major collapse of the housing market along with the mortgage-backed bond instruments that supported the fake bubble that eventually burst. It is also generally acknowledged that these bond instruments could only have been sold with the cooperation and blessing of the major ratings agencies that turned a blind eye to defects that are painfully obvious now – and should have been obvious three years ago.

So it is ironic that two of these complicit ratings agencies, Moody’s and Standard & Poor’s have announced that downgrading the credit standing of the United States may occur if the debt ceiling/budget deficit debate is not resolved soon. These agencies abandoned any semblance of objectivity as they granted bogus ratings to bonds sold by soon to be bailed out investment banks while they raked in Midas-like fees.

For these agencies to now step up and add more stress to an already contentious debate for nothing less than the financial soul of America is outrageous. Moody’s and S&P are relying on the historic amnesia of the American public. We are supposed to forget that the crisis about which they are opining was in no small part due to their transgressions and malfeasance – how their reputations can be above reproach is one of the great fan dance mysteries of our time.

Meanwhile, there is a financial crisis of tsunami-like proportions looming. Somehow the G.O.Tea Party has created an Alice in Wonderland logic that goes something like this: the federal budget should be balanced at all times (there are boatloads of economists who would debate this “fact”), the budget should be balanced now (although the deficit was created over the last 12 years, somehow it can be erased in one year), the budget should be balanced by reducing spending (many economists will argue that targeted government spending does indeed create jobs and stimulate the economy) and taxes can nevernevernever be increased (taxes for upper income Americans have been drastically reduced during the past dozen years).

The intransigence and stubbornness and stupidity of the G.O.Tea Party are compounded by the politics of the moment. Since January 20, 2009, Republicans have declared as their sole mission insuring that Barack Obama is a one term president. In modern history there has never been such unyielding and irresponsible opposition to every single proposal or initiative of a president. The future of the country takes second (or third) place to making sure that President Obama “fails”, as Rush Limbaugh so delicately put it.

And so we have a political party on a permanent crusade against the president. This would be the same political party that has jettisoned common sense and basic economics into the dumbosphere and built an economic strategy on this tattered logic. The notion that the federal government must have a deficit of zero is based on the analogy that the government of the United States of America should operate like a business.

Except the government of the United States of America is not a business, its mission is to promote and preserve the general welfare (so says the same Constitution of the United States which is so often quoted by the G.O.Tea Party zealots).

Government is not supposed to turn a profit in the manner of a private corporation. The “profit” that the government is supposed to show is in the improved lives of its citizens as well as safeguarded the future. The G.O.Tea Party is looking to establish a caretaker government that will be minimalist in its approach to the needs of the people.

Taking care of people is the antithesis of the G.O.Tea Party.
So in a G.O.Tea Dada world where no sense makes sense, it makes sense to cut taxes and reduce or eliminate human services spending wherever possible because government is not supposed to take care of people. In this mean and flinty world, the strong may not survive, but the rich will prosper. And in the logic of the G.O.Tea party, that is the same thing.

During the next two weeks we can hope that the American public can take time out from worrying about Casey Anthony’s new job or Jennifer Lopez’ next husband and keep their eye on the ball. The G.O.Tea Party rhetoric that glorifies a balanced budget masks the hidden agenda of visiting misery and hopelessness upon too many Americans for too long.

Nothing less than the soul of the country is at stake. Let’s hope that we can all wake up.

Source: Wallace Ford, Point of View

Intro­duc­tion

Polls show that most Amer­i­cans are dis­gusted at the stand­off in Wash­ing­ton over the nation’s debt. Aren’t they used to this by now? After all, bat­tles over fed­eral bor­row­ing and spend­ing go back to George Wash­ing­ton. Yet each era’s debates and deci­sions change the stage for the chal­lenges to come.

We asked some promi­nent his­to­ri­ans for their per­spec­tive on the back­ground to the cur­rent drama, as the clock ticks down on nego­ti­a­tions to keep the nation from falling into default. What evo­lu­tion in the role of the two par­ties do we see? How have deficits affected a president’s ide­ol­ogy, and vice versa? What are the impor­tant his­tor­i­cal markers?

F.D.R., Bud­get Hawk
By: David Kennedy

In the stan­dard con­ser­v­a­tive demonology, Franklin D. Roo­sevelt fig­ures as the Deficit Devil Incar­nate, the pres­i­dent whose prof­li­gate New Deal “tax and spend” poli­cies put the repub­lic on the path to fis­cal perdition.

But Roo­sevelt was in fact a stub­born fis­cal con­ser­v­a­tive, as the his­tor­i­cal record unam­bigu­ously demon­strates. The deficits of the early New Deal he ascribed to what he called the strictly seg­re­gated “emer­gency bud­get,” an entirely notional polit­i­cal fic­tion that reflected his fealty to the same budget-balancing ortho­doxy that had so strait-jacketed Her­bert Hoover.

In only two New Deal years, 1934 and 1936, did the fed­eral deficit, as a per­cent­age of gross national prod­uct, exceed the 4.6 per­cent of Her­bert Hoover’s last year in office. The year 1936 saw the New Deal’s biggest absolute deficit, $4.4 bil­lion, or 5.3 per­cent of G.N.P., largely because Con­gress — over Roosevelt’s veto — passed the noto­ri­ous Bonus Bill, award­ing some $2 bil­lion to World War I veterans.

The fol­low­ing year Roo­sevelt warmly embraced the con­ven­tional bud­getary coun­sel of Trea­sury Sec­re­tary Henry Mor­gen­thau and sub­mit­ted an aus­ter­ity bud­get, sharply con­tract­ing gov­ern­ment spend­ing and thereby trig­ger­ing the so-called Roo­sevelt Reces­sion. The already wheez­ing econ­omy with­ered rapidly. Unem­ploy­ment bal­looned to 19 per­cent from 14 per­cent. Not until World War II gen­er­ated deficits of nearly 30 per­cent of G.N.P. did the econ­omy finally rebound and unem­ploy­ment all but disappear.

Mean­while, Roo­sevelt was craft­ing his most mem­o­rable reform, Social Secu­rity, on a markedly – indeed, uniquely — con­ser­v­a­tive fis­cal basis. “No dole,” he instructed the leg­isla­tive draft­ing team. “Mustn’t have a dole. No money out of the Trea­sury.” Instead, Social Secu­rity was to be funded ever after by match­ing pay­roll con­tri­bu­tions from employ­ers and employees.

Almost alone among advanced indus­trial soci­eties, the United States thus defined old-age pen­sion sup­port not as a civil right but as a prop­erty right, and built the Social Secu­rity sys­tem on a private-insurance model.

Yes, Roo­sevelt was a bold and vision­ary inno­va­tor who sub­stan­tially rewrote the Amer­i­can social con­tract. But the Beelze­bub of the Bud­get he was not.

Reagan’s Deficit Dream­scape
By: Richard Reeves

Any dis­cus­sion about Amer­i­can pres­i­dents and eco­nom­ics has to begin with this dis­cour­ag­ing word: Amer­i­can politi­cians don’t know any­thing about economics.

They are guess­ing — as I think most econ­o­mists and pun­dits are — and they seize on almost any idea that sounds good at the time. So a main­stream Amer­i­can con­ser­v­a­tive, Richard Nixon, blurts out that we are all Key­ne­sians now, and a main­stream Amer­i­can lib­eral, Bill Clin­ton, declares that the era of big gov­ern­ment is over. And a more fun­da­men­tal con­ser­v­a­tive, Ronald Rea­gan, grabs on to the think­ing of an unknown econ­o­mist able to write every­thing he knows on a napkin.

When Pres­i­dent Rea­gan, who loved to brag that he was an eco­nom­ics major in col­lege, picked up Arthur Laffer’s “sup­ply side” nap­kin — a sort of for­tune cookie that said the lower mar­ginal tax rates are, the higher gov­ern­ment rev­enues will be — both Reaganomics and our cur­rent econochaos were born. Instinc­tively, Rea­gan, one damned good politi­cian, real­ized that there was some­thing on the table that looked very much like a free lunch.

Once upon a time it had been called “trickle down eco­nom­ics” — if the rich got richer, every­one else would play in the crumbs under the table. That was really no dif­fer­ent from John F. Kennedy’s idea that a ris­ing tide lifts all boats. Usu­ally hope­ful words and rosy bud­get sce­nar­ios sat­isfy the pub­lic, at least until after the election.

This time not so much. The rich folk of this gen­er­a­tion have relearned Gilded Age lessons about how Wash­ing­ton and tax codes work and gamed the sys­tem to split the gap between rich and poor like the Red Sea.

After four months in office, Rea­gan told the Con­gress: “High taxes and excess spend­ing cre­ated our present eco­nomic mess. More of the same will not cure the hard­ship, anx­i­ety and dis­cour­age­ment it has imposed on the Amer­i­can peo­ple.” So, a man who made his polit­i­cal rep­u­ta­tion by attack­ing “spend and tax” Democ­rats invented “spend and bor­row” Republicanism.

Unfor­tu­nately, Reaganomics did not work. When Rea­gan became pres­i­dent — and began to cut taxes — the fed­eral deficit was 2.5 per­cent of the national econ­omy. When he left, eight years later, the deficit was 5 per­cent of the econ­omy. Inter­est pay­ments on the debt jumped to $169 bil­lion in 1988 from $69 bil­lion in 1981. At the time, those were aston­ish­ing num­bers, and they have exploded since.

That’s where we are now. The lead­ers of Reagan’s party — he would be a left-wing Repub­li­can now — seem to truly believe that they, and they alone, know the secret other politi­cians have sought: reduce the deficit, bal­ance the bud­get and save the Republic.

That’s quite a rever­sal from only a few years ago when Vice Pres­i­dent Richard Cheney said that, polit­i­cally, Rea­gan had proved that deficits don’t mat­ter. After all, Rea­gan ran up more debt than any of his pre­de­ces­sors and eas­ily won re-election. This time they mat­ter might­ily, at least until 2012. Politically.

After the next elec­tion, who knows? In the mid­dle of Reagan’s 1984 cam­paign against Vice Pres­i­dent Wal­ter Mon­dale, James Baker, his chief of staff, passed him a memo saying:

“Taxes are a big pic­ture issue. If we want to win — and win big — the exi­gen­cies of the elec­tion force us to solemnly swear that Mon­dale is the tax increase can­di­date and Ronald Rea­gan is the no-tax-increase can­di­date.” Then he ended the note by say­ing after the elec­tion, Rea­gan could do what­ever he wanted to do about abstrac­tions like the deficit.

Pres­i­den­tial Prin­ci­ples
By: Alonzo L. Hamby

John May­nard Keynes once remarked that states­men, for all their sur­face prac­ti­cal­ity, were gen­er­ally slaves to some defunct econ­o­mist. He became the great­est slave­mas­ter of them all.

Before the end of World War II, Amer­i­can pres­i­dents and their Trea­sury sec­re­taries gen­er­ally deliv­ered bud­get sur­pluses except in times of war or eco­nomic depres­sion. The dis­ci­pline of the inter­na­tional gold stan­dard and an unfa­vor­able bal­ance of pay­ments required noth­ing less. The pub­lic debt grew grad­u­ally but did so apace with the growth of a wealthy and expand­ing nation.

World War I reversed the bal­ance of pay­ments sit­u­a­tion, mak­ing the U.S. a net cred­i­tor. Dur­ing the pros­per­ous Roar­ing Twen­ties Pres­i­dents Hard­ing and Coolidge actu­ally reduced the national debt by about one-third. The Great Depres­sion of the 1930s, how­ever, all but required sharply unbal­anced bud­gets, whether from Her­bert Hoover or Franklin Roosevelt.

The eco­nomic dom­i­nance of the United States at least per­mit­ted mon­e­tary tin­ker­ing (includ­ing a 60 per­cent deval­u­a­tion of the dol­lar in terms of gold) that would have been severe in most other nations. World War II forced huge deficit spend­ing, financed almost entirely by bond issues sold to Amer­i­can cit­i­zens and cor­po­ra­tions. Its end brought vic­tory and unpar­al­leled pros­per­ity. By then, Keynes was achiev­ing a posi­tion of dom­i­nance among aca­d­e­mic econ­o­mists, increas­ing num­bers of whom were lib­eral in their pol­i­tics and cul­tur­ally prone to reject the pleasure/pain prin­ci­ple that had dom­i­nated their profession.

Politi­cians, always eager to finance plea­sure, wel­comed the new dis­pen­sa­tion and were enabled by the pro­fes­sion­als who staffed the new Coun­cil of Eco­nomic Advis­ers and other fed­eral agen­cies. With some vari­a­tion, but largely regard­less of party, pres­i­dents since Harry Tru­man have tended toward rhetor­i­cal bud­get bal­anc­ing while being down­right heed­less of debt.

Democ­rats still gen­u­flected to Keynes. Lyn­don John­son, moti­vated by a blend of ego and social con­scious­ness, gave us an out­size Great Soci­ety. Even Nixon, bow­ing to re-election neces­sity, pro­claimed us all Key­ne­sians while attempt­ing to con­trol the infla­tion he unleashed with the snake oil of price controls.

Repub­li­cans soon devel­oped a “supply-side” ratio­nale inspired by the tax-cutting of Coolidge and Trea­sury Sec­re­tary Andrew Mel­lon. Under Rea­gan, deficits increased sharply but seemed to bring back pros­per­ity, mov­ing Dick Cheney to remark that they did not mat­ter. In a curi­ous rever­sal of roles, Bill Clin­ton treaded care­fully after the fail­ure of his national health plan, but George W. Bush spent freely. Barack Obama appears to most peo­ple (if not to Paul Krug­man) to have brought back Key­ne­sian eco­nom­ics with a vengeance.

Unfor­tu­nately, the world of the 1930s and 1940s — in which the United States was a cred­i­tor nation with strong favor­able bal­ances of pay­ments and trade and seem­ingly unlim­ited nat­ural resources — no longer exists. What­ever hap­pens with the present dis­cus­sions regard­ing the bud­get, the bond vig­i­lantes loom over the hori­zon, and pain/pleasure eco­nom­ics is on the verge of a comeback.

The True Vision Thing
By: Jon Meacham

The issue of gov­ern­ment debt — or, more accu­rately, pub­lic debt — has been with us always. The dis­pute between Alexan­der Hamil­ton and Thomas Jef­fer­son over such ques­tions dur­ing Washington’s first term set a pat­tern that has more or less endured, with some voices call­ing for bor­row­ing to accom­plish a spe­cific end (Hamil­ton) while oth­ers abhor the idea of a debt and its accom­pa­ny­ing appa­ra­tus of financiers (Jefferson).

As with so many other things in pol­i­tics, the same per­son can argue either posi­tion with con­vic­tion and inten­sity depend­ing on the cir­cum­stances of the hour. One era’s deficit hawk is another era’s Key­ne­sian. (See Bush, George W., for a rather spec­tac­u­lar exam­ple of this phenomenon.)

All pres­i­dents like to appear fis­cally sound and con­ser­v­a­tive; F.D.R. ran on bal­anc­ing the bud­get in 1932, and J.F.K. lived in mor­tal ter­ror of being seen as a big-spending squishy lib­eral. But politi­cians are politi­cians: their busi­ness is the for­ma­tion of coali­tions around cer­tain issues to achieve cer­tain results for a cer­tain period of time. If long-term fis­cal pol­icy or enti­tle­ment reform were easy or pop­u­lar, we would not need long-term fis­cal pol­icy or enti­tle­ment reform, for it would have already happened.

What to look for in the cur­rent cri­sis? Past expe­ri­ence tells us that Pres­i­dent Obama’s best chance to make a his­tor­i­cal mark is to do what every instinct in a politician’s being tells him not to do: risk every­thing, and be pre­pared to accept short-term elec­toral cat­a­clysm in exchange for his­tor­i­cal vin­di­ca­tion and honor.

There is only one model for this, but it is a model close to hand. Two decades ago, George H. W. Bush came to power lit­tle less than obsessed with the deficits run up through the 1980s. To win the 1988 elec­tion, Bush was a clas­sic politi­cian, promis­ing “no new taxes.”

To gov­ern as a respon­si­ble pres­i­dent two years later, he had to agree to raise rates in exchange for a bud­get deal that helped make the pros­per­ity of the 1990s pos­si­ble. He lost re-election in no small part because he had alien­ated his party’s con­ser­v­a­tive base with the 1990 deal. But it was the right thing to do, and he knew it, and he knew the price he would pay in 1992. So Bush led, and then he lost.

Pres­i­dent Obama feels a remark­able kin­ship with the senior Pres­i­dent Bush; he gave the 41^st pres­i­dent the Pres­i­den­tial Medal of Free­dom ear­lier this year. The incum­bent should do what he thinks is best and live with it. That is the true vision thing.

Tax and Spend the L.B.J. Way
By: Robert Dallek

In the years since Franklin Roo­sevelt strug­gled with fund­ing issues in the Great Depres­sion and World War II, every pres­i­dent has bat­tled Con­gress over how to pay for the costs of gov­ern­ment programs.

Nineteen-sixty-eight was a par­tic­u­larly dif­fi­cult year in U.S. his­tory. Anti-war demon­stra­tions, inner city riots and tur­moil in the streets of Chicago dur­ing the Demo­c­ra­tic con­ven­tion formed a back­drop to a grow­ing fis­cal cri­sis over how to fund the Viet­nam con­flict and Great Soci­ety reforms.

With 79 per­cent of Amer­i­cans say­ing they opposed a tax increase, finan­cial ana­lysts described prospects for run­away infla­tion and even an eco­nomic col­lapse. The Coun­cil of Eco­nomic Advis­ers warned Lyn­don John­son about the dan­gers of a world­wide depres­sion. John­son insisted on a 10 per­cent tax sur­charge, and Con­gres­sional con­ser­v­a­tives demanded sharp cuts in domes­tic spend­ing, which John­son saw as threat­en­ing national stability.

Although it hardly seems so now, the country’s prob­lems were so severe that a French travel agent adver­tised, “See Amer­ica while it lasts.” John­son used a press con­fer­ence to empha­size the need to fund the war and meet “the very seri­ous prob­lems in the cities” and of the poor. “We are court­ing dan­ger by this … con­tin­ued delay,” he said. When John­son agreed to some mod­est domes­tic pro­gram cuts and warned that the fail­ure to enact a tax sur­charge could mean “a major world polit­i­cal defeat for the United States,” Con­gress gave in.

Unlike some cur­rent mem­bers of Con­gress, sen­a­tors and rep­re­sen­ta­tives then were not will­ing to risk the national well-being for the sake of their eco­nomic con­vic­tions. Mem­bers of Con­gress 43 years ago were no less patri­otic than elected offi­cials now. But they were less rigid about their beliefs. Per­haps they were more mind­ful of Friedrich Nietzsche’s obser­va­tion that “Con­vic­tions are more dan­ger­ous ene­mies of truth than lies.”

Why Debt Is So Chronic
By: H.W. Brands

Pres­i­dents have never been com­fort­able with debt. George Wash­ing­ton, who saw how pri­vate debt plagued South­ern planters, had to be per­suaded by Alexan­der Hamil­ton to embrace pub­lic debt as a kind of finan­cial cement for the new repub­lic. Andrew Jackson’s proud­est moment was that unique one in Amer­i­can his­tory when he paid off the national debt. Abra­ham Lin­coln grudg­ingly accepted a huge increase in the debt as the cost of pre­serv­ing the Union. Ulysses Grant and his Repub­li­can suc­ces­sors put repay­ment of the Civil War debt at the top of their pri­or­i­ties list.

Franklin Roo­sevelt, a finan­cial con­ser­v­a­tive notwith­stand­ing the profli­gacy charges lev­eled against him by Repub­li­cans, tried to cur­tail the ris­ing debt dur­ing his sec­ond term; in doing so he trig­gered the nasty reces­sion of 1937.

Dwight Eisenhower’s pref­er­ence for nuclear weapons over con­ven­tional arms had more to do with fis­cal pol­icy than with mil­i­tary strat­egy: the general-president feared that the cost­lier con­ven­tional forces would unbal­ance the fed­eral bud­get and thereby under­mine Amer­i­can free­doms as insid­i­ously as com­mu­nism ever could. Lyn­don John­son had Con­gress levy a Viet­nam War sur­tax lest the grow­ing debt from the war and the Great Soci­ety get out of hand.

George H. W. Bush so wor­ried about the expand­ing fed­eral debt that he reneged on his “read my lips: no new taxes” con­ven­tion vow and struck a com­pro­mise with the Democ­rats that set the fed­eral bud­get on track to sur­plus by the end of Bill Clinton’s tenure — a tenure made pos­si­ble by Bush’s com­pro­mise, which alien­ated Repub­li­can tax resisters and doomed his re-election bid.

So why has fed­eral debt been so chronic? In part because pres­i­dents have repeat­edly judged that debt, if incurred to sup­port nec­es­sary defense, essen­tial infra­struc­ture and timely assis­tance to the young, the unem­ployed and the dis­ad­van­taged, can be a solid invest­ment in America’s future. The aston­ish­ing per­for­mance of the Amer­i­can econ­omy over two-plus cen­turies bears out their judgment.

Nixon’s Key­ne­sian Strat­egy
By: Joan Hoff

Richard Nixon had been con­cerned with for­eign and domes­tic eco­nom­ics from his first months in office. Faced with infla­tion prob­lems as early as the fall of 1969, he did not make bal­anc­ing the bud­get a major object of policy.

First, he tried in a typ­i­cally con­ser­v­a­tive fash­ion to tighten the money sup­ply. When this did not work and the econ­omy appeared by 1970 to be head­ing into a reces­sion, the admin­is­tra­tion turned to fis­cal pol­icy solutions.

Nixon became the first pres­i­dent to sub­mit a bud­get based on “the high-employment stan­dard,” which meant the coun­try would spend as if it were at full employ­ment to bring about full employ­ment, thus jus­ti­fy­ing an “accept­able” amount of deficit spend­ing. Sec­ond, he dra­mat­i­cally announced in August 1971 what he called the New Eco­nomic Pol­icy. The N.E.P. attempted to bal­ance U.S. domes­tic con­cerns with wage and price con­trols and inter­na­tional ones devalu­ing the dollar.

Nixon’s fail­ure to obtain more rev­enue through tax reform leg­is­la­tion in 1969, com­bined with ris­ing unem­ploy­ment (4.9 per­cent) and infla­tion (5.7 per­cent) rates in 1970, prompted these actions in 1971 when the Amer­i­can fed­eral bud­get deficit totaled $23.03 bil­lion, and he proudly pro­claimed him­self to be a con­ser­v­a­tive Keynesian.

Float­ing the dol­lar on inter­na­tional mar­kets resulted in the aban­don­ment of the Bret­ton Woods sys­tem and con­tributed to exchange rate insta­bil­ity. It increased Amer­i­can exports abroad and stopped spec­u­la­tive pres­sures on the dol­lar, but it left long-term scars with respect to tra­di­tional U.S. trad­ing part­ners, espe­cially Japan.

How­ever, the N.E.P. was a short-term domes­tic suc­cess. It worked so well that by early 1972 out­put rose sharply and unem­ploy­ment fell, although infla­tion increased. This made Nixon the only pres­i­dent since World War II to bring about an eco­nomic upturn in a pres­i­den­tial elec­tion year, and so the N.E.P. con­tributed to his land­slide re-election in 1972.

Long-term imple­men­ta­tion of wage and price con­trols exac­er­bated infla­tion­ary trends, and when Nixon resigned in 1974, infla­tion was 11 per­cent and unem­ploy­ment 5.6 per­cent, but the deficit was down to $6.14 bil­lion. This mixed bag was sur­pris­ingly more lib­eral than it was conservative.

Source: The New York Times