the mojowire

The homework your dog is too proud to eat.

A brief foray into starting to think through the budget and macroeconomic questions. From Brad Delong:

President Obama asks if you would write up a two-page memo for his political staff telling them what the ideal macroeconomic fiscal policy over the next several years for him and the congress to undertake to deal with the aftermath of the recession would be if there were no political constraints on the federal government's budget. He tells you to keep it to at most 400 words--that is all that they will read. He tells you that most of the audience for this memo took courses like Econ 1 and IAS 107 in the past, but that they have forgotten all of it. You can use equations and graphs if you wish, but they had better be understandable to somebody who knows no economics. He also asks you to forecast what will happen to the growth of the American economy over the next 25 years if we do not recover from the downturn but, like Japan after 1990, remain in a depressed state with low investment at its current share of GDP for a generation. Be sure, he tells you, to outline both the risks from adopting the policy you recommend and the risks from not adopting the policy you recommend but continuing with business as usual. 

The ideal macroecomoic policy wihtout political constraints would include the following:

1.  Reform bankruptcy laws to protect consumers rather than reckless creditors.

Outcome if issue not addressed:  Consumers unable to recover from bad economic choices and erosion of economic position of working and middle class

2.  Create a public banking option to provide basic banking services to Americans without having to only choose between rapacious private banks and a check cashing industry that is thinly disguised loan sharking.  

Outcome if issue not addressed:  Banks continue to engage in predatory behaviors and fail American consumers in meeting their actual banking needs.   

3.  A carbon tax aimed at incentivizing the movement of the american economy towards a different energy framework.   Revenue to to towards debt reduction and to fund an infrastrcuture fund and infrastructure bank.

Outcome if issue not addressed:  Accelerating climate change and the erosion of the American economy as energy costs and oil shocks reduce its efficiency and competitiveness.   American economic growth non-existant as competitors develop sustainable energy instrastructures.

4.   A strategic review of U.S. defense policy with the express goal of reducing the size of the defense budget and restructure U.S. military away from Cold War thinking to a more modern framework.  

Outcome if issue not addressed:   Diminishing resources directed at sustaining a military built to fight the cold war that does not build a military capable of defending American interests in the future.  

5.   End the Bush Tax Cuts, restore the Estate Tax, and change the tax code to lower corporate rates, create a tax bracket above 1 million with a much higher rate and mimimal deductions to force wealthy Americans to pay a fairer share of their income in taxes.

Outcome if issue not addressed.   Not enough revenue to fund legitimate activities of Federal Government and the burden of paying for that government falling disproportionately on the Middle and working classes.  Corporate tax rates should be consistent with other nations but devoid of the breaks that keep them from paying their fair share.

6.  Increase the size of investment of the Federal government in science and technology research.

Outcome if issue not addressed:  American technological edge will diminish over time.  Pool of intellectual capital will be brain drained abroad if sufficient investment does not keep it here.  American economy depends on innovation.  

7.   Real Net Neutrality

Outcome if issue not addressed:  Net infrastructure becomes owned by a predatory cartel of companties and eliminates competition beyond that of small group of corporate players.  

8.   A G.I. Bill for all veterans and any young Americans willing to committ to some kind of public service.  

Outcome if issue not addresed.   Failure of American educational institutions outside of narrow range of quality public and private institutions to train a competitive workforce with a wide range of skills.  Currently limited ability to retrain workers as ever faster economic pace eliminates whole industries and worker skill sets rendereds obsolete.  Human Capital most important resource, most underdeveloped.  

Hey, remember us? The Mojowire lives...

The news has been pretty unpleasant for the left/liberal team lately, and I think its time we start airing out this discussion here at the premier blog for shouting in the wilderness.

Editor Mojo and I have been kicking around this ball about the pros and cons of the Presidents approach to dealing with the constituencies that comprise the Modern Republican Party.  From my perspective, the President and his  political team operates under a certain set of assumptions.  Lets throw a few of them out there and examine them.  Pleae feel free to add to the list in comments:

 The President seems actually believe what he claims to believe about the destructive nature of harsh partisan rhetoric and fighting in Washington, and that  he was elected in part because he promised to move beyond, above or around that partisanship.   I would call this the Sullivan Theorem. 

There is a hubris to this belief that I find troublesome.  I have no problem with the usual partisan combat.  Democracy is a rough sport, and always has been.  There is no doubt though that the Republican Party in recent decades has adopted a level of viciousness driven by a few particular constituencies, particularly the Christian Dominionists and the NeoConservatives, that is more than a little reminiscent of the rigid Marxist ideologues of years past.  It is very difficult for me to discern to what degree the President and his team actually recognize this.  Its hard to believe amidst all the birther talk and Socialist Kenyon conspiracy nuttery the President doesn't recognize what these people are really about, and how they are not playing by the "rules" of putting the country before ideology.  These constituencies I referenced above "believe" in a way that the sort of policy nerd technocrat that Obama appears to be cannot negotiate or compromise with.  They want a bloody victory, not a dry policy compromise.  He needs to get this in a way I think he doesn't.

The President seems to believe that the Republican Party is a coherent entity with the best interests of the country at heart.

My argument has been that the Republican Party is essentially being driven by populist media outlets like talk radio and Fox that don't recognize the primacy of the national party.   Many people might argue that corporate  oligarchs, Party leaders, think tanks, etc, decide what these outlets communicate, when they do it, and why.   I agree that these same oligarchs, leaders, think tanks, etc, believe that is exactly what they are doing.

 I beg to differ.

 I think these groups suffer from the same lack of understanding that Barack Obama does about the Dominionists,  NeoCons, and related constituencies.  That is they operate under a different understanding of what the stakes of the game are and what the endgame actually is.   Many GOP political opeatives recognize the power of the the Dominionists and treat them like Dems treat their important constituences.  That is they take their money, pander to them, but also don't let them threaten their own grip on power or drink the Kool-Aid those groups are peddling very deeply.  

The reality is that talk radio and Fox are running their own game for their own reasons, and when push comes to shove recognize their ad dollars come from their viewers and listeners, not from party hacks.  So they will push whatever drives their ratings and profits, which is pandering to the worst and most extreme elements of their audience.   And that suits the hardcore groups just fine.  So the question then is, who is really wagging who, the tail or the dog?  The White House needs to believe in an almost religious way that they are not dealing with just the party, but also the goals of hardcore groups and their chosen media outlets.  

The White House political team seems to believe that in the general, liberals and other Democratic Party constituences will have no choice but to come to him in the general, and will be pissed of enough at the TeaTardians to come out in great enough numbers to help them.

There is lot of truth to this.  To some degree, liberal anger with TeaTardia will drive voters to the polls.  A core element of conservative ideology  and policy action is driven by attacking and screwing with liberals and liberal institutions, at least what they perceive those to be.   This makes them happy but also helps the Democratic party at the polls in large turnout elections with people coming out to vote against the GOP.  This works both ways of course.   But I think the President and Dems in general have for a long time not recognized something important the Republicans understand clearly.  And that is you need to give your team the occasional piece of red meat to keep them motivated and happy.   The Democratic Party has allowed itself to be bullied and talked out of this belief.  They allow themselves to buy into a media driven paradigm that liberal ideas and policies are not popular enough to be worth fighting for and being defeated occasionally for.  They essentially fear defeat more than they desire victory.   This is I think a core issue that many of the Presidents liberal critics  are complaining about.  They do not believe that this President will fight for them and their values and beliefs.  I can rationalize most of the Presidents actions on poltiical or policy terms.  But fviewed holistically, I think his liberal critics are right so far.  

The President seems almost pathologically averse to partisan combat to fight for liberal policy goals that either do not poll well or are perceived to be unpopular.  I don't belive that he understands he doesn't have to fight for all of them to the death to make those critics happy.  He just needs to pick a few and pick up a few cuts and bruises to demonstrate that he can be counted in a fight.  I cannot emphasize enough this is not about manliness or anything to do with the sort of weirdass genderized psychobabble that you get from the opinoin page of the Post or on the Chris Matthews show.  Its about proving to people that you have their back.  Many liberals don't belive the President does and its up to him, and Democrats in general to prove they do.  Most Democrats resent this, and based on the Presidents rant about this he does too.  My answer is:  Too Frakkin Bad.   The people we are up against, and I don't mean t Republicans I mean the freaks they are shilling for, are playing for keeps.   If the President isn't willing to stand up to these assholes,  then we need to find someone who does.  I want Barack Obama to be that guy because I think he's good enough on the policy stuff to be worth supporting.  But he needs to seriously raise his game in this area as does his party.    And I believe that the issue this President needs to make that stand on is on the national security state, Guantanomo, and the Patriot Act.   

Policy wise, the White House seems to have bought into the argument about the nature of the  long term fiscal state of the country.

Specifically, that in order to address the long term debt issues, that Social Security needs to be replaced with a less generous and progressive alternative.  This is a drumbeat I hear from some liberals too, so I cannot say I blame the White House entirely.  The problem with America's long term debt rests almost entirely with Health Care Costs, defense spending including the out of control national security apparatus that includes intelligence, and a tax system that is too regressive, complex, and where the extremely wealthy do not pay enough.   I give the President major kudos for pushing healthcare through and I don't suscribe to the criticism from my side of the fence about it.   But he needs to not buy into the Social Security lie and recognize that the war in Afghanistan is too expensive  and that Defense spending is completely out of control.  

On the shutdown, I suspect that the President regarded the short term political value of the shutdown as of less value than avoiding the damage such a shutdown would do the recovery.  

Again, in term of policy I agree with him.  The recovery is too fragile to risk fucking up over a few billion dollars.  But at a certain point, the President needs to recognize that recovery is equally at risk by the modern incarnation of the Treasury View and he needs to fight the Republicans over infrastructure, the consumer agency, and tax cuts for the wealthy.  

Just to finish with that despite all the thing I think the President needs to do, the truth is the GOP alternative is much worse.  That is I think something that people really need to get their head around.  There is a time for the liberal circular firing squad, and then we need to put our water pistols down and make sure we don't end up with another Bush Administration.  Because as bad as those fools were, a Bachman or  Daniels administration would be worse.  Plan accordingly.