The Financial Times Editorial Board Turns Shrill, Joins the Left Opposition, and Calls for More Economic Stimulus Still Down for the Fifth Day in a Row...

For the Virtual Green Room: June 7, 2011

Rebuttals to right-wing talking-points misinformation that I want to have at the forefront of my brain--for when I am surprised, as I will be, by an unexpected question from an unexpected direction while talking to reporters, phone callers, passers-by, radio interviewers, cable TV interviewers, etc....

A baker's dozen:

  1. The claim that the American economy faces binding supply-side constraints: Matthew Yglesias: "Why such slow economic growth?... [T]here are a lot of things the US could do to increase economic growth, and there’s also a lot of disagreement about what those things are.... [I]t’s possible to go down a rabbit hole of controversies about what “the real problem” and the “real solution” and blah blah blah.... But you also should be constantly asking yourself “could we make real output grow faster by boosting demand, or are we facing some binding supply constraints that mean efforts to boost demand will just lead to inflation?” This is an important question because if we could boost real output by boosting aggregate demand, then our failure to do so means we’re leaving money on the table. It means that unemployment is higher than it needs to be, and also that economy-wide production of goods and services is lower than it needs to be. Unfortunately, we see more and more evidence that policymakers from the Obama administration on down have decided they don’t have a problem with this..."

  2. Republican Claims That Obama' and Bernanke's policies are dangerously inflationary: Paul Krugman summarizes Robert Kuttner: "Kuttner makes a very good point: everything we’re seeing makes sense if you think of the right as representing the interests of rentiers, of creditors who have claims from the past — bonds, loans, cash — as opposed to people actually trying to make a living through producing stuff. Deflation is hell for workers and business owners, but it’s heaven for creditors.... [M]y experience is that there are relatively few people who consciously keep a secret set of intellectual books, who preach Neanderthal goldbuggism because it’s in their interests while rereading Keynes by dead of night to figure out what’s really happening. Instead, people generally manage to believe whatever is in their interests.... I suspect that there are a fair number of small business owners who faithfully believed in Glenn Becks’s warnings of hyperinflation by 2010, quite unaware that the intimidation of the Fed has savaged their own bottom lines. Still, thinking of what’s happening as the rule of rentiers, who are getting their interests served at the expense of the real economy, helps make sense of the situation..."

  3. Robert Samuelson's claim that "It is only a slight exaggeration to say that unless we end Medicare “as we know it,” America “as we know it” will end": Bill Egnor: "This is, not to put too fine a point on it, a lie. There is no chance that our taking care of the elderly has to end America as we know it. Well, unless you have been so brainwashed by the conservative movement that you are still living in the 1880’s idea of what America is. You know, white, rich and a bunch of basically peasants that are just there to turn the wheels of industry and take the crumbs the Robber Barons deign to leave behind. Then it might be end to that America, which the rest of us left behind long ago..." Many other countries manage to run functional single-payer systems for large shares of their population without ending their countries "as we know it."

  4. Senator Richard Shelby: James Fallows: "Here's the real question: America is rich and resilient. But is it resilient enough to permit folly and self-destruction of this sort? There is no recourse against Sen. Shelby for his abuse of power except to make sure everyone knows and remembers what he has done. Which is the point of this note..." Jonathan Cohn: "Even before Friday’s disappointing employment report, it was clear the economy was not growing very quickly—and in need of some sort of stimulus. But by keeping Diamond off the Fed, where he likely would have pushed for expansionist policies, Republicans are blocking monetary stimulus—just as surely as their votes against infrastructure, aid to the states, and other spending programs are blocking fiscal stimulus. Kill the economy. Blame the Democrats. It’s the perfect crime."

  5. The claim that it is time for central banks to tighten: The Financial Times Editorial Board: "In recent months, both the European Central Bank and the US Federal Reserve have become more vocal in their desire to raise rates. This temptation must be resisted. The west’s inflation problem stems from the voracious demand from Asia’s new industrial powerhouses. This must give hope that a mild dose of stagflation is simply the temporary symptom of an inevitable economic shift. Squeezing domestic inflation to offset it would be counter-productive. In abnormal times, policymakers should also be alive to the balance of risk between inflation and unemployment. Letting the latter rise and become entrenched at a time of weakness would risk hardening the economic arteries further. The real peril now is a double-dip recession rather than inflation. This is no time for tightening."

  6. RERUN: The claim that if Medicare starts limiting the procedures it will pay for, this would be an infringement of your freedom of choice: Paul Krugman: "Nobody is proposing that the government deny you the right to have whatever medical care you want at your own expense. We’re only talking about what medical care will be paid for by the government. And right-wingers, of all people, shouldn’t believe that everyone has the right to have whatever they want, at taxpayers’ expense.... What will it take to shoot this zombie in the head?..."

  7. RERUN: Peter Diamond unqualifed to be a Federal Reserve Governor: Peter Diamond: "Last October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be? The easy answer is to point to shortcomings in our confirmation process and to partisan polarization in Washington. The more troubling answer, though... a failure to recognize that analysis of unemployment is crucial to conducting monetary policy.... The leading opponent to my appointment, Richard C. Shelby of Alabama, the ranking Republican on the committee, has questioned the relevance of my expertise. “Does Dr. Diamond have any experience in conducting monetary policy? No,” he said in March. “His academic work has been on pensions and labor market theory.” But understanding the labor market... is critical to devising an effective monetary policy..."

  8. RERUN: Paul Ryan's Claim that "Obamacare Ends Medicare As We Know It... creates this 15 panel board of unelected, unaccountable, bureaucrats starting next year to price control and ration Medicare": Igor Volsky: "It does no such thing.... The “15 panel board,” as Ryan calls it, is actually the Independent Payment Advisory Board (IPAB).... Ryan himself proposed a very similar commission in 2009.... In fact, Ryan’s Patients’ Choice Act (PCA) sought to establish 'two governmental bodies to broadly apply cost effectiveness research' and had more teeth than the ACA, including provisions to allow for penalties for physicians who did not follow the guidelines..."

  9. RERUN: Mitt Romney's claim that we are only inches away from ceasing to be a free market economy: Buce: "[W]hen Mitt Romney says that we are 'only inches away from ceasing to be a free market economy', you'd just have to write it up as an arrogant, insolent, baldfaced lie. Which is pretty much what they are calling it over at Politifact, the Poynter journalistic fact-checker (sourced, ironically, in large measure, to those bomb-throwing insurrectionists at the Heritage Foundation).... [T]he US ranks ninth from the top "freest") out of 179.... None of this is surprising to anyone of even mildly wonky sentiments, a group which clearly includes Romney himself. But here's an extra irony I hadn't noticed before: health care. Namely that every one of those top eight has some kind of universal public health care. And they virtually all get better results than the US has, and at substantially less cost.... I dunno, maybe Romney (who can clearly say anything with the same schoolboy grin) will soon be telling us that Singapore and Hong Kong (and Switzerland, and Denmark, and Canada, and Ireland, and New Zealand, and Australia) are just mired in post-Leninist purgatory. Others might say otherwise: they might say it shows that freedom can be enhanced (even on a Heritage definition) by the right kind of government intervention. Like, say, in Massachusetts..."

  10. RERUN: Douglas Holtz-Eakin's claim that it would be reckless to pass a clean increase in the debt ceiling: Let's quote right-leaning Clive Crook again: "Tea Party true believers may be salivating.... Shutting down the government [by blocking the debt-ceiling increase is a button [Republicans] dare not press.... To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it..."

  11. RERUN: Tim Pawlenty's claim that President Obama is setting up this false choice between default and raising the debt ceiling: Pawlenty claims "you can take away that false choice by ordering the Treasury to pay the obligations to outside creditors first..." Failing to pay people inside the United States to whom the U.S. government owes money has a name, Tim. It's name is "default." It's not an alternative to default, it's a type of default.

  12. RERUN: Glenn Hubbard's claim that Obama has "ruled out long-term entitlement spending restraint": Nancy Ann Min De Parle: "[T]he tools in the Affordable Care Act and other steps... already taken will save nearly $120 billion for Medicare over the next five years.... While we’ve made real and significant progress, there is more work to do... the President’s framework... includes reforms that would save at least an additional $200 billion for Medicare over the next decade. The framework would: (i) Bend the long-term cost curve by setting a more ambitious target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018, through strengthening the Independent Payment Advisory Board (IPAB). (ii) Reduce Medicare’s excessive spending on prescription drugs and lower premiums for beneficiaries without shifting costs to seniors or privatizing Medicare..."

  13. SPEAKS FOR ITSELF: Ron Paul favors defaulting on the national debt: "A default is already occurring, it’s just how they do it. Governments always default... by giving you money back that doesn’t have as much value and that’s when prices go up. So that’s how they’re defaulting and since there’s inflation back and hurting us, there’s plenty of default going on right now.... [I]f you didn’t raise [the debt ceiling], people say it would be the end of the whole system, but maybe people will say, “hey, maybe they’re serious!” And maybe it would be a positive. That’s what we should do because if we continue to do this, we’ll destroy the dollar..."