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Duncan Black Is Smart Today! So-What-Else-Is-New? Department

He sends us to the very worst people in the world:

Jamelle Bouie: The Beltway's Destructive Obsession with the Deficit: Yesterday afternoon at the National Press Club (the standard Washington venue for events that need a little class), the Committee for a Responsible Federal Budget—a bipartisan debt-reduction group—rolled out its “Fix the Debt” campaign, an attempt to push deficit reduction to the top of the congressional priority list. It's hard to overstate the extent to which this was an almost stereotypical gathering of Beltway deficit scolds. The event featured Pete Peterson—businessman and former Commerce secretary in the Nixon administration—who funds the Committee, as well as members of the Bowles-Simpson fiscal committee—including the titular Erksine Bowles and Alan Simpson—along with former New Hampshire senator Judd Gregg, former Pennsylvania governor Ed Rendell, and former OMB director Alice Rivlin.

Despite the subject, policy recommendations were not the focus of this event; at most, the panelists praised Bowles-Simpson for its “boldness”…. Instead, the bulk of the conversation was devoted to hyperventilating over the threat of the federal debt, and indulging the centrist conceit that both parties are responsible for the impasse in Congress….

The astounding thing about this entire show was the extent to which unemployment went unmentioned. Each panelist spoke about how economic growth was paramount, but none seemed aware of the country’s employment crisis. Indeed, listening to the panelists, you wouldn’t know that 12.7 million Americans are unemployed, and that millions more have dropped out of the workforce altogether. At most, you had fact-free statements about how debt reduction was a necessary precondition to economic expansion.

“Fixing the debt and growing the economy are tied together,” said Alice Rivlin. “We can’t grow the economy without fixing the debt.” Of course, this isn't true: As we saw to a limited extent with the stimulus, you can improve the economy by taking on debt, as long as that debt is used to finance consumer spending. A second, $1 trillion spending program would increase the debt, but would do more for jumpstarting the economy than any agreement on long-term budgets. This isn't hard to see. But in the Beltway, among the permanent establishment, there is a dangerous myopia that leads to the conclusion that our short-term budget deficit—and a hypothetical, long-term debt problem—is the greatest threat to our continued economic health…

And asks the question: "Does the Fed think they're doing their job? Or are they afraid of looking like they're helping Obama? Or are they not afraid of looking like they're helping Obama but just unwilling to do something that might help Obama even when it is the right thing to do? His bottom line:

Tribal loyalty is strong, even for highly educated technocrats.

And he sends us to Paul Krugman:

Paul Krugman: The Feckless Fed: Hmm. When I published a critique of Ben Bernanke’s recent performance, suggesting that he should reread his own critiques of the Bank of Japan, there were a fair number of people saying that I was just a big meanie. But my sense is that his latest testimony, in which he declared that the Fed has the power to take action, that the economy is in really bad shape, but declined to, you know, actually take action, has left even his usual defenders more or less speechless. It really makes no sense — except in terms of politics. I really believe that we have reached a point where the Fed is afraid to do its job, for fear of being accused of helping Obama.

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