On this one, I am with Obama. The deal cut by the President with the Republicans is enough to make one sick. Extending the unjustified tax cuts for the super rich is appalling, and my in-box is filled each day with messages from left-liberal political groups urging me to do this or that to help block the deal. [Full disclosure: I also have somehow gotten onto the Republican national Committee's database, and I receive endless postal appeals and robo-phone call "surveys" designed to get me to say whether I prefer Palin or Huckabee or Romney. I am ashamed to be on their list, but I have chosen to leave myself on it because it costs them something to contact me, and every little bit helps.]
NEVERTHELESS: I think it is preferable to a political standoff in which all the Bush tax cuts would end. Let me spend a little time explaining myself, before you remove the link to this blog from your list of favorites and conclude that Wolff has gone over to the dark side [or alternatively, has simply gone senile -- always a threat at my age.]
Since I am a strong believer in making politics personal, I shall begin with some facts about myself. I was awarded tenure at Columbia University in 1964. For the next forty-four years, until my retirement in 2008 from the University of Massachusetts, I had an assured salary that rose steadily, either because of cost of living increases or because of genuine raises, from the $11,000 I received from Columbia in '64 as a tenured Associate Professor to roughly $180,000 that I was earning at the end of my career, thanks to an eleven month administrative salary. [By the way, the CPI calculator tells me that the 2008 equivalent of my 1964 salary is $76,400, so my real salary more than doubled over my long period of tenure -- not bad for an atheistical anarchistic Marxist on the public payroll.] Like countless others in my social and economic class, I have been completely protected from the vagaries of inflation, recession, job layoffs, outsourcing, and the rest. National politics has been, for me, a deadly earnest spectator sport, roughly on a par, emotionally, with college basketball here in Chapel Hill. One of the reasons that I have trouble remembering which years have been boom years and which recession years in America is that I have experienced no noticeable alteration in my personal circumstances as a consequence of the one or the other. There were a series of terrible budget crises at UMass during my thirty-seven years there, but although they resulted at one point in the phones being removed from our faculty offices, and though there was never money for travel or research, the simple fact is that I coasted along happily as though I had an independent income.
Now, with these personal reminiscences on the page, let me turn to the deal that Obama struck with the Republicans. Bad stuff first: The handout to the super rich will continue for two more years. In light of what I have said on this blog in recent months, I am going to take it as given how I feel about that. So what did Obama get in return? Well, all the attention is on the extension of the tax cuts for those referred to as "middle class," which, since it includes households with net taxable annual income of less than a quarter of a million, means, by my way of thinking, a great many rich people as well as "struggling middle class families." This is, all by itself, a good thing for the economy, since taking all of that money out of the economy in the form of higher taxes would have an anti-stimulus effect. But Obama got two other things as well. He got an extension of unemployment benefits for two million out of work Americans for another thirteen months. These people are hurting, and those benefits are desperately needed to put food on the table and clothes of peoples backs. All of it, we can assume, will be spent right away, providing a maximum amount of stimulation to the faltering economy.
And -- in many ways the biggest gain of all -- Obama got a one year reduction in the FICA or social security tax levied on the paychecks of working Americans. Let us please remember that for those at the bottom of the economic pyramid, many of whom pay no income taxes, the payroll tax is a huge regressive bite into their meager incomes. If I understand what I have read, that tax will be cut roughly a third or a bit less, for a period of a year.
These people have been completely forgotten in all the political talk about "the middle class." To have secured some benefit, however short-lived, for them is in my eyes a political triumph.
Now, how will this play out politically? I do not think there is any doubt that it will help the Republicans, who will be perceived as having faced down the President. The appalling Mitch McConnell will gloat. John Boehner, the George Hamilton of politics, will preen himself and probably weep. We on the left will gnash our teeth and take antacids to counteract the bile in our stomachs. But millions of poor and middle income Americans will get a break when they need it.
Worn down teeth and a bilious stomach seem to me a small price to pay for forty-five years of secure comfort.
So, on this one, I am with Obama.
OK, you've got me. What on earth does that mean?
Well, at least in terms of the Wynne Godley version of macro accounting, the public deficit isn't being shrunk at a time when the private sector is deleveraging/"saving" and the foreign sector is increasing its balance with the trade deficit rising, together with oil and the U.S.$. But that's about the best that can be said for the deal. It will have only a small effect on the UE rate and poor results in bang-for-the-buck terms on "growth" and public finance.
Perhaps, but it will make life somewhat easier for many millions of people living close to the edge. I take that seriously.
Then again, there's this report about what's not included in the deal:
And in further banana republic news, some 39 municipalities, including 5 major ones, are currently considering selling or leasing their water systems to meet budget gaps. Just what the economy needs: further erection of toll gates for the extraction of rents! (Of course, some small part of me thinks this is a self-inflicted and deserved fate, after 65 years of the U.S. imperium inflicting similar such fates in the RoW, chickens coming home to roost, just as the current luck of the Irish is partly the result of the beggar-thy-neighbor policy of serving as a tax haven for MNCs).
But just why then should the working class constantly be held hostage for the sake of the pity of their betters. Seems that kinda misses the point. Economizing, considerations of functional efficiency, only matter when it's a question of the "burden" of the poor, not the depredations of the rich?
As for Obama, it was always clear that he was a center-right DLC corporate Democrat, and, aside from his understanding of economics being somewhat poor, it's not just a lack of leadership or poor strategy and tactics, but of actual, if shallow, conservative belief. He's an over-ambitious conformist whose swallowed the neo-liberal kool-aid, and, not just his econ advisors, but Obama himself actually believes that Hi-Fi is a key comparative advantage of the U.S. economy, rather than a rent-sucking parasite upon its real productive capacity. Hence the ease and eagerness with which he accommodates the wealthy investor class.
O.K. I'll just add on this link, in the interest of, following on Pip, the "higher cynicism":
There's a hear-say story about Hyman Minsky being asked in the 1980's about "Reaganomics", to which he replied, in the end, they'll sell of the national parks.
OK, so I share you anger [is despair too strong?] at the present state of affairs. But what I am not hearing is any answer to the question: Just exactly why is this trade -- tax cuts for the rich in return for extended unemployment insurance, social secutiy one year cut, etc -- bad for the people in this society who are the poorest and the neediest? Why would it be better to let the two million have their unemployment insurance run out? Maybe it would be -- these are complex matters with many secondary and unintended consequences -- but no one who is posting such angry response is even addressing that issue directly.
It's bad because, as expected it will increase the deficit and debt. Take a look at what his deficit panel is trying to cut out of the budget. All social expenditure. With higher deficit their argument, to folks like obama and center-to-right politicians, holds more sway.
Now a question for you.what will it take for you to see Obama is a wolf in sheeps clothing.
At this point, deficit spending is needed to spur economic recovery, and putting money in the hands of the poorest among us is the best way to do that, because they will spend it all on necessaries, rather than saving it.
It sounds to me as though you think it is worthwhile to inflict pain on the poor to avoid giving deficit hawks an extra argument. Very nice if you don't happen to be desperately poor and trying to hold a family together.
He isn't a wolf in sheep's clothing. He is a mainstream center-left Democrat, as those terms are used these days. He is not, and I never thought he was, the answer to a leftie's prayer. He is as far left as the present constitution of the elctorate will support, which is not very far left at all -- blame the American people for that, not him. You want Bernie Sanders to be president? Fine, so do I. How do we get the rest of the country to consider that? Thanks to the incredible self-destructiveness of the Republicans, Obama will almost certainly get re-elected. He has done, and will continue to do, many good things, all within the general limits of the consensus that has held sway for the last fifty years. If you think the character of that consensus is his fault, or indeed the fault of any single politician or group of politicians, you are sadly mistaken.
But no one has confronted and addressed the question I posed: How do you weigh the sufferings and needs of the poor and the homeless and the jobless when making these broad sweeping pronouncements about what is wrong with America today? I worry about that, because I have found that striking radical poses is easy [and, with a little luck, can even get you tenure], but actually helping people who need help is hard.
If you want me, periodically, to make an angry statement about everything that is wrong with capitalism in general and America in particular, I will be happy to. Nothing is easier, and costs less effort. But then I must go back to asking how to help those who need help [which, by the way, does not include me, thanks to a life and career almost entirely free of real tribulation.] I know how good it feels to d amn all the sciundrels and expose the clay feet of all the idols. Unfortunately, that doesn't put any food on the plates of those who are hungry.
I know deficit spending is best in these times. I'm not in disagreement there, but, the deficit panel, which Obama created, is in disagreement. And we know this President's predilection for reaching consensus with his already right of center appointees - and informing the left they need drug test and such when not reaching consensus with them. So it doesn't matter what you and I KNOW to be true regarding deficit spending, when, by increasing the deficit his own panel will only push him harder on cutting other social expenditures; and the obvious fact he will never decrease the defense budget (he actually increased it remarkable over Bush).
As far as your assumption regarding my income, and my intentions, both are dead wrong. I already told you in a past discussion, I'm flat broke, living in a one room apartment. I graduate this semester, with no job prospects on the horizon (Florida's - where I live - unemployment is something like the top five worst in the country). In the meantime I work part-time at Whole Foods, which is most alienating work I've ever done. Your critique of my intentions is also dead wrong. Yes, these poor will get unemployment benefits, but if the deficit panel has its way, it will lose numerous other social benefits. Just look at what they are intending to cut:
"The White House panel on reducing the deficit meanwhile has released its final report calling for widespread cuts to Social Security and Medicare. Panel co-chairs Erskine Bowles and Alan Simpson want to raise the retirement age for Social Security to 69 by 2075, decrease the cost of living benefits for Social Security recipients, impose new limits on the Medicare health insurance program, and end several middle-class tax breaks while reducing income taxes for corporations. "
So, again, it's not that I want to inflict pain on the poor to avoid deficit hawks excuses. It's that this WILL happen, regardless of what I want. And Between the two, I don't see Obama as being worthy of praise; since this is his bloody deficit panel. His picks for advice (like Summer, Geithner, Gates, Hillary, James Jones, McChrystal, etc...this man continues to show his deck, and the left refuses to see it).
As far as the needs of the homeless, I don't see Obama touching that; or anyone. All you ever hear about is middle-class and upper-class. Anything below those brackets is a social-Darwinian weeding out process (not my view, but I assume politicians and executives).
So at the end of the day, do I think unemployment should be extended; of course. Do I side with Obama, hell no, because of my prediction of his caving to his own deficit committee, who is addressing the deficit he's actually increasing. He's a cunning bastard, or myopic?
Blaming the "electorate" seems to me very dubious, since there are huge bodies of evidence to show that mainstream opinion among ordinary people in the US is far to the left of any US president ever. See, for example, the data at
Given what ordinary people actually think, it should be clear who is to blame. And it is absolutely essential that we always remember who is the enemy, and who isn't.
Also, I sympathize with the desire to do something concrete, but it seems to me that there are real questions about whether electoral politics offers substantive opportunities to do so (especially when an election isn't in progress).
The question for me is this: let's assume that we have specific long-term goals (say, a stateless and classless society, as Marx and Bakunin both envisioned) but that we also have short-term goals (like keeping humans who are now alive from starving, say). What do we do if a given action is consistent with our short-term goals but inconsistent with our long-term goals? Because it seems to me that part of the effectiveness of monopoly capitalism is that it presents us with exactly that difficulty: we can only palliate present suffering at the cost of any future hope. (Or, similarly, we can only help US citizens at the cost of abandoning the rest of the world to the choice between wage slavery and extermination.) If this way of thinking about the situation is right, shouldn't we focus our energy on finding something to do other than merely accepting or rejecting the Devil's bargain offered by Obama and the other demons? It strikes me as a real problem if, whenever push comes to shove, we always abandon our long-term goals in the name of worldly-wise practicality.
"But no one has confronted and addressed the question I posed: How do you weigh the sufferings and needs of the poor and the homeless and the jobless when making these broad sweeping pronouncements about what is wrong with America today?"
Well, in the first place there's no tenure protection for me: long ago college drop-out, part-time working stiff, full-time slacktivist. But the point is that there is little in this deal to assist the most disadvantaged and what little there is is at a horrifically bad ratio of exchange in terms of using fiscal and policy "space" toward economic recovery. (Basically, the U.S. economy needs restructuring, both in the sense of reduced debt loads and in the sense of intersectoral re-balancing and re-investment for anything like a sustainable recovery to occur. But that another matter, for high policy discussions, even though the Obama administration seems not to have the slightest clue as to what's really needed). There is a continuation, but no increase in extended UE payments and a 2% payroll tax decrease. (A payroll tax holiday is what lots of us, and by no means just on the left, were calling for 2 years ago, and Alice Rivlin has also just proposed it now, so this is a very minimal step). Perhaps $200 billion in real aid and stimulus, in exchange for $140 billion is tax cuts for the rich, a watered down "death tax" and a meaningless $200 billion in business expense write-downs, (when profits are at a nominal record and there is no AD to encourage business investment), which will have negligible stimulus effect. So, maybe, this might add 500,000 jobs that wouldn't otherwise occur. But at what overall expense, both fiscally and politically? It's just scraps from the table, if not a small band-aid applied to a bleeding festering sore. Your attitude here is just a bit too perilously close to "qu'ils mangent de la brioche", in the light of the likely length and depth of the distress involved.
And, of course, Obama has gone in for some more counter-productive political lying, claiming it will create "millions" of jobs, (just as he claims that TARP is being repaid and costs little, when that can only be true if the real costs are being borne elsewhere in the economy). Just as he started by proposing a too small and very poorly structured stimulus package with bold predictions of its effects, (which he refused to go back on), only to negotiate and compromise with himself and drop $100 billion in aid to states to gain a couple of Republican votes. When, of course, as I just pointed out to you, it's the fiscal crisis of the states where the real distress is about to strike and the administration seems oblivious.
I don't see how any of this is really supportable or defensible, even as Obama himself hypocritically decries "hostage-taking". The fact of the matter is that nothing will really be accomplished without the political will to fight and struggle, and the utter lack of such from Obama is I think an indication of his true colors. Supporting him on this, is a bit like supporting Hoover, on account of the RFC.
I won't argue with you about the "Overton window" and Obama's positioning in the spectrum, except to note that I think you're completely mistaken there. But why, pray tell, should we resign ourselves to a "50 years consensus", precisely at the point when that neo-liberal paradigm has structurally broken down and is exhausted? In the old jargon, the objective conditions are ripe- (or is that rife?)-, but the subjective conditions are utterly lacking. Unless, of course, one continues to maintain an actively critical position and structural analysis of the longer-term "big picture", rather than suppressing criticism for the sake of a few inadequate crumbs or some spare change.
And Bernie, by the way, is leading the charge against this deal.
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