From: "Max Sawicky" <sawicky at bellatlantic.net> Date: Sun, 28 Jan 2001 10:42:50 -0500
The outlook for fiscal and monetary policy has never been worse.
The main symptom is Greenspan Worship, the root problem is fealty to financial markets, a.k.a. Capital. The other side of the coin is varieties of left stupidity.
The clue on the first count is the response to Wacky Al by Members of Congress. Instead of outrage, there was puzzlement and propitiation.
The case for tax cuts was patently idiotic. This case is faithfully replicated in all its idiocy in the Washington Post.
* Circumstances had changed, we were told, since Al's last appearance. This is true, but the changes implied opposite conclusions. One purported change was growth in the surplus, but in fact the change in surplus estimates was only half a trillion (relative to a $5T base), and the recent signs of slow-down would mean this change should be discounted. The other change is the slow-down, but as noted this means a smaller surplus, not a larger one. In the face of the argument that a smaller surplus calls for stimulus, there would be a case for a tax cut, but AG also asserted that a stimulus would not work because it would be too little and too late. In summary, we can do a tax cut because the surplus is bigger, and we should do a tax cut because the economy is slowing down (and the surplus will be smaller).
* Al's attack on Gov ownership of financial assets precludes the centrist proposal of pre-funding Social Security. This is not a loss if one felt, as I do, that such a pre-funding is unnecessary. But if that's what you had to hang your hat on, the only alternative is politically untenable adjustments in benefits and taxes, or full privatization.
* The idea of a problem in liquidating Treasury debt down to zero is no problem at all, since debt need not be zero -- or should it? It's hard to tell from his advice. Naturally, buying other assets while a residue of Treasury debt remains is tantamount to zero debt.
* AG's opposition to using surplus to spend money might not surprize anyone here, but it's a gross breach of his role (as is his Soc Sec dis-advocacy and preference for lower marginal tax rates, except on payroll).
* There remains AG's mishandling of employment, for which he is still getting a pass from all sides.
It does not appear the Dems will stop Bush's package. They are dithering, talking about a slightly bigger grab-bag of options. They will only affect this thing at the margins, by all appearances. There is a mini- boomlet around the proposal Bob Cherry and I have been cooking up, but so far it's still a sideshow. The main rap is that it's too complicated, in comparison to an across the board rate cut, which has the illusion of being "for everybody." We will persevere, in any case.
I did a spot on Fox News Friday at 4 pm and got a nice little batch of negative e-mail, one was on my machine when I got back to the office 20 minutes later. The striking thing is the extent to which rote right- wing tax ideology has taken hold among the non-rich. I got a full dose of it from Fox's driver on the way to and from the studio -- I may have shook him a bit but not by much. He would have done as well in a debate with me as Steve Moore did, not taking anything away from Steve.
I also had an op-ed in USA Today Friday. Interesting thing is they required it be along the lines of, tax cuts no, spending yes. No talk of alternative tax cuts. This is an example of negative pigeon-holing. The op-ed was what got me on Fox, and the pre-interview was along the same lines; once I got on I could talk about different tax cuts and it went well enough.
The liberal advocates are in the same bag. They all have their little wagons to push -- all in the name of spending priorities. They don't have a chance. The tax cut is coming first, maybe before April. But they persist. It's only some people on the Hill and my new best friends in the DLC who realize that they will get reamed without some alternative proposal.
We talked a little while ago about the spitting on Viet Vets mythology. I noted at the time I had never seen such a thing. Well I did see it on J20, when the helicopters and military bands went by. No spitting, but the same simple-minded 'you suck because you're military.' So life follows myth.
First on the list of left miscreants are the political big shots, who will bank on fiscal discipline to the bitter end. why not, a Bush tax cut would not be the worst thing in the world for them. It is clear that the Clintons adherence to fiscal discipline has been a perfect setup for the present situation. Bind yourself to a position that must erode, wait until it's too late, or never, before proposing alternatives that are not austerity measures.
For years I had pondered the nature of the political forces underlying the deficit/surplus mania. The fears of insolvency and savings made some sense in the late 1980's and up until 1992, when the projections showed untenable deficits. They made little sense once the corner was turned after 1993. So why the elite lineup for debt paydown? It could have been simple partisanship: deny Clinton and the Democrats the political approval that would follow some large use of the surplus, either for tax cuts or spending. Now that the GOP has a sweep of both houses of Congress and the WH, let the good times roll. A total sucker-job. The Dems follow Mondale and play good fiscal boy scouts, then when the GOP gets in, they get no political backup for their fiscal virtue. The Clintons were and will be key in this political sabotage -- their prospective roles make Democratic Party allegiance less tenable than ever.
I endorsed RN for these sorts of reasons, but so far he has been mum on these issues. It was more the potential stemming from his independence that motivated me. But this can get old.
The way things look now, there will be some late and hasty counter-proposals from the Dems which will fail to assert a contrary idea, and the Bush package and more will pass. We are starting to hear talk of adding business tax breaks to the package, so basically the entire non-Social Security surplus will be eaten alive. We're looking at another generation of stagnation in the Federal public sector, while the Clintons tell us things are so great because they reduced the debt.
mbs
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Doug Henwood Left Business Observer Village Station - PO Box 953 New York NY 10014-0704 USA +1-212-741-9852 voice +1-212-807-9152 fax email: <mailto:dhenwood at panix.com> web: <http://www.panix.com/~dhenwood/LBO_home.html>