Here’s a year end roundup (aka The Wonky Awards) from Ezra Klein’s Wonkblog at The Washington Post. While wonky indeed, he’s presented it all in such a way that even we economically illiterate get the drift. It’s a terrific piece of work and challenges much of the conventional narrative, but don’t expect any corrections in the media script – plain facts aren’t sexy.
This one strikes me as the most revealing example of media failure – every time a politician or partisan warns we’re going to become Greece!!!, the punditocracy ought to use this information to inform any discussion.
As we endlessly debated deficits and debts this year, every so often it was worth surfing over to the neglected corner of the Treasury.Gov Web site where they track the inflation-adjusted yield on government debt. Those quick jaunts were always a good reminder that everyone in politics was completely insane.
The thing you worry about when you have high deficits is that the market will lose its confidence in your ability to repay your debts. The place you’d see the market losing its confidence is in high interest rates on government debt — that would be a signal that the market is pricing in some risk of default. But all this year, the real yield on three- , five- , seven- and, occasionally, even 20-year government debt has been negative. Negative! The world is so dangerous that the market will literally pay us to keep their money safe.
If any corporation could borrow for less than nothing, they’d see that as the opportunity of a lifetime. We can borrow for less than nothing at a moment when our infrastructure is crumbling and millions are out of work. But instead of taking advantage of this amazing opportunity, we’re actually cutting our support to the economy and arguing exclusively about how to reduce our deficits. It’s embarrassing.
POSTED BY ORHAN
In a recent post, Robert Reich catalogs and rebuts the biggest whoppers spun by the Republicans regarding job creation:
“Cutting taxes on the rich creates jobs.” Nope. Trickle-down economics has been tried for thirty years and hasn’t worked. After George W. Bush cut taxes on the rich, far fewer jobs were created than after Bill Clinton raised them in the 1990s.
“Cutting corporate income taxes creates jobs.” Baloney. American corporations don’t need tax cuts. They’re sitting on over $1.5 trillion of cash right now. They won’t invest it in additional capacity or jobs because they don’t see enough customers out there with enough money in their pockets to buy what the additional capacity would produce. Florida Governor Rick Scott, for example, says his proposed corporate tax cuts “will give Florida a competitive edge in attracting jobs.” They’ll also require education spending be reduced by $3 billion. Florida already ranks near the bottom in per-pupil spending and has one of nation’s lowest graduation rates. If Scott’s tax cuts create jobs, most will pay peanuts.
“Cuts in wages and benefits create jobs.” Congressional Republicans and their state counterparts repeat this lie incessantly. It also lies behind corporate America’s incessant demand for wage and benefit concessions – and corporate and state battles against unions. But it’s dead wrong. Meager wages and benefits are reducing the spending power of tens of millions of American workers, which is prolonging the jobs recession.
“Regulations kill jobs.” Congressional Republicans are using this whopper to justify their attempts to defund regulatory agencies. Regulations whose costs to business exceed their benefits to the public are unwarranted, of course, but reasonable regulation is necessary to avoid everything from nuclear meltdowns to oil spills to mine disasters to food contamination – all of which we’ve sadly witnessed.
“Cutting the federal deficit will create jobs.” It’s not true. Cutting the deficit will create fewer jobs. Less government spending reduces overall demand. This is particularly worrisome when, as now, consumers and businesses are still holding back. Fewer government workers will have paychecks to buy stuff from other Americans, some of whom in turn will lose their jobs without enough customers.
Reich calls on the President to refute these claims loud and long, before they become conventional wisdom. He can’t understand Obama’s silence in the face of the Republican onslaught.
Posted in Congress critters, corporate power, economy, elections, Florida, From Orhan's Perch, labor, Plutocrats, Politics
Tagged Barack Obama, corporate income taxes, deficits, Florida, Government spending, jobs, regulation, Republicans, Rick Scott, Robert Reich, Trickle-down economics