On the Contrary

Okay, I don’t always get everything right, and in a perfect world, well even a normal world, there would be useful back and forth to arrive at the truth. But not in this world. The Republicans have gone so far off the map of rationality that honest debate no longer happens. They can’t afford to let it happen. They need for nothing to change and nothing to improve. So in this day and age, honest dialogue is an oxymoron.

What brings this to my mind is reading an attack on what Paul Krugman said the other day that a writer from Bloomberg, Clive Cook, felt it necessary to critique. And his critique was that Paul is too shrill and even though he may be right, he is preaching to the choir and unless he changes his tactics, he will get no new converts. Here is the gist:

Krugman says his opponents are motivated by politics. “Am I (and others on my side of the issue) that much smarter than everyone else? No. The key to understanding this is that the anti-Keynesian position is, in essence, political. It’s driven by hostility to active government policy and, in many cases, hostility to any intellectual approach that might make room for government policy.”

Talk about lack of self-awareness. Does Krugman imagine that he isn’t motivated by politics? His own views are equally driven by support for active government policy; in many cases, they are also driven by support for any intellectual approach that might make room for such government policy. Like any politician, he expresses certainty where he knows there is doubt. He’s more than happy to simplify and exaggerate as the cause demands.

I think Clive is not only wrong, but fails like so many to understand how closed the other side is. I think he misses Krugman’s point. When you lay out data, it is a waste of time. Austerity and how it hangs with us is the case in point. It is everywhere and it is failing. So like President Obama needs to have a drink with Mitch McConnell, Paul needs to accept failed ideas and show the proper respect for discredited data. No I don’t think so. What this does is point the finger at the wrong problem.

Continue reading ‘Reflection on Honest Debate’ »

In case you have missed it, after the bombing the crazies came out in full force with all sorts of Right wing conspiracy theories about the Boston bombing. And what is really scary is that their Right wing megaphones are picking it up and pretending it is real news. Of course the Righties like to say that the left wing has conspiracy theories too, so name one. Better yet name one that the “liberal” media is echoing. Maybe 40 years ago the left had some real loonies, but we out grew it. On the Right they are growing in number. What should frighten you about this is that this is also one of the hallmarks of extremist behavior leading to violence.

So can the conspiracy theory nuts be countered with the facts? In a word, no. They are not interested in facts and they hang on to their crazy ideas like a religion (which is one of the problems when faith based thinking leaks over into our public sector). Last night Rachel Maddow had Alice Hoagland who was the mother of one of the passengers on flight 93 that nose dived into a Pennsylvania field on 9/11. She got involved with meeting and trying to convince the conspiracy nuts who believe that 9/11 didn’t happen, that the government did it, or that the buildings could not have been brought down by airplanes. Her conclusion was they were sweet, nice, and totally loony tunes. There was no hope. What should scare you about this fringe is that they make up the base of the Republican Party.

Continue reading ‘Does Rational Thinking Have a Prayer?’ »

I found some interesting similarities in our initial analysis of the bombing in Boston and the continuing, although now maybe slightly shifting, analysis of our economic problems. I think there are some lessons here about how vested interests, who profits, and political dogma leads us astry. And more importantly, after we got both wrong, the need to shift our tactics and focus which may not happen. Lets start with the bombing.

As soon as it happened, the “experts” were talking some kind of international conspiracy plot. They were evaluating everything they saw based upon what they needed to justify their expertise. I chronicled in my day after the bombing blog, The Boston Tragedy, what did not jive with that “expert” analysis. While the experts were going on about the attack site being a important terrorist target, powerful bombs, and extreme coordination between the two blast that would require professional planning and guidance, I came to exactly the opposite conclusions seeing the same event.

The site was not the optimal terrorist target, it wasn’t strategic, but very local and begged the question is this a local grudge attack? The bombs were not large considering what plastic high explosives such as RDX or HMX could do, and the timing was easy to accomplish, and not planned to create even more terror (same site after first responders run in). It screamed local and amateur to me. When they published the photos of these two bombers walking through the crowd, it screamed Columbine to me, two young men who have been marginalized and isolated and are striking out.

Continue reading ‘What Do Terrorist Experts and VSPs* Have in Common: They Both Got It Terribly Wrong’ »

I think we are seeing the problem with news as entertainment in the last week, and when this is all over we need to take a step back and consider this circus we created. For my money it is the largest argument there can be made that the cable networks must provide a certain amount of news that is not revenue driven, but that is a whole other blog. Oh, and have you ever seen so many “personalities” on the scene when the scene is nothing but a street with police tape? By being there, they are not clarifying the story, only confusing it.

I think, and I may be proven wrong, but I think I have had a fix on this from day one. This is local, represents a domestic issue, and is not some international plot. See The Boston Tragedy. I think the suspects Uncle said it best (and he is a victim too) when asked why they did this and he said, “What I think what it is, being losers. Not being able to settle themselves and thereby hating everyone who did.” It is a couple of kids feeling totally emasculated and lost, and took on a fantasy mission of violence and mayhem to empower themselves (a la Columbine). There were many indications this was the real motivation, yet the media was all over some international terrorist plot, Saudi national, dark-skined, foreign motivated event.

One of the things you have to ask yourself is what is the motivation of each media “expert”. We have a whole industry built up around international religious terrorism and they needed to see this as some international terrorist plot to validate their existence and their livelihood. I don’t think it has anything to do with that and while their tactics are similar, it is the tactics of terrorism, not just jihadists. It is tactics anyone would have used if they decided to express their anger and lash out at society (and a local lash out, not an international statement) and had internet access.

That doesn’t justify what they did, and understanding how they can be so disconnected from the damage they did probably will never be understandable. There may even have been some foreign influence, but the root of this thing is domestic, the feeling of hopelessness and the need for some radicalized empowerment.

But I think there is something else here which may seem like a wild stretch to push my politics, but I don’t think so. Paul Krugman has written about how the Euro unified Europe and help to defuse local competition and economic rivalry that was the basis for two world wars even though it may have been a bad economic idea. He has opined about how austerity is really a repeat of what we did after WWI that set the stage for WWII. Europe may be setting the stage for the demise of the Euro and European unity with their misguided austerity to punish people who did nothing wrong.

When people have little hope of improvement, they radicalize their beliefs. We are seeing similar growths in radical organizations both in Europe as a result of enforced austerity today, and here in America after the financial crisis. I think there is a connection between failing economies, loss of hope, and these kinds of mindless events. We might want to think about that as we continue the sequester, fail to invest in tomorrow to create jobs, and create a whole new generations that sees themselves as losers.

I watched This Week with George Stephanopoulos because Paul Krugman was on it, and it was all I could do not to hurl my shoe through the screen. Here is a critical exchange that went nowhere and is typical of why Sunday News Shows are to be avoided:

GRETA VAN SUSTEREN: And you talk about the Main Street, is that we’re strangling small businesses. I mean everyone, no is paying much attention to these small businesses. The regulations start strangling them, some are laughable and silly, but they have profound impact on the job creators, those who are making jobs. They can’t afford to hire people.

PAUL KRUGMAN: There’s been, there’s been tons of work on this. And what’s holding small business back is not regulations, it’s the fact that they don’t have sales.

VAN SUSTEREN: It’s not all, it’s some of it.

KRUGMAN: There’s not, there’s no correlation looking across, which parts of the economy do small businesses complain about regulations? Which don’t they? There’s no correlation between that and actual job –

GEORGE STEPHANOPOULOS: Let me ask Paul a question and then I’ll bring you in. I just want to ask you one question. Is the one exception to that perhaps on health care? Where firms that are greater than 50 people have to pay more. Don’t you see some firms cutting off at 49?

KRUGMAN: You really — there might be. but you can’t see that in the numbers. The overwhelming fact of the matter–

VAN SUSTEREN: Well If you talk to them, instead of looking at just the numbers, why don’t you sit down and talk to these people, lot of them are struggling with this. They don’t understand a lot of those things that happen. They don’t understand a lot of the things that are happening in Washington. They’re very cautious because they see a real dismal economy out there. And that doesn’t –

KRUGMAN: If you actually talk to them, that’s not what they say.

Note a couple of things: Krugman never got to finish his thought and George immediately refocused the debate on Obamacare impact leaving the false claim by Greta, Nobel Laurette and economic professor, or Fox talking point master, your choice, unchallenged. And might I add, you can find anecdotal evidence for anything.

So do regulations hurt small businesses? Sure but is it what is keeping them from hiring? And some of those regulations by the way, are what keep workers safe, not working as slaves, our food safe, and our environment clean. Here is a bit of the data from Media Matters (and lots of data presented here) that refutes* Greta’s conservative talking point, but as Paul alleged, there is tons more (like common sense):

Investment data refutes Susteren’s claim that high regulatory environments tend to suppress growth. An Economic Policy Institute (EPI) analysis of the past four economic recoveries found that the slowest growth actually occurred during the deregulatory Bush administration…Instead of uncertainty about regulations, there is strong evidence that the absence of job creation reflects the continued unwinding of the financial collapse and the corresponding lack of demand. Firm investments and hiring are lower because they have ample capacity to produce the goods and services they are selling to a shrunken market, while firms are deleveraging at the same time.

My point is that did this exchange allow Professor Krugman to present the data or was it just more he said/she said that is the terrible state of our media today and allows the loudest and most aggressive speaker to win the day? And as we continue to allow conservatives to cloud the real cause and effect of economic issues, it is impossible to allow us to coalesce on policies that would actually work. I would have been ashamed to say I hosted this show. Sunday news programs are off my list of useful information gathering sites.

*Here are real survey results instead of Greta’s carefully selected interviews:

Gallup surveys of small business owners in 2012 and 2013 have found that regulatory concerns lag far behind demand concerns. And even a monthly survey of small business owners conducted by a conservative front group called the National Federation of Independent Business (NFIB) has found that regulation has been a comparatively minor concern for small business owners for many years, as EPI explained:

Paul Krugman, my hero*, is facing a real challenge this weekend when he debates David Stockman on This Week with George Stephanopoulas on Sunday. Actually Paul has been facing a difficult challenge for many years as he tries to educate America about the failure of our policies and in particular our approach to our financial crisis and debt. At any rate David came out with a screed that can be summed up as WE ARE DOOMED! WE ARE DOOMED! FEAR DEBT! FEAR DEBT! (Oh, and fear the Fed, and fiat money)!

What he is going to try to do is show that debt can be our friend in certain circumstances and our basic understanding of debt based upon our microeconomic (home budget analogy) understanding of debt, is deeply flawed in the marcroeconomy. Doing things that make sense in microeconomic world (home budget, small business) are counterproductive in the macroeconomic world. What makes this difficult is that our own experience colors how we understand how the world works and our own experience is the home budget where sooner or later, the books must balance. Where Paul has, in my mind, lost some traction is in the fact that he needs to understand his audience better and that audience are not people well versed in anything economic. Not an economic groupie like me and many who read his and other economist’s blogs.

I went back and read some of his arguments and even for me, they are a struggle until I have versed myself in some economic concepts (Thinking Straight about the Debt, Sam, Janet, and Debt). If you go through these carefully, which is what his blog is intended for, you can understand the basis of his logic and argument. But it takes work that most people are not going to do nor understand. For example when he refers to the fact that “we earn more on foreign assets than we pay in our foreign liabilities” (see Hedge Fund America) or the fact that our debt is not a problem because for the most part, we owe it to ourselves (“the overall level of debt makes no difference to aggregate net worth”), he loses the average person who knows at some basic level, debt is scary. When he says all debt is not created equal, the uninitiated zone out. It is all true, it is important, but it is not getting through to people who know from personal experience that debt can crush you.

So I would think that the argument he needs to make has to connect with the average American. Easier said than done because I struggle with some of the complexities of economics and economic concepts and I am no shrinking violet when it comes to doing my homework. And I am the last one who should be giving advice to Professor Krugman who understands economics and has spent his life studying it. But I do know something about understanding how the other side thinks. So for what it is worth:

• Don’t get trapped into economic lingo and archaic arguments. The issue is how debt now helps most Americans. Borrowing money is free and it is a crime not to be using this opportunity to rebuild our infrastructure
• The implicit assumption about debt is that it is hurting our economy. The basic approach is to show explicitly how it isn’t, interest rates have not increased as predicted, inflation from printing money hasn’t happened, and dispel the confidence fairy with examples where demand has occurred and spending has followed
• Ask how Japan runs high debt and survives
• Show how the home budget analogy does not work: Cutting spending which is what you must do in the home budget analogy simply cuts your revenue and makes things worse in the macroeconomy (don’t use the term macro economy)
• Show how the growing economy after WWII and in the Clinton years is what really reduced the deficit and our focus must be on jobs with a long term plan to reduce spending when the economy is humming
• Use zingers, not detailed economic arguments. No it is not professional or fair, but it is effective in this medium
• Don’t be afraid to attack and use history to challenge misstatements or outright lies
• Attack and use the European experience on austerity to drive home it does not work
• Don’t assume anyone knows the facts and that the host will moderate by correcting obvious misrepresentations. In this day and age, they just referee and you can’t let lies stand unchallenged
• Use a surrogate and practice

I personally want to apologize to Professor Krugman for all of the above. He has worked tirelessly to develop a logical base that supports everything he puts forward. He has been attacked from all sides and yet unlike an ideologue, he re-evaluates his data, adjusts his arguments and fights the fight. His intellectual integrity can not be challenged (but frequently is). He speaks truth to power and his message is what will save us if we would only listen. That is why he is my hero. The advice I give is to shallow his argument and go for the jugular. It is the only thing that works in the media today where form over substance is all that matters. Sadly debate has become a beauty contest and you are going to need some glitter.

If you listen to Very Serious People* (VSP), their new talking point is, okay near term debt is not a problem, but we need to address our growing costs in Entitlements before they swell the deficit to an unmanageable level. So I thought we would examine that assertion based upon a few facts, those pesky facts.

Remember that VSPs have been telling us the debt is the problem and interest rates and inflation are going to sky rocket for 5 years now. They got it first hand from a CEO at a cocktail party who knows that if we just bring down our debt, confidence would break out, and businesses will spend, spend, spend, kind of like it has in Europe. The fact that the growing deficit came from the lessor depression, and temporary spending as a result, was missed by them. That along with the fact that the deficit has been decreasing now for the last 3-years at record levels.

So now after being wrong for five years and recommending all the wrong policies for our economy and the real problem, unemployment, they have this wonderful new insight and want a grand bargain which slashes entitlements. Now here is where Paul Krugman makes wonderful sense and JoeScar screws himself into the ceiling because he doesn’t understand that. If entitlement spending is not a problem right now (and it is not), why would we cut entitlements now when the problem is in the future in some kind of grand bargain? That is not a hard concept is it?

Okay, so you get that, but all the experts say we will have a problem if Medicare and Medicaid continue to grow at rates above GDP and normal inflation, and that is true. But is it the entitlements themselves or their costs that are driving the train (entitlements are the free things you get, costs are what they cost). Well we get a hint of this one when we compare what we pay for health care compared to other nations who have better programs and better outcomes. We pay on average 2 1/2 times as much as other countries:

Okay, maybe if we paid what other countries pay, we wouldn’t have a problem. So why do we pay so much, and that gets me to the next dot to connect, a posting on the Wonkblog about how Fortune 500 companies are reducing the health care costs. In particular GE:

As General Electric’s director of health services, Robert Galvin was the guy responsible for managing the health insurance costs of about 150,000 employees. The job wasn’t easy — and, about five years ago, Galvin stumbled on some data that helped explain his challenges.

“I looked through all our contracts and the data, where we were spending $1.5 billion on health care,” Galvin, now CEO of Equity Healthcare, remembers. “One percent of those payments were based on value. The rest was just pure volume.”

The problem Galvin ran up against is one that is endemic to health care. For as long as we’ve had a health-care system, insurers have paid doctors and hospitals a fee for every service they provide. This isn’t an especially unique model. Any widget-maker tends to earn more money for selling more widgets.

In other words, fee for service, not fee for outcome, and their solution was to act more like Medicare, pooling with other large companies to negotiate with insurers on their payment models. Note that this does not address the fact that under a single payer system you would not have to pay the middle man, the insurance company either, which would further reduce costs.

But here comes the final dot and the best part: Costs of Medicare are decreasing and not rising near as fast as private insurance:

Wait! Could this say that Medicare and Medicaid will not grow at a rate that makes our deficit a problem? Could we be jumping the gun and cutting benefits when there is no need? If Medicare and Medicaid costs increase at or below GDP/inflation rates of growth, we don’t have a problem. And reasons for this decline in rate of growth could well be due to Obama care and the requirements for results instead of fee for service to reduce costs. Think what we could do if we really put our minds to it. Oh, and you might want to think about all those moron Republicans who are trying to scare you to death about Obama care.

So should we be doing a grand bargain to cut benefits to reduce costs right now? Of course not, but it is the talking point of all VSPs, because well they heard it from some other VSPs just yesterday over cocktails.

Note: On Social Security, it does not impact the deficit and is solvent until the 2030′s. It could be projected to be solvent for another 85 years if we just lifted the cap on taxable income. So why are we trying to cut benefits again?

I was watching Alex Wagner this morning and I shuddered when I knew one of her panelist was Ed Redell who is a screaming moderate Republican hiding in Democratic clothes. And he did his best impression of what Paul Krugman calls a VSP (Very Serious Person). That is a person who one, does not understand Macroeconomics, and secondly always counsels that there needs to be pain for the recovery. They have bought into the debt is the problem and we have to suffer some pain to solve our problems (meaning poor people). So here is how it went down.

Alex referenced the Tomasky, The GOP’s Three Lies (See Who Said It Best Today), and asked her panel to respond to it. Josh Barro from Bloomberg, pointed out that we have been in a deficit for 46 of the last 50 years so if it was going to ruin the economy, it is slow in coming. And then he pointed out that debt can go on as long as forever and if the economy keeps growing, the absolute size of the debt can grow. Rana Foroohar from Time Magazine pointed out that it is all about growth. We can grow out of our deficit problem, and we fail to recognize what we have already done to reduce the deficit. Then she raised the healthcare spending problem. This is another conventional wisdom that we must do something about our healthcare spending which is code for cutting entitlements which is what the grand bargain would be about (the answer to that is no, but as many have pointed out, if we had the costs of everyone else in the industrialized world for healthcare, there would be no problem).

Then Joy Reid jumped in by pointing out that the Republicans have been so successful, aided and abetted by Democrats, in getting us only focused on debt reduction instead of jobs and growing the economy. Then Alex pointed out that the Democrats brought this focus on the deficit on themselves as they bought into the Republican narrative. Then Joy said, “Our problem is the economy and jobs. That’s where the President started, and even Democrats have managed to get on this playing field, and the media, and the beltway where everyone in Washington agrees we have to talk about deficits and debt all the time.”

This is encouraging as the consensus is that the debt is a long term problem, we need to start focusing on growing, and then here comes Governor Rendell with a grudging acknowledgement of this, but wait, be afraid of the debt, be afraid of the debt:

“I think that in my party we have too many people who are debt deniers (who?). The point Josh made is the right one. It is not balanced budgets, it is debt as a percentage of GDP. If we let our debt get to 90-95% we are a European Nation and we are going down the tubes fast. That is number 1. Number 2 we got to drive debt down between 70 and 60% of GDP. We don’t have to do that in the next year or two and Simpson Bowles (the Holy Grail of the Beltway) doesn’t recommend that, they recommend that the debt reduction gets phased in in the out years so we can grow the economy, and Simpson Bowles says we can invest in the short run.

So it is like everything else if we put our mind to it. We can invest in the short run, juice up the economy as Joy says, and at the same time we can put things in place things are going to have some level of pain for all sides, put things in place that will reduce to a manageable level of GDP, and Josh I disagree about one thing, I have dealt with enough CEOs in my role as campaign chair to fix the debt, that if we were to do a debt deal that would in the long term bring the debt under control, I think you would see a lot of investment that is not happening right now (The confidence fairy!).”

Now there is so much wrong with what Governor Rendell said, I am not sure where to start and he is the Chairman of the Fix the Debt task force. God I hope no one is listening to him. First of all is his first statement that Democrats are debt deniers. That is pure B.S. and lends itself right into the Republican talking points, Democrats will spend us into hell. Then he gets it a little right because more people are starting to recognize we can’t get out of this problem without some growth, but his whole discussion doesn’t focus on stimulus and growth, it is totally focused on debt reduction again playing right into Republican talking points, be afraid of the debt. We must deal with it first.

Oh, but it gets worse. He tells us we could be a European nation. No we can’t and does he understand anything about the macroeconomy and the fact that we can print our own money (fiat money)? It is not the same at all as many economists have pointed out, but is another false Republican talking point. Oh and Governor, how have nations like Japan (who does print their own money) run a debt over 100% of their GDP and do fine? An economist you are not and you have your facts wrong. Then he says, some level of pain for all sides, meaning the poor will have to fund this again through cuts in entitlements. The man is a walking talking Republican talking point.

Then we get to the pièce de résistance, that he has been talking to CEOs. You remember, the guys who did not see the housing bubble, are making tons of money in our depressed economy, and have said inflation and higher interest rates will destroy our economy for the last four years (and there has been neither). And they have told him, with a grand bargain they will just start creating jobs right and left. This is the confidence fairy that Paul Krugman and others have so discredited. Oh, and that same bull shit is what drove austerity in Europe and that has work out so well, right? Good lord. The man is brain dead and is so far behind what the rest of us know, it is scary. If that is what we are getting for Democratic leadership on the economy, we are doomed.

Please, somebody fire him so we can talk about what is really going to be effective and not Republican and CEO talking points. He is clueless and is the perfect caricature of a VSP. Alex, are you listening?

*VSPs – Are those that look at a problem and appear serious because they call for harsh measures and self-sacrifice to seem serious about the problem when those measures are actually counterproductive, but makes them appear to be serious thinkers. Very Serious People hear other Very Serious People citing an alleged finding that supports their conclusions, then repeated it themselves, and it became part of what Everyone Knows — after all, everyone they talked to said it was true (this is also known as the Scarborough effect).

Remember when JoScar (Joe Scarborough) said that it was preposterous when Paul Krugman told him and Mika that we should not be paring back entitlements for a problem in the future. The logic from Paul’s perspective was that if Medicare and Medicaid spending were not a problem now, why would we cut benefits now so that future cost growth, when they happen, would not be a problem. Joe and Mika were shocked, shocked I tell you. In their home budget mentality, we should take action now. Paul’s approach was, let’s not solve that problem till we have it. Cutting Medicare and Medicaid now doesn’t save money for the future and just short changes people in the near term or puts in place a fix for the future that may not be necessary.

Well reality in the form of slower growth of Medicare and Medicaid costs may in fact prove that these costs will not be a problem in the future. Gregg Sargent in his Plumb Line Blog for the Washington Post put it this way:

“Remember, in the short and medium run, most economists say that current budget deficits, especially after all the deficit-cutting over the last two years, are not a problem. It’s true that there are deficits, but they’re falling from recession-induced highs, and at any rate interest rates are low so the effects of deficits are minimal. The real problems come later, and are almost completely caused by expected exploding health care costs.

But what if health care costs are no longer rising faster than GDP? In fact, if health care costs follow what’s been happening over the last several years, there will be no explosion at all — and that would mean budget savings of about 2 percent of GDP a year in about twenty years. That’s enough to entirely wipe out the real threat of budget problems. Of course, we don’t know whether this moderation will continue, but it very well might.

What this really means is that we need an immediate moratorium on “grand bargain” talk. We need a halt to any major reforms undertaken purely for budgetary reasons — either the major cuts that Republicans have pushed for or the search for a deficit reduction deal exchanging spending cuts for new revenues that Barack Obama wants. It means the best replacement for sequestration is probably nothing, at least for now. And, most of all, it means continuing to implement the Affordable Care Act, especially those provisions that are intended to reduce costs“

Gee was Paul right once again?

Maybe the dawn is breaking. Maybe someone finally realizes that a balanced budget may not be the end game. Reasonable debt might be okay and as most corporations operate, that is how they fund their modernization and upgrades. Maybe in a rush to a balanced budget (See Ryan non-plan) you destroy what made you rich. Poor and homeless people generally have balanced budgets and it works out so well for them, doesn’t it?

The real driver around what is too much debt is the interest rate you have to pay for it. If your debt is seen as too high, therefore you present a risk, then you have to pay more to borrow. So the real question becomes, what debt is sustainable in the eyes of the market place which sets the rate on borrowing. Anybody notice it is at historical lows right now? That is Paul Krugman and others argument that the debt is not a problem right now. Note that for the last four years we have been hearing how the interest rate is going to soar, but it hasn’t because we are in a liquidity trap*. Are listening Dr. Sachs?

So you have these competing requirements, cutting spending to reduce the need for debt, but contracting our spending reduces our GDP and revenues. So you have one camp (Sachs/Scarborough/Ryan) who think the debt is the problem and want to cut it as fast as possible. You have this other camp (Krugman/sane people) who think that we should not be worrying about the debt right now, but growing the economy to have the revenue to pay down the debt later. So what should we do?

Well, and oh I am so sorry for introducing rationality into a basically emotional argument about the debt, but maybe we ought to come to a more reasonable understanding of what is a sustainable debt and work toward that number instead of a fool’s errand to be debt free. Dr. Krugman has suggested this number is around $460 billion. This may be arguable, but when you look at how Japan has managed a deficit of 100% of GDP and still gets low interest rates, you get the drift, that a high debt per se is not the only determining factor on interest rates. So if we come to the conclusion that we do not need to contract our economy right now with massive spending cuts, and we need to be working toward a sustainable debt over a reasonable period of time after we crawl out of the liquidity trap, what are we being offered?

This graphic represents what the Senate (thank you Patty Murray) has come up with, which the Republicans will probably filibuster compared agains what Paul Ryan has presented. This graphic courtesy of the Wonkblog:

What we can say here is that the Democrats put us on a long term glide path to a sustainable debt with a balanced approach of cuts and revenues, along with some stimulus (not enough, but none is going to get passed anyway). What the Republicans offer is an all cuts approach that hammers the poor and middle class, numbers are not supported, dismantles government, and will give us the European experience with austerity that I am sure we are all craving. Now tell me again how we need to work together and both sides are at fault. One side is loony tunes and finding a middle way between these two is not compromise, but stupidity.