RANDALL WRAY [email]
Author of Modern Money Theory, professor of economics at the University of Missouri, Kansas City, and senior scholar at the Levy Economics Institute in New York, Wray said today: “We all knew the election was a minor diversion because no matter who won, the first order of business would be to gut the social safety net. The ‘fiscal cliff’ was always part of the plot line, to stiffen the will of Democrats to reverse the progressive stance it had taken since the time of Roosevelt. Pete Peterson’s billions bought both parties and now it’s payback time. Don’t be duped by the dopes in Washington — there is no deficit and debt crisis now or looming in the distant future. The electorate must hold the feet of politicians to the fire: keep your darned hands off my Social Security and Medicare!” See Wray’s blog, “Great Leap Forward”.
ROBERT KUTTNER [email]
Co-founder and co-editor of The American Prospect magazine, Kuttner is the author of A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Street’s Power, and the Struggle to Control Our Economic Future.
In a recent piece in the Huffington Post titled “Let’s Not Make a Deal,” Kuttner writes: “We need more public spending both because the private economy is weak and because Hurricane Sandy just revealed the need for hundreds of billions of more outlay to protect our coastal communities from ocean waters that will continue rising. We will need hundreds of billions beyond that invested in renewable energy to keep global climate change from worsening. …
“The president’s own proposed budget cuts of $4 trillion over ten years average out to $400 billion a year. In other words, the Obama Cliff is almost as large as the fiscal cliff that everyone dreads. Whatever the precise mix of tax increases and spending cuts, $4 trillion is too big a cliff. …
“In that aborted [budget] deal [of 2011], Obama was prepared to cut Social Security and increase the Medicare eligibility age. White House leaks have suggested that both items will be on the table this time. That’s bad policy, and worse politics. The clearest principled differences that distinguish Democrats from Republicans is that Democrats are staunch defenders of Social Security and Medicare, while Republicans are eager to cut, privatize, and voucherize.
“So the good news is that the Democrats won the election and President Obama’s spine has been stiffened on the subject of taxes. The bad news is that the skids are greased for a budget deal that cuts more than necessary, risks putting the economy back into recession, and blurs differences between the parties on critical issues like Social Security and Medicare.
“If Obama will just realize it, he holds most of the cards. He prevailed in the election. Most voters agree that the rich should pay higher taxes. Most don’t want cuts in Medicare and Social Security. …
“But by all appearances, the eager-beaver bipartisan Obama that we saw in early 2009, (until he got his clock cleaned) is back. Despite his recent victory, if he is too eager to make a deal, he –and we — will get rolled.”