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Paul Krugman writes about the politicizing of federal budget deficits in today’s column:

To me — and I’m not alone in this — the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war.  Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt.  Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency.  Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.

And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction.

This is the year that the Bush tax cuts expire, so the Republicans will use their scare tactics to convince people that raising taxes on the rich is the wrong thing to do, and they’ll probably even argue that we should lower the tax rates to stimulate economic growth, because everybody knows that more money in the pockets of billionaires creates jobs, right?  WRONG!

Obama has been making a point of placing blame for the deficit spending where it belongs – with the Republicans – and he has been pretty vocal about how their tax-cutting schemes have not worked in the past.  He has pointed out that they are the party that reduced federal revenue by trillions of dollars by cutting taxes for the super rich, and they are the party that handed a blank check to Bush for the funding two very long wars.  Obama should keep hammering on the Republicans about the deficit they created and he should be very firm with Reid and Pelosi about not extending the Bush tax cuts for the rich.

The Democrats in Congress should not be pressured by the deficit hysteria Krugman writes about.  Now is not the time to cut funding for government programs that are essential to stimulating the economy and getting us out of this recession.

Like Mr. Barnes, was sying, people don’t know what’s in the healthcare bill – they just know it’s “socialist” and it must be bad, ’cause they heard about it on the most watched noise network, FOX. 

Krugman tell it to his face:

President Obama must have read Paul Krugman’s January 18th column in which he wrote about how “Reagan spent his first few years in office continuing to run against Jimmy Carter,” which led into:

Mr. Obama could have done the same — with, I’d argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America’s economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration’s refusal to regulate the banks.

But he didn’t. Maybe he still dreams of bridging the partisan divide; maybe he fears the ire of pundits who consider blaming your predecessor for current problems uncouth — if you’re a Democrat. (It’s O.K. if you’re a Republican.) Whatever the reason, Mr. Obama has allowed the public to forget, with remarkable speed, that the economy’s troubles didn’t start on his watch.

Obama got the message:

Now, even as health care reform would reduce our deficit, it’s not enough to dig us out of a massive fiscal hole in which we find ourselves. It’s a challenge that makes all others that much harder to solve, and one that’s been subject to a lot of political posturing. So let me start the discussion of government spending by setting the record straight.

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door.

Now — just stating the facts. Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis. And our efforts to prevent a second depression have added another $1 trillion to our national debt. That, too, is a fact.

That’s a fact he needs to wield as a hammer far more often than he did during his first year in office.

From today’s column, “The Big Zero:”

What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.

Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing.  Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand.  Even after triggering a global economic collapse, and having to be rescued at taxpayers’ expense, bankers wasted no time going right back to the culture of giant bonuses and excessive leverage.

Then there are the politicians.  Even now, it’s hard to get Democrats, President Obama included, to deliver a full-throated critique of the practices that got us into the mess we’re in.  And as for the Republicans: now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is — tax cuts and deregulation.

So let’s bid a not at all fond farewell to the Big Zero — the decade in which we achieved nothing and learned nothing. Will the next decade be better?  Stay tuned. Oh, and happy New Year.

Can’t get any worse, can it?

And that’s a good thing, says Paul Krugman, because without government involvement the U.S. healthcare system would be way worse than it is now. 

Excerpts from “Health Care Realities:”

It’s not just that many Americans don’t understand what President Obama is proposing; many people don’t understand the way American health care works right now. They don’t understand, in particular, that getting the government involved in health care wouldn’t be a radical step: the government is already deeply involved, even in private insurance.

And that government involvement is the only reason our system works at all.

..

Still, most Americans do have health insurance, and are reasonably satisfied with it. How is that possible, when insurance markets work so badly? The answer is government intervention.

Most obviously, the government directly provides insurance via Medicare and other programs. Before Medicare was established, more than 40 percent of elderly Americans lacked any kind of health insurance. Today, Medicare — which is, by the way, one of those “single payer” systems conservatives love to demonize — covers everyone 65 and older. And surveys show that Medicare recipients are much more satisfied with their coverage than Americans with private insurance.

Still, most Americans under 65 do have some form of private insurance. The vast majority, however, don’t buy it directly: they get it through their employers. There’s a big tax advantage to doing it that way, since employer contributions to health care aren’t considered taxable income. But to get that tax advantage employers have to follow a number of rules; roughly speaking, they can’t discriminate based on pre-existing medical conditions or restrict benefits to highly paid employees.

And it’s thanks to these rules that employment-based insurance more or less works, at least in the sense that horror stories are a lot less common than they are in the individual insurance market.

This is no surprise to anyone at all familiar with the business, because it’s a business and and insurance companies exist not to take care of everyone, but to make a profit.  Sick people are not profitable.

Well as long as we’ve got Paul Krugman up on the site, let’s talk about today’s column titled “The Joy of Sachs.” Paul’s always been good at puns, but he’s best at clearly describing what’s going on in our economy, how it affects us, and what needs to be changed.

Krugman’s column is about how and why Goldman Sachs is making billions again and is about to reward its employees with huge bonuses.  How can this be?  We haven’t even seen the worst of this recession yet. How can they possibly be making so much money again?  Paul gives you three reasons:

1.  They are really good at what they do – making money out of nothing.

2.  The compensation system for financial “wizards” hasn’t gone away.

3.  Government hasn’t yet done anything to protect us from another crisis.

Krugman writes:

Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls.  They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.

Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype.  Other banks invested heavily in the same toxic waste they were selling to the public at large.  Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed.  All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers.

And Wall Streeters have every incentive to keep playing that kind of game.

…

Now the last time there was a comparable expansion of the financial safety net, the creation of federal deposit insurance in the 1930s, it was accompanied by much tighter regulation, to ensure that banks didn’t abuse their privileges.  This time, new regulations are still in the drawing-board stage — and the finance lobby is already fighting against even the most basic protections for consumers.

Who do you think will win the battle? I’m betting on the greedheads.  They always win, and everybody else loses.

The only way they don’t win is with tight government regulations that make the “perfectly legal” things they do now – making money off the lies they tell us - a felony, and then the greedy bastards get prosecuted, their assets get forfeited, and they get thrown in jail.

Things are getting worse more slowly.

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Let me say something postitive.  We do actually have people in the white House who understand the stuff.  I think they’re not forceful enough, but they’re not stupid people.  They’re not crazy people… they understand what the problems are… which is a big improvement on previous management.

Paul Krugman wrote about right-wing, hate-filled extremists in his column “The Big Hate” for The New York Times today.  In it he references a report released by the Office of Intelligence and Analysis, an office of the Department of Homeland Security, that was released last April.

Here are three key points from the report titled, Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment:

Threats from white supremacist and violent antigovernment groups during 2009 have been largely rhetorical and have not indicated plans to carry out violent acts. Nevertheless, the consequences of a prolonged economic downturn-including real estate foreclosures, unemployment, and an inability to obtain credit-could create a fertile recruiting environment for rightwing extremists and even result in confrontations between such groups and government authorities similar to those in the past.

Rightwing extremists have capitalized on the election of the first African American president, and are focusing their efforts to recruit new members, mobilize existing supporters, and broaden their scope and appeal through propaganda, but they have not yet turned to attack planning.

Proposed imposition of firearms restrictions and weapons bans likely would attract new members into the ranks of rightwing extremist groups, as well as potentially spur some of them to begin planning and training for violence against the government. The high volume of purchases and stockpiling of weapons and ammunition by rightwing extremists in anticipation of restrictions and bans in some parts of the country continue to be a primary concern to law enforcement.

And here are excerpts from Krugman’s column:

There is, however, one important thing that the D.H.S. report didn’t say: Today, as in the early years of the Clinton administration but to an even greater extent, right-wing extremism is being systematically fed by the conservative media and political establishment.

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And at this point, whatever dividing line there was between mainstream conservatism and the black-helicopter crowd seems to have been virtually erased.

Exhibit A for the mainstreaming of right-wing extremism is Fox News’s new star, Glenn Beck. Here we have a network where, like it or not, millions of Americans get their news – and it gives daily airtime to a commentator who, among other things, warned viewers that the Federal Emergency Management Agency might be building concentration camps as part of the Obama administration’s “totalitarian” agenda (although he eventually conceded that nothing of the kind was happening).

…

What will the consequences be? Nobody knows, of course, although the analysts at Homeland Security fretted that things may turn out even worse than in the 1990s – that thanks, in part, to the election of an African-American president, “the threat posed by lone wolves and small terrorist cells is more pronounced than in past years.”

He also commented on an opinion piece for The Washington Times, the bile spewing out of the Republican Party’s main mouthpiece – Rush Limbaugh, and the recent remarks by a new member (new to me anyway) of the lunatic fringe – Jon Voight.

So all you liberals out there, I guess this is really just a warning to watch your back.  You never know who might show up at your next MoveOn.org meeting, environmental group meeting, ACLU function, or even you local library for that matter.

Yesterday Arlen Specter announced that he was leaving the Republican Party to join the Democrats with whom he now finds himself more philosophically aligned.  Specter’s statement included:

While I have been comfortable being a Republican, my Party has not defined who I am. I have taken each issue one at a time and have exercised independent judgment to do what I thought was best for Pennsylvania and the nation.

Since my election in 1980, as part of the Reagan Big Tent, the Republican Party has moved far to the right. Last year, more than 200,000 Republicans in Pennsylvania changed their registration to become Democrats. I now find my political philosophy more in line with Democrats than Republicans.

I’ve always thought that Specter, like Lincoln Chafee and Olympia Snowe, were GOOD members of the Republican Party because they provided it with some much needed moderate views.  But as many people have pointed out, there is no room for moderates under the shrinking tent that covers the Rightwingoverse.  Specter saw what happened to Chafee, so he defected to save his Senate seat that he would otherwise first lose to Patrick Toomey, a hard-right Republican challenger, who would in turn lose to the Democratic candidate in 2010. 

Olympia Snowe used a very effective quote from Reagan in her column for the New York Times to explain why the party’s hard line on moderates is a going to make them irrelevant.

When Senator Jeffords became an independent in 2001, I said it was a sad day for the Republicans, but it would be even sadder if we failed to confront and learn from the devaluation of diversity within the party that contributed to his defection. I also noted that we were far from the heady days of 1998, when Republicans were envisioning the possibility of a filibuster-proof 60-vote margin. (Recall that in the 2000 election, most pundits were shocked when Republicans lost five seats, resulting in a 50-50 Senate.)

I could have hardly imagined then that, in 2009, we would fondly reminisce about the time when we were disappointed to fall short of 60 votes in the Senate. Regrettably, we failed to learn the lessons of Jim Jeffords’s defection in 2001. To the contrary, we overreached in interpreting the results of the presidential election of 2004 as a mandate for the party. This resulted in the disastrous elections of 2006 and 2008, which combined for a total loss of 51 Republicans in the House and 13 in the Senate — with a corresponding shift of the Congressional majority and the White House to the Democrats.

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I have said that, without question, we cannot prevail as a party without conservatives. But it is equally certain we cannot prevail in the future without moderates.

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Reagan said:  “We should emphasize the things that unite us and make these the only ‘litmus test’ of what constitutes a Republican: our belief in restraining government spending, pro-growth policies, tax reduction, sound national defense, and maximum individual liberty.” He continued, “As to the other issues that draw on the deep springs of morality and emotion, let us decide that we can disagree among ourselves as Republicans and tolerate the disagreement.”

As much as Republicans have worshipped at the altar of Ronald Reagan over the past eight to ten years, you’d think they’d latch on to the key to his strategy that grew their party and gave them power for many years – Tolerance.  I guess today’s Republicans can’t accept any gray in their black-and-white world.

For now, I think that’s a good thing.  As soon as Norm Coleman does the right thing and concedes to Al Franken, the Democrats will have a filibuster proof majority and might be able to push a few important items through congress.  However, since their party is far more tolerant and can accept shades of gray under its tent, I doubt they will be able to garner very many filibuster-proof majorities.

Paul Krugman wrote on his blog about what Specter’s defection means:

… we have a party that seems to be in a death spiral: the smaller it gets, the more it’s dominated by the hard right, which makes it even smaller. In the long run, this is not good for American democracy– we really do need two major parties in competition.  But I’ll settle for getting that back after we get universal health care and cap-and-trade.

Those are both difficult bills to get through Congress without filibuster proof majorities.  I do hope we see both of them enacted during Obama’s first term though.

It’s been a very busy week (that job thing again…) so I have not had much time to write much about anything, but I have been able to read and watch a few things that are of interest, so here’s a quick review with links so you can learn more.

Obama promised transparency but, as Glenn Greenwald reports, his Justice Department is taking the exact same stance towards the Executive Branch’s power to tap our phones and read our emails without warrants as Bush did.  I consider this a MAJOR breach of trust.  We should all be as outraged as Keith Olbermann.  You can go here to tell Obama what you think of his stance on this issue.

Jon Stewart explains to conservatives that they lost, and that yes… “it’s supposed to taste like a shit taco.”

He bowed.  Stupid mistake.  What should we do?   Impeach him for breach of protocol?  If our previous president was held to account for such minor lapses, he wouldn’t have lasted a week in office.  Whenever Bush did something stooooopid, his supporters just laughed it off with a “Ha ha ha!  Isn’t that charming?”  Now the Obama haters, the worshippers of Bush, blab for hours on 24-hour news channels about an Obama goof-up that doesn’t warrant more of a comment than “he really shouldn’t have done that.  I’m sure he’ll hear about it from his staff and not do it again.”   (I am looking forward to Jon Stewart’s coverage of it.  It will be funny, and I’ll bet he’ll be done in one minute or less.) 

Glenn Beck is batshit crazy.

Krugman says banking SHOULD be boring. It works better that way.

That’s all…