Tomorrow, I will consider the furore that has arisen in the last few days after the US Congressional Budget Office released its latest forecasts, which showed the US deficit will rise, and, because they still insist in matching the deficit with bond-issuance to feed the corporate welfare machine, public debt will also expand. With an on-going jobs gap and depressed labour force participation rate, the rising deficit if properly targetted would be desirable. The rising public debt is a negative but only as a result of its unnecessary corporate welfare dimension rather than any concerns about capacity to pay etc. But today, given it is Wednesday and a ‘blog light’ day for me now I have only one related observation to make, which will contextualise tomorrow’s more detailed discussion. For today though I am mostly engaged in revising the final manuscript of our new, upcoming Modern Monetary Theory (MMT) textbook after receiving edits from the publishers, Macmillan.
There is a need for a new political force in the US
The US Democratic Party has lost its right, in my view, to attract the progressive vote.
The CBO Report, which I will discuss in technical terms tomorrow, really just estimated that the latest policy shift under Trump will increase the US fiscal deficit and public debt ratio.
The main game should have been on debating whether the the composition of the US fiscal deficit was beneficial to all Americans or not, rather than running a hysterical political response about the need to cut deficits and stop the public debt sacrificing the prosperity of future generations.
It should also attack the public debt issuance in terms of its corporate welfare aspects and the fact that the US government spending is not reliant on raising revenue from either taxes or debt-issuance.
Unfortunately, the Democrat leadership do not seem to know any better than just mouthing the neoliberal refrain.
Here is the Democratic House leader Nancy Pelosi on the CBO statement (April 9, 2018) Source):
The CBO’s report exposes the staggering costs of the GOP tax scam and Republicans’ contempt for fiscal responsibility. In their craven haste to give corporations and the wealthiest 1 percent massive tax breaks, Republicans saddled our children and grandchildren with trillions of dollars of debt …
The American people cannot afford Republicans’ fiscal hypocrisy … Democrats will continue to fight for real action to create good-paying jobs, reduce the deficit and grow the economy for everyone …
And then there was the response from the Democrat Senate leader Chuck Schumer (April 9, 2018) (Source):
The CBO’s latest report exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself. From day one, the Republican agenda has always been to balloon the deficit in order to dole out massive tax breaks to the largest corporations and wealthiest Americans, and then use the deficit as an excuse to cut Social Security and Medicare.
No statement from either that the rising deficit is not the issue.
No statement that the increase in public debt does not burden future generations – au contraire – as in Pelosi’s fear mongering!
I consider the way in which the US Democratic Party leadership had lost the plot in this blog post – When neoliberals masquerade as progressives (November 9, 2017).
It is clear that the political arm of the Party, at least, is infested with neoliberal mantras, which only perpetuate everything they claim to oppose.
All this talk of “wealthiest 1 per cent” and “massive tax breaks to the largest corporations and wealthiest Americans”, the Democrats have been instrumental in ensuring policy is biased towards these groups.
To put a finer point on it, a month earlier (March 6, 2018), 17 of their Democrat colleagues in the US Senate, all of whom received substantial donations from the financial sector over the past five years, voted to pass the ” the Economic Growth, Regulatory Relief, and Consumer Protection Act” (Source) which was designed:
… to allow bankers to return to the same dangerous practices that gave us the economic recession in the first place. They are giving Wall Street the go-ahead to gamble with money that isn’t theirs. They are giving lenders more leeway to discriminate against black homeowners and other people of color.
It was reported that “Senate Minority Leader Chuck Schumer technically voted against the bill, he also did nothing to stop its progress”.
Back on January 10, 2008, Schumer did support the ‘Emergency Economic Stabilization Act of 2008’ which included George W. Bush’s massive bailout payments to the banksters – along the lines of the ‘privatise the returns, socialise the losses’ narrative that the neoliberal era has refined to an art form.
No Iceland solution was imposed – forcing the losses onto the banks’ shareholders. No, no-no.
A public bailout which saw the US government take bad assets off the banks. The Senate Democrats were up to their necks in supporting this bill.
Time for Bernie or someone to abandon this shell of a political party and break out with something new and credible.
I challenge all citizens in the US who identify both with being progressive and a Democrat supporter to break the link and abandon their affiliation to the Democratic Party.
I don’t believe one can be both.
Music I am listening to while working …
Albert King recorded it on his 1967 Stax album Born Under A Bad Sign, which is the version I have been listening to today.
It has all the great players on it – Steve Cropper, Booker T. Jones, Isaac Hayes, Donald Dunn, Al Jackson, Wayne Jackson, Andrew Love and Joe Arnold.
You cannot get a better band than that.
But the video to follow was from his 1977 double album Albert King Live which was recorded during his appearance on Wednesday, July 6, 1977 at the Montreux Jazz Festival.
Special guest player on this song is the incomparable Irish guitar player Rory Gallagher who drank himself to death at the age of 47. His playing is much missed.
His solo starts at 3:10 and is a great demonstration of how to play a Fender stratocaster.
Albert King’s solo is at the end – he played a Gibson Flying V.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.