Economic Recovery

Some comments about the slow economic recovery:

• The median wage in the US is stagnant.  If this does not improve, recovery will take longer as there will be no growth in demand for goods and services.  "Trickle down" economics, which promotes tax breaks for the wealthy and corporations and which was rightly called "voodoo economics" by none other than Bush Sr. back before he became Reagan's running mate, has not worked in the 30 or so misguided years that it's been promoted by conservative economists.
• The UK, hit by PM Cameron's conservative austerity program that cut social program funding, has experienced ZERO growth over the last 6 months.  This should be a cautionary tale for those US conservatives who focus on spending cuts at the expense of job-creation and would damage the social safety net to maintain tax breaks for the wealthiest Americans.
• If the jobless rate doesn't improve and Obama continues to swallow the nonsense that the 2010 electoral losses were related to "too much spending and the deficit", he will lose his base and the 2012 election.  The turnout in first-time voters, the young, the poor, and minorities were the difference between the results in 2008 and 2010.  Unemployment of African-Americans in cities are double-digit, depression era figures.  Hard to get enthusiastic about voting when you don't have a job.  The Republicans can run Mickey Mouse in 2012.  They would easily win the election because you know that they will be firing up their base - not appealing to alleged "center".

NYTimes Deficit Reduction Puzzle

The puzzle has somewhat limited choices but provides an interesting way to look at the deficit: NYTimes "You Fix the Deficit" Puzzle

Here is a link to my solution based on those limited choices.  It derives 66% from tax increases, 34% from spending cuts.

If anyone wants to take a shot at it, you can post your solution to the puzzle in the comments section.

Challenges

The Republicans were able to extract most, but not all, of their Draconian cuts to the social safety net but the government stayed in business.  Now that it can continue to run until September, what's next?

Long-term, there are five key challenges for progressives. We have been remarkably inept recently in framing the political debate.  Unless we get better at it, future generations will suffer badly.   The major challenges that we need to address and develop policies for are:

• Revising the nation's "permanent state-of-war" mind set where the accepted first response to any international crisis is a military one.   The neo-cons, with their false "war" against terror and their misguided wars in Iraq and Afghanistan, have foisted this mind set on an American public, which has been primed for decades to ignore President Eisenhower's 50 year-old warning against the military-industrial complex.  The cost in blood and money and the USA's role as a global leader has been staggering.
• Developing a long-range plan as well as immediate actions to remedy the coming environmental crisis caused by human-induced global warming.  The lag in the environment is such that we cannot hope to reverse the effects of 150 years of carbon-based industrial development in a few decades.  Besides conservation and alternate energy sources, engineering solutions must be developed to mitigate the serious damage that will occur within the next 50 years especially to coastal regions.  The ongoing nuclear power plant crisis in Japan (today Japan raised its alert level to the highest available) reminds us that there is no easy answer to our energy needs.
• Addressing the US deficit in a way that does not destroy the social safety net (e.g.  Social Security, Medicaid, Medicare) and does not throw the ongoing recovery into reverse (e.g., if the debt ceiling is not raised).   The poor and the elderly should not be the ones to shoulder the burden of balancing the budget.  Some balancing will occur naturally (and slowly) as tax revenues increase with (slowly) increasing employment during the economic recovery.  Cuts in military spending, revisions of the tax code to close corporate tax loopholes, higher taxation of the super-wealthy, and reforms to the health care systems will all be necessary.  On health care reform, serious consideration needs to be given to taking the profit out of the health care delivery system.  A single-payer system would go a long way in this regard.
• Developing a plan for full-employment with a livable minimum wage.  Until a long-range plan can be developed and implemented, the government may need to become the employer of last resort.  Infrastructure projects, sustainable/non-CO2-producing energy, and a tiered expertise system of medical care delivery combined with extensive job-training programs to accomplish this would be a good start.
• Provide leadership and expertise to solve global food distribution problems and to ensure clean water supply throughout the world.  This is essential to combat hunger and disease and help maintain political stability.  The world is so interconnected that problems in the developing South will affect the developed North.  A pro-active, internationalist attitude must replace a nationalist/isolationist one. 

Back from Hawaii

Back from our Hawaiian vacation Saturday night.  What a relief not to have had to listen to the babblings of the House Republicans and their threats to shutdown the government (and then blame it on the Democrats) if their job-destroying budget cuts are not accepted.  They are betting that a government shutdown will be welcomed by the voters because of their proposed cuts.  Guess what?  Cutting spending during a period of high unemployment hasn't work in the European countries that tried it recently (Ireland, Great Britain, and Portugal).  Paul Krugman had an excellent op-ed piece explaining why this is so. 

The Republican budget proposal has been estimated to destroy 700,000 jobs.  Boehner just doesn't get it - insisting that budget cuts in times of high unemployment will create jobs...welcome back to loony-land.