Obama’s Elephant
All that undeniable truth, all that heart, all that wisdom, all that sheer rightness, yet not a direct word in the President’s eloquent acceptance speech about the undeniable reality that, even if he wins reelection, can make it all irrelevant.
In a political climate where the bottom-line truth can’t be spoken, both the President and Joe Biden barely sideswipe it. They speak passionately, the crowd cheers, but nobody acknowledges the elephant in the room:
Even if they are reelected, unless November ballots also wrest control of Congress from a treasonous Tea Party, all their sane rhetoric will change nothing.
Obama and Biden are only nominally running against Romney-Ryan. The true opposition are Boehner-McConnell and the minority of zealots who hold them—-and the nation—-hostage in both houses.
As if to underscore that essential truth, the day also brings excerpts from Bob Woodward’s new book about last year’s debt ceiling debacle, a needless crisis manufactured by Tea Party willingness to decimate the nation’s credit rating to score political points.
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The fact the Tea Party wasn’t run out of town on a rail last year when they held the utterly absurd tantrum of debt ceiling garbage that ACTUALLY DOWNGRADED AMERICA’S CREDIT RATING is yet another thing that I will not get. I can only assume that most of this country mistakenly thinks that the debt ceiling vote is actually about deciding what to spend and not what it really is, a mere procedural issue of paying for what we have already spent. Otherwise I’m sure there would have been riots over the utter political malpractice of screwing our national credit rating over what amounts to Tea Party people refusing to sign the check after the waiter drops it on the table.
This article is dead on. We need to kick the ignorant children out of the House before we can put it back in order.
The big problem with economy today is lack of demand. We are suffering from the over-spending people did a few years ago based on rising real estate values. When the bubble burst people suddenly realized they weren’t as rich as they thought and that things they bought on credit like houses were now worth less than they owe. People hunkered down and quit spending and started paying down their balances.
If you believe this is correct than we have big economic problems regardless of who is elected. With Romney we will get spending cuts and big tax cuts which will do only two things, reduce demand further(thereby weakening the economy further) and increase the deficit. If Obama is elected (unless there is a big change willingness of Congress to reach a compromise-doubtful)we will go off the fiscal cliff at the end of the year, with mandatory spending cuts and tax increases and probably return again to recession in 2013.
The debts will eventually be paid down and people will eventually start spending again, but this is going to take more time. Unfortunately I haven’t heard this real reason for our economic troubles discussed honestly by either party. I guess its just not feasible politically to tell people the real truth and admit there’s not that much that can really be done in the short term.
With China slowing and Europe already in deep trouble we could be in for a very trying time in 2013.
The fact that congress is still held hostage by the GOP/TP speaks to a learning disabled electorate.
“Treasonous” IS the correct word in this context.
“If Obama is elected (unless there is a big change willingness of Congress to reach a compromise-doubtful)we will go off the fiscal cliff at the end of the year, with mandatory spending cuts and tax increases and probably return again to recession in 2013.”
I disagree with that. Historically when taxes are raised, the recession goes away. Despite the fact that people will make less, the tend to spend more then. Progressive taxation rebalances the flow of money, keeping more at the mid and low levels. When a greater percentage of the overall economy resides in the hands of the consumer class, demand rises.
Demand sucks now because in addition to the bush tax cuts sinking more money into the top tier “non-consumer” class, median wages have stagnated in spite of claims by conservatives that if “job creators” have more money it will benefit us all. Instead of that happening the top tier have simply been holding onto the money, not reinvesting, not raising wages. Take Walmart. Their profits have been doing very well. Does that translate into higher wages or better working conditions for their employees? Nope. And that has been the case all around the country. As has been quoted here before, Henry Ford wanted his people to be paid enough to buy his own cars. That was a good philosophy, and builds a strong consumer class. Today’s “job creators” think the other way. Hold onto everything, cut corners, screw the little guy.
Slamfu, can’t say I agree with your argument. If taxes are increased people have less money to spend, can’t see how we get more demand from that. The only way this could work is if the added taxes are spend by the government to offset private demand, but this won’t happen as spending is suppose to be cut as well. Remember, this is the only recession I am aware of caused by a credit/real estate bubble. The remedies for past recessions may not be as relevant.
Will, let me ask you something. Why don’t you agree? Historically there is some pretty solid evidence to back up what I’m saying. The math supports it was as well. Is it because of the “credit/real estate bubble” that makes this different? What evidence would convince you? I’m not being sarcastic here, I will do some research and see if any of my assumptions are off, but I would like you to point me in the right direction by stating explicitly why you think this isn’t the solution. I want to see if I can come up with an argument that doesn’t just rattle around my own echo chamber, but can actually change someone’s mind.
Oh and for the record, I have written down the first issue you:
1) People will have less money to spend, so they will buy less. Any others would be helpful.
Slamfu, perhaps you are correct that tax increases make recessions go away, I haven’t seen this research. In any event this is probably a too lengthy and complex an issue for discussion in a comments section.
According to most modern economic theories, spending by the government during a recession helps. The reason is that all other sources of increased demand are gone. Meanwhile, the net increase in spending is what would matter (i.e. deficit spending).
This is how it goes: during good times, a country increases its tax levels (not the other way around) as taxing the populace will help to curb inflation. Tax money is money taken out of the economy. During bad economic times, the government needs to spend more money into existence (i.e. borrow–in our case, although the borrowing part is actually not needed). This spending puts money into circulation, which, in turn, allows people to spend more.
When the perceived quantity of money/assets crashed (i.e. the housing bubble burst), the economy reacted as if we lost somewhere in the order of $12 – $20 trillion. That amount of money is kind of hard to replace. People are STILL deleveraging (paying off debts), so business has no incentive to increase productive capacity (they won’t have more customers).
There are four sources of demand
1) Government (federal, state and local, however only federal can create the money with which it purchases, the others are dependent on revenue).
2) Consumers
3) Manufacturers (i.e. business–but only counts for increasing productive capacity)
4) Exports (people outside the country, whomever they may be)
When 2, 3, and 4 can not or will not increase spending, then 1a is the stimulater of last resort.