Who's Afraid of Debt and Deficits?

We just posted material from the May/June, 2010 issue of Dollars & Sense, including Marty Wolfson’s article on myths of the deficit, and the table of contents of the issue. Enjoy!

Here’s the editorial note for the issue:


The Big Bad Deficit

Sarah Palin held a Tea Party on the Boston Common across from the Dollars &
Sense
office on April 14th, the day before Tax Day. As the local media noted, the
turnout was underwhelming, and many of those who showed up seemed to be
gawkers—Boston residents wondering who on earth these Tea Partiers are.

Tea Partiers are among those who are exercised about the federal deficit and
the national debt, but who exactly loses sleep over federal budget policy? In any
case, these folks don’t seem to care about many of the biggest contributors to debt
and deficit, like Bush’s tax cuts for the rich, or massive military spending (though the
Ron Paul fans among them may worry about the latter).

On the other hand, deficit hawks are good at exploiting the generalized anxiety
about the economy, telling stories about the big bad deficit that seem like common
sense but fall apart on closer inspection. Marty Wolfson (p. 7) dismantles two of the
key myths that lead people to suppose that it is more important for the government
to reduce the deficit now, rather than do what might actually alleviate people’s economic
woes, e.g. spending money to create jobs.

Outside of the United States, Greece has become the poster child for deficits and
debt run wild. Mike Epitropoulos (p. 9) helps untangle a situation in which ordinary people
are being asked to pay for the deeds of a corrupt public sector that has been unwilling
to tax the rich. And Arthur MacEwan (p. 31) explains the class politics behind the
pressure that “the bond market”” exerts on the government in Greece and elsewhere.

National debts and deficits are tied into the international trade system, and in particular
to a kind of deficit that we should be wary of. As Katherine Sciacchitano explains
(p. 13), the U.S. trade deficit sends dollars spewing out into the world economy
to return not as demand for U.S. products, but as fuel for stock market and housing
bubbles. Forging an alternative global system “will be the work of generations.”

Also in this issue: health care reform and redistribution, bankruptcy and impunity
at ASARCO, the true (military) costs of oil, and more!

And here’s info about a “Counter-Conference” and teach-in about “fiscal sustainability,” which is to counter this “Fiscal Summit” populated with deficit hawks. Hat-tip to LP for this.

A Teach-In Counter-Conference on Fiscal Sustainability
Submitted by joe on Wed, 2010-04-14 16:53

On April 28, 2010, the Peter G. Peterson Foundation is sponsoring a “Fiscal Summit” in Washington, DC. The purpose of the Conference, which is scheduled for the day after the first meeting of the President’s recently constituted National Commission on Fiscal Responsibility and Reform (By the way, where the Conference is happening is a mystery not cleared up on the PGPF web site), and which includes many notables, is:

“. . . to further a national dialogue on solving America’s fiscal challenges through several moderated discussions with leaders on the issue from across the political spectrum. . . .

Robert Kuttner’s comment on the Peterson-sponsored Conference is:

“This is billed as a ‘national dialogue on solving America’s fiscal challenges,’ but spare me. This is a propaganda event. For the most part, the featured speakers follow the Peterson line. John Podesta, the closest thing to a liberal playing a headliner role, accepts that there is a serious deficit problem, but would entertain a value-added tax as part of the remedy. But the speakers’ list is clearly stacked and there is no one to Podesta’s left.”

And for good measure, the left-right paradigm is not even very applicable here at all, because everyone listed In the PGPF’s announcement, whether “liberal” or conservative, shares the neo-liberal assumption that Government spending in the United States is operationally constrained by the ability to tax or to borrow money from non-Government sources. Given this false assumption, all the participants in this so-called “national dialogue” will share the assumption that fiscal sustainability has something to do with Government deficits, debts, and the ratio of debt held by the public to GDP. There will be disagreements among them about how long the Government has to bring deficits down over time, or to moderate the trend toward increasing debt, or about what a “responsible” ratio of debt held by the public to GDP ought to be. But none will entertain or discuss the idea that deficits, debts, and debt to GDP ratios are inappropriate tests of fiscal sustainability, irrelevant measures of the degree of fiscal challenges we face, and, in fact, nothing more than a by-product of the real fiscal challenges facing us, namely achieving renewed economic growth and full employment. So, this Conference will take “off the table” any ideas about what fiscal sustainability, that don’t center around a neo-liberal definition of this idea.

That’s just intolerable. What is badly needed is an immediate answer to the President’s Commission and the Peterson Conference. Our answer is entitled the Fiscal Sustainability Teach-In Counter-conference. We plan to hold it in Washington DC, on April 28, 2010, from 8:00 AM to 4 PM, at The Marvin Center of The George Washington University, Room 310, The Elliott Room and to make it a free event open to the public. Please get there early since the seating capacity of the room is 90.

The purpose of our conference and teach-in is to look at fiscal sustainability relative to public purpose, including full employment, and also to teach the new economic paradigm of Modern Monetary Theory (MMT) and its application to fiscal sustainability. We want to propagate an alternative message about what fiscal sustainability means, and to do that in the mainstream mass media, and in the blogosphere, on the same day as the Peterson Foundation Conference. Here is our tentative program schedule, topics and presenters as of 04/20/10.

Please make your plans to come to this Teach-In Counter-Conference. You will learn why the thinking and austerity posture of the deficit hawks is the single biggest threat to the American economy since the policies of Herbert Hoover himself, and why the new economic paradigm of Modern Monetary Theory provides a much better guide to our economic crisis than the “seven deadly innocent frauds,” (the frauds themselves, not the linked book which is, itself an introduction to MMT) and other neo-liberal economic myths.

For more information, click here.

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