Krugman's view of Obama's plan

    By Flavius on Thu, 04/14/2011 - 9:09am |
    He laterals to Bob Greenstein who doesn't reject it per se but objects to it as the starting point for a long process

    Bob Greenstein   ..........finds the Obama plan still too weighted to spending cuts and with not enough revenue increases — and I will abide by his judgment:

    ......... an important step forward in the debate. But ............. this plan is a rather conservative one, significantly to the right of the Rivlin-Domenici plan. While we worry about some particular elements of the President’s plan, we worry much more that the deficit-reduction process that’s now starting could produce an outcome ......... well to the right

     

    ......... much better than some of the ..... trial balloons; it’s a plan that we could live with. But ...............if it’s the starting point for negotiations that move the solution toward lower taxes for the rich and even harsher cuts for the poor, just say no.

     

    Comments

    For my sins I've had jobs that required a lot of bargaining. The Flavius theory of bargaining is you'll always have to give up something and your opening bid  should take that into account- leave you with something you can give up to close the deal.

     But never cut twice. If you do, you're going to cut twemty times or more likely not do the deal. The second cut ,rightly or wrongly, is taken by the other side as a signal that there's a third and  fourth cut available. And and and. 

    I'm hoping Obama's following the Flavius doctrine. That what he opens with yesterday is pretty close to his bottom line.If so, I'm fine with it.

    We'll see..

     


    by Flavius on Thu, 04/14/2011 - 9:58am

    The problem with this game's setup is that Obama wants a deal, any deal, more than he wants any particular deal. He sees himself as the coordinator of a consensus-based legislative approach. So if there are 60 senators in favor of something to the right of Bowles-Simpson, I bet he'd take that deal, and celebrate it in the name of bipartisanship. On the other hand the GOP wants their deal more than they care about having any deal at all. Having no deal and creating a debt crisis by not raising the debt ceiling (the CDS markets will go nuts) just strengthens their hand as bond rates and the cost of US debt rises.

    The democrats have boxed themselves into a corner by not raising the debt ceiling themselves last year. And that was a choice - to hand the GOP the debt-ceiling issue as a part of some convoluted 5-dimensional chess strategy.

    Dumb move, and now there is no one to defend the progressive cause. There is only one self-described progressive in the Senate - Sanders. And no progressive with any clout in the administration - they're all clintonistas who think this is 1994. It is going to require a popular movement against any deal, and that is going to be hard as it is likely to happen behind closed doors.

    Don't see how this turns out well...


    by Obey on Thu, 04/14/2011 - 11:22am

    It seems to have taken Krugman only half a day to nod to Greenstein's take, oh well.

    Obama is in full re-election mode, so it is a campaign speech above all, IMO.  And he was given by the flaming right-winger a gift on a platter: a budget so radical that a full-throated attack on it made Obama look almost Liberal.  Makes even Simpson-Bowles look almost centrist!

    So if Plouffe and Obama know that the Democratic base has no place to go, and the Progressives or whatever are grumbling, PLUS he is wooing Independents, center-right economic policy works for him.  And again, Dems have gotten great at this triangulation as cover for preserving the status-quo; and how much more status-quo has Obama been on economics, war, and security state?  Goldman Sucks pretty much owns his White House.

    Man, are we idiots allowing this.  No--check that---cheering a speech like that. 

     


    by we are stardust on Thu, 04/14/2011 - 11:54am

    Don't cry before you feel the force of the blow.

    In statistical terms you're both extrapolating beyond the range of the data.

    We know how Obama acts when dealing with legislation requiring 60 senate votes when he only had 58. We can't assume that's  how he's now acting  when issuing one of the main planks of an election platform 

    He could have announced a bad plank.and if so he should have been criticized for it. Instead he issued a plank that Greenstein says we could live with.

    When he does the wrong thing we should criticize it. When he does the right thing there ought to be some difference in how we react.

     

     


    by Flavius on Thu, 04/14/2011 - 12:11pm

    Cry       Cry      Cry

    Okay, but I have some concerns.  One is the framing of the dire need for reducing the debt now, and this:

    "Then, as the Baby Boomers start to retire and health care costs continue to rise, the situation will get even worse.  By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs, Social Security, and the interest we owe on our debt.  That's it.  Every other national priority – education, transportation, even national security – will have to be paid for with borrowed money." 

    He implies that SS comes out of the general fund, and though some say maybe it should, it doesn't.  He doesn't say a peep about WHY the projections looks so bleak, IMO, because he already told us he doesn't want to address what 'some' in his party think about these austerity measures (assumedly as opposed to stimulating jobs, which would put more money into the general fund AND into SS, making it more solvent.

    In another paragraph, he makes borrowing money from CHINA a big EEEK! (it's a popular bogey-man) and how borrowing more *might* make businesses invest less, yada, yada, and everyone knows that banks are very happy not loaning to businesses, especially small and start-up ones because they can borrow boatloads of money from the discount window and rent-seek with it.

    I asked for citations, but a diarist at fld said today that Obama's reversing Bush's Wildnerness-Fucking (one great thing he did) was just reversed again in the present budget deal, which just passed the house with a mess of Democratic votes.  And that he agreed to cut 900-some thousand bucks out of clean air and water monitoring.

    But I really went looking for ONE qualifying word I thought I'd heard about Social Security.  Check me out on this.  (The transcript was written as I' thought.)

    "That includes, by the way, our commitment to Social Security.  While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that is growing older.  As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations.  But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market."

    'Putting at risk CURRENT RETIREES'.

    Now I admit that watching Inside Job made me furious with him all over again, but these things signal to me that he is ready, willing and fine with being the Third Point in the Triangulation Express.  Yeah; simmer down...we'll see at the end of June...


    by we are stardust on Thu, 04/14/2011 - 5:17pm

    Look, Genesis tells us that following the Great Flood, men would only live 120 years.

    As a matter of fact, the Egyptians felt that reaching 120 was the supreme example of a perfect life.

    So we take our cues from sacred scripts and make 90 years of age the perfect age for retirement! And that would be the mandated age for retirement immediately.

    That leaves the retiree 30 full years of basking in the sun and sand of Miami without a care in the world!

    That small change in our Social Security System would pay our entire debt in five or six years or cut the taxes for those making a million bucks or more down to 10%.

    We could call the entire bill a stab at tithing.

    the end


    by Richard Day on Fri, 04/15/2011 - 12:35am

    Krugman was on the News Hour last night defending the plan

    It seems to me there are two subjects. One is the opinion we've formed about Obama over his two years in office. The other is this plan.


    by Flavius on Fri, 04/15/2011 - 8:42am

    As far as I'm concerned, Obama shouldn't give into any more budgets cuts of public services until the GOPer's first address how they plan to settle once and for all how the Bu$h tax cuts, both Afgan and Iraq wars and the Medicare subscription plan will be paid for. He needs to publicly remind them they were running the place when all those budget busters were passed and are currently the bulk of the lion's share of the deficit they're complaining so loudly about...their own mistakes and he should be quite vocal about placing the blame squarely on their shoulders where it belongs. He needs to direct them to develop a plan that address all those minor legislative mistakes they made back between 200 ad 2006 before he gives them single penny more in budget cuts they're demanding.


    by Beetlejuice on Fri, 04/15/2011 - 8:43am

    I just read a profile of Peter Orszag which reports that his NYT op-ed on extending the Bush tax cuts really threw the Obama administration for a loop on the negotiations on that front. I have copied the pertinent excerpt below. From

    Revolver. (Why do some of the most capable public servants in America, people like economist Peter Orszag, keep circling back from Washington to Wall Street? One guess)
    By Gabriel Sherman, New York Magazine, 4/18/11 issue:

    Not long after leaving the Obama administration, Orszag received an e-mail from David Shipley, then the New York Times’ deputy opinion editor. “We’d ­really like to get you involved, can I come see you?” he wrote.

    Shipley’s offer of a semi-regular economics column intrigued him. For Orszag, writing was something that came naturally. Joseph Stiglitz recalled how he had often assigned Orszag, when he was a 25-year-old member of his staff on the Council of Economic Advisers, to write weekly economics briefings for President Clinton. “Peter is one of the people who can write well,” Stiglitz told me.

    A few days later, Orszag and Shipley met, and Orszag agreed to sign on as a columnist. Orszag told Shipley that he wanted to write his debut column about the debate raging in Washington over whether to extend the Bush tax cuts. Congress was preparing to return from recess to vote on the issue. Obama was in full campaign mode, aggressively stumping to let the tax cuts for families earning more than $250,000 per year expire while upholding his signature campaign pledge of preserving the middle-class tax cuts. Orszag argued that Obama should accept a temporary extension of all the Bush tax cuts, then let all of them expire in 2013, including those to the middle class. Orszag’s plan made a certain amount of economic sense from a deficit-hawk perspective—keep the money pumping through the system at the depths of the recession, and then, when things got better, focus like a laser on the deficit. But Obama’s political advisers, as well as Summers, thought it politically daft, seeing as Obama had promised to make the middle-class tax cuts permanent, and also suspected that the Republicans would renege on any such deal about the tax cuts, leaving the Obamans with nothing for their concession. Orszag now says his views on taxes and the deficit were one of the factors that made him decide to leave. “I didn’t think I could be an effective advocate for the administration on making the tax cuts permanent, and I didn’t want to be in office when that happened,” he told me.

    The column appeared on September 7, 2010. “The debate was approaching, and I felt like I would regret not speaking out,” Orszag said.

    Not surprisingly, the White House was outraged by the op-ed’s timing and content. Orszag’s column provided powerful ammunition to Republicans who were winning with the argument that repealing the Bush tax cuts during the flagging recovery would be bad news. The press seized on the op-ed as evidence that Obama’s brain trust was split on the issue. At a briefing that morning, reporters grilled press secretary Robert Gibbs about Orszag’s column. In private, Rahm Emanuel was upset Orszag hadn’t told him the column was being published. Orszag e-mailed Emanuel to refute the claim he hadn’t alerted anyone in the administration. When I ask Orszag about the op-ed dustup, he told me: “I provided a very senior official in the White House with a very specific heads-up.”

    Orszag’s move to Citi not long after the op-ed controversy created more political baggage for the White House....

    For me, it puts a different perspective than the argument I often read in the liberal blogosphere about him not knowing how to start up negotitations by starting further left than he's willing to go. It's more like not having tip top control of team and messaging. That he likes to have a "team of rivals" as advisors, but then he doesn't have enough control over them reflecting on the administration. (Even with someone leaving office, like Orsaz, there are ways to do that.)

    I recommend the whole article. The lede in the title isn't very accurate; there's a lot of good nuanced info. on Orszag and the circle of Rubin, Summers, Stiglitz. Lot of good info. on Rubin.


    by artappraiser on Fri, 04/15/2011 - 12:34pm

    Orszag's demeaned himself with that Oped.. Rather than being an exceptional human being he was revealed as yet another boring example of the standard issue technocratic giant/moral midget. Think; Werner VonBraun,Douglas McCarthur

    Most bright 13 year olds could tell you that if the President admits you to his inner circle accepting the job is your implicit acknowledgement that when your eventual departure comes you'll shut up for a a decent interval. If you're a decent person.

    In 1933 FDR recruited  Dean Acheson as Deputy Secretary of Treasury. Acheson sailing through the appointment process wth  jokes about his complete lack of qualifications. Soon the joke was on him since the Secretary became ill and Acheson ran the Treasury while FDR tried to resuscitate the economy. 

    FDR tried devaluation which  Acheson publicly opposed on moral grounds- believing that this was essentially robbing the holders of US bonds. One morning he was surprised when he  opened his paper to read that he had "resigned". FDR had selected a more amenable replacement  without having Acheson notified.  

    Two days later when FDR opened his paper he was surprised.when the front page photo of the signing in of the new Secretary included  the unmistakable Acheson -bowler hat, enormous mustache ",6 feet 6", prominently -beaming approval.

    A couple of years later when  FDR fired another senior official the same way:annoucing his replacement without bothering to  notify him ,he  went public with bitter complaints. FDR remarked, I think to Ickes, "someone should tell Charlie to talk to Acheson and learn  how a gentleman goes about leaving an administration." .

    Not the same thing of course. But you get the ida

     

     


    by Flavius on Fri, 04/15/2011 - 11:08pm

    Interesting. Thanks.This bit confirmed the stuff Summers has been saying recently claiming he was on the right side of the deficit-reduction vs stimulus framing argument inside the administration.

    All this public attention gave Orszag juice: He transformed the wonky Office of Management and Budget into a power center on the West Wing’s fiercely competitive economics team. He plunged into the intense debates over the $800 billion stimulus and was also a major player in the health-care fight. Orszag was a deficit hawk and clashed with Larry Summers, who wasn’t as focused on the long-term debt crisis. Orszag argued that some of the biggest things the White House could do to tame the deficit were to tackle health care and repeal all of the Bush tax cuts. True to his Rubinesque roots, Orszag lobbied for the deficit commission; Summers was against it, telling aides that the commission posed “McChrystal risk,” because its findings could box Obama into a corner, the way the former general’s leaked report about boosting troop levels in Afghanistan did.

    So Orszag won the argument. Summers lost. And now it's all deficit-reduction all the time.


    by Obey on Fri, 04/15/2011 - 2:13pm

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