Posts tagged ‘Small Business’

Obama To Extent Tax Cut For 98% Americans And 97% Small Business



Extending Middle Class Tax Cuts for 98% of Americans and 97% of Small Businesses (via The White House)

President Barack delivers a statement on the need for Congress to act to extend tax cuts for middle class families, in the East Room of the White House, July 9, 2012. (Official White House Photo by Pete Souza) Today the President called on Congress to extend the middle class tax cuts for the 98 percent…

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More on the spurious victory claims of MMT


 

 

Led by Randy Wray (see this and this), supporters of so-called Modern Monetary Theory (MMT) are declaring that they were the first to identify the problems of the euro and that MMT has now proved itself to be the correct approach to monetary theory.

As regards these two claims, permit me to quote the following:

“5.3 Will capital still be able to veto policy?
…First, financial capital may still be able to discipline governments through the bond market. Thus, if financial capital dislikes the stance of national fiscal policy, there could be a sell-off of government bonds and a shift into bonds of other countries. This would drive up the cost of government borrowing, thereby putting a break on fiscal policy (Palley, 1997, p.155-156).” Read the rest of this entry »

From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics

May 9th, 2012

Many countries are now debating the causes of the global economic crisis and what should be done. That debate is critical for how we explain the crisis will influence what we do.

Broadly speaking, there exist three different perspectives. Perspective # 1 is the hardcore neoliberal position, which can be labeled the “government failure hypothesis”. In the U.S. it is identified with the Republican Party and the Chicago school of economics. Perspective # 2 is the softcore neoliberal position, which can be labeled the “market failure hypothesis”. It is identified with the Obama administration, half of the Democratic Party, and the MIT economics departments. In Europe it is identified with Third Way politics. Perspective # 3 is the progressive position which can be labeled the “destruction of shared prosperity hypothesis”. It is identified with the other half of the Democratic Party and the labor movement, but it has no standing within major economics departments owing to their suppression of alternatives to orthodox theory. Read the rest of this entry »

From Financial Crisis to Stagnation: An Interview with Thomas Palley

April 18th, 2012

Conducted by Philip Pilkington and posted on Naked Capitalism on April 18, 2012.


His latest book, From Financial Crisis to Stagnation, was recently published by Cambridge University Press, 2012.

A 20% discount is available when you purchase using this discount code.

[Select country location & enter code "palley2012" at checkout to get the discount]

Philip Pilkington: At the beginning of your book From Financial Crisis to Stagnation you refer to the 2008 crisis as a ‘crisis of bad ideas’. Could you please briefly explain why you refer to the crisis in this way?

Thomas Palley: A central and critical element of my book is its emphasis on the role of economic ideas in generating the crisis. This feature fundamentally distinguishes it from mainstream explanations that tend to represent the crisis in terms of surprise events and economic shocks (e.g. black swans).

My book starts with the fundamental idea that economies are made, not found. The way economies are organized and function is significantly the product of social choices, not the product of nature. Over the past thirty years we (society) have embraced a set of economic ideas that shaped economic arrangements – including the pattern of income distribution, the power of corporations and finance relative to labor, and the way in which the economy generates demand.
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The euro lacks a government banker, not a lender of last resort

December 19th, 2011

In his novel, The Jungle, the American muckraking author Upton Sinclair wrote about the horrendous work and sanitary conditions in the Chicago meat packing industry of the early 20th century. It is sometimes said Sinclair aimed for the heart but hit the stomach. That is because he aimed for progressive social and economic change but instead prompted the founding of the Food and Drug Administration. Read the rest of this entry »

Euro Bonds Are Not Enough: Eurozone Countries Need a Government Banker

September 6th, 2011

The eurozone’s public finance crisis continues to fester, reflecting both political and intellectual failure. The intellectual failure is the crisis has been interpreted exclusively as a debt crisis when it is also a central bank design crisis resulting from the euro’s flawed architecture. The flaw is the inability of eurozone governments to harness the central bank’s power to assist government finances. This systemic weakness explains why U.S. and U.K. government bonds are weathering the storm, whereas Spain confronts default rumors despite having roughly similar debt and deficit profiles. Read the rest of this entry »

A Global Minimum Wage System [1]

July 18th, 2011

Published in the FT Economists’ Forum, July 18, 2011

The global economy is suffering from severe shortage of demand. In developed economies that shortfall is explicit in high unemployment rates and large output gaps. In emerging market economies it is implicit in their reliance on export-led growth. In part this shortfall reflects the lingering disruptive effects of the financial crisis and Great Recession, but it also reflects globalization’s undermining of the income generation process. One mechanism that can help rebuild this process is a global minimum wage system. That does not mean imposing U.S. or European minimum wages in developing countries. It does mean establishing a global set of rules for setting country minimum wages. Read the rest of this entry »

Deaf to History’s Rhyme: Why President Obama is Failing

December 2nd, 2010

The great American novelist Mark Twain observed “history does not repeat itself but it rhymes.” Today the rhyme is with the 1930s, and if you don’t hear it read FDR’s great Madison Square Garden speech of October 1936:

“For twelve years this nation was afflicted with hear-nothing, see-nothing, do-nothing government. The nation looked to government but the government looked away. Nine mocking years with the golden calf and three long years with the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that government is best which is most indifferent.”

Despite this clarity, the Obama administration insists on hearing a rhyme with the 1990s. That tone deafness has its roots in political choices made at the administration’s outset and explains why the administration has stumbled so badly in its first years. If continued, the economic and social consequences will be grave. Read the rest of this entry »

Plan B for Obama on the economy

September 8th, 2010

TO: President Obama
FROM: Thomas I. Palley
RE: How to avoid stagnation and restore shared prosperity
DATE: Labor Day, 2010

Mr. President,

With hopes of a V- or U-shaped recovery fading, there is the increasing prospect of an L-shaped future of long stagnation, or even a W-shaped future in which W stands for something worse.

The reason for this dismal outlook is economic policy is trapped by failed conventional thinking that can only deliver wage stagnation and prolonged mass unemployment. Read the rest of this entry »

The Federal Reserve Should Raise Rates and Lower Them Too

August 30th, 2010

There is much debate over whether the Federal Reserve should tighten or further ease monetary policy. This dichotomous framing overlooks another possibility, which is whether the Fed should change the mix of its stance, tightening in some areas and further easing in others. Read the rest of this entry »

Europe’s debt crisis and Keynes’ green cheese solution

May 26th, 2010

The great German physicist Max Planck remarked that “Science advances one funeral at a time.” The situation is worse in economics which is subject to regress, as happened when the valuable but imperfect insights of Keynesianism were supplanted by the ideological blinkers of neoliberalism. Read the rest of this entry »

More on the spurious victory claims of MMT.

Only In America Could This Happen The RICH Will Let A Poor Person Die From Hunger


Despite What Boehner Says, Republicans Have Voted To Cut Medicare, Repeatedly


The words “voted to” could come back to haunt House Speaker John Boehner.

In his weekly Capitol briefing with reporters Thursday, Boehner made an unmistakably false claim. “The only people in Washington, DC who have voted to cut Medicare have been the Democrats when they voted to cut $500 billion in Medicare during Obamacare,” he said. Given a chance to walk it back, Boehner’s spokesman did not.

Even if you leave out the key modifier “voted to” this is far from true. Both parties have actually “cut” Medicare many times over the years. Republicans in particular haven’t just voted for cuts, but passed legislation that presidents either signed or vetoed.

That happened repeatedly in the 1990s, as laid out in detail here. In late 1995 and early 1996, it precipitated a government shutdown. In 1997, it resulted in the Balanced Budget Act.

But if you leave the modifier in, this turns into a huge whopper.

Not only did Republicans vote aspirationally to cut Medicare — in both the near and short term, and by huge amounts — in their dead-on-arrival budget this year, they’ve arguably made cutting Medicare a hallmark of what it means to be a Republican.

Here’s a brief, incomplete recap of how that’s played out in recent years.

The House GOP budget — which an overwhelming majority of Republicans in both chambers voted for — would cut Medicare in the near-term by repealing the new health care law. That would re-open the prescription drug donut hole, and rescind new guaranteed wellness benefits for seniors. It would also maintain the health care law’s $500 billion Medicare cuts — principally over-payments to private insurers participating in Medicare advantage.

It would impose much, much larger cuts in the long term. Setting aside the privatization scheme, the government saves money under the plan principally by capping Medicare spending (the value of the subsidies to private insurers) and pegging that cap to inflation — way below the rate of growth of medical costs. That’s a cut no matter how you slice it.

They’ve been at this very plan for some time.

In 2009, 137 or their 178-member minority, including Boehner, voted for the Republican alternative budget, authored by — whom else — Rep. Paul Ryan (R-WI). That budget will sound familiar. It “[p]reserves the current Medicare program for individuals 55 and older. For those under 55, the resolution gradually converts the current Medicare program into one in which Medicare beneficiaries receive a premium support payment — equivalent to 100 percent of the cost of the Medicare benefit — to purchase health coverage from a menu of Medicare-approved plans, similar to options available to members of Congress.”

The plan also reduced the prescription drug benefit for seniors with household incomes over $170,000

Despite the similarities to the current GOP budget, dozens of Republicans defected from this plan, including many members — like Dean Heller (R-NV) and Pete King (R-NY) to name two — who just walked the plank on the 2011 version.

In 2007, a similar story played out when 159 of their 202-member minority, including Boehner, voted for Ryan’s alternative. That version of his plan would have capped Medicare spending and cut it relative to the growth of health care costs, and would have imposed further means testing of the program. It didn’t lay out the precise privatization scheme included in the 2009 and 2011 Republican budgets, but it envisioned “a reform strategy that will advance the transformation of Medicare into a vital and flexible program that can meet its mission without imposing unmanageable burdens on the Nation’s medical community, and its economy.”

Republicans have been at this about as long as there’s been Medicare. But from time to time they make it obvious. In the 1990s, then-House Speaker Newt Gingrich proposed a milder version of the current Medicare phase out policy. His version would have preserved traditional Medicare as an option alongside a privatized program, and incentivized seniors to drop out of the government plan. Here’s how he famously described it in a speech to Blue Cross in 1996. “[W]e don’t get rid of it in round one because we don’t think that’s politically smart and we don’t think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are going to voluntarily leave it.”

These votes were mostly about positioning. To the extent that they could succeed, they would have loved to, but the main ideas were to stake out bargaining stance, and draw a distinction between the GOP and the Democrats. But that’s precisely the point: if they had their way — if Congress was a parliament and Boehner was Prime Minister– this is what they would do.

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