Ed Pearl: Paul Krugman: The Lesser Depression, Jeff Cohen: Obama is NOT "Caving" , Action: Tuesday Noon. Get Out There!

http://www.nytimes.com/2011/07/22/opinion/22krugman.html?_r=1&nl=todaysheadlines&emc=tha212

The Lesser Depression

Paul Krugman

NY Times Op-Ed: July 22, 2011

These are interesting times — and I mean that in the worst way. Right now we’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Let’s talk for a moment about why our economies are (still) so depressed.

The great housing bubble of the last decade, which was both an American and a European phenomenon, was accompanied by a huge rise in household debt. When the bubble burst, home construction plunged, and so did consumer spending as debt-burdened families cut back.

Everything might still have been O.K. if other major economic players had stepped up their spending, filling the gap left by the housing plunge and the consumer pullback. But nobody did. In particular, cash-rich corporations see no reason to invest that cash in the face of weak consumer demand.

Nor did governments do much to help. Some governments — those of weaker nations in Europe, and state and local governments here — were actually forced to slash spending in the face of falling revenues. And the modest efforts of stronger governments — including, yes, the Obama stimulus plan — were, at best, barely enough to offset this forced austerity.

So we have depressed economies. What are policy makers proposing to do about it? Less than nothing.

The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remain near historic lows.

Yet the conversations in Washington and Brussels are all about spending cuts (and maybe tax increases, I mean revisions). That’s obviously true about the various proposals being floated to resolve the debt-ceiling crisis here. But it’s equally true in Europe.

On Thursday, the “heads of state or government of the euro area and the E.U. institutions” — that mouthful tells you, all by itself, how messy European governance has become — issued their big statement. It wasn’t reassuring.

For one thing, it’s hard to believe that the Rube Goldberg financial engineering the statement proposes can really resolve the Greek crisis, let alone the wider European crisis.

But even if it does, then what? The statement calls for sharp deficit reductions “in all countries except those under a programme” to take place “by 2013 at the latest.” Since those countries “under a programme” are being forced into drastic fiscal austerity, this amounts to a plan to have all of Europe slash spending at the same time. And there is nothing in the European data suggesting that the private sector will be ready to take up the slack in less than two years.

For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed.

Did I mention that the European Central Bank — although not, thankfully, the Federal Reserve — seems determined to make things even worse by raising interest rates?

There’s an old quotation, attributed to various people, that always comes to mind when I look at public policy: “You do not know, my son, with how little wisdom the world is governed.” Now that lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on.

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http://www.commondreams.org/view/2011/07/24

Obama is NOT “Caving” to Corporate Interests

by Jeff Cohen

CommonDreams: July 24, 2011

In a campaign almost as frenzied as the effort to get Barack Obama into the White House, liberal groups are now mobilizing against the White House and reported deals that would cut Social Security, Medicare and Medicaid benefits. They accuse President Obama of being weak and willing to “cave” to corporate and conservative forces bent on cutting the social safety net while protecting the wealthy.

Those accusations are wrong.

The accusations imply that Obama is on our side. Or was on our side. And that the right wing is pushing him around.

But the evidence is clear that Obama is an often-willing servant of corporate interests -- not someone reluctantly doing their bidding, or serving their interests only because Republicans forced him to.

Since coming to Washington, Obama has allied himself with Wall Street Democrats who put corporate deregulation and greed ahead of the needs of most Americans:

In 2006, a relatively new Senator Obama was the only senator to speak at the inaugural gathering of the Alexander Hamilton Project launched by Wall Street Democrats like Robert Rubin and Roger Altman, Bill Clinton’s treasury secretary and deputy secretary. Obama praised them as “innovative, thoughtful policymakers.” (It was Rubin’s crusade to deregulate Wall Street in the late ‘90s that led directly to the economic meltdown of 2008 and our current crisis.)
In early 2007, way before he was a presidential frontrunner, candidate Obama was raising more money from Wall Street interests than all other candidates, including New York presidential candidates Hillary Clinton and Rudy Giuliani.
In June 2008, as soon as Hillary ended her campaign, Obama went on CNBC, shunned the “populist” label and announced: “Look: I am a pro-growth, free-market guy. I love the market.” He packed his economic team with Wall Street friends -- choosing one of Bill Clinton’s Wall Street deregulators, Larry Summers, as his top economic advisor.
A year into his presidency, in a bizarre but revealing interview with Business Week, Obama was asked about huge bonuses just received by two CEOs of Wall Street firms bailed out by taxpayers. He responded that he didn’t “begrudge” the $17 million bonus to J.P. Mogan’s CEO or the $9 million to Goldman Sachs’ CEO: “I know both those guys, they are very savvy businessmen,” said Obama. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.”

After any review of Obama’s corporatist ties and positions, the kneejerk response is: “Yes, but Obama was a community organizer!”

He WAS a community organizer. . .decades before he became president. Back when Nelson Mandela was in prison and the U.S. government declared him the leader of a “terrorist organization” while our government funded and armed Bin Laden and his allies to fight the Soviets in Afghanistan. That’s a long time ago.

It’s worth remembering that decades before Reagan became president, the great communicator was a leftwing Democrat and advocate for the working class and big federal social programs.

The sad truth, as shown by Glenn Greenwald, is that Obama had arrived at the White House looking to make cuts in benefits to the elderly. Two weeks before his inauguration, Obama echoed conservative scares about Social Security and Medicare by talking of “red ink as far as the eye can see.” He opened his doors to Social Security/Medicare cutters -- first trying to get Republican Senator Judd Gregg (“a leading voice for reining in entitlement spending,” wrote Politico) into his cabinet, and later appointing entitlement-foe Alan Simpson to co-chair his “Deficit Commission.” Obama’s top economic advisor, Larry Summers, came to the White House publicly telling Time magazine of needed Social Security cuts.

At this late date, informed activists and voters who care about economic justice realize that President Obama is NOT “on our side.”

Independent Senator Bernie Sanders of Vermont -- widely seen as “America’s Senator” -- is so disgusted by recent White House actions that he called Friday for a challenge to Obama in Democratic primaries: “I think it would be a good idea if President Obama faced some primary opposition.”

Although Sanders has said clearly that he’s running for reelection to the senate in 2012 – not for president -- his comment led instantly to a Draft Sanders for President website.

Imagine if a credible candidate immediately threatened a primary challenge unless Obama rejects any deal cutting the safety net while maintaining tax breaks for the rich. Team Obama knows that a serious primary challenger would cost the Obama campaign millions of dollars. And it may well be a powerful movement-building opportunity for activists tired of feeling hopeless with Obama.

It’s time for progressives to talk seriously about a challenge to Obama’s corporatism. Polls show most Americans support economic justice issues, and that goes double for Democratic primary voters.

If not Bernie, who? If not now, when?

Jeff Cohen is an associate professor of journalism and the director of the Park Center for Independent Media at Ithaca College, founder of the media watch group FAIR, and former board member of Progressive Democrats of America. In 2002, he was a producer and pundit at MSNBC (overseen by NBC News). He is the author of Cable News Confidential: My Misadventures in Corporate Media - and a cofounder of the online action group, www.RootsAction.org.

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Tuesday. Noon. Get out there!

Find your representative's office here

Dear Ed,

Last weekend, it became 100% clear that Republicans would rather see America default, Social Security payments stopped, and unemployment soar ever higher than give an inch on their position: The very richest people and most profitable corporations shouldn't pay one penny more in taxes.

House Leader John Boehner walked out of another meeting, and President Obama appears ready to cut Social Security, Medicare, and Medicaid benefits to appease the Republican base. Now is not the time for political theater, or further undermining the social safety net that so many Americans depend upon.

American Dream Movement Rallies large and small in all 435 Congressional districts will be held at noon Tuesday—today—at local Congressional offices. (Find your local office here.) This is an "All Hands On Deck" effort with no one "coordinating" it.

Last week, PDAers and our allies were in front of Congressional offices at Brown Bag Lunch Vigils with the message "Hands off Social Security, Medicare, and Medicaid." Now, the American Dream movement is urgently calling for every patriotic American to show up outside every congressional office to deliver a crucial message: "Don't destroy the American Dream."

Find your representative's office here. Download signs here, here, and here. Better yet, make your own!

We need to bring together—now—the vast majority of Americans who find the Republicans' position immoral and the Democrats' reticence unconscionable. Let's get out there today and let our Republican and Democratic representatives know how important it is to stand up to Republican threats and Democratic capitulation—for the American people.

Find your representative's office here.

And make the call Wednesday for the National Call-in Day.

In solidarity and urgency,

Tim Carpenter, national director

P.S. Read Van Jones's appeal, and please spread the word!