Отложеният фалит: накъде след компромиса в САЩ?

След споразумението за корекция на тавана на държавния дълг на САЩ, наблюдателите са единодушни, че тази временна мярка отлага, но не предотвратява фалита.Как ще се отрази компромисното решение на американската икономика, на данъкоплатците и на външния имидж на страната-това са въпроси, които се коментират оживено след драматичния развой на преговорите между администрацията на президента Барак Обама и представителите на Демократическата и Републиканската партии.
Дебатът по този въпрос е интересен и за българската публика, доколкото темата за приходите и разходите в бюджета, за данъците и дефицита ще е изключително актуална до края на 2011 и през 2012 г.
Публикувам първите подбрани анализи по компромисното споразумение в САЩ- намерили място през последните дни в сайта"Other news".

"Other News" is a personal initiative seeking to provide information that should be in the media but is not, because of commercial criteria. It welcomes contributions from everybody. Work areas include information on global issues, north-south relations, governance of globalization. Roberto Savio

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The biggest loser

Patricio Navia*

After the frantic negotiations that avoided a default on the fiscal debt, President Obama and the Republican leadership in Congress are trying to spin the news coverage to come out of the impasse as the political winners. However, the short sightedness of the agreement and the kick-down-the-road nature of the way the two sides dealt with tax increase and spending reduction trade off make it clear that both sides ended up losing. Even worse, the American economy will be the biggest loser, since there was no definitive solution to the mounting debt problem and to the structural fiscal imbalance.

The two sides had some good points. Republicans, after many years of spending excesses under the Bush administration, are now deeply committed to reducing spending. Democrats are rightly worried about the negative impact that cutting many social programs will have on the economy.

The Republican commitment to fiscal responsibility might be opportunistic and overly dogmatic, but it is breath of fresh air after many years of runaway spending championed by both parties during the Bush years. Many first term Republican congresspersons came to Washington on a single-issue agenda, cutting spending. True, politics requires compromise, but elections are often won by promising not to compromise. After many years of irresponsible fiscal behavior, going cold feet responsible and balancing the budget right away might produce more damage than good. In addition, claiming that you can both cut taxes-by extending the Bush tax cuts beyond its original expiration date-and balance the budget is simply the kind of populist dogma that many Latin American countries know too well from past experiences with leaders who defied basic economic theory and led their countries into recession, stagnation and permanent underdevelopment.

Democrats, who failed to raise concerns over excessive spending under the Bush administration, have taken on defending social programs. They have some solid points. Precisely under conditions that, according to economic theory, government spending can stimulate the economy, cutting social programs might throw the economy back into a recession. The argument that the economic stimulus failed and thus a drastic cut on government spending will have no impact on the economy is nonsense. If the problem indeed was that the stimulus was not big enough, as many liberal economists argue, then draconian spending cuts will have dramatic negative consequences on the American economy. However, democrats have failed to come up with a sufficiently credible plan to reduce spending and achieve a balanced budget in the foreseeable future.

Republicans are right to be worried about the mounting deficit. Governments must live within their means. The growing costs of some entitlement programs and excessive military spending cannot coexist with a relatively low tax take. If a country wants to spend more, it must collect more. However, when the country has already spent more and it needs to pay up past bills, it makes no sense to demand drastic cuts today to pay for yesterday's excesses.

Logically, a balanced solution would require spending cuts and revenue increases. Sadly, the Republican majority in the House only wants to focus on cuts. That will simply not be sufficient. Moreover, many Republicans and Democrats are opposed to cuts in military spending because their districts will be adversely affected. To oppose those cuts, they make the same argument that liberal economists make to oppose cuts in social programs. Democrats are not much more commendable than Republicans. The electoral groups they claim to represent are not making their voices heard as loudly as the Republican bases in part because those disadvantaged groups perceive that both parties are equally captured by special interests. Thus, the Democratic Party position is fragile and lacks coherence.

President Obama is caught between a rock and a hard place. On the one hand, he needs to show leadership and resolve and, on the other, he must face the reality that he lacks a majority in the House and does not really have a working majority in the Senate-even Democrats are nominally a majority there. Because his approval numbers are in the low 40s, President Obama has not been able to get public opinion to rally behind him.

According to his liberal critics, he has ceded to Republican pressure too much, too early. According to Republicans, he has failed to realize how strongly they feel about reducing the fiscal deficit. Both sides would agree that President Obama has lacked sufficient leadership and has failed to maneuver in an admittedly complicated scenario to get Republicans and Democrats to compromise behind a sensible solution.

As a result, the agreement reached upon by the White House and congressional leaders does avert the August 2nd default deadline-and its incalculable negative consequences-but it does advance sufficiently towards finding a sound and sustainable solution to the long term fiscal imbalance problem that America faces.

President Obama was unable to bring the fiscal deficit debate to a closure, or at least to an agreement that can put that issue off the table, and thus the fiscal deficit ghost will continue to haunt him until the end of his first term. That makes the U.S. the biggest loser in this last minute deal between the White House and Congress. Buenos Aires Herald, August 2, 2011

*Patricio Navia (PhD in Political Science) is a Master Teacher in Liberal Studies at New York University and professor at Universidad Diego Portales, Chile. He lives in NY and has a regular column in La Tercera newspaper (Santiago de Chile).

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Crisis and Response

By Jack Rasmus and Michael Albert - Zspace

Below we include two essays. The first, by Jack Rasmus, addresses yesterday's budget deal, revealing its essence. The second, by Michael Albert, proposes some ideas for a general campaign or program, dealing with the times, but seeking positive gains rather than being entirely reactive.

We also want to let you know that we are within a few weeks of testing both IOPS and ZSocial to be made public some weeks thereafter. Additional announcements and news will follow next week...

"The $1 Trillion Debt Ceiling Deal of July 31"

By Jack Rasmus*

Sunday evening, July 31, President Obama and Senate Majority and Minority leaders, Harry Reid and Mitch McConnell, announced they had reached an agreement on cutting $1 trillion in spending in exchange for raising the debt ceiling. House Speaker, Boehner, indicated he was also in agreement, subject to voting to take place in the House on Monday.

This latest 'deal' is essentially the same that was reached by Harry Reid in the Senate on July 29 and Boehner in the House on July 27, with two major changes­one favored by the Republicans and another by Obama. These two changes were then 'traded off' this weekend, bringing the parties to a deal.

Boehner and Reid essentially came to an agreement last Friday, July 29. Their respective July 29 (Reid) and July 27 (Boehner) positions called for $917 to $927 in spending cuts, only $10 billion apart. Both proposals contained no reference to tax loophole closings. The tax hikes idea was given up by Obama and the Democrats early last week, bringing the Democrats to essentially the Republican position on spending vs. tax hikes. The only substantive difference as of July 29 between the two was that Reid also proposed $1.044 trillion in additional cuts in Defense spending, as well as a measure that prohibited a re-opening of the debt ceiling issue before the 2012 November elections.

Today's Boehner-Reid final agreement effectively drops explicit cuts in Defense, another Republican position all along. Reid's defense cuts are now replaced with 'triggers' in defense spending reduction. The 'triggers' concept has been a maneuver used by Congress on occasion in the past. It is designed to let one party save face, allowing it to appear that their provision is retained in the bill, when in reality it will never be implemented. In fact, 'triggers' have never been implemented in any instance since 1980 in which they were included in a spending bill.

With Defense spending cuts taken effectively 'off the table' this weekend, the only remaining substantive issue was whether the debt ceiling would be allowed to come up as an issue before the 2012 elections. Republicans now agree it will not.
This Republican shift means Reid's previously proposed $1 trillion additional cuts in Defense appears, in retrospect, to have been a 'trading item' and tactical maneuver all along to get the Republicans to agree not to revisit the debt ceiling issue again before the coming 2012 elections.

But the Republican leaders in the House and Senate don't need a debt ceiling issue again to get further cuts. The 2012 budget deadline of October 1 will do just as well for a threat to shut down the government.

So, in summary, it appears the deal just negotiated means both parties agree on cutting $1 trillion in spending only, with no tax hikes. The Republicans will shift to the 2012 budget deadline for a new hammer to extract extra spending cuts. Defense will remain effectively untouched. And, in exchange for $1 trillion in cuts and no tax hikes and leaving defense spending untouched Obama gets an agreement not to raise the debt ceiling issue again before his next election. But don't think that's the end of the story. It's just the beginning.

The bigger attack on social security, Medicare, Medicaid is still to come. The next round in what amounts to 'class economic warfare by legislation' is the 2012 budget negotiations that are supposed to conclude by September 23. Republicans will get another 'bite of the apple' in spending only cuts at that time. And Obama and Democrats will likely cave in to those demands yet again, as they have repeatedly the past year.

But the even bigger bite will come as a result of another provision in today's agreement: the creation of a so-called 'Bipartisan Commission' to reduce the debt and deficits by even greater magnitudes. That Commission will make still further major proposals for cuts by November of this year, to be voted on by Congress before year-end.

Following Senators Reid and McConnell, President Obama spoke on national TV tonight to endorse the tentative Boehner-Reid agreement and to announce the 'Bi-Partisan Debt Reduction Commission'. In his brief comments this evening he employed an important phrase that TV commentators mostly overlooked. He said, "The Commission's proposals will be submitted for an up or down vote only" by members of Congress. That means some small group­no doubt appointed by him or Congressional leaders­will now decide solely between themselves the composition and magnitude of cuts in Medicare, Social Security, Medicaid, how much tax loopholes will be closed, and how much Defense spending will be cut. The rest of Congress will then be limited to voting 'yea' or 'nay' and that's it.

The conservative composition of such appointed commissions in the recent past are well known. There was the Simpson-Bowles deficit commission appointed by Obama in 2009 that was lopsidedly conservative. And Obama's commission to recommend Health Care legislation that was composed of mostly conservative Republican and Democrats.

The forthcoming 'Bipartisan Commission' will almost certainly assume the same conservative-leaning composition. We can expect $2 in cuts in Medicare and Social Security for every $1 in tax loophole closing and Defense spending reductions...if we're lucky.

This deal of the past weekend to raise the debt ceiling in exchange for $1 trillion in spending cuts­with no tax hikes or defense cuts­shows clearly that politicians in Washington are concerned first and foremost with their re-elections. Democrats don't want to be confronted with another debt ceiling debacle during their re-election campaign. Both Republicans and Democrats are, furthermore, intent on protecting their Defense industry friends, and on ensuring their corporate campaign contributors don't have to pay their fair share in taxes. The rest of America gets to pay the bills and pay the price. Monday, August 01, 2011

*Jack Rasmus is the author of 'Epic Recession: Prelude to Global Depression', Palgrave-Macmillan and Pluto Press, 2010; and the forthcoming 'Obama's Economy: Recovery for the Few', same publishers, 2011. His blog is jackrasmus.com and website: www.kyklosproductions.com.

Fight Forward

By Michael Albert

What should be the approach of leftists, progressive, and anyone with even a smidgin of concern for those suffering economic distress in hard times?

A debate over reducing government, cutting spending, or raising taxes has no self evidently positive aspect. More government, more spending, more taxes, all sound bad to working people. In fact, even with context added, most working people fear that larger government will be intrusive and negative. Greater spending will be boondoggles for the rich. And increased taxes will wind up coming from them. And this is indeed what would happen to such a program in the absence of powerful forces able to compel better results. But powerful forces means massive sustained public campaigns that know what they want. And demanding more government, more spending, and more taxes, won't generate that campaign.

So how about as a possible focus, having a public campaign for: More Jobs, Less Work, More Pay, More Training, and Less War. It would make sense here in the U.S., I think, but also elsewhere - Greece, Spain, and in fact, pretty much everywhere. Here is the logic.

(1) Current outrageous levels of unemployment horribly hurt the poor, the weak, and all those working for wages at anything less than the highest income levels. It weakens working class constituencies, and since owners profit more when workers are weak, owners and politicians who represent them try to expand unemployment. So, for a positive exit from crisis, government and society must be forced to generate more jobs. But how can that happen with people working 60 or 80 hours - as many do now? That is an ecological, climatological, and tension-inducing nightmare.

So, (2) we also need Less Work - meaning we need to reduce the length of work down to, let's say, 30 hours a week. Five days at six hours a day might be a nice approach, or even four days at seven and a half hours each, where work beyond that earns overtime. This opens the way to relatively easy job creation as new workers take up the slack for workers who now have shorter schedules. We needn't add wasteful production. So now we have everyone working, but most are working less hours, creating a new problem - many folks won't earn enough in fewer hours.

So, (3) we need to raise hourly pay rates so that working well less hours still yields us the same income we had before, or more. We get 40 hours pay for 30 hours work, and the minimum wage should climb as well, so that those who were earning too little due to low minimum pay before, now earn more due to higher minimum pay. What about the people who earn a ton already? Should they get a pay rate raise? They shouldn't. So for anyone who was earning $100,000 or more, they do 30 hours work in the new regime, like those who earned less, but unlike those who earned less, they do it for 30 hours of their old pay - thus their income drops by 25%, though they get 25% more life, in return. But if lots of highly skilled and technical and professional workers are working 25% less, who is doing the work they were doing before?

(4) For a time, they probably are, at least some of it. So they get back some of that lost 25% of their prior income, in overtime pay. But, that isn't ideal. What would be better is to have More Training. That is, society needs to prepare more people to do highly skilled, conceptual, and especially empowering labor. Thus, not only do the currently unemployed fill easily accessible slots freed by the lower hours of work per week that they were and are ready for, they also get training to fill more advanced slots, as do current workers. But then there is a new problem.

(5) The unemployed likely won't be enough folks to pick up 25% of all work currently happening. Even overtime efforts from high income folks won't fix that, nor training. Who else can do it? How about military personnel? Think about army, air force, navy, and marines - and all the workers who currently maintain their bases, and shuttle them around, and build their useless and pointless weaponry - or, worse - weaponry they are actually using. Instead how about all those people building housing, cleaning and refurbishing cities, developing and deploying green tools for homes and neighborhoods and transportation, and otherwise doing productive work that benefits people. That is a nice image. Imagine some huge military bases transformed to produce, say, low income housing. Imagine that the GIs and others on the base not only do that work, get nice pay, have lives due to sensible hours, but also are the initial recipients, should they wish to be, of the newly created housing. Okay, so we need Less War. And with less war not only do we pile up fewer corpses around the world, we can also have fewer soldiers deployed all over the world, and and thus able to doing productive work for society.

The above five point program would not only alleviate tremendous pain and suffering for millions of people who are now unemployed, only improve social outcomes via creation of new infrastructure and useful products including fighting climate catastrophe, only expand life time training and increase the skills, confidence, dignity, and empowerment of working people, only maintain and expand income levels for the poor and weak lowering only those that are already unfairly high, only reduce war and violence more generally, but it would also empower working people relative to employers and thus leave them in position to continue a trajectory of improvements to society until finally changing it entirely.

Could the next step be serious redistributive taxes? Could it be formation of workers and consumer's councils to begin taking responsibility for locale decision making in firms and neighborhoods? Could it be massive electoral reforms? And so on. Sure it could.
Is this a banner: More Jobs, Less Work, More Pay, More Training, and Less War.

Maybe this is better: More Jobs, Pay, and Training - Less Work and War.

I don't know. Maybe it needs bigger or different changes. Maybe we should put Tax the Rich in there, somehow? Whether something like this resonates or not isn't just an analytic question, but, instead, is also a matter of people's preferences, desires, hopes, and fears. It is how words move people, or not, no matter what they objectively are intended to mean. What works works. What doesn't, doesn't. Maybe we ought to see if this does.

One thing for sure. We need to stop fighting on the terrain that banner bearers for the rich and powerful champion. We need to stop Fighting Back against what they want. We need to Fight Forward, for what we actually want. Sunday, July 31, 2011