A must read article by Nobel Prize winning economist Paul Krugman that puts our budget deficit in perspective. Most importantly it illustrates either the hypocrisy or lack of depth in understanding our economic system in a historical context.

Fiscal Scare Tactics

By PAUL KRUGMAN

Published: February 4, 2010

These days it’s hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.

Yet they aren’t facts. Many economists take a much calmer view of budget deficits than anything you’ll see on TV. Nor do investors seem unduly concerned: U.S. government bonds continue to find ready buyers, even at historically low interest rates. The long-run budget outlook is problematic, but short-term deficits aren’t — and even the long-term outlook is much less frightening than the public is being led to believe.

So why the sudden ubiquity of deficit scare stories? It isn’t being driven by any actual news. It has been obvious for at least a year that the U.S. government would face an extended period of large deficits, and projections of those deficits haven’t changed much since last summer. Yet the drumbeat of dire fiscal warnings has grown vastly louder.

To me — and I’m not alone in this — the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war. Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt. Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency. Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.

And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction. CONTINUE

Op-Ed Columnist – Fiscal Scare Tactics – NYTimes.com

Heavy concentration on jobs and small business.

Dems To Force GOP Vote On Anti-Social Security Privatization Resolution

Christina Bellantoni | February 5, 2010, 2:02PM

House Democrats are going to force their Republican colleagues to vote on a resolution opposing the privatization of Social Security. The move shows Democrats are putting their full political muscle into painting the Republicans as enemies of Social Security and using the chief GOP budget writer Rep. Paul Ryan’s plan to cut benefits as evidence.

Rep. John Larson (D-CT) and Rep. Linda Sanchez (D-CA) this afternoon introduced the resolution which "expresses the will of House Democrats to preserve Social Security and reaffirms our commitment to working in a bipartisan way to make common sense adjustments to strengthen the program for generations to come."

It’s the sort of tough political vote that Democrats have rarely pushed Republicans on since winning back control of Congress in 2006, and similar to resolutions the GOP constantly forced the Democrats to take positions on when they were in power. CONTINUE

Dems To Force GOP Vote On Anti-Social Security Privatization Resolution | TPMDC

Anyone trying to characterize the Tea Party movement as anything less than a movement with large racist undertones need only view its speakers.

Decoding Obama’s Health Care Plan

Jonathan Chait February 5, 2010 | 10:56 am

At a fundraiser last night, President Obama laid out his vision for health care reform. This is interesting:

Mr. Obama said that once Congressional Democrats had worked out their differences and settled on a final bill, he would push for a vibrant, public debate over the health care legislation. He said he planned “to call on our Republican friends to present their ideas.”

“What I’d like to do is have a meeting whereby I am sitting with the Republicans, sitting with the Democrats, sitting with health care experts and let’s just go through these bills,” Mr. Obama said. “Their ideas, our ideas. Let’s walk through them in a methodical way, so that the American people can see and compare what makes the most sense. And then I think that we have got to move forward on a vote. We have got to move forward on a vote.”

Mr. Obama said that Americans were apprehensive about the health care legislation because there was too much misinformation that he would now work to clear up.

“They are certain that they would have to go onto a government plan, which isn’t true,” the president said. “But that’s still a perception a lot of people have. They are still pretty sure that they would have to give up their doctor. They are still pretty sure that if they are happy with their health care plan, that it’s bad for them. They are still positive that this is going to add to the deficit. So there is a lot of information out there that people understandably are concerned about.”

He continued, “That’s why I think it’s very important for us to have a methodical, open process over the next several weeks and then let’s go ahead and make a decision. And it may be that if Congress decides, if Congress decides we’re not going to do it, even after all the facts are laid out, all the options are clear, then the American people can make a judgment as to whether this Congress has done the right thing for them or not. And that’s how democracy works, and there will be elections coming up and they will be able to make a determination and register their concerns one way or another during election time.”

Is this wishy-washy capitulation? Greg Sargent is worried:

Maybe I’m misreading this. But if you look at the transcript of Obama’s remarks at a fundraiser last night, it seems like the President was at least raising the possibility that health reform may not happen.

To be clear, Obama didn’t say this was a desirable outcome — quite the opposite, in fact — but he did seem to suggest that it’s possible.

I don’t think that’s what’s going on. I actually had to read Obama’s remark twice to fully understand what he’s getting at, but now that I have, it seems pretty clear. I think Obama sees the perception that the process is broken — that it’s backroom deals and "ignoring the will of the people" — to be the biggest impediment to passage of the bill. So he’s proposing a remedy to that perception.

The most important part is what Obama says should happen first: Democrats should settle their differences and work out a final bill. That’s crucial. Then he wants to sit down with both parties, and health care experts, and walk through the details in a methodical way. I’d guess he’s imagining a process that might look a little like his back-and-forth with House Republicans — they present him with wild claims about a government takeover, and he calmly responds. They insist that their ideas are better, and he gets to show that they’re not. Then you vote. In other words, a debate in which he gets to take center stage, on top of the kabuki theater of a House debate. That way Obama gets to demonstrate that the plan he has is the product of having considered all the alternatives and arriving at the best way to solve the problem, not just cooking up a backroom deal. The idea seems to be to use his wonky, technocratic style to counteract the process-based objections and sell the bill.

Another key element of Obama’s remarks is his insistence that Congress actually have a vote. Let me repeat that section:

That’s why I think it’s very important for us to have a methodical, open process over the next several weeks and then let’s go ahead and make a decision. And it may be that if Congress decides, if Congress decides we’re not going to do it, even after all the facts are laid out, all the options are clear, then the American people can make a judgment as to whether this Congress has done the right thing for them or not.

He’s saying that Congress can’t just ignore the issue and let it die in quiet. It needs to have a vote, relatively soon, and make a decision, rather than decide by default to keep the status quo. This strikes me as enormously positive news.

Now, Obama’s remarks are laying out what happens after Democrats have laid aside their differences and agreed on a final bill. As Jonathan Cohn writes, getting to that point is not going to be easy, and will probably require Obama’s involvement, which to this point has been weak-to-nonexistent. But these remarks suggest a deep commitment to success and a pretty smart plan for making it happen.

Decoding Obama’s Health Care Plan | The New Republic

Franken Lays Out ‘Pledge And Pass’ Strategy For Health Care

First Posted: 02- 5-10 03:47 PM   |   Updated: 02- 5-10 04:38 PM

Sen. Al Franken (D-Minn) called on Friday for Senate Democrats to commit to passing amendments to its health care legislation through the process of reconciliation — so that the House can then pass legislation of its own.

In a call organized by the pro-reform group Health Care for America Now, the Minnesota Democrat laid out what he called a "pledge and pass" strategy for getting a bill into law.

"If we in the Senate pledge to fix those top priorities right away through reconciliation… the House of Representatives should pass the Senate bill. The exact details of this process need to be worked out by the leadership and the president."

Franken also tried to alleviate some of the concerns of those who argue that the Senate legislation — even with reconciliation fixes — doesn’t go far enough.

"Like it or not, the reality is that big pieces of legislation often need to be fixed after passage," he said. "Health care is a historic undertaking and this is no different. I think we have to stop letting the perfect — and everyone has different definitions of perfect — we have to stop letting the perfect be the enemy of the good… Walking away empty-handed to me is just not an option."

In offering his preferred procedural remedy for health care’s impasse, Franken echoed a emerging sentiment within the Democratic caucus. Sens. Arlen Specter (Penn), Max Baucus (Mont.), Ben Nelson (Neb.) Kent Conrad (ND), Jeff Bingaman (NM), Dick Durbin (Ill.) and others have all either endorsed or openly considered the idea of using reconciliation to change their bill.

There were some crossed messages on the call — the person who preceded Franken, HCAN National Campaign Manager Richard Kirsch, advocated a slightly different legislative strategy for congressional Democrats.

As Kirsch sees it, the Senate would have to make reconciliation changes to its legislation first before the House would then vote on the entire package.

"A bill can be passed without having to have these 60 votes. The whole 60 votes [thing] is crazy. There is nothing in the constitution about 60 votes," said Kirsch. "Through [budget reconciliation], a lot of what’s in that final compromise can still be passed. That would mean that both the Senate and House will pass a budget reconciliation bill and then the House will pass the Senate bill."

"It is totally a matter of political will," Kirsch added. "It is not a matter of procedure. It is up to the Democrats to exercise their political will… and it up to us to help provide the energy behind that."

Franken Lays Out ‘Pledge And Pass’ Strategy For Health Care

That is the headline every Democrat must use on Republicans blocking appointments and progress for pork and ideology.

The (Missed) Second Chance

Josh Marshall | February 5, 2010, 1:00PM

The key thing about the Shelby/hold story is that it provides the Democrats a second chance to revisit the vote blocking issue with the public. What recent polls have shown is that very few people actually have any idea how the senate rules work. So while political junkies on both sides of the aisle know that President Obama has been hung up on numerous pieces of legislation this year because Republicans are forcing a de facto 60 vote rule, very little of that has gotten through to the broader public. It’s just: Dems tried; Dems failed; nothing happened. Back when we went through this drama in 2005 with the shoe on the other foot, the Republican message machine was very clear and persistent on "allowing an up or down vote." Simple, clear, a strong small-d democratic argument, and one that makes the out party work for the 60 vote standard as opposed to taking it as a given.

On the contrary, this issue never really became an issue all year in Democratic messaging. It was discussed at the level of obscure parliamentary terminology — cloture, filibuster, etc. That’s very different from ‘they should at least let the senate vote on it’; but not a lot of people in the Democratic establishment in Washington seemed to get that. With a lot of anger and bluster it was just sort of taken as granted that the Republicans had set the goalpost at sixty. And all the action was on corralling the conservative Dems and trying to get one or two Republicans over the line.

Now, I’m not saying Health Care Reform would have sailed through if the messaging had been different. I’m not saying Republicans would have buckled. I am sure, however, that the public reaction and consequences for the GOP would have been different. Maybe not vastly different, but significantly different. (Note as an example that it really hasn’t occurred to the Democrats to hit the airwaves with the fact that Senate Republicans now won’t even allow a vote on the Jobs Bill.)

The Shelby blanket hold isn’t unprecedented, though it’s close. But doing this to shake the administration down for a couple of earmarks is pretty unheard of. And given the current electrical charge about ‘earmarks’ and ‘pork’ it gives the White House a golden opportunity not just to embarrass the Republicans over Shelby’s obstructionism over an earmark, it gives them a second chance to engage the public on Republican refusal to even allow votes — regardless of what one thinks of the substance — on critical national issues. Not allowing votes here leads to a discussion or not allowing votes on the Jobs Bill. The headline writes itself: Republicans shut down senate so Shelby can get his earmarks. (Remember, he can’t do this himself. He needs to be supported by his caucus.) The GOP leadership sees that it’s toxic.

Alas, it seems the White House has already decided it doesn’t want to take up the opportunity. Which is probably a good preview of 2010.

The (Missed) Second Chance | Talking Points Memo