The Fiscal Cliff and Other Distractions
We have just passed into the new year, and the distractions created by the debate over the fiscal cliff appear to be behind us. Maybe. That debate has been part of a larger distraction — the concern over budget deficits at a time when by far the country’s most important problem remains the economic downturn caused by the collapse of the housing bubble. The obsession with budget deficits is especially absurd because the enormous deficits of recent years are entirely the result of the economic downturn...
Profits have returned to pre-recession levels. This means that from the standpoint of the people who own and run American businesses, everything is pretty much fine. Moreover, they see the deficits created by the downturn as providing an opportunity to go after Social Security and Medicare.
The Campaign to Fix the Debt, a nonpartisan organization involving many of the country’s richest and most powerful CEOs, sets out to do just that. It has become standard practice in Washington for Wall Street types and other wealthy interests to finance groups to push their agenda. The Campaign to Fix the Debt involves the CEOs themselves directly stepping up to the plate and pushing the case for cutting Social Security and Medicare as well as lowering the corporate income tax rate.
It’s clear what’s going on here. We don’t need any conspiracy theories. CEOs from both political parties have openly come together to demand cuts in Social Security and Medicare, two programs that enjoy massive political support across the political spectrum. The wealthy are joining hands without regard to political affiliation to cut benefits that enjoy broad bipartisan support among everyone who is not rich.
President Barack Obama has an opportunity to show real leadership. He should explain to the public the basic facts that all budget experts know: We do not have a chronic deficit problem. The big deficits are the result of collapsed economy. The priority of the president and Congress must be to put people back to work and bring the economy back up to speed.
When the housing bubble burst, annual spending on residential construction fell back by more than 4 percent of GDP... consumption plunged as people drastically curtailed their spending in response to the loss of $8 trillion in housing bubble generated equity. There is no easy way for the private sector to replace this demand...This is why it is necessary for the government to run large deficits. Ideally...in areas that will make us richer in the future...development in clean energy, etc...Obama needs to explain this simple story to the country.
http://www.counterpunch.org/2013/01/03/the-fiscal-cliff-and-other-distractions/
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