We’re Not Greece

Sam Seder has a great video, calling bullshit on the conservative fears that the US is going to be the next Greece to leverage reduction of deficit spending. In the economy we are in, with 10% unemployment, the best way to get things on track is with a steady diet of stimulating federal dollars. But conservatives just don’t want to see the government spend money helping people who aren’t Wall Street tycoons or insurance CEOs.  The stalking horse for conservative opposition to stimulating expenditures is the deficit. You’d think that if the deficit was a major concern for the markets and for people who make money in the finance industry, that they would be reacting accordingly, driving up the US government’s bond rates and betting against the dollar.

But you’d be wrong. Paul Krugman noted on Monday that conservatives are pushing for austerity and measures to calm the markets from fears of inflation, there is no inflation and no fear of inflation in the markets.  And in yesterday’s Washington Post, there was a long expose on the gap between DC Conventional Wisdom that says the debt is going to turn the US into Greece shortly, while bond traders are heavily investing in the US government. Neil Irwin writes, “they can’t both be right.” And as is so often the case, Conventional Wisdom is wrong.

So why the massive shift in Washington from concern about fixing the economy through job growth (last year) to doomsday proclamations about the growth of the deficit (now)? Brad DeLong addresses this question:

But whenever I wander the halls of Washington these days, I can’t help but think that something else is going on—that a deep and wide gulf has grown between the economic hardships of Americans and the seeming incomprehension, or indifference, of courtiers in the imperial city.

Have decades of widening wealth inequality created a chattering class of reporters, pundits and lobbyists who’ve lost their connection to mainstream America? Has the collapse of the union movement removed not only labor’s political muscle but its beating heart from the consciousness of the powerful? Has this recession, which has reduced hiring more than it has increased layoffs, left the kind of people who converse with the powerful in Washington secure in their jobs and thus communicating calm while the unemployed are engulfed in panic? Are we passively watching an unrepresented underclass of the long-term unemployed created before our eyes?

Digby answers DeLong:

To coin a patented DeLong phrase — Simple Answers To Simple Questions: Yes.

At the bottom line, it seems that Washington, particularly Republicans, but also conservative and “moderate” Democrats, are no longer seeing the financial difficulties of working Americans. At a moment of economic crisis, they are looking past the challenges Americans are facing and towards policy prescriptions that will slow recovery and not help unemployment. This is going to hurt people. It’s going to prolong the unemployment crisis. And American families will suffer as long as Washington isn’t serious about creating jobs and growing the economy.

I’ve often said that if there is a disconnect between how you would want your elected officials to behave and how they actually behave, it’s most likely that they are not behaving how you would want because they don’t believe in the same things you believe in. What’s becoming clear is that decision-makers are, in bipartisan fashion, showing that they do not believe there is a jobs crisis and they do not believe that the government has a major role to play stimulating the economy to create new jobs.

And if you think things are bad now, wait until there is a push to cut Social Security again.

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