Krugman on Keyes in 2011

OP-ED COLUMNIST

Keynes Was Right

By PAUL KRUGMAN

Published: December 30, 2011 LINK

"The boom, not the slump, is the right time for austerity at the Treasury." So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy - which had been steadily recovering up to that point - into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.

Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can't create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash.

So the real test of Keynesian economics hasn't come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans - and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits.

This wasn't supposed to happen, according to the ideology that dominates much of our political discourse. In March 2011, the Republican staff of Congress's Joint Economic Committee released a report titled "Spend Less, Owe Less, Grow the Economy." It ridiculed concerns that cutting spending in a slump would worsen that slump, arguing that spending cuts would improve consumer and business confidence, and that this might well lead to faster, not slower, growth.

They should have known better even at the time: the alleged historical examples of "expansionary austerity" they used to make their case had already been thoroughly debunked. And there was also the embarrassing fact that many on the right had prematurely declared Ireland a success story, demonstrating the virtues of spending cuts, in mid-2010, only to see the Irish slump deepen and whatever confidence investors might have felt evaporate.

Amazingly, by the way, it happened all over again this year. There were widespread proclamations that Ireland had turned the corner, proving that austerity works - and then the numbers came in, and they were as dismal as before.

Yet the insistence on immediate spending cuts continued to dominate the political landscape, with malign effects on the U.S. economy. True, there weren't major new austerity measures at the federal level, but there was a lot of "passive" austerity as the Obama stimulus faded out and cash-strapped state and local governments continued to cut.

Now, you could argue that Greece and Ireland had no choice about imposing austerity, or, at any rate, no choices other than defaulting on their debts and leaving the euro. But another lesson of 2011 was that America did and does have a choice; Washington may be obsessed with the deficit, but financial markets are, if anything, signaling that we should borrow more.

Again, this wasn't supposed to happen. We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor's downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money.

The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren't actually a problem and, in the process, made the real problem - a depressed economy and mass unemployment - worse.

The good news, such as it is, is that President Obama has finally gone back to fighting against premature austerity - and he seems to be winning the political battle. And one of these years we might actually end up taking Keynes's advice, which is every bit as valid now as it was 75 years ago.

Reagan's Church and State Speech

Reagan Speech to Temple Hillel and Community Leaders in Valley Stream

(October 26, 1984)

Rabbi Friedman, Senator D'Amato, members of Temple Hillel, and to all of you, a very, very warm thank you for this wonderful greeting. It is a great honor for me to be here with you today.

I've covered a bit of territory since this campaign began. What's heartened me most is the new spirit that I have found around this country, a spirit of optimism and confidence, of pride and patriotism, that has been brought forth by a great American renewal.

America's greatest gift has always been freedom and equality of opportunity -- the idea that no matter who you are, no matter where you came from, you can climb as high as your own God-given talents will take you. But a few years ago we were being told that this vision was no more, that America was in decline, and all of us had to lower our expectations.

I think you remember the disasters that defeatist spirit led to: the first back-to-back years of double-digit inflation since World War I, a 21\1/2\-percent prime interest rate, record taxation, declining growth, savings, investment, income, and confidence in our future -- not to mention growing problems of crime and drugs and in education. Overseas, we had lost the respect of friends and foe alike. Our determination had grown weak, undermining commitments to even our closest friends like Israel. We talked and acted like a nation in decline, and the world believed us.

Well, in 1981 the American people set out on an entirely new course. And working together, we have cast aside the pessimism, along with high inflation, stagnation, and weakness, in a wonderful rebirth of freedom, prosperity, and hope. And today we're seeing not humiliation and defeatism, but pride in ourselves, in our accomplishments, and in our country.

From New York Harbor to San Diego Bay, a strong economic expansion with low inflation is leading the rest of the world into recovery. America is back. America is on its feet. And America is back on the map. But we cannot and we will not rest until every American who wants a job can find a job.

A nation's greatness is measured not just by its gross national product or military power, but by the strength of its devotion to the principles and values that bind its people and define their character. Our civil rights: on that subject, we are enforcing the law with new determination. Since we took office, the Justice Department has filed more criminal charges on civil rights violations, brought more violators to trial, and achieved more civil rights convictions than any one before us. I've said this before, and I'll say it again: As President, I will continue to enforce civil rights to the fullest extent of the law.

That's why I have appointed to the Civil Rights Commission people like Commissioners Clarence Pendleton and Morris Abram and Staff Director Linda Chavez. They recognize that you cannot cure discrimination with more discrimination. I'm proud that they're serving on the Commission, and I intend to keep them there. And as long as I'm President, we'll have a Justice Department which argues for the rights of individuals to be treated as individuals, whether the case involves hiring, promotions, layoffs, or any other matter subject to the law.

And we're also remembering the guiding light of our Judeo-Christian tradition. All of us here today are descendants of Abraham, Isaac, and Jacob, sons and daughters of the same God. I believe we are bound by faith in our God, by our love for family and neighborhood, by our deep desire for a more peaceful world, and by our commitment to protect the freedom which is our legacy as Americans. These values have given a renewed sense of worth to our lives. They are infusing America with confidence and optimism that many thought we had lost.

You know, when you talk about human life, I think that means seeing that the immeasurable pain of the Holocaust is never dehumanized, seeing that its meaning is never lost on this generation or any future generation, and, yes, seeing that those who take our place understand: never again.

Now, perhaps that message should again be impressed on those who question why we went on a peacekeeping mission to Lebanon. Indeed, anyone who remembers the lesson of the Holocaust must understand that we have a fundamental moral obligation to assure: never again.

To help preserve that lesson for future generations, I'm satisfied that our General Services Administration has approved the use of the old Customs House by the New York City Holocaust Memorial Commission as a means of commemorating the Holocaust. And it will be a museum of the Jewish people in the Diaspora. It will serve to remind our children and our children's children the tragic consequences of bigotry and intolerance.

We in the United States, above all, must remember that lesson, for we were founded as a nation of openness to people of all beliefs. And so we must remain. Our very unity has been strengthened by our pluralism. We establish no religion in this country, we command no worship, we mandate no belief, nor will we ever. Church and state are, and must remain, separate. All are free to believe or not believe, all are free to practice a faith or not, and those who believe are free, and should be free, to speak of and act on their belief.

At the same time that our Constitution prohibits state establishment of religion, it protects the free exercise of all religions. And walking this fine line requires government to be strictly neutral. And government should not make it more difficult for Christians, Jews, Muslims, or other believing people to practice their faith. And that's why, when the Connecticut Supreme Court struck down a statute -- and you may not have heard about this; it was a statute protecting employees who observed the Sabbath. Well, our administration is now urging the United States Supreme Court to overturn the Connecticut Court decision. This is what I mean by freedom of religion, and that's what we feel the Constitution intends.

And there's something else. The ideals of our country leave no room whatsoever for intolerance, for anti-Semitism, or for bigotry of any kind -- none. In Dallas, we acted on this conviction. We passed a resolution concerning anti-Semitism and disassociating the Republic[an] Party from all people and groups who practice bigotry in any form. But in San Francisco this year, the Democratic Party couldn't find the moral courage or leadership to pass a similar resolution. And, forgive me, but I think they owe you an explanation. [Applause]

Thank you.

What has happened to them? Why, after the issue became so prominent during the primaries, did the Democratic leadership alk away from their convention without a resolution condemning this insidious cancer? Why didn't they turn their backs on special interests and stand shoulder to shoulder with us in support of tolerance and in unequivocal opposition to prejudice and bigotry?

We must never remain silent in the face of bigotry. We must condemn those who seek to divide us. In all quarters and at all times, we must teach tolerance and denounce racism, anti-Semitism, and all ethnic or religious bigotry wherever they exist as unacceptable evils. We have no place for haters in America -- none, whatsoever.

And let's not kid ourselves, the so-called anti-Zionists that we hear in the United Nations is just another mask in some quarters for vicious anti-Semitism. And that's something the United States will not tolerate wherever it is, no matter how subtle it may be.

We have a tremendous watchdog on this, Jeane Kirkpatrick. She is one very forceful and determined woman. And she has defended Israel with persistence and courage, and America is very proud of Jeane Kirkpatrick. Contrast her performance with that sad moment on March 1st, 1980, when the American delegate to the United Nations actually voted in favor of a resolution that repeatedly condemned Israel. And why did my opponent remain silent? I ask you again, what has happened to the party of Harry Truman and Scoop Jackson?

I was once a member of that party, and for a great part of my life, myself. And I don't believe that what we've seen and what I've been talking about is true of the millions of rank-and-file, patriotic Americans; it is only true of an element of leadership that somehow seems to have lacked the courage to stand for what is right.

I'd like to remind you of an important, indeed, a key position of the United States. Ambassador Jeane Kirkpatrick has my explicit instructions that if Israel is ever forced to walk out of the United Nations, the United States and Israel will walk out together.

I think we've come quite a long way together, at home and abroad. Gone are the days when we abandoned principle and common sense. Gone are the days when we meekly tolerated obvious threats to peace and security. I can tell you today from my heart, America is prepared for peace. And because we're stronger than before, because we've regained our respect, and because our allies and friends know once again that we can be counted on, we're in a position to secure a future of peace -- not peace at any price, but a true, meaningful, lasting peace supported by freedom and human dignity.

Now, make no mistake, if ever we were to heed those who would cripple America's defense-building program, we would undermine our own security and the security of our closest friends, like Israel. And as long as I'm President, that's not going to happen. Israel and the United States are bound together by the ties of family, friendship, shared ideals, and mutual interests. We're allies in the defense of freedom in the Middle East. And I'm proud to say, borrowing Prime Minister Peres' words of 2 weeks ago, relations between the United States and Israel ``have reached a new level of harmony and understanding.''

In partnership, Israel and the United States will continue to work toward a common vision of peace, security, and economic well-being. Our friendship is closer and stronger today, yes, than ever before. And we intend to keep it that way.

Let me leave you with one final thought. I know that many of you here today have your political roots in the Democratic Party. And I just want to say to all of you, to repeat what I said a moment ago, that I was a Democrat most of my life, and I know what it's like when you find yourself unable to support the decisions of the leadership of that party. But to you and to the millions of rank-and-file Democrats who love America and want a better life for your children, who share our determination to build a stronger America at home and abroad, I can only say: Come walk with us down this new path of hope and opportunity, and in a bipartisan way, we will keep this nation strong and free.

The spiritual values which the Jewish community represent are now being seen by the American public on a television series, ``Heritage, Civilization, And The Jews.'' These are values we want and need in the Republican Party. We stand with you, working for an America that works for everyone, an America strong and successful, inspired and united for opportunity. We stand with you, committed and determined to help you protect the traditions and ethics that you hold dear. And we stand with you in your belief in the inviolability of the first amendment.

We stand with you in condemning any and all who preach or countenance bigotry, hatred, or anti-Semitism. And we stand with you in supporting the rights of Soviet Jewry and other believers. We will never be silent in the fight for human rights. We stand with you in support of our friend and democratic ally in the Middle East, the State of Israel. And together, we can build an even better future for our children and for America. And together, we will.

The other day I said something to a group of students in the White House that I will repeat to you: We are free. We are the land of the free, because we are the home of the brave.

Thank you, and God bless you all, and lechayim.

Source: Remarks by President Reagan to Temple Hillel and Community Leaders in Valley Stream, New York, Public Papers of the Presidents, Ronald Reagan, 1982

Insuring kids nice, but too expensive, Rick?

Rick Santorum Rejects Obamacare’s Success At ‘Pro-Life’ Event
By Scott Keyes on Dec 15, 2011
Link
http://thinkprogress.org/health/2011/12/15/389859/santorum-rejects-obamacares-success-at-pro-life-event/

At a pro-life event in Iowa yesterday, former Pennsylvania Senator Rick Santorum (R) spoke out against new data showing that 2.5 million young adults now have health coverage as a result of the Affordable Care Act. Ignoring the good news, Santorum insisted that health care reform had “failed miserably” by not doing more to bring down costs and said that insurance was “too expensive” to cover young adults.

Asked if he saw any contradiction between attending an event that celebrated life and criticizing the health law for extending health coverage to living people, Santorum replied that he didn’t:

KEYES: Could we get your reaction to the new study that the Affordable Care Act extended coverage to 2.5 million young adults in this country?

SANTORUM: How about the same reaction that’s also caused a dramatic increase in the price of health insurance? In fact, a substantial increase in the cost of health insurance to millions of Americans. It has failed miserably in the one area the president suggested it would have the most impact, which is decreasing the cost of health care in the country. [...]
KEYES: But if we’re at an event though celebrating life, shouldn’t we be pushing to cover more young adults like the Affordable Care Act is doing?

SANTORUM: No. Again, if government had unlimited amounts of money we could cover everybody with all the coverage in the world, but of course we don’t. The objective President Obama sold to the American public was that this would reduce health care costs, make it more affordable, save the government and people money, and thereby expand insurance. It is not doing it in that fashion. It is simply spending more money and wasting more money.

KEYES: So it’s just too expensive to cover the kids?

SANTORUM: It’s too expensive, number one. Number two, it’s the wrong approach in solving health care, which is government-run, top-down and that’s why it’s wasteful and inexpensive.

Despite Santorum’s claims, the government is not financing the coverage expansion; the ACA allows families to keep young adults on their existing health plans until they turn 26. The provision has added more young people to health care risk pools and has had a negligible effect on premiums.

The fact that Santorum dismissed this achievement at a pro-life event demonstrates just how much Republicans are willing to let their dislike for President Obama’s policies shade their judgment of policy outcomes. For years, the Republican Party has fought the perception that they care more about pre-birth fetuses than post-birth humans who are struggling to make ends meet. Santorum’s remarks Wednesday did little to shed that reputation.

Fees or taxes?

Tennessee family home burns while firefighters watch
By Eric Pfeiffer | The Sideshow –

December 6, 2011 LINK

A Tennessee couple helplessly watched their home burn to the ground, along with all of their possessions, because they did not pay a $75 annual fee to the local fire department.

Vicky Bell told the NBC affiliate WPSD-TV that she called 911 when her mobile home in Obion County caught fire. Firefighters arrived on the scene but as the fire raged, they simply stood by and did nothing. "In an emergency, the first thing you think of, 'Call 9-1-1," homeowner Bell said. However, Bell and her husband were forced to walk into the burning home in an attempt to retrieve their own belongings. "You could look out my mom's trailer and see the trucks sitting at a distance," Bell said. "We just wished we could've gotten more out."

South Fulton Mayor David Crocker defended the fire department, saying that if firefighters responded to non-subscribers, no one would have an incentive to pay the fee. Residents in the city of South Fulton receive the service automatically, but it is not extended to those living in the greater county-wide area.

"There's no way to go to every fire and keep up the manpower, the equipment, and just the funding for the fire department," Crocker said.

The South Fulton policy produced precisely the same nightmare scenario last year, when homeowner Gene Cranick--who had likewise failed to pay the $75 annual fee for rural Obion County residents--saw his house engulfed by flames as South Fulton firefighter watched close by. That incident sparked a debate among conservative pundits over the limits of fee-for-service approaches to government. For his part, Mayor Crocker stressed that the city's firefighters will help people in danger, even those who haven't paid the fee.

"After the last situation, I would hope that everybody would be well aware of the rural fire fees, this time," Crocker said

HCR coming through for breast cancer victims

Op-Ed

'Obamacare' to the rescue

A woman who felt President Obama had let the middle class down has changed her mind.

By Spike Dolomite Ward

LA Times LINK

December 6, 2011

I want to apologize to President Obama. But first, some background.

I found out three weeks ago I have cancer. I'm 49 years old, have been married for almost 20 years and have two kids. My husband has his own small computer business, and I run a small nonprofit in the San Fernando Valley. I am also an artist. Money is tight, and we don't spend it frivolously. We're just ordinary, middle-class people, making an honest living, raising great kids and participating in our community, the kids' schools and church.

We're good people, and we work hard. But we haven't been able to afford health insurance for more than two years. And now I have third-stage breast cancer and am facing months of expensive treatment.

To understand how such a thing could happen to a family like ours, I need to take you back nine years to when my husband got laid off from the entertainment company where he'd worked for 10 years. Until then, we had been insured through his work, with a first-rate plan. After he got laid off, we got to keep that health insurance for 18 months through COBRA, by paying $1,300 a month, which was a huge burden on an unemployed father and his family.

By the time the COBRA ran out, my husband had decided to go into business for himself, so we had to purchase our own insurance. That was fine for a while. Every year his business grew. But insurance premiums were steadily rising too. More than once, we switched carriers for a lower rate, only to have them raise rates significantly after a few months.

With the recession, both of our businesses took a huge hit — my husband's income was cut in half, and the foundations that had supported my small nonprofit were going through their own tough times. We had to start using a home equity line of credit to pay for our health insurance premiums (which by that point cost as much as our monthly mortgage). When the bank capped our home equity line, we were forced to cash in my husband's IRA. The time finally came when we had to make a choice between paying our mortgage or paying for health insurance. We chose to keep our house. We made a nerve-racking gamble, and we lost.

Not having insurance amplifies cancer stress. After the diagnosis, instead of focusing all of my energy on getting well, I was panicked about how we were going to pay for everything. I felt guilty and embarrassed about not being insured. When I went to the diagnostic center to pick up my first reports, I was sent to the financial department, where a woman sat me down to talk about resources for "cash patients" (a polite way of saying "uninsured").

"I'm not a deadbeat," I blurted out. "I'm a good person. I have two kids and a house!" The clerk was sympathetic, telling me how even though she worked in the healthcare field, she could barely afford insurance herself.

Although there have been a few people who judged us harshly, most people have been understanding about how this could happen to us. That's given me the courage to "out" myself and my family in hopes that it will educate people who are still lucky enough to have health insurance and view people like my family as irresponsible. We're not. What I want people to understand is that, if this could happen to us, it could happen to anybody.

If you are fortunate enough to still be employed and have insurance through your employers, you may feel insulated from the sufferings of people like me right now. But things can change abruptly. If you still have a good job with insurance, that doesn't mean that you're better than me, more deserving than me or smarter than me. It just means that you are luckier. And access to healthcare shouldn't depend on luck.

Fortunately for me, I've been saved by the federal government's Pre-existing Condition Insurance Plan, something I had never heard of before needing it. It's part of President Obama's healthcare plan, one of the things that has already kicked in, and it guarantees access to insurance for U.S. citizens with preexisting conditions who have been uninsured for at least six months. The application was short, the premiums are affordable, and I have found the people who work in the administration office to be quite compassionate (nothing like the people I have dealt with over the years at other insurance companies.) It's not perfect, of course, and it still leaves many people in need out in the cold. But it's a start, and for me it's been a lifesaver — perhaps literally.

Which brings me to my apology. I was pretty mad at Obama before I learned about this new insurance plan. I had changed my registration from Democrat to Independent, and I had blacked out the top of the "h" on my Obama bumper sticker, so that it read, "Got nope" instead of "got hope." I felt like he had let down the struggling middle class. My son and I had campaigned for him, but since he took office, we felt he had let us down.

So this is my public apology. I'm sorry I didn't do enough of my own research to find out what promises the president has made good on. I'm sorry I didn't realize that he really has stood up for me and my family, and for so many others like us. I'm getting a new bumper sticker to cover the one that says "Got nope." It will say "ObamaCares."

Spike Dolomite Ward is the founder and executive director of Arts in Education Aid Council, a nonprofit organization that is restoring the arts to public schools in the San Fernando Valley. http://www.aieac.org

Copyright © 2011, Los Angeles Times