Monday, August 06, 2012

We need big stimulus, but neither major party is pushing for it

Robert Kuttner addresses the dilemma we face on the economy given the dominance in both parties of neoliberal economics in Don't Blame Bernanke Huffington Post 08/05/2012. He strikes a resigned tone in the following, which is a little unusual for him:

Though President Obama strikes the right rhetorical notes, the actual budget debate is the Republicans demanding that we cut more while the Democrats respond that we should cut a little less. Nobody is declaring that only massive public investment will cure the shortfall in private purchasing power.

And so we will continue with growth depressed, and unemployment stuck above 8 percent, with some slightly better months of job growth like July, and some worse ones like April, May, and June.

Despite this feeble performance, President Obama may get re-elected, thanks to the reliable ineptitude of Mitt Romney. Unless Obama's feistier campaign performance translates to a Democratic Congress and a much bolder recovery program, Obama's second term will be a time of continuing economic frustrations.
His phrasing is misleading when he says, "Nobody is declaring that only massive public investment will cure the shortfall in private purchasing power." It would be more accurate to say that neither Presidential candidate, nor either of the corporate-dominated elites in the two major parties, are making such a case. Certainly there are Democrats who are making such an argument, along with the very prominent advocacy of such measures by the two Nobel laureate economists Paul Krugman and Joe Stiglitz.

But the problem Kuttner identifies is real. The Republicans wants to use the depression to destroy the remaining unions and capture an even larger share of the national income and wealth for the One Percent. Obama and like-minded Democrats would like to have a modest increase in stimulus, but are basically satisfied as long as they think the financial system is not in crisis.

And there's the December fight over massive cuts to Social Security, Medicare and Medicaid coming no matter which Presidential candidate wins. And Obama will be pushing for the cuts.

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