Sunday, March 1, 2009

The Ideological Dimensions of Political Economy and the Present U.S. Crisis

http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1&th=&emc=th&pagewanted=print

All,

What this article and others like it predictably neglects to mention--and it is a very serious omission indeed--is that economics are NEVER separate from politics and ideology. In this specific context this means that the national budget that Obama is proposing (like that of any President) is fundamentally an ideological and practical statement about precisely what economic and social PRIORITIES are going to dictate the course of the national political economy--Depression or no Depression. In other words: This is a matter of what specific political forces prevail in the emerging ideological dogfight over whose economic and social interests are generally perceived as most important (i.e. protected and defended)--corporations or workers, Wall Street or consumers, citizens or economic and political elites. So just as Franklin Delano Roosevelt was compelled by objective circumstances in the U.S. to address the economic catastrophe of the Great Depression in 1932-33 with many of the most radically progressive and innovative political reforms in American governmental history, it is imperative to remember that, despite his own ruling class elite status, in terms of public policy with his 'New Deal' agenda HE CONSCIOUSLY CHOSE TO GO TO THE LEFT because the bottomline reality is that he could have far more easily chosen to go in the exact opposite political and economic direction towards the far right. The New Deal happened because millions of American citizens represented by hundreds of organizations actively demanded it. As just one example of citizens failing to adequately demand such an alternative the Weimar Republic in Germany (a society that had a much longer and far more intellectually sophisticated tradition of social democratic and radical leftist political activity than the United States) collapsed and in its place German society and its political and economic elites consciously chose the rightwing fascist alternative of Adolf Hitler and the Nazi Party. There were also similar responses throughout Europe and Asia which were determined by how the people in those societies were organized and mobilized and-- most importantly-- by whom...

All of which means that what Obama's administration is also being compelled to deal with in the present crisis is also the result of mass based political pressure (never forget that 68 million people voted for the President in November!). Needless to say we must all continue to demand LOUDLY that not only the progressive side of Obama's agenda prevails over all others--especially the Republican right--but that Obama go much further in the same eaxct direction with regard to every single aspect of that agenda---both foreign and domestic...

Kofi



February 28, 2009
Sharper Downturn Clouds Obama Spending Plans
By PETER S. GOODMAN
New York Times


The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.

Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.

Rather, economists are using the word depression — a subjective term with no academic definition — to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.

This is more than a matter of semantics. As the government determines its spending plans, readying another infusion of cash for troubled banks while contemplating an additional bailout for the auto industry, the magnitude of those needs will hinge on the extent of the damage.

Mark Zandi, chief economist of Moody’s Economy.com, now places the odds of “a mild depression” at 25 percent, up from 15 percent three months ago. In that view, the unemployment rate would reach 10.5 percent by the end of 2011 — up from 7.6 percent at the end of January — average home prices would fall 20 percent on top of the 27 percent they have plunged already, and losses in the financial system would more than triple, to $3.7 trillion.

Allen Sinai, chief global economist at the research firm Decision Economics, sees a 20 percent chance of “a depressionlike possibility,” up from 15 percent a week ago.

“In the housing market, the financial system and the stock market, we’re already there,” Mr. Sinai said. “It is a depression.”

Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 percent in 2010, with growth accelerating to 4 percent over the next three years.

“It’s a hope, a wing and a prayer,” Mr. Sinai said. “It’s a return to a sanguine view of the economy that is simply not justified.”

If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenue will be lower, forcing the government to cut spending, raise taxes or run larger deficits.

Economists also criticized as unrealistically hopeful the assumptions by the Federal Reserve as it began so-called stress tests to gauge the health of the nation’s largest banks. In testimony, Ben S. Bernanke, the Fed chairman, said that the nation’s unemployment rate would most likely reach 8.8 percent next year.

“That forecast just doesn’t seem realistic,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, “and I don’t think it helps the Fed’s credibility to make these sorts of forecasts right now.”

As federal regulators estimate potential losses at banks, the harshest assumptions they are testing entails the unemployment rate topping out at 10.3 percent — the highest level since 1983, but hardly the worst case.

By Mr. Baker’s reckoning, the unemployment rate may exceed 12 percent — the highest level since tracking began in 1948.

“We continue to see across-the-board numbers coming in worse than we expected,” Mr. Baker said.

By Mr. Zandi’s estimation, in the most likely case, the unemployment rate will reach 9.3 percent next year. The distress in the financial system, the job market and real estate have become inextricably intertwined.

As troubled banks remain hesitant to lend, even healthy companies are laying off workers. As more Americans lose jobs, they are cutting spending, depriving businesses of revenue, and falling behind on house, car and credit card payments, multiplying losses in the financial system. As more homes land in foreclosure and would-be buyers fail to secure mortgages, housing prices fall further, adding to the losses of the banks — a downward spiral.

Many economists expect that the labor data to be released next Friday will show that as many as 700,000 jobs disappeared in February, lifting the unemployment rate near 8 percent and pushing total job losses to more than four million since the recession began in December 2007.

Given the brutal forces at play, some experts question the administration’s decision to publicize the bank stress tests, as opposed to conducting them quietly.

“It invited the interpretation that this was the beginning of triage for the banks, that we were going to start lining them up and shooting them,” said Alan S. Blinder, a former vice chairman of the Federal Reserve and a professor at Princeton. “There are some things in the bank supervisor role that you just keep secret.”

Others argue that the tests could sow needed assurance. “The stress test could create transparency,” said Alan D. Levenson, chief economist at T. Rowe Price in Baltimore.

As the gruesome data accumulates, this much is already clear: Transparency is not for the squeamish.

Mr. Levenson noted that the weakening economy was destroying demand for goods and services even faster than the $787 billion stimulus program could replace it.


Copyright 2009 The New York Times Company


All,

Very Important information...Spread the word...

Kofi


Obama's Progressive New Budget
From: "Daniel Mintz, MoveOn.org Political Action" moveon-help@list.moveon.org


Want to see what change looks like? Real change?

Well, here it is. Last week, President Obama unveiled his budget—his blueprint for America—and it's ambitious, amazing, and unapologetically progressive. As Paul Krugman said, it will set America on a "fundamentally new course."1

President Obama called his budget "a threat to the status quo," and trust me, the status quo noticed. Oil companies, big banks and insurance companies are already mobilizing to stop it.2

Unfortunately, most folks don't realize how far-reaching and progressive the plan is—that's where we all come in.

Here are 10 really incredible things about Obama's plan. Check them out and then send them on to your friends and family so that millions of people will have the information they need to fight to make this vision a reality.

10 things you should know about Obama's plan (but probably don't)

The plan:

Makes a $634 billion down payment on fixing health care that will go a long way toward paying for a more efficient, more affordable health care system that covers every single American.3

Reduces taxes for 95% of working Americans. And if your family makes less than $250,000, your taxes won't go up one dime.4

Invests more than $100 billion in clean energy technology, creating millions of green jobs that can never be outsourced.5

Brings our troops home from Iraq on a firm timetable, finally bringing the war to a close—and freeing up almost ten billion dollars a month for domestic priorities.6

Reverses growing income inequality. The plan lets the Bush tax cuts for the wealthiest Americans expire and focuses on strengthening the middle class.7

Closes multi-billion-dollar tax loopholes for big oil companies. 8

Increases grants to help families pay for college—the largest increase ever.9

Halves the deficit by 2013. President Obama inherited a legacy of huge deficits and an economy in shambles, but his plan brings the deficit under control as soon as the economy begins to recover.10

Dramatically increases funding for the SEC and the CFTC—the agencies that police Wall Street.11

Tells it straight. For years, budgets have used accounting tricks to hide the real costs of the wars in Iraq and Afghanistan, the Bush tax cuts, and too many other programs. Obama's budget gets rid of the smokescreens and lays out what America's priorities are, what they cost, and how we're going to pay for them.12
This is the change we voted for. President Obama has done his part, now we need to do ours.
Can you pass this on to your personal network and then click here to let us know how many people you told, so we can track our impact together:

http://pol.moveon.org/budget10/?id=15687-9442574-gonrS3x&t=1

Thanks for all you do.

–Daniel, Tanya, Peter, Justin and the rest of the team

P.S. Turns out there are way more than 10 amazing things in Obama's budget and we couldn't resist sharing just a few more.

Stops unnecessary government subsidies to big banks, health insurance companies and big agribusinesses.13,14,15

Expands access to early childhood education and improves schools by investing in programs that make sure every child has a qualified, strong teacher.16

Negotiates for better prescription drug prices using Medicaid's tremendous bargaining power.17

Expands access to family planning for low-income women.18

Caps the pollution that causes global warming, and makes polluters pay to support clean energy innovation.19
Sources:
1. "Climate of Change," The New York Times, February 27, 2009
http://www.nytimes.com/2009/02/27/opinion/27krugman.html?em

2. "Obama Calls His Budget Sweeping, Needed Change," The New York Times, February 28, 2009
http://www.moveon.org/r?r=51201&id=15687-9442574-gonrS3x&t=2

3. "Obama Offers Broad Plan to Revamp Health Care," The New York Times, February 26, 2009
http://www.moveon.org/r?r=51202&id=15687-9442574-gonrS3x&t=3

4. "Obama Expects Fight Over $3.55 Trillion Budget Plan," Bloomberg News, February 28, 2009
http://www.moveon.org/r?r=51203&id=15687-9442574-gonrS3x&t=4

5. "Energy Budget Is Sunlight After Eight Years of Darkness," Center for American Progress, February 26, 2009
http://www.moveon.org/r?r=51204&id=15687-9442574-gonrS3x&t=5

6. "The Economic Cost of War in Iraq and Afghanistan," The New York Times, March 1, 2009
http://www.nytimes.com/2009/03/01/weekinreview/01glanz.html

7. "Tax Cuts," The New York Times, February 26, 2009
http://www.nytimes.com/2009/02/27/washington/27web-tax.html

8. "Energy Budget Is Sunlight After Eight Years of Darkness," Center for American Progress, February 26, 2009
http://www.moveon.org/r?r=51204&id=15687-9442574-gonrS3x&t=6

9. "Student Loans," The New York Times, February 26, 2009
http://www.nytimes.com/2009/02/27/washington/27web-edu.html

10. "Obama unveils budget blueprint," CNN, February 26, 2009
http://www.cnn.com/2009/POLITICS/02/26/budget/

11. "Obama budget would boost SEC, CFTC, FBI," Reuters, February 26, 2009
http://www.moveon.org/r?r=51205&id=15687-9442574-gonrS3x&t=7

12. "Obama's budget," Los Angeles Times, February 27, 2009
http://www.moveon.org/r?r=51206&id=15687-9442574-gonrS3x&t=8

13. "Student Loans," The New York Times, February 26, 2009
http://www.nytimes.com/2009/02/27/washington/27web-edu.html

14. "Health Insurance Stocks Dive on Medicare Advantage Cuts," The Wall Street Journal, February 26, 2009
http://www.moveon.org/r?r=51207&id=15687-9442574-gonrS3x&t=9

15. "Agriculture," The New York Times, February 26, 2009
http://www.nytimes.com/2009/02/27/washington/27web-agri.html

16. "Investing Wisely in Our Children," Center for American Progress, February 26, 2009
http://www.moveon.org/r?r=51208&id=15687-9442574-gonrS3x&t=10

17. "Obama Offers Broad Plan to Revamp Health Care," The New York Times, February 26, 2009
http://www.moveon.org/r?r=51202&id=15687-9442574-gonrS3x&t=11

18. "Obama Offers Broad Plan to Revamp Health Care," The New York Times, February 26, 2009
http://www.moveon.org/r?r=51202&id=15687-9442574-gonrS3x&t=12

19. "Setting 'Green' Goals," The New York Times, February 26, 2009
http://www.moveon.org/r?r=51209&id=15687-9442574-gonrS3x&t=13

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