Has bogus "austerity movement" won over Obama?

President Barack Obama has nominated Jacob “Jack” Lew as his new director for the Office of Management and Budget. Peter Orszag recently announced plans to step down from that position. Lew served as OMB director during Bill Clinton’s administration. Announcing his choice at a July 13 press conference, Obama said,

“Jack’s challenge over the next few years is to use his extraordinary skill and experience to cut down that deficit and put our nation back on a fiscally responsible path. And I have the utmost faith in his ability to achieve this goal as a central member of our economic team,” Obama said.

The president pulled this line straight from Republican talking points:

“At a time when so many families are tightening their belts, he’s going to make sure the government continues to tighten its own,” Obama said in announcing Lew’s selection at the White House.

“He’s going to do this while making government more efficient, more responsive to the people it serves,” Obama continued.

How will the government become “more efficient”? We know the Pentagon won’t be asked to make any sacrifices, since Obama can’t bring himself to request even a slight reduction in our defense budget. On the contrary, he keeps going back to Congress for more supplemental war spending.

I hope Obama doesn’t believe what he’s saying, because aggressive policies to reduce unemployment are much more urgently needed than “belt-tightening” by the government. The Clinton economic boom turned deficits into surpluses not only (or mainly) because of spending cuts, but because unemployment dropped to historically low levels across the country.

If the president was speaking sincerely yesterday, then Lew’s appointment likely means less spending on infrastructure, social benefits and other domestic programs. The trouble is, we’re not going to significantly reduce the federal deficit if unemployment remains high. More federal spending may be needed to stave off a double-dip recession and ease the strain on state budgets. Bonddad decimated the argument for “austerity” here. Click over to view the numbers he posted, which show that the U.S. has had a structural deficit for the last decade.

Notice this started a long time ago. Yet suddenly everyone is up in arms about the deficit. Please.

Secondly, the complete denial about the important beneficial effects of government spending (especially infrastructure spending and unemployment benefits) is maddening. Regrettably, everyone now talks in sound bites instead of facts. So here’s a few inconvenient facts.

1.) The US economy grew at a solid rate in the 1960s. Why? A big reason was the US government building the highway system. Now goods and services could move between cities in a far easier manner. If you think that wasn’t a big deal then you obviously don’t get out much.

2.) Since 1970, government spending has accounted for about 20% of all US GDP growth.

Bonddad further explained here why austerity hasn’t created economic expansion in European countries that have gone down that road.

Instead of echoing Republican messaging, which suggests the deficit should be the government’s top concern, Obama should be out there making the case for more spending on job creation and economic relief (such as unemployment benefits, which yield more stimulus “bang for the buck” than most forms of government spending). He should also demand more federal fiscal aid to the states, particularly through the Medicaid program. If Congress cuts off further support now, state budget cuts could cost this country nearly a million jobs, according to Nicholas Johnson of the Center on Budget and Policy Priorities:

The [National Governors Association (NGA) and the National Association of State Budget Officers (NASBO)] report shows that federal Recovery Act [2009 stimulus bill] assistance has greatly helped states deal with their shortfalls in a responsible, balanced way. But that assistance will largely run out by the end of December, halfway through states’ fiscal year and long before state budgets are expected to recover.

In the year ahead, state budget-closing actions could cost the economy up to 900,000 public- and private-sector jobs without more federal help. When states cut spending, they lay off teachers and police officers and cancel contracts with vendors. The impact then ripples through the wider economy as laid-off workers spend less at local stores, putting more jobs at risk.

If Obama stakes his presidency on bringing down the budget deficit in the short term, he may be looking for a new job in 2013.

LATE UPDATE: Chris Hayes wrote a good piece for The Nation called “Deficits of Mass Destruction”:

Nearly the entire deficit for this year and those projected into the near and medium terms are the result of three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession. The solution to our fiscal situation is: end the wars, allow the tax cuts to expire and restore robust growth. Our long-term structural deficits will require us to control healthcare inflation the way countries with single-payer systems do.

But right now we face a joblessness crisis that threatens to pitch us into a long, ugly period of low growth, the kind of lost decade that will cause tremendous misery, degrade the nation’s human capital, undermine an entire cohort of young workers for years and blow a hole in the government’s bank sheet. The best chance we have to stave off this scenario is more government spending to nurse the economy back to health. The economy may be alive, but that doesn’t mean it’s healthy. There’s a reason you keep taking antibiotics even after you start to feel better.

And yet: the drumbeat of deficit hysterics thumping in self-righteous panic grows louder by the day.

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Senate finally confirms Sebelius; Grassley votes no

President Barack Obama’s cabinet is complete just in time for his 100th day in office, now that the Senate has confirmed Kansas Governor Kathleen Sebelius for Health and Human Services secretary by a vote of 65 to 31. Senator Chuck Grassley joined most of his Republican colleagues in voting no, citing her ties to George Tiller, a Kansas doctor who performs late-term abortions.

When Obama picked Sebelius I didn’t expect her confirmation to become controversial, since she is a popular Democratic governor in a conservative state. (Both of the Republican senators representing Kansas voted to confirm Sebelius.) However, anti-abortion groups have been fighting the nomination because when asked how much money Dr. Tiller had donated to her, Sebelius initially reported only his contributions to her campaign funds and not his contributions to her political action committee.

For a time Republicans threatened to filibuster Sebelius’s nomination, but they never appeared to have the votes to support a filibuster. Grassley indicated last week that although he opposed Sebelius, he would not have backed a filibuster of her nomination.

Republicans did manage to hold up her confirmation vote for a while. The silver lining behind that obstructionist cloud was that Sebelius remained governor long enough to veto a bill that would have paved the way for two huge coal-burning power plants in Kansas.

Sebelius’s 31 no votes in the Senate make her the second most-controversial Obama cabinet member. Treasury Secretary Timothy Geithner was opposed by 34 senators, including both Grassley and Tom Harkin.

Earlier this year it seemed that Republican opposition would be strongest to Obama’s choice for attorney general, but Eric Holder drew only 21 no votes in the Senate. Grassley voted to confirm Holder despite some doubts, saying he was influenced by his (then Republican) colleague Arlen Specter.

Grassley also voted for the fourth most controversial Obama nominee, Labor Secretary Hilda Solis. Seventeen Republican senators voted against her confirmation.

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Solis (finally) confirmed as Labor Secretary

Senate Republicans finally gave up on obstructing Hilda Solis’ nomination as Secretary of Labor today, and the Senate easily confirmed her by an 80 to 17 vote. Chuck Grassley was among the 24 Republicans who voted to confirm Solis. Tom Harkin did not vote but clearly would have voted yes, along with all the other Democrats, had he been in the chamber.

Solis’ confirmation was tied up for weeks in committee after Senator Mike Enzi of Wyoming put an anonymous hold on her nomination. Today even he voted yes, indicating that he had no solid grounds for blocking her from serving in the cabinet. I suspect Enzi was just trying to see whether he could trick Barack Obama into withdrawing her nomination as a gesture to Republicans.

Solis’s staunch longtime support for organized labor will make her a target for the right-wing noise machine, but who cares?

For more on why Solis is one of Obama’s best appointments so far, read this piece by Meteor Blades and this one by Paul Rosenberg, who notes,

People just loved talking about what a great political leader Hilda Solis is. I didn’t have nearly enough room to include all the good stuff that was said.

Calitics takes a first stab at handicapping the special election in California’s 32nd district, which Solis is vacating. It’s a safe Democratic seat but will have a competitive primary.

Obama has two cabinet positions left to fill. Kansas Governor Kathleen Sebelius appears to be the leading candidate for Health and Human Services now, and former Washington Governor Gary Locke is reportedly Obama’s pick for Commerce.  

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Gregg out at Commerce--Whom should Obama appoint?

Senator Judd Gregg of New Hampshire withdrew his name from consideration for Commerce Secretary in Barack Obama’s cabinet today. Politico posted the statement from Gregg’s office. Excerpt:

I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

Obviously the President requires a team that is fully supportive of all his initiatives. […]

As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate.

One wonders why Gregg only noticed today that his views on economic stimulus and the census would impede his effectiveness as a cabinet member. (The U.S. Census Bureau is part of the Commerce Department.)

Despite the last paragraph of Gregg’s statement, you have to wonder whether something popped up in the vetting process here.

Whatever his reasons, I welcome the news and hope that the third time will be the charm for President Obama as he tries to fill this position.

This thread is for any comments or speculation about why Gregg dropped out and who should replace him at Commerce. I don’t want the job to go to another conservative or another Republican.

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