A tough road ahead

by John Quiggin on November 5, 2008

Over the fold is my piece from today’s Australian Financial Review on the task facing Obama. The original version started “Following his convincing election victory, Barack Obama can look forward to taking office under the most challenging conditions facing any incoming president since Franklin Roosevelt’s inauguration in 1933,”, but another columnist came in with an almost identical lead, so I changed mine. But the great thing about a blog is that you can choose which version you like best (or dislike least). The original opening paras are at the end of the post.

Following his convincing election victory, Barack Obama will have only a brief moment to relax, before preparing to face some truly daunting challenges. The financial crisis is the most immediate, but it is merely a symptom of unsustainable economic, social and environmental trends that have built up over decades, and accelerated greatly under Bush.

As regards the banking system, the immediate liquidity crisis has eased a little, as the banks have been bribed and bullied by their new public part-owners into extending at least some credit to each other, and to the finance markets on which the ordinary operations of business depend.

But the implications for the broader economy are only just beginning to emerge, and here the news is almost uniformly bad. Car sales have crashed, business investment is grinding to a halt, and the housing market shows no sign of a recovery. With many other countries entering a slowdown or recession, the few bright spots in the economy, such as exports, are turning dark.

With ten weeks until his inauguration it is hard to tell how far the economic situation will deteriorate in the interim. But Obama will have to be ready to take immediate and radical action.

First, the government will almost certainly need to extend further help to, and further control over, the financial system. While the bad news about mortgages has largely been received by now, there are looming disasters in credit card defaults, and the prospect of large-scale defaults by businesses hit by the recession. More public equity, and more encouragement to maintain lending to creditworthy borrowers will be needed immediately.

The new global financial architecture that is already emerging, more or less by default, needs some serious thought too. The old architecture rested on the implicit premise that the US system at its centre would never fail, and this in turn created a huge moral hazard problem. The institutions at the core of the system need to be separated much more sharply from the areas of high-risk innovation where rewards need to be matched by the absence of any public safety net.

In fiscal terms, the new Administration must act immediately to stimulate demand, both through aid to those hit hardest by the crisis, notably the unemployed, and through direct public expenditure. At the same time, Obama cannot afford to backslide on his core policy commitments, most importantly on health care.

The existing system of employer-provided health insurance, already in dire straits, is unlikely to survive the current crisis in its present form. Obama proposes subsidies, including public reinsurance for catastrophic claims. The result will be a big expansion in coverage and in costs, leading to a need for more effective public control over health costs, including initiatives similar to our own Pharmaceutical Benefit Scheme.

And looming over all of this is climate change. Obama has promised a cap-and-trade scheme, and a return to world leadership at Copenhagen. But, as in Australia, there will be powerful voices calling for a continuation of the Bush policy of delay and denial, and putting the financial crisis forward as a pretext. Neither the world nor the position of the US as a world leader can afford this.

And there will be bills to pay. The US national debt, is already over $10 trillion thanks to the incompetence and extravagance of the Bush Administration, with its ruinous wars and lavish tax cuts for the rich. The cost of the bailout, and of the deficits that will be necessary to soften the recession and stimulate a recovery, will add trillions more to that figure.

Ultimately that means higher taxes. Obama has already promised to let the Bush tax cuts expire for those earning more than $250 000, but this won’t raise a huge amount. The burden of cleaning up the mess left by Bush, and paying for a more equitable future, must be borne primarily by households in the top 20 per cent of the income distribution. This is the only group that saw consistent gains during the three decades of neoliberalism that began in the late 1970s.

Republicans from John McCain down have called the election ‘a referendum on socialism’. That’s nonsense, of course, but Obama’s victory should mark a revival of the progressive politics of the New Deal, in retreat ever since the 1970s. If Obama can combine an economic recovery with a new commitment to social equity, his election victory could prove more significant than any since that of Roosevelt in 1932.

The original intro in full

Following his convincing election victory, Barack Obama can look forward to taking office under the most challenging conditions facing any incoming president since Franklin Roosevelt’s inauguration in 1933, though it is unlikely that Obama will have to deal with a full-scale closure of the banking system.

As economic managers, Henry Paulson and Ben Bernanke have at least outperformed Hoover’s Treasury Secretary Andrew Mellon, whose motto “Liquidate labor, liquidate stocks, liquidate farmers” was a perfect recipte for Depression.

But they underestimated the crisis until the last possible moment, before proposing a bailout that would simply have handed a trillion dollars of taxpayers money to those who caused the crisis, on a ‘no questions asked’ basis. Even the modified bailout they were forced to accept remains at best an expedient to stave off imminent disaster.

As regards the banking system…

{ 37 comments }

1

stuart 11.05.08 at 9:25 pm

…with its ruinous wars and lavish tax cuts for the rich.

Ultimately that means higher taxes. Obama has already promised to let the Bush tax cuts expire for those earning more than $250 000, but this won’t raise a huge amount

So there were lavish tax cuts for the rich, but undoing them won’t raise a huge amount?

2

John Quiggin 11.05.08 at 9:51 pm

As the post makes clear, the definition of “rich” as “income over $250K” implicit in your comment is the problem here.

3

bob mcmanus 11.05.08 at 10:44 pm

The only way to get the money is to increase taxes on almost everybody. Quite a bit, and draconically on the rich, defined as over $100k. I think the politics of getting higher taxes on the $100k demo will be taxes for everybody.

I am around $75, and I would pay an additional 10% on my gross for healthcare and some move toward mass transit etc. Then we get a 20% surcharge on 100k, and maybe 50% addon for those over 250k, taking the schedules back to the Eisenhower years.

The US probably needs $20 Trillion a year for the next decade.

4

bob mcmanus 11.05.08 at 11:05 pm

Ok, the $20T was out of my hindquarters. But a $1T deficit is almost certain for 2009, and I expect considerably more than that. Say 1 1/2T…deficit. So we are already at around $5T for a Federal Budget that doesn’t really make much progress toward our goals and drives into debt.

To go another way, I think Federal spending is aroung 17% of GDP, with State and local added to around 35%. I think we desperately need to move that to 50% of GDP to get anywhere at all, and temporarily probably 75% of GDP makes sense. So $10 trillion dollars a year for a decade.

We could do $20T if we started confiscating. There’s a lot more wealth than income.

5

Stuart 11.05.08 at 11:06 pm

So about 40% more than the entire US GDP Bob? That would be quite a tax hike.

6

John Quiggin 11.06.08 at 12:09 am

My estimate is that a sustained increase in revenue equal to between 5 and 10 per cent of domestic product will be needed. Since the top 20 per cent of households get about half of all income, that implies an increase in taxes equal to 10 to 20 per cent of their income. That would still leave this group well ahead of the other 80 per cent in terms of increases over the last few decades.

7

notedscholar 11.06.08 at 12:37 am

Yes, but according to Ha-Joon Chang, governments can solve all these problems, because they can run losses while investing in infrastructure. Pure brilliance!!!

8

bob mcmanus 11.06.08 at 12:41 am

“My estimate is that a sustained increase in revenue equal to between 5 and 10 per cent of domestic product will be needed. ”

We borrowed that trillion dollars last quarter before any stimulus. I fully expect Obama to see trillion-dollar interest nuts during his first term.

If the US went up to 45% of GDP that puts us at the levels of Europe. However, it does not leave any room to catch up with Europe or the Far East after thirty years of neglect, nor does it take the debt and twin deficits into account.

“Since the top 20 per cent of households get about half of all income, that implies an increase in taxes equal to 10 to 20 per cent of their income.”

At the top quintile, you are reaching below $100k annual income. In America, they don’t believe for a second they are rich, or that they are so much better off than those making 50k. In the cases of people living on the coasts, leaving aside the benefits of living on the coast, they may not be. I don’t think the politics will work.

9

Steven 11.06.08 at 1:41 am

“My estimate is that a sustained increase in revenue equal to between 5 and 10 per cent of domestic product will be needed. Since the top 20 per cent of households get about half of all income, that implies an increase in taxes equal to 10 to 20 per cent of their income.”

Doesn’t this implicitly assume that there is zero deadweight loss associated with tax increases? 20% on top of 35% (current top marginal income rate), plus state and local tax, seems likely to put you in a range where there is not a one-to-one relationship between tax rate levied on current income and tax revenue generated.

10

c.l. ball 11.06.08 at 3:00 am

In 1943 the US deficit was over 30.3% of GDP. We recovered. Today , it is 2.9% of GDP. During the Reagan administration it peaked at 6% of GDP. So let’s get a grip.

The deficit was the bogeyman than scared the Clinton administration into undercutting the progressive/left base of the Democrat party, paving the way for the 1994 GOP takeover. The Obama admin. cannot repeat this. For example, any real healthcare reform is going to entail increased government spending in the near to mid term. The plan workers need is that if you’re fired, your current healthcare plan continues for 6 months with the gov’t picking up your premiums (and probably your employer’s too). If deficit reduction is the priority, there will be no meaningful healthcare reform.

If trimming the deficit is the goal, the progressive agenda is fucked. We might as well pat ourselves on the back that an African-American male was elected, and then stick a lit cigar up our asses, because will have shit to show for it come 2010.

11

John Quiggin 11.06.08 at 3:20 am

In the current environment, the deficit needs to grow, as the post says.

But in the long run, debt has to be serviced and repaid. The long run is not the next two years, but if we don’t start a serious discussion of the need for higher taxes, and the issue is dodged in 2012, the progressive agenda will be in deep and permanent strife.

12

Michael Turner 11.06.08 at 4:42 am

OK, ball, but consider the political contexts of those higher deficit periods. FDR had a war on when his deficits peaked, and massive inflation was OK because there was a war on. (While we have a war or two on, it’s not total war for the future of civilization blah blah etc., GWOT rhetoric notwithstanding.)

Reagan’s deficit peak undoubtedly (I haven’t looked it up, though) corresponded with a deeper recession than we’ve seen so far; we’re only in the early stages of this recession, but it could be comparable, and if so it will drive tax receipts way down. Also, inflation was very high back then, and Volcker’s forcing of recessions to bring inflation down was a kind of War on Inflation. To justify any kind of short-term economic suffering in a democracy, you’ve got to have a War on Something that trumps the voters’ more immediate financial concerns.

And it’s not just the budget deficit but the trade deficit too, and the national debt.

I’ve been living in Tokyo (“Dude, where’s my decade?”) Japan for about 13-14 years. They bailed out the banks here, finally, made them solvent, but all that bad private debt per capita simply became public debt per capita, and it hasn’t budged much since. During this time, the population only aged, and more recently the population started shrinking. The economy never really perked up much after the property/stock bubble of the late 80s, so it’s been more like The Lost Decade and a Half. The main force pulling Japan though those years was its export-orientation, hitched as it was to the U.S. the vaunted “locomotive” of the world economy. Those days are over.

It’s not an easy corner to get out of. Just in case you’re wondering what Obama means when he uses the word “sacrifice”: something’s gotta give. Can we tax very high incomes? Obama’s main econ guy, Austan Goolsbee, has written papers showing that if you tax CEO compensation at higher rates, the compensation packages just get adjusted so that the same income gets paid out over a longer period of time, hence at lower tax rates overall.

I say: tax wealth. Tax it in a virtually unavoidable way: pick a higher inflation target. At the same time, spread the safety net wider, especially for people coming up on retirement age. Those people have seen their 401k’s and home equity shrink drastically, suddenly, scarily. So a much more gradual shrinking in asset valuation (in PPP terms) shouldn’t bother them as much, especially if they feel they won’t slip down below a certain level. Inflationary expectations get people spending again, if they are palpable enough. A devalued dollar also makes U.S. exports more competitive.

Selling higher inflation as a solution isn’t easy. Actually, you might as well try to sell Americans on piping-hot dogshit with a side order of broken glass. But it’s not necessary to sell it directly. Quite likely, the public will instead be sold on more palatable programs as the supposed solution to our ills, with inflation ostensibly only a regrettable side effect. I’m not sure such a sales job would be so hard. For one thing, it’s not even particularly unprecedented. For many years, Alan Greenspan was sold to the American voter as Our Brave Inflation Fighter, as if he were waging a never-ending battle to get CPI growth rates down to zero. Actually, he was an inflation targeter, the FOMC was a scared of zero as any group of modern central bankers could be, and the Fed kept the U.S. inflation rate safely above that level. I doubt that even one American voter in ten understands this. I don’t expect that situation to change much.

13

a 11.06.08 at 7:00 am

Andrew Mellon said: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”.

Now the Great Despression *did* liquidate labor, stocks, farmers, and the real estate. And afterwards people *did* work harder, live more lives, and values were adjusted.

Those who quote Mellon are those who always fight the last war, those who think that a lot of government spending here and there is going to stop economic bad times. Maybe it will, maybe it won’t. But deficit spending of the type you propose is fundamentally and profoundly immoral. The times were good for twenty-five years in the Western world. Now faced with some bad times, the same people who enjoyed the good times are expecting the generation ten to twenty-five years from now – who have no say in the matter – to pay for their pleasures.

14

Joel Turnipseed 11.06.08 at 7:55 am

A few quick thoughts:

1) A lot of the value of various desired/possible initiatives depends on their order.

2) Starting with health care. It’s ridiculous that this country spends ~ 4% more of its GDP on health care than its next OECD member nation (Switzerland, and, closely, France). If we could get nationalized health care first at bat, negotiate with drug companies (and other health-care industrial complex members), then we’d save an ENORMOUS amount of money right there.

3) I’m in a $100K/year household and I don’t think we could swing an extra 10% a year. At the same time, we could probably swing 5%–and we certainly don’t need a tax cut, which Obama has been promising us. $100K for a two-income family with daycare and education needs isn’t really “rich.” It’s not poor, by any stretch, but it’s not even in the ballpark of lavish for a family in a major metro area.

4) Political capital is hard to come by, but in addition to a more progressive tax rate, national health care, the end of the wars in Iraq and Afghanistan (and pulling out of Japan, Korea, Germany, et. al.), we really should start means testing Social Security.

5) It shouldn’t be as impossible as it seems to be to get what needs to get done, done. Some Keynesianism on things like renewable energy, infrastructure (related, strongly so, to things like electric cars), education, plus some merely sensible reforms (that will, no doubt, leave as many as 10,000,000 Americans howling–but the other 300M+ in much better shape).

So… why does it seem so hard to do? Hard to say. Even as a storyteller, I’m hesitant to buy entirely into the Lakoff/”Framing” thing. Anyone else got ideas?

15

Joel Turnipseed 11.06.08 at 8:02 am

Also: the Great Depression/WWII are complete non-starters as comparisons, if for no other reason than our getting out of both of those required the rest of the world to completely self-destruct: which it won’t do again for us.

So, in some ways, even though our situation is not as dire–our problems may require even more sacrifice/cleverness in their solution. Indeed, given the kinds of resource restrictions we face (whether through strict declines in availability or strong reasons for reduction in use), we may need to entirely rethink the idea of “solutions.”

16

Michael Turner 11.06.08 at 8:35 am

“1) A lot of the value of various desired/possible initiatives depends on their order.”

No kidding. To a good first approximation, costs in any industry are a function of headcount. So if we could cut U.S. healthcare costs down to, say, typical European standards, practically overnight, the main effect would be to throw a lot of people in the healthcare industry out of work — practically overnight. Also, although I know it won’t make me overwhelmingly popular to say so here, much the same might be said of suddenly pulling out of Iraq and Afghanistan. I once calculated that it takes 8-10 American jobs to support one American soldier in the field. Far fewer jobs are required to support a soldier at home. And a mustered-out soldier is a soldier is generating no jobs at all (except insofar as he/she draws on VA benefits and the GI bill and the like) and needs a job to boot.

There are certainly better ways to spend the money. However, you’d better have those ways all ready to sop up eligible human resources, or else you just threaten to make the economic problem worse. Any such threats will be noted by the financial system and investors, making the threats self-realizing to a great degree.

17

virgil xenophon 11.06.08 at 8:45 am

I love those here who want to means test social security. You might notice that even the most liberal Democrats in Congress, like David Obey, avoid even the mention of such things like Dracula avoids the Cross. The reason? As soon as this is done the system is immediately revealed for what it already is anyway–an income transfer program (i.e., welfare) from the well off to the less well off. And with that realization by the middle class that it is just another welfare program political support will sink like a stone–which is why FDR disguised it as a retirement system in the first place. “Any program exclusively for the benefit of poor people will always remain a ‘poor’ program”, he once stated. Which is why it is the largest middle-class entitlement system in the world. So go ahead, if you want to kill off social security, by all means, means test.

18

A. Y. Mous 11.06.08 at 9:02 am

A tough road ahead indeed. Realisations are creeping in and machinery moved into place to tone down expectations. http://www.nytimes.com/2008/11/06/us/politics/06expect.html?_r=1&oref=slogin

19

J Thomas 11.06.08 at 11:34 am

To a good first approximation, costs in any industry are a function of headcount. So if we could cut U.S. healthcare costs down to, say, typical European standards, practically overnight, the main effect would be to throw a lot of people in the healthcare industry out of work—practically overnight.

When private industry has a large make-work system going, what should the government do? Subsidize it? We can’t let our first priority be to keep useless jobs. We’d do just as well to hire lots of bureaucrats and have them generate paperwork for each other.

Here is a proposal to simplify the tax code. One problem with any tax simplification is that it will throw tax advisors out of work, but I’m not going to worry about that.

Declare that employment income will no longer be taxable. Instead, make all the with-holding taxes be a tax paid by employers. State that it’s expected that salaries will go down by enough to reflect this.

Right away, people who only have employment income will pay no income tax. This is a good thing. Employers will not have to generate W2 forms for employees to send to the IRS. The complex web of adjustments that give some people extra tax while others get refunds, will be a little simpler without employment income mixed in — the employer pays an employment tax independent of the employees’ deductions.

This has a good ideological result. Joe the Plumber thinks he pays taxes that the federal government shouldn’t spend. It’s his $48,000, dammit, he shouldn’t have to pay taxes on it. But it was never his money. He never saw it. His employer send the money to the IRS and pretended it was Joe’s money. Stop pretending it was Joe’s and things change some.

Also, if it’s only a guideline that salaries will be reduced to the after-tax values, then there’s room for lots of variation. Some people don’t get cut as much — a defacto raise. Some employers are hardnosed and cut more. It isn’t the government’s fault, that’s between you and your employer. Meanwhile income taxes have to be revised extensively with that great big bite taken out of them. In all the confusion it won’t be clear which results to blame on whom. But the underlying implication should be that if you actually do something useful then you’re safer than if you do make-work.

In the middle of the confusion, put a reasonably high tax on employee health insurance paid by employers. The more it costs, the less willing employers will be to do it. The more obviously that employer-paid health insurance is failing, the easier it is to get an alternative put in. With luck that system is already failing so thoroughly that there won’t be time for such a tax to take effect, but it doesn’t hurt to make sure.

Do we actually need a war to get people to agree to big changes? If we had an extremely scary inconclusive war with china could we cancel our debt to them? It sounds risky and unethical. Is there some way to get a consensus without a war?

20

Slocum 11.06.08 at 11:53 am

The long run is not the next two years, but if we don’t start a serious discussion of the need for higher taxes, and the issue is dodged in 2012, the progressive agenda will be in deep and permanent strife.

But the progressive agenda (as CTers seem to envision it anyway) is already in trouble, because Obama ran on tax cuts for (almost) everybody. Republicans repeatly claimed he was lying and would redefine ‘rich’ way, way downward, and Obama denied it explicitly and repeatedly. People aren’t going to forget those 95%/$250K numbers of Obama’s. I just ran my numbers through Obama’s tax cut calculator, and he’s promising me $1300. Wow — it’s pretty cool he could promise me that even with all the financial challenges he knew the nation was facing. I mean, I didn’t even qualify for a stimulus check under Bush, so the tax cut from Obama will be great. Wonder what I should buy…

Why did Obama promise tax cuts even to quasi-rich struggling middle-class people like me? Because he knew the electorate would not have gone for an ambitious progressive agenda paid for by substantial tax increases on everyone making over $100K. And he can’t plausibly come out soon and say, “But look, I didn’t realized the problems we were facing”, since all of the conditions were well known before Tuesday — budget deficits, financial crisis, looming recession, wars, etc.

(BTW, I remember when there was only one ‘ruinous’ Bush war because the Democrats all were in favor of Afghanistan, recognizing it as the true front in the fight against Al Queda from which Iraq was a distraction. Obama, remember, has promised to redouble, not scale back efforts there).

21

Paul 11.06.08 at 1:44 pm

I hope that Obama can respond to the challenges that face him in the spirit of Franklin Delano Roosevelt. His task is a complex one with no guarantee of success. He will have to use bipartisanship if he is going to make positive changes.

22

J Thomas 11.06.08 at 1:51 pm

And he can’t plausibly come out soon and say, “But look, I didn’t realized the problems we were facing”, since all of the conditions were well known before Tuesday—budget deficits, financial crisis, looming recession, wars, etc.

Yes, he can.

Unless things fail to get a whole lot worse in coming months.

What are the chances? Do you think we won’t find out about problems that are a whole lot worse than what we’ve seen so far, before say March?

23

J Thomas 11.06.08 at 2:00 pm

He will have to use bipartisanship if he is going to make positive changes.

How can he create bipartisanship?

Wouldn’t he have to persuade the GOP to agree to bipartisan solutions? And aren’t they absolutely, completely over-my-dead-body deadset against that?

Maybe they’ll come around. But so far they’ve been totally against any positive changes, and there’s no particular reason to suppose they’ll modify that stand.

I think the Democrats should work toward making it easier for third parties. Both campaign finance reform and voting reform, something like IRV. Make it easy for Republicans to switch to the Libertarian party, and work hard for bipartisanship with ex-Republicans.

Bipartisanship with Republicans is a fine thing too, provided they don’t double-cross too much.

24

Slocum 11.06.08 at 2:23 pm

What are the chances? Do you think we won’t find out about problems that are a whole lot worse than what we’ve seen so far, before say March?

Well, the economic slowdown will almost certainly get worse than it is right now — but we already know that — it’s in the nature of recessions — so it won’t be a surprise. In any case, he’s not going to be able to use worsening economic conditions as a justification for a big upper middle class tax increase.

Wouldn’t he have to persuade the GOP to agree to bipartisan solutions? And aren’t they absolutely, completely over-my-dead-body deadset against that?

But the GOP and Bill Clinton found common ground on quite a few things. If he governs like a Clinton centrist, bipartisanship shouldn’t be impossible at all.

BTW, here’s what I would do if I were Obama and wanted to sneak through elements of a progressive agenda without doing a 180 on taxes and the definition of ‘rich’:

1. On climate change — get the carbon credit auction system in place, but have a very generous allotment of credits during the economic downturn. Emitters would have to buy credits, but they’d cost very little, which would mean a negligible increase in electricity rates. The sale of credits wouldn’t generate much, but whatever couple billion trickled in would be spent on alternative energy, allowing Obama to claim he’d fulfilled a couple of promises (but without much effect or pain…at first). Heat that frog slowly.

2. On health care — use the economic downturn as justification. Give the unemployed ‘temporary’ access to Medicare. And then let them stay on if the new jobs they find don’t provide benefits. What starts as temporary gradually becomes permanent.

25

PHB 11.06.08 at 2:30 pm

Actually, there is a good chance to balance the budget in 2012.

The key here is that Obama will not have the cost of the Iraq war (currently in excess of $350 billion), the recession will be over and capital gains taxes will be coming in again, and the rescue of the financial industry should be starting to return a dividend on the original investment.

It is also likely that inflation will have cut the real value of the national debt somewhat in the interim. Maybe by 10% or so.

The key here is that no Republican is going to be competitive in the 2012 election cycle on a message of return to Bush era economics.

There is also going to be a real and urgent effort to scour the tax code and eliminate the $100-200 billion plus of tax breaks targeted at GOP donors. The Dems could not do this with control of Congress alone, they need the administration to tell them about the effects.

There are also many GOP spending plans that can be cut back or eliminated. No point in deploying a missile defense shield that does not work. The Bush era solution was to quit testing, kill that plan and you save $50 billion a year right off.

The cap and trad scheme for carbon emissions will be brought in and used to fund the energy program. But no other spending increases are likely to happen, except for universal health care.

26

Rich Puchalsky 11.06.08 at 2:52 pm

I also hope that Obama will act as FDR did. Which means packing the court if necessary. And getting rid of the filibuster if necessary.

27

Amos Newcombe 11.06.08 at 3:05 pm

Now the Great Despression did liquidate labor, stocks, farmers, and the real estate. And afterwards people did work harder, live more [moral] lives, and values were adjusted.

Right, because poverty is so much more moral. OTOH, there is this little snippet of 30s folk song:

Back again, back again,
We’ve got Franklin D. Roosevelt back again.
Since Roosevelt’s been elected moonshine liquor’s been corrected,
We’ve got legal wine, whiskey, beer and gin.

28

lemuel pitkin 11.06.08 at 4:12 pm

we really should start means testing Social Security.

No, we really should not.

(Unless “we” want to destroy the program but have given up on the direct approach.)

29

salient 11.06.08 at 5:03 pm

“if I were Obama and wanted to sneak through”

Personally I see no reason for anyone to attempt to “sneak” anything, but then, I’m not taking the irrational perspective that Obama is a closet sociomarxmaoist attempting to undermine our way of life, etc.

“If he governs like a Clinton centrist,”

and the Republicans find a House leader who can scuffle with him, and then create some compelling-sounding soundbites about a Second Contract With America, then there would be some potential for a 2010 backswing, and maybe you’d get your dream, wouldn’t you?

30

virgil xenophon 11.06.08 at 5:09 pm

Slocum@20

Sushhhhhhhhhhhh! Someone might get ideas. Don’t encourage people who pine for the return of Stalin.

Rich pack-the-court-and-get-rid-of-the-filibuster Pulschasky@26

I always love to see true Stalinist impulses ooze out.

31

c.l. ball 11.06.08 at 5:19 pm

I agree with Quiggin here; my concern is that the shrink-the-deficit mantra crowds out the Obama and liberal-left agenda as it did during the Clinton years. This morphed into a popular policy ideology that new spending on social programs is bad because it raises the deficit, but tax cuts are good because they put money back into the economy. This ideology persists.

32

J Thomas 11.06.08 at 5:37 pm

But the GOP and Bill Clinton found common ground on quite a few things. If he governs like a Clinton centrist, bipartisanship shouldn’t be impossible at all.

Sure, if Obama gives up his mandate for change and agrees to do precisely what the GOP wants, then they’ll be bipartisan with him.

But he’d be a fool to do that. Clinton got two terms to toady for the GOP, but Obama would only get one.

33

Walt 11.06.08 at 5:51 pm

Yes, what Stalin is most famous for is increasing the size of the courts.

34

virgil xenophon 11.06.08 at 7:36 pm

No, Walt, one does not have to increase the size of the courts if a Stalin i norder to have show trials, but in democratic countries instantaneously “packing the court” with one’s ideological soul-mates rather than waiting for the roulette wheel of the normal process of attrition is sooo much more immediately gratifying and the functional equivalent
of Stalin’s grip of terror–don’t have to fool around with the niceties of legislative
sausage-making–judicial ukases’ will do just fine.

35

Righteous Bubba 11.06.08 at 10:30 pm

in democratic countries instantaneously “packing the court” with one’s ideological soul-mates rather than waiting for the roulette wheel of the normal process of attrition is sooo much more immediately gratifying and the functional equivalent
of Stalin’s grip of terror

Why isn’t it like Hitler’s grip of terror?

36

Michael Turner 11.07.08 at 5:49 am

Yes, what Stalin is most famous for is increasing the size of the courts.

Not that this thread-branch is anything but rankly silly, it might be interesting to look into Stalin’s judicial appointments. Of course, Stalin is more (in)famous for the Gulag, but he’s also quite (in)famous for the show trials. Maybe some packing the Soviet courts was part of his process of getting the judiciary pointed at his political enemies. Saddam Hussein, a notorious admirer of Stalin, used every chance he got to make judicial appointments favorable to his own career when he was on his way up. (I read somewhere, he says weakly.)

A dictator isn’t someone who gets his way with the pistol on his hip, personally holding entire nations and conquered territories in thrall. Saddam Hussein could barely control his own sons that way, at times. A dictator mostly works as most national leaders do, by leveraging existing institutions and the inherited legitimacy of those institutions. For every show trial in Stalin’s time, there were probably thousands of trials for ordinary (I should say, “real”) crimes. Perhaps most of those trials were adjudicated as fairly as before. Perhaps more fairly for all we know — it would be the sensible way to maintain a grip on power, wouldn’t it? To be seen by most people as tough, ruthless against one’s enemies, but otherwise fair? And what better way to get there and stay, but to appoint judges you can depend on, in a crunch, and can depend on to be reasonably fair at all other times?

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someguy 11.07.08 at 4:27 pm

I get 250 billion from a 10% increase on the top 1%.

I get 155 billion form a 5% increase on 20-5.

I don’t think 4-2 would bring in more than 50 billion.

100k a year living outside a major metro area doesn’t feel like that much for a family. 5k extra in taxes would be felt.

It would be political suicide. It would validate everything Republicans have been saying. Hlobo wouldn’t be able to post anymore.

Obama might get re-elected but Democrats would at the very least suffer serious losses in both houses.

It’s a tight spot.

I hope I am wrong, but my guess is the upper 1% or so is taxed at something less than 10%, and most of that money goes into new spending. Maybe we get a peace dividend on top of the savings from leaving Iraq and that gets applied to deficits.

So we get more taxes and spending and big but smaller deficits.

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