Thursday, April 29, 2004

Billy Brahma said yesterday that trading our Dean pins for Kerry pins is "not even a decent trade." Alexander Cockburn is no fan of Kerry's either. This month's column in The Nation criticizes Kerry's economic plans. Kerry, in frequent consultation with Clinton's man Robert Rubin, is making deficit reduction his priority. Cockburn argues that doing so will not create jobs, and jobs are what this economy needs most right now.

If you still foolishly believe that the economy in Clilnton time was properly guided for the long-term benefit of the many, as opposed to short-term bonanzas for the wealthy few, I strongly urge you to read Robert Pollin's Contours of Descent, which I hailed here last November.

Cockburn contends that reducing the deficit is perhaps useful for boosting the GDP, but boosting the GDP in no way guarantees more jobs. That's why we have the term "jobless recovery." He quotes his colleague Pollin: "The Democrats should instead be talking about a major jobs program, through refinancing of state and local government spending in education, health and social welfare."

I'm not sure we can't do both. Let me remind you Dean folks that as governor of Vermont, Howard Dean was a deficit hawk who nevertheless increased jobs by 20 percent. If we had to choose, though, between jobs and deficit reduction--yes, jobs come first.

Cockburn contends that the problem with the deficit isn't so much that it is intrinsically bad. It's not "unparalleled in recent U.S. economic history." But the deficit IS bad when it's used as an excuse to strangle social programs. We amass a huge deficit by giving tax cuts to the wealthy, then we get:

the Greenspan Two-Step: Endorse the tax cuts, then say, as the Fed chairman did in February, that the consequent deficits require the evisceration of Social Security. Remember, Bill Clinton was all set to start privatizing Social Security, until the allurements of the divine Monica postponed the onslaught.

In fact, this two-step is what Paul Krugman's been warning us about for months now. Krugman is fond of reminding us that it was Greenspan who recommended increasing the Social Security tax in the late eighties--to make the program permanently solvent. So actually, what we've got here is the Greenspan Three-Step.

Pollin suggests that a progressive way to shrink the deficit would be a small tax on stock transactions--say 0.5 percent. That would raise $100 billion next year even if the shock of it sent markets tumbling "an implausibly large 50 percent."

But, Cockburn concludes:

A tax on financial transactions? Now you're talking, but not about anything you might expect from the Democratic Party or John Kerry.


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