2012 election

Obama, Yes. And Win the House Too.

Roger Hickey — Sun, 09 Sep 2012 18:37:57 -0400

President Obama is enjoying a post-convention bump in job approval (Gallup says 7 percentage points – from 45 to 52 percent) after the negative and divisive Republican convention, followed by the energetic populism of the Democrats in Charlotte. With large leads among women and people of color, and the stark contrast on economic issues building movement toward Obama even among white males in key states, the prospects for Obama winning a second term are starting to look pretty good.

But what about the House? Prospects for Democrats keeping the Senate are looking better, but if the House of Representatives stays in Republican hands, even if President Obama is re-elected his second term will be crippled. Obama can still name good Supreme Court justices, and he can veto terrible legislation – both good reasons to vote for him – but, in the face of Republican obstructionism, he will be virtually powerless to pass economic recovery laws aimed at creating jobs and getting the economy growing and not shrinking.

Obama has repeatedly told voters they have the opportunity to "break the current stalemate in Washington between two fundamentally different ideas on how to create strong, sustained economic growth," – as he said in Cleveland on June 14. A few days later he told a campaign crowd, "What's holding us back is a stalemate in Washington between two fundamentally different visions on which direction we should go, and this election is your chance to break that stalemate."

Obama is right, of course, but only if the voters reelect him AND sweep into office at least 25 Democrats to seats now held by Republicans. You didn't hear much about taking back the House as a goal of Democrats at the Charlotte convention – an indication that they don't want to look like failures if they fall short. But for the same reasons Obama now looks like a winner, Democrats and independent activists now have the possibility of "nationalizing" contests for the House and turning this election into an historic wave election that can truly "break the stalemate" and put the nation on a course of decisive change. How do we do that?

1. Tell voters Republican economics won't just fail--they will kill jobs and plunge us back into recession.
Too many Democrats describe the Mitt Romney-Paul Ryan-Republican economic plans as taking us back to "the failed Bush policies." But they are much worse than that – because they would not only cut taxes for the rich, THEY WOULD KILL JOBS AND PUSH AMERICA BACK INTO RECESSION. Republican candidates Romney and Ryan (and every House member who voted for the Ryan budget) would cut public spending so drastically they would destroy our struggling recovery and throw millions more Americans onto the unemployment rolls. Republicans have voted repeatedly for this kind of European-style austerity. Democratic challengers should call them what they are: job killers. And challenge incumbent Republican Members of Congress to repudiate their votes for the Ryan budget.

2. Oppose outrageously unfair tax cuts for the wealthy.
House Republicans think making the Bush tax cuts for millionaires permanent is very popular with voters – but they are very wrong. All but four House Republicans voted for the Ryan budget containing these tax provisions. Many of them were committing political suicide – if Democrats take them on. Every tax provision in the Ryan budget is wildly unpopular in the minds of the majority of voters who reject the idea of more tax cuts for the super-rich. A June 2012 Peter Hart and Associates poll of likely voters for Americans for Tax Fairness found:

72 percent favor increasing tax rates on household income above $250,000 (rolling back the Bush tax cuts).
68 percent favor ending tax breaks for corporations shipping jobs overseas.
64 percent want to ensure large corporations pay their fair share of taxes.
And 46 percent want to end the low (capital gains) tax rate on income from stocks and bonds.

The take-away: Americans hate the idea of tax cuts for the wealthy – on fairness grounds alone. But Republicans claim tax cuts for the rich are the best way they will create jobs, so the unpopularity of their tax plan (if we expose it) undercuts the entire GOP (so-called) jobs and growth plan as well.

3. Stand up for Social Security, Medicare and Medicaid – and expose all GOP incumbents who have voted to destroy those popular programs.
A large number of House Republicans are on record calling for cuts to Social Security benefits or increases in the retirement age. And many support the kind of privatization of Social Security that Ryan called for in his 2010 Roadmap for America's Future, embraced by most of the House Republican caucus. If Democratic challengers are bold enough to declare opposition to Social Security benefit cuts and attack the idea of privatization, they will find they can put their Republican opponents on the defensive, as these damaging changes to America's most important retirement program are unpopular, even to members of the Tea Party.

All but four House Republican incumbents voted for the 2012 Ryan budget, which passed the House only to be defeated in the Senate. Denounced by the U.S. Catholic bishops for its very large cuts to programs aimed at reducing poverty, including Medicaid, the Ryan budget was described by the bishops as "failing to meet the moral test." And the "Nuns on the Bus" have been touring the country, rallying voters against Medicaid cuts.

The Ryan budget would also turn Medicare into a voucher system, which would cost seniors a larger and larger portion of their incomes, as the value of vouchers fail to keep up with the cost of health care. And it would force older Americans to deal with a confusing array of private insurance plans in their retirement years. This Medicare voucher plan, embraced by Romney, is very, very unpopular with seniors and Americans of all ages. Aggressive defense of Medicare by Democratic challengers can turn many a contest into an upset.

For those who doubt Dems can win in tough races, consider the 2011 special election victory of Rep Kathy Hochul, a Democrat running in Jack Kemp's old upstate district, New York 26 – which hadn't elected a Democrat in four decades. A Washington Post article attributed her victory to her opposition to the "House Republicans' budget plan authored by Wisconsin Rep. Paul Ryan – and, in particular, his proposal to turn Medicare into a voucher program." Hochul's winning message could win almost anywhere this year: "I won't to let them cut Social Security benefits and end Medicare as we know it while giving more tax cuts to the rich." That was, and is, a winning message. Add a plan for jobs, and your opponent is on the ropes by Election Day.

4. Fight for JOBS FIRST--and go after every incumbent who opposed Obama's American Jobs Act.
Republicans won the House in 2010 by pointing to high unemployment and charging the Democratic economic program had failed. At that point Democrats had no new jobs plan to run on. A year ago, President Obama stopped talking about deficit reduction and put the American Jobs Act on the table. Every Democrat running for a House seat this year can accuse the Republican incumbent of blocking that jobs plan, which independent experts have estimated would have produced 1.9 million jobs by rebuilding America's infrastructure and schools and helping states hire, not lay off, teachers and cops and firefighters. Democrats need to campaign as a party with a popular plan to put people to work, grow the economy, and get the private sector growing faster. And it would be great if President Obama would campaign a little bit more like Harry Truman, denouncing Republicans in the House (what Truman called the "do nothing Republicans") for their obstructionism in blocking passage of his jobs bill.

Democratic candidates for the House also need remind voters that the (Romney-Ryan) Republican plan to slash public spending will kill jobs and throw the US back into recession – just as similar radical austerity regimes in Britain and Ireland and Spain and other European countries have caused recession to sweep the continent. We have to expose the Republicans' post-election plans to cut taxes for the wealthy (which won't stimulate the economy) and their plans to slash public investment, which will kill economic growth and increase joblessness.
While acknowledging that we have to get deficits under control in the long term, Democrats must insist that America's first priority must be to get unemployment down and economic growth up. And that means getting voters educated and alerted to Republican plans to impose draconian austerity if they manage to keep the House. In the next 60 days, Democrats must be the champions of full-employment, and get the voters to see Republicans as the job killers that they are.

5. Charge up the Democratic base voters--and give them a reason to get out and vote.
The spectacle of Republicans in Tampa attacking women, welfare-baiting minorities, and doubling-down on tax cuts for the rich has fired up Democratic base voters – even among progressives, who may have problems with Obama, but who know letting Romney and a Republican Congress run the country would be a disaster. The Charlotte convention helped as well: showing off Democrats as both diverse and united – and fighting for a much more progressive vision of our economic future.

President Obama is right when he says this election offers us the opportunity to "break the current stalemate in Washington between two fundamentally different ideas on how to create strong, sustained economic growth." But we all have to work to get him to go beyond a pitch for his own re-election. He should ask voters to "send to Washington a new group of Congressional leaders who will work with me to break that stalemate." As he gets more confident in his own re-election, I hope we can get him to call for throwing out the obstructionists.

However, as we've learned, we can't wait for Obama. It's our country, and we need to save it. So it's our job to get to work in every Congressional district that might produce that swing of 25 seats. We've got to teach the Democratic candidates how to campaign – against the Romney-Ryan job-killing plan, for Social Security, Medicare and Medicaid, against unfair tax cuts for the wealthy, and for the Democratic plan for jobs.

As I write this, MoveOn is sending around Nate Silver's new analysis in the NY Times that finds "Obama's chance of victory would be an amazing 91% if everyone who's registered actually votes this year." MoveOn asks for your contribution to raise $600,000 this week to create (with the AFL-CIO's Workers' Voice) the largest independent get-out-the-vote operation in the country. This kind of thing is doable, and you can contribute here, because getting out the Democratic base vote – and giving them good reasons to vote – is going to be crucial in the next two months.

Here's another encouraging sign: Political scientists Jacob Hacker and Nate Loewentheil recently published a paper that summarizes in accessible (and non-political) language, the first four points above. After a blogger conference call to discuss A New Strategy for Prosperity, the legendary Digby and colleagues got the document to progressive House candidates they are supporting, and 16 of them have endorsed the ideas and are running under the banner of Americans for Real Prosperity.

The old optimism from 2008 is coming back – tempered by the realities of the last four years. We should all work for the re-election of Barack Obama, but we should also work to make sure he has a Congress that can help him carry out the big changes that America needs. And we've got to make sure that after the election there is a powerful progressive movement pushing President Obama and the new Congress to do what needs to be done.

Debating the Debt!

Joseph M. Firestone — Fri, 29 Jun 2012 21:22:42 -0400

Maya MacGuineas urges America to debate the debt. She even wants the presidential candidates to devote a whole presidential debate to it. But she's not interested in debating the private sector's debt and how we might reduce that, which is very, very strange, especially since middle class Americans have lost 40% of their net worth since 2007, and the private sector debt burden has been a key factor in depressing consumption and preventing the economy from fully recovering and creating full employment. However, in spite of this private debt crisis which has placed the United States more than 3.5 years into a lost decade, now, she and her cohorts at the various Peter G. Peterson Foundation-supported organizations, whether 'left,” “right,” or “center” in the Washington, DC area, are hot for everyone to debate the “national debt problem” rather than the “private debt problem.”

Well, far be it for me to turn down such a reasonable request from such a wise lady and all her friends and supporters in the Washington, DC “village” community. I will happily proceed to debate the national debt by analyzing what Maya had to say in her piece for CNN at the end of April. I'll begin by debating a question that Maya seems to have overlooked as a desirable one for debate. Specifically, “whether the national debt is really a “problem” or not, and if so, what kind of a problem is it?”

A Daunting Challenge Or Just “Shock Doctrine”

Maya starts off her article this way:

“It's not news that the national debt presents a daunting challenge. The public debt is growing faster than the economy, a trend that cannot be sustained.”

It's not news that all sorts of people are saying that the size of the national debt is a daunting challenge, but that doesn't make it one. Nor does the fact that the national debt has been growing faster than the economy, necessarily make its growth unsustainable. In fact, to claim that its growth is unsustainable, you have to assume that the growth of the debt reduces the future capacity of the government to spend. There are at least three reasons why the national debt isn't a daunting challenge, including one that denies that growing public debt reduces the US government's capacity to spend.

First, the “debt problem” can be solved in a few afternoons with some simple legislation by the Congress, if only they were willing to pass it. That alone, makes it not very “daunting.”

Second, even if Congress won't pass new legislation, it already has passed legislation that allows the Executive branch to solve the “debt problem,” by forcing the Federal Reserve to create money out of thin air and deposit that money into Executive Branch accounts at the Fed.

And third, continuing to issue debt, even at a rate faster than the economy is growing, doesn't reduce the future capacity of the government to spend. In fact, it has no effect on that capacity at all. Let's explore the first reason in more detail and then move on to the others.

Ours is a Government with a non-convertible fiat currency, a floating exchange rate, and no debt to foreigners in a currency our government can't freely create. That means our government can always pay any and all of the debt instruments it issues and the interest on them, when payments on them fall due, by simply marking up the reserve accounts of its creditors to repay its debts.

At this point, Maya or some other deficit hawk might ask, “where's it going to get the money to do that marking up? Treasury can't freely create its own reserves, or borrow from the Fed, the government agency that can create reserves “out of thin air.” Treasury can only get reserves credited to its accounts by taxing or borrowing!”

This sound like a good question and a fair one; but actually, it's neither good nor fair, because it dodges a still more basic question that she and other Petersonians like David Walker must be aware of, but don't want to talk about, because it's very inconvenient for them. That question is: since the Congress has unlimited constitutional authority to create money, and has delegated that authority to the Federal Reserve, then why doesn't it also delegate the Treasury the same authority to freely create reserves when it needs to pay bills?

Indeed, why doesn't it just pass legislation re-locating the Fed to the Treasury Department, so that 1) Treasury would have that authority, 2) the Fed would be more accountable to the people, and 3) the extra-constitutional existence of the Fed as an obviously executive function being performed outside of the Executive Branch in violation of the separation of powers clause of the Constitution, would be ended?

In other words, if the national debt is a problem; then it's only one because of money creation constraints, including the debt ceiling, that Congress has placed on the Executive Branch over and above the normal constraints of the appropriations process. So, if there is a national debt problem, it's clearly Congress's fault, and the solution to “the problem” is for Congress to legislate the constraints away, and let the Executive Branch freely meet all its debt and appropriations obligations at will, rather than to pretend that the debt is dangerous, unless we all engage in extraordinary efforts to have the government spend less, borrow less, and raise more money in taxes.

Put simply, Congress can authorize the Executive Branch to create whatever money it needs to pay all debts as they come due, and to spend future appropriations without borrowing, ensuring that the debt will eventually disappear. So, what kind of problem is it that Congress can solve by passing a simple bill in one afternoon in each house? A false problem, I think, or at least a political problem, rather than an economic or financial problem that requires “shared sacrifice” to solve.

In fact, the claim that there is a government debt crisis, is so easy to solve with Congressional action that it is very hard not to think that all the noise about its being a monumentally difficult problem to solve that requires extraordinary courage is really about delivering more “shock doctrine” to Americans. Why? So that there is an excuse to legislate their already inadequate safety net away, while more nominal wealth is delivered into the hands of the already wealthy.

After all, why else would Maya McGuineas and the think tanks she works with, go to such extraordinary lengths and expense as they have been doing to suggest a “shared sacrifice” solution to this “problem” lasting many years, when all it would really take to solve it would be some Congressional action? If they're so worried about the national debt why aren't they circulating petitions asking Congress to place the Fed within Treasury, rather than petitions telling people that the fiscal sky is falling and only a long-term deficit reduction plan will prevent an eventual fiscal collapse?

The second reason why one should doubt that the national debt is a daunting problem, is that there's a 1996 law that allows the US Mint to create proof platinum coins with arbitrary face values and deposit them in the Mint's Public Enterprise Fund (PEF) at the Fed. Since the coins are legal tender, the Fed MUST accept the deposits and credit the PEF with the face value of any coins, however large those face values are. The Treasury is then allowed to periodically “sweep” the Mint's PEF profits from "coin seigniorage" into the Treasury General Account (TGA).

For example, if the Mint created a proof platinum coin with a $60 Trillion face value and deposited it into the PEF account, the Fed would have to credit the PEF with $60 T in its account, while taking the coin and transferring it to one of its vaults, where it would sit, permanently. The Treasury could then transfer the sum of $60 T – about $3500.00 (the cost of producing a 1 oz. proof platinum coin), or nearly $60 T into the TGA. The credits in the TGA could then be used to pay down the national debt plus interest as various debt instruments come due. They could also be used to deficit spend appropriations used by Congress.

Essentially, the profits from the coin would fill the public purse (the TGA) in the form of electronic credits generated using the Fed's power to create money out of thin air. But they couldn't be spent except to repay debt obligations, unless Congress opened the purse strings by appropriating deficit spending.

In short, within a few days after minting such a coin, the Treasury would be able to begin paying down the debt subject to the limit without further taxing or borrowing, if it chose to do so. It could pay the $6.7 T or so of debt held by the Fed and other agencies within a week, and then it could continue to pay the remainder of the debt as it falls due. As of June 27th the Treasury had redeemed $4.9 Trillion in debt instruments in June of 2012. So, had it begun paying down the public debt on June 1, and also paid off its debt obligations to other agencies and the Fed as well. By this time it would have paid off 74% of the total debt subject to the limit. Only 4.1 T or 26% of the debt would have remained. So, if this is all we need to do to pay down the national debt, then I think it is no problem at all for the Treasury, and certainly not the great crisis depicted by folks like Maya MacGuineas who are calling for shared sacrifice and austerity.

So, again, I have to ask a question. Since by now, the idea that the President can cause the Mint to create very high value proof platinum coins has hit such mainstream blogs as CNN's (Jack Balkin post), Reuter's (Felix Salmon), Think Progress (Matthew Yglesias), and Naked Capitalism (a post of mine), and a number of others, how is it that Maya MacGuineas won't discuss it as a possible solution to the debt problem, and won't call on the President to solve this very, very, serious problem by minting one or more platinum coins with face values great enough to end this oh so serious crisis by paying down the national debt by 74% in 6 weeks?

The third reason why there's no debt problem follows from the first two. If either Congress or the Executive can so easily fix “the debt problem” by either re-organizing the Government, or creating platinum coins, then why would our continuing to issue debt at a faster rate than the economy is growing reduce the future capacity of the government to spend? Let's say the national debt owed to parties external to the Government grew to 91% by 2025, from its present level. Would it be any more difficult to continue to spend by creating money out of thin air, or by minting platinum coins, or even by borrowing more, if those buying our debt instruments knew that, come what may, we can always pay our debts by creating fiat money?

Somehow, I don't think so. I think Governments controlling a non-convertible fiat currency with a floating exchange rate and no debts in currencies not their own have no spending capacity limits in their fiat currency, at any particular point. It doesn't matter how much debt they've issued in the past, because neither the size of that debt, nor the size of the debt-to-GDP ratio associated with it, affects their capacity to create new fiat money. That capacity is a matter of the political survival and functioning of such a government, in the context of its constitutional authority to create money, it has nothing to do with economic or so-called “fiscal sustainability” considerations.

In brief, the United States Government (including Congress, the Executive, and the Fed) can't have any involuntary solvency problems, because it has no involuntary limits on its capacity to spend except those implicit in Congressional Appropriations. It may want to limit deficit spending in any fiscal year to prevent demand -- pull inflation. But the repayment of debt doesn't add any net financial assets to the private economy. It's just a swap of debt instruments for money; and that's not inflationary. So, there's no “daunting debt challenge” for the United States. It's all just “a deadly innocent fraud” as Warren Mosler would say. What about the “fiscal cliff,” vs. “the debt tsunami” that the austerians like to talk about?

The Fiscal Cliff vs. The Debt Tsunami

Maya MacGuineas says:

“Even more immediately, at years' end we will face a $7 trillion fiscal cliff—a series of policies will kick in, from the blunt, across the board spending cuts (or sequester) to the expiration of the tax cuts that would reduce spending and raise taxes so abruptly and mindlessly it would put us back into recession. But ignoring and waiving the policies instead would add additional trillions to the debt and set us up for a fiscal crisis.”

Since, I've just pointed out that the US has no real debt/solvency 'problem,” it's pretty clear that this choice is no dilemma at all. When the debt ceiling crisis during the lame duck comes, just mint that $60 Trillion coin, start paying off the national debt, and refuse to make any spending cuts or support any tax increases on the middle class. Since the debt's getting paid off, there's no down side to that course.

”A fiscal cliff or a mountain of debt. It will require presidential leadership to avoid either threat. While the likely approach will be to replace the slated policies with a gradual debt reduction plan that would bring the deficit down and leave the debt so that it is no longer growing faster than the economy, there are many different ways to achieve this -- all with pros and cons -- and many specifics that need to be filled in.”

None of this is necessary. The mountain of debt isn't a problem. The fiscal cliff can be safely destroyed by a Congress and President unwilling to drive the country off of it, and there's no need for a long-term deficit reduction plan to flatten that cliff. In fact, having one is a bad idea because the deficits we run need to be determined by spending programs directed toward public purpose in the context of current economic conditions.

Whether there's a deficit or not and how large it or the debt is should not be forced by fiscal policy aimed at reducing either one or both; but should be determined by policies designed to improve both the economy and the society it serves. When you can run out of money and become insolvent, then you have to make sure that debts and deficits don't impair your future capacity to spend.

But when solvency isn't an issue, all that counts is the economic and societal impacts of fiscal policies, not their impact on the abstract debt or deficit numbers. It's not that deficits don't matter. They may matter very much if they're large enough to cause demand – pull inflation. But if fiscal policies are evaluated from the viewpoint of their impact, then inflation becomes one of the possible impacts of policy, to be assessed against other outcomes as necessary in estimating and planning for a fiscal policy that will achieve public purpose.

The Debates and the Debt

Maya continues:

”However, the tendency during campaigns, of course, is for politicians to talk about what they promise not to do, rather than own up to the tougher decisions their stewardship would require.

Instead of allowing the presidential candidates to duck and bob to avoid specifically saying how they would stem the flow of red ink, what if voters insisted that all presidential candidates directly answer the question, "how would you fix the debt?"”

If voters insisted on that, then it would be a very big distraction from real issues. As I've already said, the idea that there is a debt crisis is “a deadly innocent fraud”; and part of its deadliness is that people become preoccupied with this false fiscal, but real but minor political problem, and spend far too little time on the myriad of real economic and societal problems we face as a nation. Everyone knows the litany of these problems well enough. I needn't repeat it here. But I can't emphasize heavily enough that voters ought to insist that presidential candidates directly answer questions about how they would handle real problems, and the question “How would you fix the debt?” is not directed toward one of these.

But questions like: “How would you help to create full employment?” “How would you create a health care reform bill that covered everyone and cut total health care expenditures as a percent of GDP by 1/3?” “How would you reduce economic inequality in the United States?” “How would you expand the social safety net to implement FDR's economic bill of rights?” 'How would you rebuild the energy foundations of the United States to create an economy no longer based on fossil fuels?” “How would would you rebuild the public education system in the United States, so that we are among the top few nations in the world in educational quality?” And, of course, “How would you stop and reverse the trend towards plutocracy in the United States to save our democracy?” All of these are questions that are targeted on real problems.

So, I think that these are the kinds of questions that presidential candidates ought to debate. But, under no circumstances should they waste another moment of time debating how to meet the non-existent “debt problem.” And as for detailed deficit reduction plans and scoring candidates performance on these is concerned, forget it! It's just a waste of time, a diversion for people who'd rather play games than solve real problems.

(Cross-posted from Correntewire.com)

Election Politics and the Trillion Dollar Coin

Joseph M. Firestone — Mon, 25 Jun 2012 12:34:50 -0400

Sometimes people object to the idea of the President ordering minting a $1 Trillion proof platinum coin on political grounds, even though they believe it's: legal to mint such a coin, won't be inflationary, and will allow the President to avoid the debt ceiling crisis. Robert Rice offered the following as part of a longer comment on a post of Beowulf's:

“Given a large portion of the country regards any form of money creation as inherently inflationary, coining the billion, trillion, or infinity coin will be fought tooth and nail in the name of preserving the value of the dollar. While this position is of course grossly mistaken, do you really think the Obama administration is going to want an argument a few weeks before the election on whether money creation is inherently inflationary?”

I think that's right. I don't think the Administration is going to want a big fuss over the inflation bogeyman a few weeks before the election. However, It won’t happen before the election because the President still has almost $800 B in headroom before the debt ceiling is reached (See Daily Treasury Statement, June 20, 2012). It will happen after the election. My hunch is November, though there’ll enough money to last until the new Congress starts in January, if Obama wants to continue deficit spending at the $109 B per month rate he has been running this fiscal year.

In any event, during the lame duck, and the succeeding months after he mints a jumbo coin, the President could have that debate about money creation being inflationary. He could take plenty of time to educate people about his initiative. But I think he'd be a fool to try that after minting only a $1 Trillion coin, because that coin won't solve the problem of persuading people that there are no solvency or inflation problems to worry about. It's just a half-measure, and it won't pay off the debt that many people are so freaked out about.

Let’s say, however, that he creates a $60 T coin and uses it to repay other Government agencies and buy the Treasury debt from the Fed on November 15. That will reduce the debt by 6.4 T bringing it down to $9.3 T or so. Since none of that money will be spent into the private economy, beyond normal entitlement spending, there won’t be any inflationary impact.

The Treasury has been rolling over close to $4 T in debt instruments every month; meaning that most of that is probably short-term debt. So, by the end of the year our debt subject to the limit will be down to $5 T or so, and we will find out by the first quarter of next year whether paying down the debt using seigniorage is inflationary or not.

If it isn’t, as Modern Monetary Theory (MMT) predicts, then the fight over “printing money” will be over, won by MMT and reality. We’ll probably be down to about $3 T remaining longer term debt to be paid off as it comes due, and both the debt terrorists and the inflationistas will have to fall silent. Obama will have won the political fight and he will still have more than $45 T left to cover remaining debt subject to the limit, and future spending for 20 years, at least.

In short, I think the political argument against huge value Proof Platinum Coin Seigniorage (PPCS) will fall to the ground, since people will love the idea of no more national debt, especially those who, not knowing about MMT, believe that our national debt is fiscally unsustainable and fiscally irresponsible.

(Cross-posted from Correntewire.com)

An Imminent Spending Blitz (?) and the Debt Ceiling

Joseph M. Firestone — Sun, 24 Jun 2012 23:07:46 -0400

About Two and a half months ago, Mike Norman pointed out that when Federal spending and tax collections in fiscal 2012 were compared with those for the same calendar date in 2011, data from the Daily Treasury Statements (DTS) showed that 2012 Federal spending was lagging behind 2011 spending by $433 Billion; while 2012 tax revenue was running ahead of 2011 by $45 Billion. So, the Federal stimulus for the macroeconomy in 2012 was $478 Billion less than it was in fiscal 2011 at a comparable time in the fiscal year, or looking at it another way, we can say that the 2012 fiscal drag produced by the Government was $478 B more in 2012 than at a comparable time in 2011. Given these numbers, and the continued reluctance of banks to lend for business expansion, the slow down in the economy and continued high unemployment are exactly what one would expect.

In a sense, austerity, has already come to America, courtesy of the Obama Administration, because the $109 B per month in deficit spending it has averaged so far this year is too small to do more than support slow growth, even though it corresponds to an annual deficit of almost $1.3 Trillion.

is a Spending Blitz Coming?

I checked the DTS again on June 21st, because I was curious about where the fiscal drag was relative to last year and also to see where the debt ceiling vs the debt subject to the limit was. I found that the closing balances on June 20th showed that Federal spending had caught up a bit with 2011 and was now behind by $412 B. However, tax revenues compared with 2011 had increased by $66 Billion. So, at almost 9 months into fiscal 2012, the total fiscal drag compared to 2011 was still at $478 B, almost as if someone was managing spending against revenues so that deficit spending would not increase in the 3rd quarter.

So this raises the question: what will happen in the 4th quarter of FY 2012 and the first quarter of FY 2013? Will the Administration suddenly ramp up Federal deficit spending, so that there is a massive deficit spending shock delivered to the economy over the next four months?

Let's go to the DTS again for June 20, 2012:

-- Statutory Debt Limit: 16,394,000 in millions

-- Total Public Debt Subject to the Limit: 15,737,388 in millions

The difference or space between current debt subject to the limit and the debt ceiling is: $657 Billion with a little more than 4 months left until the election. In addition, there was another $140 B in operating cash in the Treasury general Account as of June 20th. Adding the two together, we see that the President has almost $800 B in head room before he reaches the debt ceiling, and amount comparable to the size of the Recovery Act of 2009.

So, the President can increase deficit spending to $170 B per month, provided Congress has already appropriated the money, an increase of $65 B per month for the next 4.3 months, and still have about $70 B in deficit spending to spare for November and December, before Geithner has to start juggling things to prevent default. In other words, the Administration can probably deficit spend at an annual rate of $2.0 T for the next 4.3 months in a blitz that can perhaps reduce U-3 unemployment quite a bit below the 8% level, a reduction that is probably enough for him to win going away in November.

So, 1) I think President Obama has been holding back 2012 deficit spending a good bit, probably thinking that if he can spend the money in July, August, September, and also in October, then he can see the U-3 numbers go substantially below 8% and also talk about a trend toward a stronger recovery but 2) I still don’t think he’ll get close to the debt ceiling until the middle of November.

The Debt Ceiling: What Will Happen?

On the question of what will happen in a debt ceiling crisis this time around, I think that depends on whether we come to the ceiling in October or November. The analysis I just did suggests that the President can make sure it will be in November, but If something goes out of control and it is October, then I think the President may go out of character and use the 14th Amendment, or the Trillion Dollar coin, or even Beowulf's latest consols idea (which the President may prefer because it can be seen as a slick, merely technical solution taken to get around the debt ceiling) to avoid giving away stuff on key entitlements. He won’t want seniors going to the polls and voting disproportionately for Romney, or progressives staying home, because he gave away SS and Medicare, and other important “discretionary” programs like Head Start, rolled over on defense spending, and accepted tax cuts for the rich without a fight. He also really doesn’t want a Republican Congress next time, even if he wins himself, because then, they’ll try to impeach him.

So, he’ll fight this time if it’s in October. If it’s in November, the much more likely occurrence, however, then, if he wins the election, I think, he’ll do kabuki, make some BS statements, and do something in the Bowles-Simpson framework, but with more in spending cuts and less in tax increases than progressive Ds say they want.

Judging from his past behavior, I think he’ll start negotiating from Bowles-Simpson, go down from there, and then end up with a “compromise” that’s much worse from the viewpoint of progressives than even Bpwles-Simpson. He’ll do this especially, if the Rs win control of Congress. But even if the Ds win both Houses, I think he’ll still do it, because I believe his vision has always been to get rid of the New Deal as much as he can, and to implement neoliberalism more fully.

If Romney wins, finally, I still think that Obama will try to broker a deal based on Bowles-Simpson in the lame duck, and will probably call Romney in to bring some of the Republicans over on tax increases. So, given all the possibilities I think it’s November for the crisis and then a settlement using Bowles-Simpson or some variant of it, and that the middle and working classes, women, seniors, and the vulnerable will take another big hit from the austerians, while the rest of us experience the lost decade, or even more if we can't get rid of the neoliberals before then.

What He Should Do?

What President Obama should do is to take the whole debt ceiling issue off the table right now, and for the foreseeable future by minting the $60 T proof platinum coin, and follow up by paying down the debt subject to the limit drastically, and pressuring the Rs with massive stimulus bills that won’t involve any “deficits” in the sense of a gap between revenue and spending. I’d like to see the Rs oppose massive spending to get the economy going, or Medicare for All, when the money to pay for these is already in the Treasury General Account (TGA). Good luck with that!

(Cross-posted from Correntewire.com)

The Democrats' Jobs Dilemma: Celebration vs. Call to Action

Richard Eskow — Mon, 12 Mar 2012 04:15:22 -0400

Perhaps my reaction to the latest unemployment statistics is colored by the fact that I'm reading them in Africa, far from the comfortable familiarity of Washington, New York, and California. There's nothing like the songs of unfamiliar birds as the sun rises over the hills of Pretoria to accentuate the strangeness of conventional Beltway wisdom.

But no matter where you are, it should always be disorienting to see the the words "8.3 percent unemployment" alongside phrases like "good news" and "economic recovery."

Barack Obama and his fellow Democrats are in an unenviable position: If they celebrate the tepid revival of jobs growth they run the risk of being seen as out of touch with the ongoing pain of many Americans and the reduced prospects for many others. If they acknowledge the ongoing misery that has abandoned millions of Americans to long-term joblessness, and millions of others to wage stagnation, they're giving ammunition to their own opponents.

The President hasn't struck the right balance yet.

"The economy is getting stronger," President Obama said on Friday. "When I come to places like this and I see the work that's being done, it gives me confidence there are better days ahead. I would bet on American workers and American know-how any day of the week."

But the rosy picture is filled with fracture lines: The pace of growth still isn't enough to bring unemployment down to reasonable and historical levels in the next several years. We're not creating the right kind of jobs. Even this tepid recovery is fragile, and could collapse at any moment because of events beyond the President's control.

Let's put the latest employment figures into perspective:

We've had three consecutive months with jobs growth of more than two hundred thousand. That's an improvement, of course, but it still leaves more than twenty million people un- or under-employed. And the fastest growing category of employment is in temp work, followed by health care (mainly low-level caretaker jobs) and "leisure" - which is described as consisting primarily of "food service and drinking places."

If it's "morning again in America," at least we know somebody's been hired to pour the coffee.

But we also know that this is not a sustainable path forward. If you want to revive the economy you need to provide well-paying jobs, which isn't happening. In fact, we're barely denting the long-term unemployment problem.

The Democrats seem to be searching for the formula that will carry them to victory. How about the truth? The truth is this: The stimulus measures worked, but we need more action. Without it the long-term reality for millions of Americans will be one of perpetual economic recession or depression.

The President could say "Our stimulus measures worked, but we compromised with Congress and didn't get enough. That means we need more of the same, because we need to improve on these successes by helping millions of people join in the recovery - which will help all of us."

Is that what he will say? There are no crystal balls in the immediate vicinity, so we don't know. But if he doesn't, he's leaving his fate in the hands of forces beyond his control - and leaving millions of Americans with no one to speak for them.

Satan Speaks to Santorum - and Has Some Words For Sarah Palin Too

Richard Eskow — Fri, 24 Feb 2012 02:29:22 -0500

Psst. Hey, Senator! Just wanted to say thanks for all the free publicity! It's getting even better now that your pal – what's her name, the Half-Governor? - is talking about me too. You know what they say: It's not bad press if they spell your name right!

But listen – and I really shouldn't do this – I'm not sure you realize where you're headed. Put it this way: When the lead singer from Megadeth says he'll vote for you, take it as a sign. I mean, c'mon man! They sang “Prince of Darkness”!

You already talk about me like you know me. Have we met? You do look familiar, but I meet so many guys in your line of work - lobbying, that is. Oh, right, you're a politician too. When it comes to politicians, let's just say we've always got a quorum down here! Talk about your “smoke-filled rooms” …

Oh, wait. Maybe you haven't figured out who I am. Please allow me to introduce myself - I'm a man of wealth and taste.

In fact, my taste is so good that when I go to a political fundraiser all the bankers want to know who my tailor is. (As if I'd tell them! But don't worry: I'll be fitting most of them for new suits soon.) I go to a lot of fundraisers these days. Gotta love that Citizens United ruling. I was able to fire a whole host of demons and start a SuperPAC instead.

I especially appreciate it when folks like you and the Half-Governor talk about me, because let's face it: We're working the same demographic. I'm after their souls and you're after their campaign cash, but it's the same crowd I've been running with since the dawn of time:

They're the moneylenders who were chased out of the Temple.

They're the Usurers that were condemned three thousand years ago in Babylon.

They're the hypocrites who shout their faith all over the airwaves after the Bible told them to “pray in secret.”

They're the liars, the backbiters, the slanderers, the rich men who are no more likely to get to heaven than a camel is to pass through the eye of a needle.

All of them flocked to me after the Competition kicked them out.

They've stood by my side ever since - and I've stood by them. I walked with them in ancient Rome. I guided them through the flames of Europe. I carried whips and chains on their slaveships and watched workers die in their sweatshops. They're my people – and now they're yours, too.

I'm talking about the money guys, mind you, not the voters. It's easy to fool voters once you've got yourself a mega-million-dollar war chest, which so many of you have amassed – with a little help from my friends.

You know what almost happened just now? I almost reminded you that you can't serve both God and Mammon at the same time. But then I thought: Why sell against myself?

As long as you're giving me so much coverage, though, I should set you straight about the way I work. "Satan has his sights on the United States of America!" you said. "Satan is attacking the great institutions of America, using those great vices of pride, vanity, and sensuality ...This is a spiritual war,” you said.

You got it all wrong, pal. I don't attack countries or institutions. I go after people. I take 'em down the same way the Competition lifts 'em up: One soul at a time. And I don't work through ethnic groups or countries or religions you don't like. I just burrow my way into a single mind, rent some space there, and go to work.

Possession? Corruption? I prefer to think of it as a “hostile takeover.”

But I'm disappointed in you, Rick. When the going got tough you tried to backpedal and pretend I didn't matter. Then your pal from the Frozen North spoke up, and she turned gutless too! She said you only “named evil as Satan.” The she said, “For those lame-stream media characters to get all wee-weed up about that, first you have to ask yourself, have they ever, ever attended Sunday school. Have they never heard this terminology before?”

Wait. Did Sarah Palin say that my name is nothing more than “terminology”? Get thee to a United Church of Christ! That's liberal-hippie talk!

And excuse me, but “wee-weed up”? “Lamesteam”? Name-calling and scatological references are a great road to go down … that is, if you're headed my way! But to we men of wealth and taste, it does sound a bit … well, juvenile.

My marketing strategy's been public knowledge for thousands of years, so how could you get it so wrong? I've got seven closers that work like a charm: Sloth, pride, anger, gluttony, greed, lust, and envy. And I've got benchmarks for tracking my prospects that would make most sales managers green with envy. The Competition calls 'em Commandments. I call them “barriers to sale.”

As for those commandments – well, I think “not bearing false witness” is pretty high up on the list, don't you? So why are you accusing your opponent of using “false theology”? And who's the Nazi in that analogy of yours?

But I gotta say: When you say that “mainline Protestantism” is "gone from the world of Christianity" … well, you're making my work easy for me. But why are you just implying that the President isn't Christian? I'm with Crazy Preacher Dude: Don't wimp out now! Say he;s a heretic and Muslim, and all those mainstream Christians are too! In fact, burn 'em at the stake while you're at it!

With all this Muslim-baiting, have you forgotten the meaning behind the story of the Good Samaritan? I sure hope so.

But I'm still disappointed that you and the Demi-Governor would deny me. Me! The one you called the “Father of Lies.” Do you deny now that we're fighting a“spiritual war”? Because we are – but it's a war for the heart, not the ballot box. And it's on, man, it's on!

In fact, it's always on. It's perpetually being fought - in the dark, in the quiet, in the lonely and secret spaces. It's always being fought, one-on-one, by a soul who's alone in the emptiness with me.

And you know me: I'm the Whisperer. I'm the voice that tells humans to do evil. I'm the vanity that makes you all want to be on television, the pride that makes you think you can run a country. I'm the greed that makes people cheat and lie to get rich. And I'm the envy that makes you lie down with them so they'll buy ads for you to steal the attention you covet in others.

You know me. Sometimes they call me “Satan.” Sometimes the call me “evil.” At too-big-to-fail banks they call me “moral hazard.” In your town they call me “electability.”

I don't care what you call me, as long as I get what I came for.

My favorite part of this isn't the talking, though. It's the policies you and your friends are pushing. They're as un-Christian as the day is long. No wonder this priest thinks you don't understand your own religion: You want to treat the Earth like toilet paper to be used and thrown away. That violates all sorts of Biblical injunctions.

That makes your comment that Obama "elevates Earth above man" even nuttier than it sounded. By not respecting the Earth, you've placed yourself above God.

The Pope's condemnation of the war in Iraq? You didn't care. Your Church's rejection of the death penalty? Yawn. Its “preferential option for the poor” that demands social and economic justice? You must have been listening to Megadeth with the headphones cranked up when they announced that.

“As you do to the least of these,” said the Competition, “so do you do to me.” You and your friends don't seem to want to hear that. In fact, you spend most of your time undermining the very teachings you claim to believe in. To which I can only add: Keep up the good work.

If you're as successful as I hope you'll be there's gonna be a whole lot of pestilence, famine, disease, and death around this place. Why, it'll be like the good old days! That ought to get the do-gooders and preachers … how shall we say it? … “all wee-weed up.” And as for the middle class that all you politicians like to talk about – well, if you have your way it'll disappear completely.

I know, I know. You grew up working class. If you've said it once you've said it a thousand times: You used to be a regular guy. So what? I used to be an angel.

Look at us now.

Last Night's GOP Debate Was Like Bad 1950's-Style Science-Fiction

Richard Eskow — Fri, 27 Jan 2012 11:31:09 -0500

The GOP presidential candidates continue to play their parts in an implausible story of a world that could never exist, acting out nonexistent conflicts while delivering dialog that insults the intelligence. That's not because they're stupid. It's because they think you are.

It's like watching a low budget science-fiction movie from the fifties: Dr. Strange vs. The Vulture in the Caverns of the Moon. It's badly executed, even by the low standards of its genre, complete with cheap sets, bad special effects and wooden acting.

They're counting on their audience to provide that state of mind which literature professors call "the willing suspension of disbelief."

Three of the candidates are selling an nearly identical story of hardy earth people who are only able to save their planet once they've been freed from taxes and regulations.The fourth, Ron Paul, is offering a different script, a 10,000 Years BC scenario of unparalleled economic savagery.

Sure, Dr. Paul seems like a likable guy. And it's great that he's saying things about war, terrorism, and human rights that nobody else will, including Barack Obama. But he wants to lead us into a blood-drenched, kill-or-be-killed world. (Remember when he was willing to let an injured man die because he hadn't paid his health insurance premium?)

The candidates' scripted lines weren't all that was "retro,"either. In the year 2012, Wolf Blitzer actually asked them which of their wives would make the best First Lady. What would he have done if they hadn't answered -- held a pie-baking contest? As the scientists' young assistant said when the monster entered the laboratory: Eek!

What did we learn tonight about the Republicans' collective and individual economic fantasies?

We come from a distant planet with news of a world vastly unlike your own ...

Rick Santorum was the first out of the box this time. By invoking the magic word, "deficits," he called the economic coven to order.

The New York Times analyzed the tax plans put forward by Romney, Gingrich, and Santorum to determine how much each of them would add to the national deficit in a single year. Romney's would add $600 billion. Santorum was tied with Gingrich at $1.3 trillion, or more than twice as much.

Ron Paul wants to eliminate the income tax altogether, making the economic future under his Presidency as difficult to predict as the space-time continuum inside a black hole. That's probably why the Times didn't try. (It would be an interesting project, though.)

Let's be clear: All of those deficit estimates -- $600 billion for Romney, more than twice that for Santorum and Gingrich -- vastly understate the true explosion in the deficit we'd see under any one of them.. They only consider the income lost through tax cuts. But other aspects of their economic plan would lead to greatly increased unemployment, prolonged recession, and an increased likelihood of another financial crisis brought about by deregulation.

So the real increase in the deficit could be several times as large. Ronald Reagan and George W. Bush both blew the deficit through the roof, and their numbers would be small-time compared to what a Romney or Gingrich Presidency would do.

What all four candidates share is the professed belief -- which Paul and possibly Santorum sincerely hold, but Romney and Gingrich almost certainly don't -- that deregulation and lower taxes will lead to a larger and healthier economy. What's wrong with this belief? There is no time or place in human history that these policies have ever led to that outcome.

Enter The Vulture

Thanks to the now-lamentably absent Rick Perry, Mitt Romney will always be known as the "Vulture Capitalist." Bain Capital and the hedge-fund business model ("Bain Capitalism") it represents is every bit as parasitic and non-constructive as the populist fulminators (and now, hilariously, Newt) say it is. Mitt got rich off of corporate and individual tax breaks and subsidies, and possibly from a bailout too.

Mitt's signature achievement as Governor of Massachusetts was, of course, RomneyCare. His Republican critics are right. The plan is virtually indistinguishable from ObamaCare. So tonight's back-and-forth about individual mandates was extremely instructive.

The Romney and Obama plans, including the individual mandate, are both based on the right-wing think tank proposal developed in the early 1990's as the Republican alternative to Hillary Clinton's plan. That's why it's such a boon to private insurers.

Santorum scored well on this issue: "You are going to claim [about the Affordable Care Act] ... doesn't work and we should repeal and he's going to say, wait a minute Governor, you said it works well in Massachusetts. Folks -- we can't give this issue away in this election." Romney's defense of his plan could have been lifted verbatim from an Obama speech.

Santorum's right about losing a campaign issue, of course. And imagine what Obama might have done if he hadn't broken his campaign pledge to oppose the individual mandate and failed to fight for the public option (or deliberately traded it away). Health care could have been a major plus for him in this election.

Seeing the Wires

On the personal level, Romney is still forced to deal with his tax breaks. Given the selective nature of the tax forms he released -- why just the last two years? -- there's a good chance he paid little to no taxes for a number of years. And he's certainly bled the tax system for all it's worth, something I don't begrudge people for doing while that's the law -- unless they belong to the party that helped write the law."

Then they're double-dippers and hypocrites. (And yes, we'll get to Newt shortly.)

There's one entertaining outcome to Romney's career embarrassments. They've forced Rush Limbaugh and other professional Republican operatives to defend vulture capitalism against the guy who wrote the Contract With America.

Gotta love it when the director of that sci-fi movie makes a mistake. That's when you see the boom mike enter the frame, or the shadow of a camera operator fall across the actors' faces, just as the space hero begins to fight his villain. And Mitt's villain is ...

Dr. Strange in Lunar Orbit

Newt Gingrich is striking at Romney from his secret moon lair with a personal animosity and stage sneer worthy of any screen villain. Except that Newt's not always wrong. When he slams Romney for his greed, he's right. Just as Romney's right when he calls Newt an influence-peddler.

Pass the popcorn, please.

About that $1.3 trillion his tax plan would add to the deficit: Apparently it's not enough. Newt wants to build a manned base on the moon. That would add a trillion or so to the deficit, easy. Why? The logical answer to that question would be the one given in the 1960s to justify the manned space program: Innovation and jobs. But that would mean promoting ... dare we say it? ... a stimulus.

And if you're talking about stimulus spending, there are much smarter ways to do it than building a base on the moon. So instead Newt invented a 1950's-era Red Menace. " I'd like to have an American on the moon before the Chinese get there," he said. And, no doubt, to get away from the nonexistent war on religion he's always talking about. After all, nothing brings you closer to God than breathing an artificial atmosphere beneath a transparent dome in the Mare Imbrium.

Americans walked on the moon more than forty years ago. The first Chinese have yet to arrive there. They don't seem to be in a big hurry. And guess what? If you're worried about the Chinese economically or militarily, the moon's a pretty good place for them to go. It would cost them a fortune to get there, making them less of an economic threat, and once they get there they would be very far away.

Gingrich even suggested that 13,000 Americans on the moon could apply for statehood. But Puerto Rico? Not so much.

Ron Paul punctured another one of Newt's sci-fi fantasies, that of Speaker Gingrich as deficit cutter, when he pointed out that the Federal deficit actually increased during Gingrich's years as Speaker of the House. That's true. It began dropping the year that Newt left (after an ethics scandal).

Splashdown!

Meet the Cast

Santorum and Paul don't stand a chance. They're the supporting actors in our science-fiction movie: the likeable but goofy sergeant who makes it to the third act before being grabbed by an alien tentacle, and the crusty old ship's doctor who says folksy things that make the whole crew laugh.

It'll either be Newt or Mitt, and after tonight Newt's chances are looking worse.

Yes, Newt is an influence peddler. But I have to admit I feel a little sorry for the guy. The Republican Machine -- as scary a bunch of lockstep-marching automatons as you'll ever care to see -- has turned out against him in the last few days with brutal determination. Then I remember his race-baiting rhetoric and I don't feel bad anymore.

He had a pretty weak night tonight, But he did get one major endorsement today. According to the Voice of San Diego, convicted felon and former Republican Representative Duke Cunningham (who's serving a 100-month term for bribery, conspiracy and tax evasion) said, "I have 80% of inmates that would vote for you. They might not be able to but their extended families will."

And yes, Mitt is a vulture capitalist. At least one person who did business with Bain during his tenure says they were duplicitous and untrustworthy.

The End ... or The Beginning?

It's no surprise that Newt and Mitt both made money off Fannie and Freddie, and no doubt from other predatory lending schemes. Newt and Mitt are peddling the same alternate reality, with only a few minor tweaks between them. In some ways it doesn't matter which one wins, because the economic script has already been written.

Wolf Blitzer asked them about the role of religion and God in the presidency. May I answer that question too? I've been pretty unhappy with Barack Obama at times. But God must love him or he wouldn't have given him opponents like these.

And now it's time for the closing dialogue for our sci-fi film. After the invaders have been vanquished, we see our scientist hero and his son staring up at a bright blue sky that's once again free of menacing saucers. The scientist's last lines to the boy reflect our own sentiments about these Republican debates:

"They're gone for now, Billy. Sure, they'll be back -- but next time we'll be ready for them!"

If Obama Moves Right He Loses Everybody - And Everybody Loses

Richard Eskow — Wed, 19 Jan 2011 00:22:20 -0500

The latest Democracy Corps/Campaign For America's Future poll on jobs and the economy has a clear message for the President and his party: Stand up for jobs, and protect Social Security and Medicare. The results couldn't be clearer. Yet it's still rumored that the President's State of the Union will emphasize deficit reduction over job creation, and the White House has refused to assure worried Democrats that the President won't also propose cuts to Social Security.

How many polls will it take to convince the White House that this is political suicide? How many expert analyses will it take to persuade them that its premature to make deficits the priority when the country desperately needs jobs and economic growth?

The latest poll is based on interviews with 1,480 people who voted in 2008, and was conducted January 9 - 12. It strongly reinforces the findings of earlier polls: Voters overwhelmingly want their government to emphasize job creation and economic growth over deficit reduction, and they are opposed to cutting Social Security or Medicare. The bottom line? The President's in danger of moving in a direction that will lose everybody he needs. Literally every demographic group he and his party needs will be alienated by a right-leaning set of policies.

Voters Today

Here's how the picture looks today, by demographic group:

Young voters will be considerably less eager to support Barack Obama in 3012, except in the unlikely event that his opponent is Sarah Palin. While he wins 64% to 29% of the youth vote in a matchup against Palin (which tellingly isn't even as great as his poll showing against McCain), he only wins 54% of the youth vote against Mitt Romney, who hasn't even begun to campaign.

Support for Congressional Dems among young voters is plunging, as the 63-18% difference drops to 50-39% in a hypothetical 2012 matchup. And these numbers don't capture the lost intensity of support, either.

After the 2008 election, the Obama team boasted that it had built an independent, youth-based team around its Internet lists that it could mobilize to win future elections. But the number of young voters plunged by more than half in 2010. 51 percent of voters aged 18-29 showed up in 2008, and that number plummeted to 20.4% last November. That's even fewer than voted in 2006. The party's lead in union households, another Democratic stronghold, has dropped from 37 points to 18 points.

The President and the party still have some very strong relationships: suburban voters, unmarried women, and African Americans are still very solid. And the President's negatives have dropped sharply since the election. But two core constituencies, the young and union members, are crumbling.

The picture's even bleaker among key groups of swing voters. Congressional Democrats are trailing by 23 points among white non-college voters, and Obama's losing them to Sarah Palin by 22 points (and to Romney by 21). Obama's losing white seniors to Palin by 8 points, to Romney by 25 points, and other Democrats are losing them by 16 points. Congressional Democrats are losing rural non-South white voters by 31 points, and Obama trails both Palin and Romney (losing to Romney by 26 points).

So the question becomes, what should the President and Congressional Democrats do - and what shouldn't they do - to improve their electoral chances?

The Way Out

The answer, as it turns out, is: The right thing. The rumored priorities for the State of the Union are exactly the opposite of voters' priorities. When asked to name the two biggest problems right now, the overwhelming answer was "jobs and the economy." Unemployment and outsourcing ranked first and second, with a total of 74% of respondents placing them in the top two. "Deficits" were included by only 18%, 18% said "wages have not kept up with the cost of living," and 17% said "the economy is not growing." The total blend of answers paints the picture of a country devastated by job loss and economic setbacks.

In a similarly-structured question, 46% said Congress' top priority should be "economic recovery and jobs," 34% said "protecting Social Security and Medicare," and only 15% said "reducing the size of the budget deficit." Another 14% included "investing in new infrastructure and new industries" as one of their two top priorities.

Should Social Security benefits be cut? White seniors said no, by 48% to 36%, and the "don't cut" voters felt much more strongly about their position. White non-college voters said "don't cut" by 55% to 35%. Voters in districts that turned Republican in 2010 opposed cuts by 57% to 34%. Even suburban voters were oppoed, 60%-34%.

The voters were strongly in favor (57 percent) of "a plan to invest in new industries and rebuild the country over the next five years." By contrast, only 52 percent approved of "a plan to dramatically reduce the deficit over the next five years," and with less intensity of support than expressed by those who wanted investment.

Other ideas sound good to voters until they're told what's involved: They liked the idea of adopting the recommendations of a "bipartisan deficit commission," supporting it 56% to 19%. But when they were told what the recommendations were, they opposed them by 54% to 34%. 55% were opposed to raising the retirement age and 57% were opposed to reducing benefits for people now entering the workforce.

Would this be a "move to the middle"? 52% of independents and 55% of Republicans oppose raising the retirement age. People under 50 oppose it by a 22-point margin, women oppose it by a 19-point margin, suburbanites oppose it by a 14-point margin, and people in districts the GOP picked up last year opposed it by 14 points. For other benefit cuts the opposition was even greater. The margins were 25 for under-50's, 27 points for women, 26 points for suburban voters, and 23 points in GOP pick-up districts.

So why are we still talking about this?

Warning Signs

These poll results show that a rightward move at the State of the Union would be disastrous, yet the signs are ominous. Robert Gibbs has indicated several times that deficit reduction will be a major theme of the speech. Now Christina Romer, a former Administration economics official, is pushing the deficit line. In a New York Times op-ed called "What Obama Should Say About the Deficit," Dr. Romer writes today that "My hope is that the centerpiece of the speech will be a comprehensive plan for dealing with the long-run budget deficit."

Romer continues: "The recommendations of the bipartisan National Commission on Fiscal Responsibility and Reform that the president created are a very good place to start." That's wrong on two counts: The bipartisan Commission never issued recommendations - it couldn't reach the required majority - and the recommendations of its' two co-chairs are harmful, anti-growth, and (as the polling has showed) extremely unpopular.

This is the same Christina Romer who wrote another op-ed only ten weeks ago, also in the Times, called "Now Isn't the Time to Cut the Deficit." Is this reversal the sign of some internal Administration shift? Now Dr. Romer says that "the need for such a bold plan is urgent -- both politically and economically. Voters made it clear last November that they were fed up with red ink." (No, they didn't, as this and many other polls have shown. This was a protest vote, more than anything else.)

Why are deficits "urgent" economically? Dr. Romer explains: "At some point -- likely well before 2035 -- investors would revolt and the United States would be unable to borrow."

Jobless Americans might be stunned to learned that a possible investor revolt sometime within the next quarter-century, based on hypothetical scenarios, is more "urgent" than they are. Many economists would be equally surprised to learn that Dr. Romer doesn't consider economic growth an effective way to cut the deficit.

Many of the President's advisors will argue that there's a new political calculus and that he no longer has the horsepower to get spending measures through Congress. They'll also point out that voters say they want cooperation and civility. Okay. But why can't you explain what you believe will work? And since when did articulating an economic policy or defending Social Security become "uncooperative"?

The Moment Before

If the President moves to the right in this way, it would be a deeply cynical strategy - one that sacrifices his party and everything it's represented for 75 years in order to win on celebrity likeability and post-partisan "branding." Worse, from his point of view, we now know it probably wouldn't work. The numbers aren't there. He would be proposing the wrong policies, at the wrong time, for the wrong reasons.

And if the President's advisors think that a deal on Social Security or deficits would give him the same boost that the tax deal did, they'd be sadly mistaken. The tax deal, whatever its flaws, put money in everybody's pockets. Social Security cuts and austerity economics would take money out of those pockets. Sure, Republicans would cut a deal. Then they'd use it against him in 2012. Large segments of his base would turn away from him, or just stay home. Swing voters would register their disapproval of the deal by turning on him, as the public face of the "grand compromise."

We're in a strange historical moment. The President's about to give a speech that will define the future of his Presidency - and our own personal futures - yet nobody knows what he will say. That's odd and disturbing. For those who want to see the Administration defend Social Security and strive to rebuild the economy, Washington seems to be moving in slow-motion. It's like the scene in a science-fiction movie right before a world-changing event. You know the scene I mean, the one where the sky grows dark and the wind rises and everything becomes silent.

You don't know exactly what's coming. But you know that afterwards nothing will ever be the same.

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This post was produced as part of the Strengthen Social Security campaign.