Krugman, Nine Years Later, Recognizes That Obama Served Only The Wealthy


What we had under the Obama administration during 2011 was slightly different looks at two aspects of the same point of view, fighting as if they were all what the political spectrum was. Either of these two aspects, the Obama one, or the Republican one, agreed on one thing: spending on the non-wealthy and, thus, most of the economy was already plenty enough, and, actually a risk: it could augment the deficit. It was an imaginary risk: when was the last time a deficit threatened the US economy, let alone society, for real? 

I said this at the time., again and again and again Paul Krugman discovers it in 2020… [1] in: Why Do the Rich Have So Much Power?

Here is Krugman:

“July 1, 2020,
America is, in principle, a democracy, in which every vote counts the same. It’s also a nation in which income inequality has soared, a development that hurts many more people than it helps. So if you didn’t know better, you might have expected to see a political backlash: demands for higher taxes on the rich, more spending on the working class and higher wages.

In reality, however, policy has mostly gone the other way.

Tax rates on corporations and high incomes have gone down, unions have been crushed, the minimum wage, adjusted for inflation, is lower than it was in the 1960s. How is that possible?

The answer is that huge disparities in income and wealth translate into comparable disparities in political influence. To see how this works, let’s look at a fairly recent example: the budgetary Grand Bargain that almost happened in 2011.

At the time, Washington was firmly in the grip of deficit fever. Even though the federal government was able to borrow at historically low interest rates, everyone who mattered seemed to be saying that the budget deficit was the most important issue facing America and that it was essential to rein in spending on Social Security and Medicare.

So the Obama administration offered congressional Republicans a deal: cuts in Social Security and Medicare in return for slightly higher taxes on the wealthy. The deal foundered only because the party refused to accept even a small tax increase.

The question is, who wanted such a deal? Not the American public.

Voters in general weren’t all that worried about budget deficits. While most Americans believed that the deficit should be reduced — they always do — a CBS poll in early 2011 found only 6 percent of the public named the deficit as the most important issue, compared with 51 percent citing the economy and jobs.

Both the Obama administration and Republicans were staking out positions that flew in the face of public desires. A large majority has consistently wanted to see Social Security benefits expanded, not cut. A comparably large majority has consistently said that upper-income Americans pay too little, not too much, in taxes.

So whose interests were actually reflected in the 2011 budget fight? The wealthy.”

Krugman, nine years later, recognizing Obama served the wealthy as little Kenyan boys with both parents connected to the CIA, from Indonesia to Kenya, are won to do (oops, just speculating for fun, just as when Pelosi accuses Trump to hire Putin to pay bounties for US soldiers in Afghanistan, or something like that, her latest diversion in Pelossi land… Just trying to explain how the mom got married to a millionaire Indonesian frontman, during the dictatorship, while the “Harvard educated”, aren’t they all, dad ended so drunk and so dead…))

Lots to say about this graph. The USA, being now so incredibly powerful, could just total to zero ALL its debt owed to foreigners. Actually FDR did just that, with one third of the debt, in 1933. Nobody noticed.

OK, here is a bit more Krugman, now that he has regained reality a bit, we may quote him more often:

“A groundbreaking study of rich Americans’ policy preferences in 2011 found that the wealthy, unlike voters in general, did prioritize deficit reduction over everything else. They also, in stark contrast with the general public, favored cuts in Social Security and health spending.

And while a few high-profile billionaires like Warren Buffett have called for higher taxes on people like themselves, the reality is that most billionaires are obsessed with cutting taxes, like the estate tax, that only the rich pay.

In other words, in 2011 a Democratic administration went all-in on behalf of a policy concern that only the rich gave priority and failed to reach a deal only because Republicans didn’t want the rich to bear any burden at all.

It’s a philosopher, Xenophon, contemporary of Socrates, but more honest, who founded what he called “ECONOMY”. Krugman is just a Nobel laureate, just like Obama is one in child killing, he is mostly a technical guy, serving the plutocrats. So of course he censored my comment… which was purely technical (I added the insults for fun… and truth… in this longer essay). Here is what I said about debt, which flew over his head like a US air force air armada over Hitler’s head in 1944 (this really happened to a flabbergasted Hitler: five thousands contrails above the Great Guide… going to bomb his beloved Reich…)

“Deficit” is just a way to avoid taxes now (the French stopped understanding this a while back, and their economy cratered).

Indeed what is the deficit? What feeds debt. And what is debt? Potentially a problem with borrowing more, if past debt is not paid well enough. In other words, debt is an abstract threat upon one of the ways the government uses to finance itself. Of course, the government doesn’t need to finance itself: it could for example order companies to produce enough masks, and requisition them. 

What became real in 2011 was the refusal of the US government to invest more in the US economy. Instead, only the wealthy were left free to do so… thus augmenting their power.

Overall the will to wealth colors the entire Western society nowadays, including a school system too obsessed with competitive sports. Or the obsession with wealthy celebrities young people are impregnated with. Instead of being obsessed with learning science, infinitesimal calculus and the history of China, Europe or the Greco-Roman empire, students are exposed to the wealth obsession of the few as the ultimate good. This sort of youth, once grown-up, believe that the “job creators” are only the wealthy… when, in truth, it’s mostly government policies which create, or don’t create, jobs in general, and quality jobs in particular. Reinforcing itself, plutocracy controls the world media (either by owning, or sponsoring), and makes sure only what it views as the correct notions are considered, be it in politics, economy or history.

Notice the lack of academic comparison between the plutocratic financing of Hitler and the one of Xi… (With US plutocrats in the lead, in either case!)

Ah, if, according to Krugman “a Democratic administration went all-in on behalf of a policy concern that only the rich gave priority to”, in that Biden-Obama administration, why should it be different for another Biden administration? I say Biden-Obama, because Biden had been financed by the finance industry for several decades by the time he entered his VP job…

Patrice Ayme

***

[1] And 24 hours later, has still not published my comment…

***

Here is more Krug:

“Campaign contributions, historically dominated by the wealthy, are part of the story. A 2015 Times report found that at that point fewer than 400 families accounted for almost half the money raised in the 2016 presidential campaign. This matters both directly — politicians who propose big tax increases on the rich can’t expect to see much of their money — and indirectly: Wealthy donors have access to politicians in a way ordinary Americans don’t and play a disproportionate role in shaping policymakers’ worldview.

However, the influence of money on politics goes far beyond campaign contributions. Outright bribery probably isn’t much of a factor , but there are nonetheless major personal financial rewards for political figures who support the interests of the wealthy. Pro-plutocrat politicians who stumble, like Eric Cantor, the former House whip — who famously celebrated Labor Day by honoring business owners — quickly find lucrative positions in the private sector, jobs in right-wing media or well-paid sinecures at conservative think tanks.”

It’s of course exactly the same for pseudo-left politicians: just turn on any anti-Trump media and watch to see recycled pseudo-left politicians and their families… Like the daughter of the guy who attacked Afghanistan on July 3, 1979, launching Jihad, is a major anti-Trump, pro-Biden activist, paid zillions…

Krug, discovering how the mood of a plutocracy works:

And even the issues that the news media discuss often reflect a rich person’s agenda. Advertising dollars explain some of this bias, but a lot of it probably reflects subtler factors, like the (often false) belief that people who’ve made a lot of money have special insight into how the nation as a whole can achieve prosperity.

Perhaps the most striking aspect of the fixation on cutting benefits in the early 2010s was the extent to which it was treated not as a controversial position but as the undeniably right thing to do. As Ezra Klein pointed out in The Washington Post at the time: “For reasons I’ve never quite understood, the rules of reportorial neutrality don’t apply when it comes to the deficit. On this one issue, reporters are permitted to openly cheer a particular set of highly controversial policy solutions.

6 Responses to “Krugman, Nine Years Later, Recognizes That Obama Served Only The Wealthy”

  1. Gmax Says:

    Love it. Krugman calling Obama a servant of the wealthy. Precious. All this deficit BS is just BS. They have the deficit tape rolling in New York next to Wall Street it’s no accident. Deficit hysteria is a cool plan of the rich

    Like

  2. SDM Says:

    Interesting how Krugman, sometimes, gets it right. Every now and then he will reveal what is really going on in spite of himself. Talk to most people and they readily regurgitate the deficit nonsense as if it is just common sense. But then most of them have no clue how money is created or how the state funds “free market capitalism”. They have been propagandized into accepting austerity and endless war.

    Like

    • Patrice Ayme Says:

      I sent him a pretty technical note about the deficit… to support his (newfound) point of view (long mine)… He censored me, though… The only sentence that the NYT censors could object was my final (out of 1496 characters) remark that wealthy people owned or influenced/sponsored ALL media (I didn’t put the “ALL” in capitals, though). It’s a fact they can’t bear…

      That Bezos (worth ~ 200 BILLION dollars) control the great anti-Trump reference Washington Post should qualify it only as an individual website… The Bezos Times… Same for NYT, whose real name is not about “New York”… We’ve got to the point Fox News sounds really fair and balanced (if you had told me 17 years ago, when I used to foam and rage against Murdoch, that I would come to that beyond weird conclusion, I would have been amazed… I had been on a steady CNN diet… until CNN became an obvious, by 1995, let’s invade central Asia propaganda piece… Murdoch has changed… he has, incredibly, become wiser, which is easy to do when he saw his pet Thatcher replaced by Boris…)

      Like

      • pshakkottai Says:

        I find it simpler in these terms with a little empiricism added.

        GDP = govt spending + non govt spending + net exports
        = ( fiscal deficit – 0*tax) + K (fiscal deficit -federal tax) + net exports ,
        K being an empirical factor on the order of 4 for USA (I have plotted it) and maybe higher 5 for India. This factor is an economic multiplier between transactions in the economy and fiscal deficit, the prime mover. The reason for 0*tax is govt does not use tax for anything but trash. Federal tax, however, removes money from the economy.
        The economy runs on fiscal deficits. And taxes reduce GDP.

        By calling cumulative fiscal deficit “National Debt” you are confusing people calling the “source” of economy = the fiscal deficit with the “sink” = tax! Fiscal deficit is nothing but PRINTED MONEY!

        The exact money balance is
        fiscal deficit – trade deficit = net private savings.

        The economy will run fine with zero taxes except that taxes are needed to prevent the formation of extreme wealth and plutocracy.

        Like

        • Patrice Ayme Says:

          We seem in total agreement, especially in the last sentence… Although I am not clear on all the technical details. It’s clear that the total debt is a monument to the establishment:”If you don’t pay the establishment as you said you would, the sky will fall on your head!” In truth, it does not matter that way: if the national debt is eradicated, common people will be hit only in their pension plans (and that’s worse with municipal bonds, and acutely serious situation RIGHT NOW!!!!) But then, in turn, that can be fixed with more printed money.

          Like

          • pshakkottai Says:

            I agree. “National debt” is a misnomer. Cumulative created money is just what it is and actually becomes “national wealth.” Bonds and printed money are both created money in different forms!

            Like

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