MEDIA ROOTS — “Both parties have conspired to bring us disaster,” says Professor William K. Black, a leading white collar criminologist, who also teaches economics and law at the University of Missouri-Kansas City. “This has strangled the recovery and may even put the economy back into recession.”  Professor Black gives a crucial recap of Obama’s (and both Democrats’ and Republicans’) recent history of assaults against the working-class, also known as austerity.

This “act of austerity is insane, self-destructive, [and] might well cause another recession,” says Prof. Black. “Neither party is getting behind a clean bill. It would be, literally, one sentence: The sequestration provisions are repealed.”

With the fast-paced 24-hour soundbite news cycle dominating attention spans, it’s beneficial to take a step back and scope the bigger picture.  Professor Black masterfully articulates the truth behind the two-party budget cuts at home coupled with war spending abroad.

Messina

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Prof. Bill Black: Both parties have conspired to bring us a disaster; Obama’s sequestration plan gives cuts without blame

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REAL NEWS NETWORK — “Welcome back to the Real News Network. I’m Paul Jay in Baltimore. And welcome to this week’s edition of The Bill Black Financial and Fraud Report. [Professor] Black now joins us from Kansas City, Missouri. Bill’s an Associate Professor of Economics & Law at the University of Missouri-Kansas City. He’s a white-collar criminologist, a former financial regulator. He is the author of the book, The Best Way to Rob a Bank Is to Own One. Thanks for joining us, Bill.”

Professor Bill Black:  “Thank you.”

Paul Jay (c. 0:33):  “So, the sequestration cuts and drama, what do you make of it?”

Professor Bill Black:  “So, both parties have conspired to bring us disaster. In this case, sequester is the fourth shoe to drop in austerity. And, collectively, this has strangled the recovery and may even put the U.S. economy back into recession.

“So, the first major act was in mid-2011 when they reached this budget deal, that created the sequestration. And the budget deal, in itself, caused over a billion dollars in spending cuts at the worst possible time.”

Paul Jay (c. 1:15):  “So, just to remind everybody, the sequestration formula deal was a proposal by President Obama.”

Professor Black:  “Well indeed, it was created by President Obama, now, under, of course, Republican pressure, where they’re threatening to not raise the debt ceiling. But it was an Obama idea. And the principal framer of it was Jacob Lew, the President’s selection to be Geithner’s replacement as disastrous Treasury Secretary.

“And then the President blocked a Republican effort to get rid of sequestration. And then the President went so far as to threaten a veto any bill, that got rid of sequestration when the Republicans tried to get rid of it again.

“Now, you shouldn’t think too well of the Republicans in all of this. What they were worried about, pretty much solely, was defence spending. And making sure there’d never be a drop in defence spending.

“In any event, what you see is neither party, even at this time of crisis, where all the supposedly serious people finally agree that this act of austerity is insane, self-destructive, might well cause a recession. Neither party is getting behind a clean bill. It would be, literally, one sentence: The sequestration provisions are repealed. Right? And we could be free of, at least, that aspect of the insanity. We’d still have the debt ceiling insanity. But the sequestration, we would no longer be shooting ourselves, not in the foot, but substantially farther up our anatomy.

“So, as I said, the sequestration is large, but it’s not the sequestration all by itself. It’s the fact that it is this fourth act austerity. I began to mention the mid-2011 pact knocked off a billion dollars in spending at the worst possible time.

“Then we raised taxes on the wealthy, which you may well support, but it is an act, that pushes you towards austerity.

“And then the far larger and vastly more destructive resuming the entire payroll tax on Social Security, which economists think—all by itself—knocked a half percentage point off of growth. And growth is really small, so that’s a massively important thing, that is gonna cost hundreds of thousands of people their jobs.

“And, now, the fourth shoe to drop of austerity, of course, is going to be the sequestration.

“And, meanwhile, this is happening while we see Europe forced back into a completely gratuitous recession. The entire Eurozone, on average, is back in recession. And the European Commissions have just come out with dreadful projections, saying things are going to get worse.

“Spain just announced today that a single bank that they were bailing out—which is really seven failed thrift-type entities—is going to cost them roughly $25 Billion dollars just this year. And Spain’s a large economy, but nowhere close to the United States.

“So, this is bigger, by far, than the most expensive US banking failure in history, all occurring in Spain, all being driven by the bubble and fraud and then this self-inflicted wound of austerity.

“And we can’t even get the President, who, you know, on day one will say, the sequestration disaster [is] insane.

“And on day two refuses to put forward a clean bill to stop it.

“And, on day three, says, hey, that Jake Lew, the guy, that created this disastrous scenario, that is going to, potentially, hurl us back into a recession. He should be our Treasury Secretary and create our financial policies.”

Paul Jay:  “So, when you read the business press, some of the stories are about how blasé Wall Street is and corporate America is. And they’re not very concerned with $85 Billion dollars of cuts. And the stock market’s doing fine. It does not seem to be affected by it. Why is that, if the threat of recession is looming?”

Professor Black (c. 5:53):  “Well, recession isn’t necessarily bad for the stock market. We’ve had a record recovery in stock market prices with extremely weak recovery from the Great Recession because it’s been strangled.

“So, they love the current system, in which wages have not simply plateaud, household wealth for the middle class is down to where it was 18 years ago. There’s over a 15% of loss of wealth of the middle class and working-class and a massive increase in corporate profitability where we get all these productivity gains, which is what allows you to pay workers higher wages without any inflationary risk. And virtually all of those productivity gains during the Great Recession have gone to the richest—not 1%—but the richest one-thousandth of 1%.”

Paul Jay (c. 6:54):  “Thanks very much for joining us, Bill. And thank you for joining us on the Real News Network.”

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Transcript by Felipe Messina for Media Roots, New Economic Perspectives, and Real News Network.

fm: Updated 23 MAR 2013 20:39 CST

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MEDIA ROOTS — The top 1% hold 40% of the nation’s wealth. But the bottom 80% hold only 7% of the nation’s wealth. This infographics video provides an arresting presentation of widening wealth inequality in the USA. It also compares and contrasts our perceptions with actual reality.

A notable segment is a graph showing perfect equality, which is summarily disregarded by our society because it’s labelled socialism. The logic goes that people need protive motive, which means we choose to have socially-stratified classes, where we always have a lower class, an underclass. However, we only hear about the mythologised middle class in our national discourse. This means we idealise having an elite, ruling-class as well, to which we’re supposed to aspire entry.  However, when over-allocated crony capitalists prey on the working-class (which includes the celebrated middle class), we wonder what went wrong. 

Messina

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MEDIA ROOTS — The deceptive term “sequester” in Obamaspeak refers to social spending cuts looming, ostensibly, in order to “balance the budget,” as if the US federal budget were the same as a household budget in need of balancing. The big mistake the public makes, aided by a lying corporate media perpetuating myths about the US economy, is it falls for the fallacious argument the federal government, a sovereign currency issuer of the US dollar, needs to “balance its budget.”

What happens is the federal budget (domestic public sector) is viewed in isolation, out of context, isolated from the foreign sector and the domestic private sector. This renders popular analysis of the federal budget flawed. So, of course Obama perpetuates existing myths about our monetary system, because he’s funded by Wall Street. UMKC Professor William K. Black breaks it down precisely how Obama fakes the funk.

Messina

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NEW ECONOMIC PERSPECTIVES — We are in the midst of the blame game about the “Sequester.”  I wrote last year about the fact that President Obama had twice blocked Republican efforts to remove the Sequester.  President Obama went so far as to issue a veto threat to block the second effort.  I found contemporaneous reportage on the President’s efforts to preserve the Sequester – and the articles were not critical of those efforts.  I found no contemporaneous rebuttal by the administration of these reports.

In fairness, the Republicans did “start it” by threatening to cause the U.S. to default on its debts in 2011.  Their actions were grotesquely irresponsible and anti-American.  It is also true that the Republicans often supported the Sequester.

The point I was making was not who should be blamed for the insanity of the Sequester.  The answer was always both political parties.  I raised the President’s efforts to save the Sequester because they revealed his real preferences.  Those of us who teach economics explain to our students that what people say about their preferences is not as reliable as how they act.  Their actions reveal their true preferences.  President Obama has always known that the Sequester is terrible public policy.  He has blasted it as a “manufactured crisis.”

The administration has stated publicly the three reasons this is so.  First, the Sequester represents self-destructive austerity.  Indeed, it would be the fourth act of self-destructive austerity.  The August 2011 budget deal already sharply limited spending and the January 2013 “fiscal cliff” deal raised taxes on the wealthiest Americans and restored the full payroll tax.  The cumulative effect of these three forms of austerity has already strangled the (modest) recovery – adding the Sequester, particularly given the Eurozone’s austerity-induced recession, could tip us into a gratuitous recession.

Second, the Sequester is a particularly stupid way to inflict austerity on a Nation.  It is a bad combination of across the board cuts – but with many exemptions that lead to the cuts concentrating heavily in many vital programs that are already badly underfunded.

Third, conservatives purport to believe in what Paul Krugman derisively calls the “confidence fairy.”  They assert that uncertainty explains our inadequate demand.  The absurd, self-destructive austerity deals induced or threatened by the Sequester have caused recurrent crises and maximized uncertainty.  They also show that the U.S. is not ready for prime time.

When he acted to save the Sequester, Obama proved that he preferred the Sequester to the alternative.  When the alternative threatened by the Republicans was causing a default on the U.S. debt (by refusing to increase the debt limit), one could understand Obama’s preference (though even there I would have called the Republican bluff).  The Republicans, however, had extended the debt limit in both of the cases that President Obama acted to save the Sequester in 2011.

Similarly, President Obama has revealed his real preferences in the current blame game by not calling for a clean bill eliminating the Sequester.  It is striking that as far as I know (1) neither Obama nor any administration official has called for the elimination of the Sequester and (2) we have a fairly silly blame game about how the Sequester was created without discussing the implications of Obama’s continuing failure to call for the elimination of the Sequester despite his knowledge that it is highly self-destructive.

The only logical inference that can be drawn is that Obama remains committed to inflicting the “Grand Bargain” (really, the Grand Betrayal) on the Nation in his quest for a “legacy” and continues to believe that the Sequester provides him the essential leverage he feels he needs to coerce Senate progressives to adopt austerity, make deep cuts in vital social programs, and to begin to unravel the safety net.  Obama’s newest budget offer includes cuts to the safety net and provides that 2/3 of the austerity inflicted would consist of spending cuts instead of tax increases.  When that package is one’s starting position the end result of any deal will be far worse.

In any event, there is a clear answer to how to help our Nation.  Both Parties should agree tomorrow to do a clean deal eliminating the Sequester without any conditions.   By doing so, Obama would demonstrate that he had no desire to inflict the Grand Betrayal.

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UPDATED 1 MAR 2013 12:39 (CST):

NEW ECONOMIC PERSPECTIVES — We have been strangling the economic recovery through economic incompetence – and worse is in store because President Obama continues to embrace (1) the self-inflicted wound of austerity, (2) austerity primarily through cuts in vital social programs that are already under-funded, and (3) attacking the safety net by reducing Social Security and Medicare benefits.  The latest insanity is the Sequester – the fourth act of austerity in the last 20 months.  The August 2011 budget deal caused large cuts to social spending.  The January 2013 “fiscal cliff” deal increased taxes on the wealthy and ended the moratorium on collecting the full payroll tax.  The Sequester will be the fourth assault on our already weak economic recovery.  We have a jobs crisis in America – not a government spending crisis and the cumulative effect of these four acts of austerity has caused a certainty of weak growth and a serious risk that we will throw our economy back into recession.  The Eurozone’s recession – caused by austerity – greatly adds to the risk to our economy because Europe remains our leading trading partner.

President Obama and a host of administration spokespersons have condemned the Sequestration, explaining how it will cause catastrophic damage to hundreds of vital government services.  Those of us who teach economics, however, always stress “revealed preferences” – it’s not what you say that matters, it’s what you do that matters.  Obama has revealed his preference by refusing to sponsor, or even support, a clean bill that would kill the sequestration threat to our Nation.  Instead, he has nominated Jacob Lew, the author of the Sequestration provision, as his principal economic advisor.  Lew is one of the strongest proponents of austerity and what he and Obama call the “Grand Bargain” – which would inflict large cuts in social programs and the safety net and some increases in revenues.  Obama has made clear that he hopes this Grand Betrayal (my phrase) will be his legacy.  Obama and Lew do not want to remove the Sequester because they view it as creating the leverage – over progressives – essential to induce them to vote for the Grand Betrayal.

Further evidence of Obama’s continuing support for the Sequester was revealed in an odd fashion today.  Bob Woodward is in a controversy because of his column about Sequestration.  His column made two primary points.  First, the administration authored the Sequester.  Second, Woodward claimed that Obama was “moving the goal posts” by asking for revenue increases.  Woodward was criticized by many Democrats for this column and created a further controversy by saying that the administration threatened him.  It turned out that the purported threat was based on a statement by Gene Sperling, Obama’s economics advisor.  David Weigel’s column summarizes the dispute.

Weigel comes out where I do on each of the three issues.  Yes, the administration created the Sequester and has fought to keep it alive when Republicans tried to kill it.  (The Republicans “started it” by their obscene extortion in 2011 in which they threatened to force a default.)  No, Obama has not moved the goal posts.  No, Sperling did not “threaten” Woodward.  I raise this background simply to provide a context for Sperling’s comments about the reasons that the administration created and continues to support the Sequester.

“The idea that the sequester was to force both sides to go back to try at a big or grand bar[g]ain with a mix of entitlements and revenues (even if there were serious disagreements on composition) was part of the DNA of the thing from the start. It was an accepted part of the understanding — from the start. Really.”

There may have been big disagreements over rates and ratios — but that it was supposed to be replaced by entitlements and revenues of some form is not controversial. (Indeed, the discretionary savings amount from the Boehner-Obama negotiations were locked in in BCA [Budget Control Act of 2011]: the sequester was just designed to force all back to table on entitlements and revenues.)

Obama continues to want to “force” a “grand bargain” in which he proposes to make large cuts to social programs, some tax increases, and reductions in the safety net.  Again, Obama can easily break with this strategy of choking our economic recovery by supporting a clean bill that would kill the Sequester instead of our economy.

Read more about Representative Conyers needs our Support to Kill the Sequestration’s Austerity.

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MEDIA ROOTS — Abby Martin speaks with firefighter Fernando Salguero on RT’s ‘Breaking the Set’ about his brush with the police, reflecting worsening trends of abuses of power by law enforcement.

MR

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BREAKING THE SET — Abby Martin speaks with Prepper and Firefighter, Fernando Salguero, about his encounter with New Jersey police, targeting him as a threat based upon his survivalist lifestyle.

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MEDIA ROOTS — Obama’s Chief Counterterrorism Advisor, or, as Jeremy Scahill puts it, “for all practical purposes, President Obama’s hit man or assassination czar,” John Brennan has been exposed by the declassification of a 30-page document, wherein he’s asked about drone strikes and targeted killings in the US.

Brennan did not rule out the possibility, and began to lay the groundwork for setting legal language precedent and codification of targeted assassinations of US citizens. As Scahill points out, there is little to no push-back from Congress when Brennan’s responses approach the absurd.

Messina

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TRUTH OUT — According to the Wall Street Journal (in a February 15 article), Obama’s nominee to head the CIA, John Brennan, ambiguously left open the possibility that US citizens could be targeted for assassination in the United States:

John Brennan, President Barack Obama’s nominee to be director of the Central Intelligence Agency, didn’t rule out the use of unmanned drones in the U.S. when quizzed about the matter.

Mr. Brennan’s written answer came in response to questions from the Senate intelligence committee following his confirmation hearing last week. The Senate intelligence committee released a declassified version of Mr. Brennan’s responses in a 30-page document Friday.

Mr. Brennan, the White House’s counterterrorism chief, was asked, “Could the Administration carry out drone strikes inside the United States?” His reply was: “This Administration has not carried out drone strikes inside the United States and has no intention of doing so.”

A few days back, Democracy Now analyzed excerpts from the Brennan Senate Intelligence Committee hearing on his nomination, including this one:

SEN. RON WYDEN: Let me ask you several other questions with respect to the president’s authority to kill Americans. I’ve asked you how much evidence the president needs to decide that a particular American can be lawfully killed and whether the administration believes that the president can use this authority inside the United States. In my judgment, both the Congress and the public need to understand the answers to these kind of fundamental questions. What do you think needs to be done to ensure that members of the public understand more about when the government thinks it’s allowed to kill them, particularly with respect to those two issues, the question of evidence and the authority to use this power within the United States?

JOHN BRENNAN: I have been a strong proponent of trying to be as open as possible with these programs, as far as our explaining what we’re doing. What we need to do is optimize transparency on these issues, but at the same time optimize secrecy and the protection of our national security. I don’t think that it’s one or the other. It’s trying to optimize both of them. And so, what we need to do is make sure we explain to the American people what are the thresholds for action, what are the procedures, the practices, the processes, the approvals, the reviews. The Office of Legal Counsel advice establishes the legal boundaries within which we can operate. It doesn’t mean that we operate at those out of boundaries. And, in fact, I think the American people will be quite pleased to know that we’ve been very disciplined, very judicious, and we only use these authorities and these capabilities as a last resort.

If ever there was the epitome of obfuscating bureaucratic blather, Brennan achieved it in pointedly not ruling out the killing of US citizens on US soil.

Jeremy Scahill, author of the best selling “Blackwater: The Rise of the World’s Most Powerful Mercenary Army,” commented about the exchange posted above at Brennan’s confirmation:

Well, you know, if you listen to John Brennan, I mean, it’s like he’s talking about buying a used car and what, you know, sort of little gadgets and whistles it has on it. He used “optimize”? Ron Wyden was asking him about whether—about the extent of the CIA’s lethal authority against U.S. citizens, on U.S. soil and abroad. And, see, the problem is that while some questions were asked that are central questions, there was almost no follow-up. People wouldn’t push—senators wouldn’t push Brennan back when he would float things that were nonsensical or just gibberish, you know, or using terms like “we need to optimize this, we need to optimize that.” There was no sense that—I mean, remember, this is a guy who is, for all practical purposes, President Obama’s hit man or assassination czar.

Read more about John Brennan Doesn’t Rule Out Targeting Americans for Assassination in the United States.

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THE GUARDIAN — Prior to President Obama’s first inauguration in 2009, a controversy erupted over reports that he intended to appoint John Brennan as CIA director. That controversy, in which I participated, centered around the fact that Brennan, as a Bush-era CIA official, had expressly endorsed Bush’s programs of torture (other than waterboarding) and rendition and also was a vocal advocate of immunizing lawbreaking telecoms for their role in the illegal Bush NSA eavesdropping program. As a result, Brennan withdrew his name from consideration, issuing a bitter letter blaming “strong criticism in some quarters prompted by [his] previous service with the” CIA.

This “victory” of forcing Brennan’s withdrawal proved somewhat Pyrrhic, as Obama then appointed him as his top counter-terrorism adviser, where he exerted at least as much influence as he would have had as CIA Director, if not more. In that position, Brennan last year got caught outright lying when he claimed Obama’s drone program caused no civilian deaths in Pakistan over the prior year. He also spouted complete though highly influential falsehoods to the world in the immediate aftermath of the Osama bin Laden killing, including claiming that bin Laden “engaged in a firefight” with Navy SEALS and had “used his wife as a human shield”. Brennan has also been in charge of many of Obama’s most controversial and radical policies, including “signature strikes” in Yemen – targeting people without even knowing who they are – and generally seizing the power to determine who will be marked for execution without any due process, oversight or transparency.

Read more about John Brennan’s extremism and dishonesty rewarded with CIA Director nomination.

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