Rachel Maddow: The Obama Paradox

addie340 and the rest of you gop conservatives read this article it places blame where it is due David Stockman was director of OMB under Reagan
Contributor
Four Deformations of the Apocalypse
By DAVID STOCKMAN
Published: July 31, 2010
IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.
s approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

In fact, since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.
Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

read the rest at nytimes.com

What are Obama's great breakthroughs ? Lets see Health care that 70 some percent of Americans didn't want. Hell we don't even know whats in it just like Pelosi said, but we are starting to hear some of the things that are in it, the very things Fox news said were in it !! Oh then there was Financial Reform, wow that really helps when they gave Freddie and Fanny the same free ride that got us in this situation to start with, oh by the way thanks Bill Clinton for allowing people that couldn't afford housing to buy homes. The Republicans, four years ago told Congress it was a problem and Barney Frank said that there was no problem, helps if your boyfriend works there. So lets blame that on Bush because he was president, with a democratic Congress that failed to solve the problem when they had the chance too. Why do you think most of this gets passed on Sunday night ? Don't really matter the Controlled Media won't report it anyway. Were screwed, but good job Obama.

Maddow is right in the sense that it's pointless for the left to sit around and be disappointed about Obama, that only makes things worse.

But she is demonstrably wrong about nearly every achievement she put up there. The stimulus, while effective, was mostly tax cuts and only ended job losses, it didn't substantially lower unemployment. The healthcare bill, while it did fix some disgusting practices, still hasn't fixed the central problem, bloated insurance companies. The Wall Street reform bill, despite being the greatest reform since the Great Depression, isn't even as strong as Glass-Stiegel, doesn't fix derivatives, credit default swaps or subprime and doesn't address too big to fail.

His accomplishments are tarred with corporate lobbying and compromise. As amazing as it is that he managed to get the votes together to do what he did, we're still boned.

And that's not even getting into the fact that he basically gave up on foreign policy, trading in change for an expansion of Bush abuses which, if left unchallenged, could become the most dangerous threat to the judiciary system if it becomes normalized.

In short, what we needed was a MASSIVE shift to the left and what we got was a sort of shit to the center.

What we needed was another FDR and what we got was someone just a little to the left of Clinton.

It's not all his fault though, it's mainly the senate that's fucked everything up. So what else is new?

Given that we're in the middle of the worst economic downturn in over 80 years, I think that the American people are simply more concerned with keeping their families fed and having a roof over their head. I'm sure that when the economy gets back to some semblance of normalcy (which I don't think is going to be anytime soon), people will be celebrating President Obama's great breakthroughs.

Hey I'll pat Obama on the back, he has done more to destroy America than any other President in modern history. At this rate we will be bankrupt and we will be just like Mexico,fleeing this Country in droves, just like the illegals that have came here. Only one problem no other Country will take us in as stupidly as the US has taken in the illegals. They receive more money from this country than people that have worked here there whole life and deserve it. This country is in for the change he promised and I can't wait to see the look on the faces of these democrats that are too stupid to see where we are headed. Now at least some Democrats in office have at least acknowledged the fact that Obama is ANTI-BUSINESS and is in fact doing more to destroy jobs than create them. When the jobs are done so is America, and we are on a fast track to disaster. So if Rachel thinks he doesn't get enough credit or thinks we don't notice well we do, I have just never seen this many people wanting to see America destroyed. If you want the Gov. to take care of everyone by redistribution of wealth, you are an Obama fan. The rest of us that work for a living don't really feel the reason we get up every day is to pay for someone that would rather sit on their butt an draw a check.

The Left is remiss to leave the responsibility of the hands on battle to others. WE are the others who have to counter every lie and misconception put forth by right wing obstructionists. Democracy works when we ALL exercise our democratic freedoms. Democracy is easily robbed from by bigotry and malice when there is no confrontation of those voices.

Obama shouldn't 'take on' Foxnews- that would be a whole campaign in itself.

Think about it- the republicans basically own a mainstream news network-Foxnews. These people are professional liars and distorters.
How is the administration supposed to fight a publicity war with a mainstream news network, while performing their other duties as well. They can't.

What did Bush do when he was attacked by the media? He didn't do anything. Foxnews did all his fighting for him, and they did it well.
Obama simply needs more leftist pundits to defend him. However, the more defenders Obama has in the media, the more objective journalism is lost, the more they become the leftist Foxnews. It's a catch 22.

Well she's partly right, but people are obviously disappointed with Obama... I guess they have to really see that change he was talking about in the numbers and with progressive legislation. It's more of the same though, but he also still thinks he can work with these people, she's right in that the Democrats have to fight back. No matter what though, as long as people don't see some real change, he'll be low in the polls. I hope he really gets something great done before his term his up and he can continue that in another term, because I really don't see a better person doing the job at this point, well realistically I mean.

LOL and you guys say fox is biased.

Those who would underestimate Obama and Axlerod do so at their own peril.
Obama was given no chance in early 2008 when Clinton was the favorite and financial powerhouse. David Axelrod will orchestrate a democratic stratagy that will leave the GOP speechless from their own words clips accumulated over the last two years. The smears and lies perpetuated will be met with the truth through legislative victories unprecedented in the last thirty years. Its going to happen just like that!!

The junk plow has stalled and they are spending the gas money to discredit their hard working neghbors but don't worry the plow man will be back behind the wheel pushing all the junk they can find into your yard.

To "I brake 4 rappers": Enlighten us - what is the "big picture" RM did not cover?

The dems are just getting started. It's so fucking obvious how oblivious and willfully ignorant the right is that when election time comes, it will only take a few swift blows during the debates and the opposition will be decimated. Obama's not the greatest public speaker, but he's got a logic to his style of argument that can leave someone speechless.

FOX news has grow strong with the dark side ....

The BIG PICTURE is that it's all a game. Politics are here to amuse and confuse us watching these two parties 'fight' against each other while we all chew each other to bits. Divide and conquer.

Obama grow some balls and beat those Tea Baggers to the dirt. You gotta step down to their level and use your fists...the gloves need to come off.

What it means is that the Tea Party and the GOP are very effective at their smear campaign against Obama. They have done a bang up job to make him look like the anti Christ and a demon.

She makes some good points, but cant get past her liberal bias to see the big picture.