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Hullabaloo


Thursday, December 10, 2009

 
Colloquy For Crisis

by digby

Milton Friedman:
Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.
Naomi Klein:
Friedman understood that just as prisoners are softened up for interrogation by the shock of their capture, massive disasters could serve to soften us up for his radical free-market crusade. He advised politicians that immediately after a crisis, they should push through all the painful policies at once, before people could regain their footing. He called this method “economic shock treatment.” I call it “the shock doctrine.” Take a second look at the iconic events of our era, and behind many you will find its logic at work. This is the secret history of the free market. It wasn’t born in freedom and democracy; it was born in shock."

Today, Senators Gregg and Conrad had a colloquy on the floor of the Senate arguing for the Pete Peterson Foundation's pet project, the Bipartisan Committee To Destroy Social Security and Medicare So Wealthy People Don't Ever Have To Pay Higher Taxes (aka "Our Favorite Idea That's Been Lying Around".) And quite an exchange of scary rhetoric it was.

The timing of this is being driven by events, to be sure. But the events that drive it aren't the debt projections, which are highly reflective of a moribund economy and will thus change dramatically if the government enacts policies that expand growth and lead to full employment. No, what's driving this initiative is the mass confusion around the bad economy and the financial system catastrophe, which provides the perfect moment to push a little "economic shock therapy" on the American people.

Kent Conrad, December 10, 2009:

This is the headline from "Newsweek" December 7. In fact, it was a cover story: "How Great Powers Fall." Steep debt, slow growth, high spending kill empires -- and America could be next... If you go to the story -- and, by the way, interestingly enough, this is on December 7, Pearl Harbor day. If you go into the story that's in the magazine, it says -- and I quote -- "This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force ... If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power." ...

I have been here 23 years. I am on the Finance Committee. I'm Chairman of the Budget Committee. I've been on those committees for many years. If there is one thing that is absolutely clear to me is that the regular order cannot and will not face up to a crisis of this dimension.

It is going to take a special process, a special commitment of the members here and representatives of the Administration to develop a plan that gets us back on track. And it is going to take a special process to bring that plan to this floor for a vote, up or down. That holds, I believe, the best prospects for success."

Judd Gregg, December 10, 2009

Right now in this country, after the possibility of a terrorist getting a weapon of mass destruction and using it against us somewhere here in the United States, the single biggest threat that we face as a nation is the fact that we're on a course toward fiscal insolvency. You can't get around it. If we continue on the present course, this nation goes bankrupt.

We came to the conclusion that the only way you could do this is create a process which drives the policy, rather than put the policy on the table first and have everybody jump on it, shoot at it and kick it and destroy it so it never gets to the starting line for all intents and purposes. We decided, ‘let's put together a process which leads to policy, which leads to an absolute vote.’"



Fortunately, one brave patriot stepped up to defend the democratic process:

Max Baucus, December 10, 2009

If Congress is going to outsource its core fiscal responsibilities, why stop with just those responsibilities? ... Why not cede to this commission all the legislation in the next Congress? Why don’t we outsource the entire year’s work and then adjourn for the year? ... It is clear from their press release that Senators Conrad and Gregg have painted a big red target on Social Security and Medicare. That’s what this commission is all about. It’s a big roll of the dice for Social Security and Medicare ... I can see that a commission may be attractive to some. It is an easy way out."


Ok, perhaps he was actually protecting his prerogatives as the Chairman of the Senate Finance Committee, but it doesn't bode well for the commission's prospects if they can't get fiscal conservative Baucus on board. But I like his argument.

As for the substance of the argument for the commission, let's hope this letter signed by 30 groups is being circulated (and comprehended) by members of congress:

Those supporting this circumvention of the normal process have stated openly the desire to avoid political accountability. Americans—seniors, women, working families, people with disabilities, young adults, children, people of color, veterans, communities of faith and others—expect their elected representatives to be responsible and accountable for shaping such significant, far-reaching legislation.

Any deficit reduction measures should be carried out in a responsible manner, providing a fairer tax system and strengthening—rather than slashing-Social Security and Medicare. Moreover, we should be strengthening, not slashing, vital programs like Medicaid, Unemployment Compensation, the Supplemental Nutrition Assistance Program (food stamps), Supplemental Security Income, the EITC, school meals and others crucial to struggling lower income and middle-income people in every corner of our country.

And as unemployment continues to grow, we need a real debate about how to balance the need for economic recovery and productive public investment with the goal of long-term budget responsibility. The American people are likely to view any kind of expedited procedure, where most members are sidelined to a single take-it-or-leave-it vote, as a hidden process aimed at eviscerating vital programs and productive investment.

As you know, the current effort to reform the health-care sector seeks to achieve reductions in Medicare spending, without cutting benefits. But the proposed budget commission—which will be viewed as a way to actually cut Medicare benefits, while insulating lawmakers from political fallout—could confuse people and undermine the reform effort. And an American public that only recently rejected privatization of Social Security will undoubtedly be suspicious of a process that shuts them out of all decisions regarding the future of a retirement system that's served them well in the current financial crisis.
As Naomi Klein pointed out in this interview:

There’s one other thing I’ve learned from my study of states of shock: shock wears off. It is, by definition, a temporary state. And the best way to stay oriented, to resist shock, is to know what is happening to you and why.

The Fiscal Scolds are taking advantage of this moment to push something that they believe people will accept in their state of shock and insecurity. But they will wake up. And if this commission succeeds they will find that they have been cast adrift in a fast changing world --- and they will look for people to blame. It is unwise on the politics as well as the policy.

It's unfortunate that we have to rely on the egos of Senate princes protecting their fiefdoms to prevent this, but if that's what it takes ...


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