Ezra Klein did a piece yesterday offering the conventional deficit dove position on deficits and debt. Here’s a commentary on it.

Mike Allen in the Politico Playbook reports that he hears from the Administration that the members of the mis-named National Commission on Fiscal Responsibility and Reform may be nearing a deal “around a package on Social Security.” The money quote is:

Bob Herbert, in his column on June 7th said:

There is no plan that I can see to get us out of this fix. Drastic cuts in government spending would only compound the crisis. State and local governments, for example, are shedding workers as we speak.

And by July 26th he still hadn’t come up with a solution and began his column with:

The pain coursing through American families is all too real and no one seems to know what to do about it.

Paul Krugman, well-known for his opposition to the austerity concerns of the deficit terrorists and his advocacy of additional Government stimulus to lower unemployment and end the recession, just ignited a paradigm conflict which promises to clarify for many, the issues dividing “deficit doves” like Paul, from economists who take a Modern Monetary Theory (MMT) approach to economics, which holds, among other things, that Government deficits and surpluses are not, in themselves important, and that Government spending has to be evaluated relative to its impact on public purposes. Paul said:

I’m not entirely sure how to put this, so I guess I’ll just come right out and say it. During the last presidential campaign and in the context of John McCain’s admission that he didn’t understand economics very well, you let us know that you thought you had a very good understanding of it. Well, Mr. President, I’m here to let you know that you don’t understand it, don’t know what you’re doing, and are now preparing to do exactly the wrong things. And, I’ve got lots of evidence for thinking that. What’s my evidence?

For everyone who wasn’t able to attend Wednesday’s Fiscal Sustainability Teach-In and Counter-Conference at GWU, with help from the volunteers who made the recordings, I’ve posted each session’s audio along with speaker slideshows for viewing (here). Hopefully transcripts will be added soon. And for anyone who is willing to make a contribution but has not yet done so, donations are still most welcome.

A little more than a week ago, I proposed a Fiscal Sustainability Teach-In and Counter-Conference to be held in Washington, DC as a response to the First Meeting of the Administration’s National Commission on Fiscal Responsibility and Reform, sardonically called by some the “steal our retirements commission,” on April 27th. The Counter-conference would also be a response to the Conference scheduled by The Peter G, Peterson Foundation’s (PGPF’s) “fiscal summit” on April 28th. This conference will be full of notables but won’t include even a single economist who doesn’t share the neo-liberal view of fiscal sustainability, centered around budget deficits, the national debt, and the debt held by the public to GDP ratio. The PGPF Conference, some powerful Senators and the President’s commission are spearheading a very broad-ranging campaign to persuade the American people that austerity is necessary for ordinary Americans (as if we haven’t had enough of that since the crash of 2008), including cutbacks on entitlements while, at the same time, the same people do all they can to preserve one of the periodic “great barbeques” in American history where well-off people accumulate immense wealth by looting the few resources owned by working people. It’s the purpose of the teach-in Counter-conference to oppose this deficit hawkism point of view with a alternate new economic paradigm offered by Modern Monetary Theory (MMT) that offers opportunity, balanced growth, and public purpose, in place of austerity, private irresponsibility, and hopeless Hooverism.

The purpose of the President’s recently constituted National Commission on Fiscal Responsibility and Reform as stated in Section 4 of the President’s Executive Order establishing the Commission is:

Sec. 4. Mission. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.

Key words/phrases in this statement are: “fiscal situation,” “fiscal sustainability,” “balance the budget, excluding interest payments on the debt, by 2015,” “stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers,” policy measures subject to uncertainty depending on the evolution of the economy,” and changes “that meaningfully improve the long-run fiscal outlook,” and “the gap between the projected revenues and expenditures of the Federal Government.” How are these related to each other?

I know that time is short between now and April 28th. But nevertheless, I propose that we organize a counter Fiscal Summit “Teach-in” Conference in Washington DC, on that day. Such a “teach-in,” depending on how many people we could get to attend, could steal media attention from the Peterson-sponsored event, and introduce an opposing narrative to the ones coming out of the deficit hawk events on the 27th and 28th. To have such a Conference would take money. Speaker expenses would have to paid, as would hotel expenses if it were possible to get a hotel site at this late date. On the other hand, it would not be hard to think of high-level speakers for such a Summit. Here’s my list of speakers who could do a really good job delivering a Modern Monetary Theory counter to the neo-liberal paradigm: L. Randall Wray, William K. Black, James K. Galbraith, Warren Mosler, Marshall Auerback, Bill Mitchell, Rob Parenteau, Yeva Nersisyan, Scott Fullwiler, and some other very good top-level participants who would question the neo-liberal paradigm to at least some degree are: Yves Smith, Simon Johnson, Joseph Stiglitz, Robert Johnson, Robert Reich, Robert Kuttner, and Dean Baker. Finally, someone who ought to be invited, since he’s expressed frequent and very explicit criticism of the neo-liberal paradigm is George Soros. It would be valuable to get him into direct discussions with others on the relationships between hedge fund traders and nations with unencumbered fiat monetary systems.

The Press continues to be full of opinions reflecting deficit: “mongering,” “hawkism,” “terrorism,” and “errorism,” all based on erroneous neo-liberal ideas about economics. There are a number of sites however that provide very good analysis and refuting of these very dangerously silly ideas, which our President, who claimed he understood economics during his campaign, both espouses and seems ready to implement at both his political and our material peril. So, I thought it would be useful to identify some of those here, especially for those progressives who still think it’s a good idea to balance budgets at all costs.