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Nice column JK.
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Loved this: “Exuberantly wealthy center-left types who staged a leveraged buyout of the Democratic Party’s economic policies in the 1980s “

Fareed is as right about this as he was in the run up to the invasion of Iraq.

Strong on bloviation, weak on substance and solutions. Isn’t that right Mr Klein?

Excellent column, Joe. Fareed Zakaria has a great mind, but he phoned this one in & doesn’t know what he’s talking about . This wouldn’t be the first time Zakaria has shown he knows almost nothing about U.S. economics. He is factually wrong in several places, showing he doesn’t even understand the commission’s mandade, which was to produce a document that Congress could give an up-or-down vote. His overall premise — that the Catfood Commission “started the conversation” — is preposterous. The deficit is all Republicans talk about when they want to reduce safety-net programs for the middle-class & poor (which is just about always).

It is clear that Zakaria is not only a bona fide member of the media elite; he is now so “inside-the-Beltway” elitist that he parrots the talking points of his benefactors & employers & new best friends in Congress.

The Constant Weader at http://www.RealityChex.com

I think both columns are good. I agree mostly with Joe but then, I’d take it further and argue that now is not the time to be discussing the deficit at all. Would love to see Joe and Zakaria debate this here in the swamp.

One thing I do agree with Zakaria on is that if this is a pressing problem then the deficit commission chairs have done us a favor by at least proving it’s not an unsolvable one, even though their solution is likely unacceptable to the majority of Americans (and thus a non-starter). They came to the wrong solution but in doing so proved that the problem can, in fact, be solved.

So far as Social Security goes, I agree with Joe. Suck it up and pay the people what they were promised. Zakaria is wrong when he says the problem is that people’s appetite for government benefits is larger than their appetites for taxes. A lot of government expenditures don’t directly benefit people. Am I supposed to believe that corn subsidies that lead food providers to feed me synthetic sugars a benefit?

This phrase stuck out at me
Will moderates and centrists — who make up the majority in the U.S.

The problem with this formulation of course is that “Moderates and centrists” in this context are not the people who have balanced political views and want cooperation. They are the people who don’t pay attention and are therefore the most susceptible to sloganeering and lies.

the sector that has had the most to do with hollowing out our manufacturing base and creating the Ponzi scheme

Again this is something underdiscussed. Everybody now knows about the housing crisis but how many of us remember when we were bragging that we were shifting from a maunufacturing to a “service economy” as if that was a good thing?

If I remeber right, much of that bragging took place during the Clinton years so it isn’t a matter of partisanship to point out that this needs fixing. There are jobs that add value to the economy and there are jobs that extract value from the economy. It appears that we jave embraced the latter while aggressively dealing away the former.

“There are jobs that add value to the economy and there are jobs that extract value from the economy. It appears that we jave embraced the latter while aggressively dealing away the former.”
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Interesting how the left likes to have it both ways. The so-called value jobs that we keep hearing about particularly manufacturing were killed not because of a shift from manufacturing to service but because unions drove the competitiveness offshore. We had the steel, paper, airline and autos forced into bankruptcy for these “value” jobs.
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Now the left complains about the service job just at a time state budgets are exploding due to the union costs again. Yet they argue for more of this.

One economic law that the left continually ignores wages and benefits cannot go up perpetuity. You can’t complain about the failure of job sectors when the policies you propose are the problem.

Why are we spending so much time and effort bloviating about long-term deficits and so little trying to untangle the immediate economic mess that we’re in?

Spot on, Joe.

The best way to increase tax revenue is to fix the economy. There is no way around that.

Fixing the debt will not lead to a strong economy. Creating a strong economy will help fix the debt.

There are multiple problems with your argument. The first is, of course that I am not necessarily a typical representative of ‘the left’ You wouldn’t know it but among my other accomplishments, I once in my role as manager help prevent the unionization of the plant where I was employed. But Union membership and influence (like taxes) are at an all time low relative to the 40 years I’ve been paying attention. Your still fighting a battle you’ve already won. State budgets are exploding because people still need the services states provide but squeal like pigs when they’re expected to pay for them. One of the reasons the Chamber of Commerce is resisting every effort to jump-start economic activity is becuase having a large pool of people desparate for work is rather helpful for the bottom line. Now if it weren’t for that pesky minimum wage……

“Why are we spending so much time and effort bloviating about long-term deficits and so little trying to untangle the immediate economic mess that we’re in?”

Because no one knows what a business cycle is any more and the Right, including the Democrat Right, has decided fiscal policy is communism.

By the way, growth is a good way to deal with deficits too.

Stein’s Law (that’s the late Herb Stein, not his son Ben) says: If something can’t go on forever, it won’t. Bobell’s Corollary to Stein’s Law says “And it will end at the worst possible time in the worst possible way.” I offer the end of the housing bubble as one recent example. Consider also the end of the German inflation of the 20s, or the way WWII ended in Japan, or the end of the Vietnam War.
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So we can expect the continuing steady increase in the national debt to end at the worst possible time in the worst possible way.
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The best way, which won’t happen, would be for the economy to heal, the Govt to figure out how to run surpluses, and the debt to shrink steadily. We thought we were getting there in 1999 or so, but we got complacent. No easy solution for us.
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The worst time would of course be during an economic downturn, so we should expect it to occur soon. And the worst possible way would be for us to become unable to borrow any more money — perhaps because the Chinese and others decide they don’t want to lend it, perhaps because the idiots in Congress refuse to increase the debt ceiling. Either way, it’ll be an economic catastrophe. And it’s scheduled for the very near future.
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I’m not Cassandra — plenty of other people have figured this out. You might wonder why I’m not stockpiling food and buying gold; so do I. I guess that my emotional side is incapable of listening to my rational side. I’ll be suitably punished. We all will.
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Or maybe, just this once, we’ll come to our senses as a country before we emulate Thelma and Louise…. Nah!

Made the mistake of posting to the column comments.
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It is going to be really, really difficult to come to terms with the “deficit crisis” without facing what is at the root of it. “Entitlements” is marketing language thought up by people trying to minimize the US commitment to recipients of income transfers. It was largely successful; income transfers have been reduced substantially in real term, although the mechanisms (EITC and food stamps on a credit card) are decided improvements over the old categorical aid systems.
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But Social Security is not one of these, nor does it represent any burden whatsoever of for the next generation plus, because all the members of the generation paying in beginning in 1983 have contributed more than was needed for pay as you go, in order to fund the boomer retirement cohort. So we need to lose “entitlements” and stop talking about Social Security.
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The other elements of the deficit are easy to address, with one exception. Taxes are historically low, and historically regressive. Defense expenditures are at a war footing level, when the US is not at war. Oligopolies are gouging consumers and ripping off taxpayers. All that takes to address these issues is a common sense assessment of policies that worked (a progressive income tax structure, effective anti-trust law and business regulation, defense in line with security needs) in the 50s 60s and 90s.
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The exception is medical costs. NOT Medicare. The Medicare will eat all the GDP problem is a manifestation of a failed health care system. That my household’s insurance bill has tripled in the last 4 years, while coverage has lessened is another manifestation. Everything else can be handled with simple application of policy measures the US has engaged in before. Whether the oligarchs will permit this to happen–whether they decide they’d prefer a Brazilian economy to a Canadian economy–is open to question. But there is no difficult policy question there.
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Revamping the US health care system to look like one of the European systems appears to be a difficult policy question. There were no sensible proposals put out by anybody during the year long health care “debate,” because they all depended on largely retaining the status quo. The closest came from Howard Dean, who suggested putting all kids under 25 onto Medicaid (give them a card at birth that expires on their 25tj birthday) and lowering Medicare eligibility to 50.
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All the rest of the discussion is just sawing in the air. Raising taxes, cutting defense, eliminating WTO violating subsidies eliminates the current deficit. The monster is health care–health care, not Medicare.
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As long as the Village keeps trotting out their little calculator toys, and whinges about entitlements, and tells us, again, how we have to sacrifice for the sake of the plutocrats, we will get nowhere.

My guess is the Chinese will not stand in the way of America making investments to reposition it’s infrastructure for the new age. They will will keep buying. They own so much now they have to. They can’t sell what they have to anyone. They also buy treasuries to maintain their currency advantage, something they seem to justify on by the fact that they are still only 120th in per capita income.

I know copy editors assign the titles to articles, but these 2 intrigue me. Zakaria: “Fixing the Deficit Our Biggest Test”. Klein: “Obsessed with the Deficit and Ignoring the Economic Mess”. Taking a TP approach, and not even reading the articles, I would go with Klein’s obsession take. In fact, the title could be a fill in the blank for much of the discourse in the media and politics now: “Obsessed with (fill in the blank) and Ignoring the (fill blank). The economy: Obsessed with housing and securities markets, ignoring financial regulation.
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In fact, it seems to me that the TPers are always obsessed with lesser issues at the expense of important ones.

“But Union membership and influence (like taxes) are at an all time low relative to the 40 years I’ve been paying attention.”
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And the premise of your argument is wrong. While membership may be low, it is growing. Influence has grown exponentially with Obama. He has met more often with Union leaders than military leaders. The helped write and rally the HC nightmare from which they now want (and received) waivers. Notice how quiet those were compared to say McDonlad’s.
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They were handed ownership of an auto company and yet they were responsible for the unprofitability of the company
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“State budgets are exploding because people still need the services states provide but squeal like pigs when they’re expected to pay for them.”
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Wrong again. Budgets are not exploding because of services but what they PAY for those services. Salaries and benefits now far exceed the private sector. They have gone up unabated and with no eye toward efficiency or the competency let alone the ability for the states to pay.

Teachers? Compensation up and up –results flat to falling.

Battle is hardly over. Maybe you should have paid closer attention

This is an excellent column all throughout, Joe. I particularly am interested in this part: “At the very least, the resplendent Olympians should work to put their squalid McMansion in order — by launching a public-service campaign against excessive executive compensation”.
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I don’t personally care much about income inequality all on its own. Let the top 1% make 75% of income, for all I care, as long as the lower 99% are able to have a good life too. (BTW, Americans have no idea how income is distributed in this society, and even conservatives claim they want a drastically more equitable distribution: http://paul.kedrosky.com/archives/2010/09/americans_have.html?mobify=0 )
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But in the past 30 or so years, something has gone wrong with the structure of our economy. The wages of the bottom 80 or so percent aren’t improving at all, household debt is skyrocketing, and a huge portion of our economic growth is within the finance sector– but all they should be doing is allocating resources, and as Paul Volker put it, the only financial innovation of the last 25 years worth a damn is the ATM. Our executive compensation is way out of line with the rest of the free world. Those huge short-term benefits to individuals tend to obscure the pursuit of long-term goals. It sometimes seems like our society is run for the benefit of the top 5-10%, parasitizing the past, future, and the bottom 90%

Incidentally, the media’s instinct to sidle up to power is part of the problem. See, e.g., http://swampland.blogs.time.com/2010/11/17/tsa-defends-new-screening-procedures/#comment-217688

Here Here! I would just like to reiterate that the real cause of our long term deficits are our unsustainable costs for medical care. I can’t figure out how to get the graph in here, but it’s in the CBO report – shows revenue and spending in line, except for medicare. And if we spent what other developed countries spend on health care, we wouldn’t have that issue, either.

free, you say:
“Wrong again. Budgets are not exploding because of services but what they PAY for those services. Salaries and benefits now far exceed the private sector. They have gone up unabated and with no eye toward efficiency or the competency let alone the ability for the states to pay.
Teachers? Compensation up and up –results flat to falling.
Battle is hardly over. Maybe you should have paid closer attention”

- “A new government study shows that federal workers make an average of 24 percent less than their counterparts in the private sector, with some areas of the country showing much larger gaps, reports the Washington Post. The gap is an average of 2.1 percent wider than it was last year, according to the Post’s Federal Eye column.
Some areas show significantly larger discrepancies. Federal salaries in the Washington-Baltimore area, for example, were 38 percent less than those in the private sector, according to the Post.”
http://fcw.com/Articles/2010/11/01/Bureau-of-Labor-Statistics-federal-pay-private-sector.aspx?Page=1
(Note that the article says that other studies reach different conclusions. Rational readers should be aware the their sponsors, Cato Institute & Heritage Foundation, have a habit of reinterpreteting actual numbers to match their “free market” ohilosophies.)
By the way, be sure to read the comments from government workers talking about their supposedly high wages.

So, what’s the source of your information?

- As for teachers, please tell me how they are overpaid:
Public Teacher Salaries: U.S. State Rankings:
$31,854 – $58,246
http://www.associatedcontent.com/article/5610332/public_teacher_salaries_us_state_rankings.html?cat=4

So, what’s the source of your information?

ohilosophies

Correct to: philosophies

Sorry.

Elvis,
You make some good points, but I have to disagree with a couple:
“I don’t personally care much about income inequality all on its own. Let the top 1% make 75% of income, for all I care, as long as the lower 99% are able to have a good life too.”
- No economy is sustainable if the top 1% takes that much of the income. When the various bubbles burst, the 99% suffer the most harm, while the 1% sit back and enjoy the income they’ve socked away.

“It sometimes seems like our society is run for the benefit of the top 5-10%, parasitizing the past, future, and the bottom 90%”
- More like the top 5% vs. the bottom 95%.

Not all rich people are greedy for more riches – but all greedy rich people are greedy for more riches.
There are more of the latter than the former.