Robert Reich: Why the President Must Come Up With Demand-Side Solutions

[woo me with science]

http://robertreich.org/post/6355770305

Why the President Must Come Up With Demand-Side Solutions, And Not Go Over to the Supply Side
Thursday, June 9, 2011


(snip)
....
Can we get real for a moment? Businesses don’t need more financial incentives. They’re already sitting on a vast cash hoard estimated to be upwards of $1.9 trillion. Besides, large and middle-sized companies are having no difficulty getting loans at bargain-basement rates, courtesy of the Fed.

....
The reason consumers aren’t buying is consumers’ paychecks are dropping, adjusted for inflation. And job losses are mounting. The 83,000 new private-sector jobs created in May represent a net loss because 125,000 jobs are needed merely to keep up with an expanding labor force. The number of Americans filing new claims for unemployment benefits edged higher last week.

....
All this translates into a continuing crisis on the demand side. Consumers can’t and won’t buy more. Between January and March, sales grew just .15 percent around the country – perilously close to no growth at all. May sales look even worse. Chain stores are reporting weaker sales. Consumer confidence has dropped sharply.

How to get jobs back, then? By reigniting demand. Put more money in consumers’ pockets and help them renegotiate their mortgage loans.

....
But we’re not hearing any of these sorts of demand-side solutions from the White House. In seeking Republican votes, Obama is putting forth Republican supply-side ideas – lowering the employer costs of hiring, cutting corporate taxes – that have nothing to do with this demand-side crisis. He may attract some Republican votes for these, but what’s the point if they’re irrelevant to the real problem?

....(more at link)

[Autumn]

1. recommended

:kick:

[Liberal_Stalwart71]

2. The problem is getting these proposals through Congress.

The House is the chamber that considers tax and revenue bills first. That is why Obama has to seek Republican votes. He has no choice.

Well, I believe that ANYTHING he puts forth will be destroyed in the House.

I agree with Paul's premise and I think he is totally right in terms of coming up with solutions.

The problem is how to get it through the House.

[Name removed]

4. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Liberal_Stalwart71]

11. Haven't we gone down this road before? I believe that I explained to you

that LBJ had a lot more political capital to use. He had MORE liberal Democrats in the Senate, and he had 67 Democrats in all, making it filibuster-proof. The Republicans he worked with were not Teabaggers or far-right wingnuts like Obama has today. You want Obama to try and reason with these people? Especially when they have made it plain that they want to destroy him? Not to mention, the remaining Blue Dogs and Corporatists are much more worried about their own elections. They don't care about standing up for the president.

You can't compare the two situations, as they are completely different!

[woo me with science]

14. Should he endorse and propose supply side solutions? nt

[Liberal_Stalwart71]

15. Actually, yes he should. He should propose a mix of supply and demand side

solutions. And I think he has done that through his budget proposals for FY11 and FY12. Right now, it's about getting these banks to stop deliberately sitting on cash and lend. It's about businesses hiring more people. They are *deliberately* sitting on cash and not hiring in the hopes that the president fails.

Also, please be aware that it is the Republican governors who are laying off public sector workers, including teachers and firefighters. The only way to balance that is by inducing the private sector to hire. So, yes, it's going to require some supply-side solutions as well.

[Avant Guardian]

21. Why would he implement more failure?

You just do not get how reality works. Why in the fuck would he implement 'supply side'? He is not a republican. Supply side economics has destroyed the economy over the last 30 years, why on earth would any sane Democrat latch onto that? Man you live in a fantasy world.

If Obama wants to fail all he has to do is implement more supply side and the economy will completely collapse. Of course businesses are not hiring THERE IS NO DEMAND. Supply side economics is a right wing fantasoy world. I demand you change your name and remove the word 'liberal' from it.

[Liberal_Stalwart71]

25. Nope! You can't DEMAND anything from me! I'm keeping my name and proud of it.

And no attacks from you or anyone else here on DU will lead me to do anything that I don't want to do.

If you are inclined, you can read my post, #24, and save the insults.

[Avant Guardian]

36. Your ignoring my question

Why would Democrats implement the very same policies that created the economic situation we are now in? You are saying we should implement failed republican policies. I am curious what your rational is.

[bornskeptic]

23. And actually LBJ got the Civil Rights Act of 1964 passed by sweet-talking Everett Dirksen

into rounding up enough Republican votes to break the filibuster. LBJ could be a bully when that was advantageous, but he was also a master of deal-making.

[polmaven]

12. LBJ had large majorities

in both the House and the Senate:

House of Representatives - Democrats 295, Republicans 140
Senate - Democrats 67, Republicans 33

There wasn't a lot of destroying to do. With numbers like that, getting his legislation passed was not too hard.

[woo me with science]

13. Should Obama endorse supply side solutions? nt

[Liberal_Stalwart71]

16. Straw Man. n/t

[woo me with science]

28. Nope. It's a question.

The employer-side payroll tax relief was his proposal.

[polmaven]

17. That has absolutely NOTHING

to do with the facts I posted. The post to which I responded was claiming that President Obama could be able to pass legislation as easily as did LBJ buy simply "destroying" anyone who got in his way. I pointed out it is not that simple, and that LBJ had not much need to "destroy" anyone, as his majorities were so large.

If it takes compromise, with some supply side and some demand side to get through this Congress, it should at least be considered.

LBJ didn't need to compromise. The president does.

[woo me with science]

29. I don't think the poster said it would be easy.

In fact, I think that was exactly the point--that it takes effort. That you have to use the bully pulpit, talk to the country, talk to legislators, twist arms, and generally be out there explaining and teaching and fighting for what will actually help, every single day.

I don't see Obama compromising in order to get significant demand side measures. I don't see him out there arguing that supply side won't work or trying to change minds at all. He is not only NOT questioning the policies that have crippled our economy, but he is also PROPOSING new supply side measures.

The payroll tax relief on the employer side only is his proposal, not theirs.

It's about being a strong voice for what you believe in, even if you have to compromise sometimes. Why is there such pushback whenever anyone here suggests that he should be more vocal about what he supposedly believes?

Could it be because he doesn't actually believe it?

[polmaven]

35. What the poster said

was that LBJ got things done by DESTROYING anyone who got in his way, and that implies that is what BHO should do. I pointed out that there was no need for LBJ to destroy anyone, because he had all the votes he needed with huge majorities in both chambers.

I agree that I would like to see this president use more of a bully pulpit, but these are not the same times as LBJ had, so to use that as an example is disingenuous. The situations are very different.

[AtomicKitten]

26. Pres O has gotten MORE legislation done than LBJ.

A Modern-Day LBJ? -- A study finds Barack Obama has the highest legislative success rate of any president in recent history.

link: http://www.newsweek.com/2010/01/14/a-modern-day-lbj.html

Excerpt:

CQ rates Obama higher than any president in the last five decades in working his will on Capitol Hill, surpassing even the fabled Lyndon Johnson. Obama's success rate in the House and Senate on votes where he staked out a clear position was 96.7 percent, beating previous record-holder Johnson's 93 percent in 1965.

[vi5]

5. This is true. But the other issue is...

he needs to convince voters that he is doing something. And it needs to be something different than what the Republicans are advocating. Because not if, but when their policies fail they need to fail on their own. The republican policies and supply side solutions are bad. Bad policy, bad for America and bad for the economy. So when these things fail, then the president can be seen as just as much to blame for advocating them as the Republicans.

So yes more demand side policies probably won't get through the House. But why won't he at least more strongly advocate for them? Stake out a clear position. I don't just mean hints of it here and there. I mean strongly standing for that stuff. If the Republicans refuse, and he's made the case then at least he can be seen as standing on the right side.

I don't like that so much of American politics is about optics and perception but it is. And even if we agree that there is nothing he can do given the make up and politics of the House which won't even listen to anything demand side, he's just not handling the optics of this whole thing correctly.

I mean I'm a political news junkie and spend a chunk of my day reading up on this stuff, and it's not clear to me that he believes that we are at the point where we need a new deal style, demand based solution rather than throwing more money at the failed supply side. And maybe it's that he legitimately does not believe it. In which case that sucks. But it sucks just as much if he does believe it but is just shrugging his shoulders and going "Well, nothing we can do so no sense fighting it might as well join them. Don't want to make the case for it because why bother."

[Liberal_Stalwart71]

10. You say that you're a news junkie. Do you watch C-SPAN?

Because if you did, you would see Obama everywhere, talking to Americans, doing town halls, weekly addresses. You won't see him utilizing the bully pulpit on the Corporate-owned networks. The fallacy that he's not out there is only because we don't see it. It doesn't mean that he's not out there.

I agree with you on the push for more demand-side approaches, but I challenge you that when the Democrats were in power, there were several jobs bills that stalled in the Senate by Republicans. Remember Harry Reid's jobs bill? Filibustered by Republicans.

Can't we see that it is the Republicans who are deliberately pushing for economic failure such that we blame the president? I can't understand why so many here at DU cannot open their eyes to see this. Everything we have tried to do has been blocked by Republicans/Blue Dog Democrats/Corporate Democrats in Congress.

[vi5]

18. That's all well and good....

and maybe you're right. But the majority of people don't watch CSPAN. That's my point. I follow a lot of political news and even I don't watch CSPAN. And yes it's good that he's out there, and if I'm wrong and he's on the stump making tons of speeches saying point blank that he's in favor of demand side solutions, and oppossed to throwing good money after bad on already failed supply side solutions then that's great (I'd like some clips or transcripts of such speeches if you have them, just to satisfy my curiosity). But the majority of people who he needs to convince are not watching CSPAN or weekly addresses.

But the fact is that the people he tends to put in place and give power in his administration favor supply side. And the fact is that he is out there advocating for a fair number of supply side solutions that have already proven not to work is definitely not good and definitely counter-productive.

I don't disagree that the republicans are pushing for failure and that they deserve the lions share of the blame. They absolutely do. But then our job is to clearly state and put forth the line that divides us from them and to explain why they are so wrong and show how their policies have failed. But I'm sorry, I'm just not going to let Obama off the hook for where he has failed, either by giving credibility to attempted solutions which almost everyone with half a brain knows is not going to work or which have proven to not have worked by either speaking out in favor of those policies or staffing himself with people who advocate those solutions.

[Liberal_Stalwart71]

19. About C-SPAN, I was offering up to you that Obama HAS been out there using

the bully pulpit. But if only C-SPAN is airing his speeches and the other media outlets won't, then why go after him on this issue?

And you're right! We should indeed hold the Democrats and President Obama accountable. Absolutely! We should never allow them to get away with bad decisions. I've disagreed on many things that Obama has done. However, to turn a blind eye to things not under his control is equally irresponsible. We have to consider the conditions on the ground and use reason to understand what's going on.

I still believe that there should be mix of both supply and demand-side solutions. There's got to be way to get these banks off their duffs and lend. Listen, I'm looking to buy a house in the Washington, D.C. market. I have excellent credit, a great salary, and can come up with some form of downpayment. And yet, the banks won't lend to me. Why is this? There's no reason why I and people like me can't get a loan despite being in a position to spur the economy. The first-time homeowner tax credit is no longer available. Congress did not extend the credit. So, now what?

Yes, we need a supply-side solution, but not as the ONLY solution. I don't think that's what Obama is arguing.

[vi5]

20. Supply side solutions have already been in place.....

Bush took care of that. He deregulated as much as he possibly could, removed as many restrictions on corporations as he could, and lowered taxes to an insane degree. It didn't work. We don't need more supply side solutions. There are enough and there have been enough.

As for your personal loan situation, I don't know what it is and won't be so nosy as to inquire. But I know plenty of people who have gotten loans recently for everything from home/condo ownership, to small business loans, to home equity loans, to just in general loans for assorted reasons. And those people have all been across the spectrum of income levels, credit, etc. So I'm guessing that maybe your issue is not entirely because the big bad government is not focused enough on the supply side.

Please by all means, make me not cynical and disenchanted. Tell me the last thing Obama has seriously proposed and forcefully advocated for that could be unequivically counted among a demand side solution. Tell me which person in any position of authority within his administration is a forceful Keynsian economist advocating for demand side solutions? Which person in his cabinet was the demand side version of equal power to Summers, Geihtner, etc.? And please don't say Elizabeth Warren until he actually appoints her to a position of power or authority. Believe me I want to be convinced of this stuff because I've got nowhere else to turn. I'd never vote for Republicans and I'll never not vote. So like a pathetic sucker I'm pulling the lever for him either way come 2012. I'd just rather not do it with a sickness and disappointment in my stomach like I'm afraid I'm going to be.

[Liberal_Stalwart71]

24. I believe that when Obama speaks of supply side, he's not talking about more

deregulation and extending tax cuts. I believe he's referring to giving businesses--especially small businesses--incentives to hire and pursue innovation. I believe that he's referring to improvements in infrastructure through investments.

I honestly do not think he is talking about more deregulation or extending tax cuts, or giving more tax cuts with no strings attached.

[vi5]

33. Then I guess it's a matter of faith....

Because it seems to me in actions and words that this is exactly what he's talking about.

Again, I'd be more than happy to see some examples that will change my mind and make me not have to feel shitty about voting for him next year. I really would. And I don't mean things that are open to interpretation or reading between the lines, or nuancing the responses.

And the fact is that even if that is what he means, those supply side solutions (even assuming he means small businesses, which I seriously don't think he does) mean nothing if there's not more money in the hands of working and middle class people to make it worthwhile for small or large businesses to make those investments. I mean right now if I had what I thought was the greatest idea in the world, and I got a ton of tax breaks for pursuing it, I"m not sure if I would because I would have zero confidence that enough people are going to have the money to spend supporting my business to make all the tax cuts in the world worth while.

[woo me with science]

32. This is a beautiful post,

especially because it underscores how futile the argument (He doesn't have the votes, so has to compromise...He has to get something done...etc.) is, POLITICALLY as well as practically.

The smartest thing to do politically at this point is to be the person in Washington who dares to speak the truth and speaks passionately about what will and won't actually help. People are sick and tired of the minimization of what they are experiencing and their sense that Washington keeps giving them more of the same. Your last paragraph is spot on.

[woo me with science]

6. The problem is that he is endorsing supply side by participating in supply side.

He has a bully pulpit and one house of Congress. He should be out there every single day of his presidency pushing for solutions that would actually help a sick country. He should work on embarrassing the opposition, giving some hope to the American people that someone in DC actually gets what they are facing, and building political will to do something different than we have been doing.

[Liberal_Stalwart71]

8. WATCH C-SPAN!! They air his speeches. Turn off the cable "news" channels.

You won't get Obama speeches there.

[woo me with science]

9. I have C-SPAN on constantly. I have posted about C-SPAN within the past week.

I also listen to and post about Obama's economic speeches:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=433&topic_id=687207&mesg_id=687382

[MannyGoldstein]

3. Great minds think alike:

http://journals.democraticunderground.com/MannyGoldstein/139">There is only one thing that can unfuck the economy. Only one.

[woo me with science]

7. That post

deserved every rec it got. :thumbsup:

[Hawkowl]

22. That is it in a nutshell

Obama doesn't push these policies because he doesn't WANT to, not because he is powerless as most of his fans here insist he is. If he doesn't do the things in your succinct post, he WILL fail and the economy will suffer for DECADES.

[woo me with science]

31. This appears to be the elephant in the room....

Thanks.

[bvar22]

27. "And Not Go Over to the Supply Side"

Obama went solidly "Supply Side" when he helped Bail Out Wall Street,
and told Main Street we had to compete with 3rd World Slave Labor for our jobs.

He ain't coming back.



Who will STAND and FIGHT for THIS American Majority?
You will know them by their WORKS,
not by their excuses!

[woo me with science]

30. I think this is the crux of the matter.

I keep hearing people claim that he is merely making necessary compromises and really would prefer demand side policies. Yet the supply side proposals are coming from him...and have been since Democrats had control of both houses.

Great picture, btw.

[harun]

34. Reich is right, but Obama wouldn't dare say this much less try to get

it accomplished in this poisoned political climate.

[woo me with science]

39. I think Americans are impatient for someone to speak honestly, at last,

about what they are experiencing.

If he is worried about alienating anyone, it is the money spigots.

[neverforget]

37. He may not be able to get anything through Congress, but he sure as hell

can change the debate to jobs instead of the deficit.

[woo me with science]

38. Thank you!

[phone]

[ej510]

40. He can start screaming about public works, medicare for everyone,

he can scream about bailing out homeowners, he can scream about making college affordable and I am not talking about a 2 to 5 thousand dollars.