US politics: Center? What center?

[lpetrich]

Starbucks’s Howard Schultz is ignoring 2016’s lessons, say Jeb Bush and Hillary Clinton alumni - The Washington Post

Starbucks's Howard Schultz has a plan for America: reduce the federal deficit, reject expensive new government programs and cut spending on existing ones.

If Schultz hopes that economic platform will pave the way to a presidential run in 2020, 2016 presidential election veterans from both parties think the departing Starbucks executive is in for a rude awakening.

They both agree that the "fix the debt" position does not have much of a following.

In an interview with CNBC on Tuesday, Schultz echoed some of his earlier political comments, saying he thinks the rising federal deficit is the single greatest threat to America and must be reined in. He also said he supports targeting “entitlement” programs — Social Security and Medicare — and does not support either a federal jobs guarantee program or a universal single-payer health-care system, policies embraced by leading Democratic politicians.

However, neither Democrats nor Republicans seem very eager to cut Social Security or Medicare.

Some political scientists said Schultz's idea of a “political center” that wants to cut the deficit is a myth.

“This is pretty typical of what CEOs think the center of American politics is, but it's not reflective of the actual center of policy opinion,” said Matthew Grossmann, director of the institute for Public Policy and Social Research at Michigan State. “Economically conservative and socially liberal with a special focus on the debt is a constituency of very few people.”

Here is how the US population divides up in economic and "identity" issues.

• Econ: left, ident: left -- 43%
• Econ: left, ident: right -- 30%
• Econ: right, ident: right -- 23%
• Econ: right, ident: left -- 4%

About that last one,

“There's a corporate executive class that tends to have exactly this set of beliefs,” said David Hopkins, a political scientist at Boston College, “but it doesn't have much of a constituency with the public.

With those numbers, economic left = 73%, right = 27%; identity left = 47%, right = 53%.

 

[lpetrich]

Such self-styled centrists might also want to consider:

Ending protection welfare by bringing US troops and military hardware back to US territory.

Fixing the debt by increasing taxes, especially taxes on people with plenty of money.

Starting a suicide cult among the old and disabled and sickly.

 

[untermensche]

The left, the true left, condemns capitalism as amoral and destructive.

The center sees it as bad but accepts it.

The right actually believes it is worth having.

 

[Harry Bosch]

Starbucks’s Howard Schultz is ignoring 2016’s lessons, say Jeb Bush and Hillary Clinton alumni - The Washington Post

They both agree that the "fix the debt" position does not have much of a following.

However, neither Democrats nor Republicans seem very eager to cut Social Security or Medicare.

Some political scientists said Schultz's idea of a “political center” that wants to cut the deficit is a myth.

“This is pretty typical of what CEOs think the center of American politics is, but it's not reflective of the actual center of policy opinion,” said Matthew Grossmann, director of the institute for Public Policy and Social Research at Michigan State. “Economically conservative and socially liberal with a special focus on the debt is a constituency of very few people.”

Here is how the US population divides up in economic and "identity" issues.

• Econ: left, ident: left -- 43%
• Econ: left, ident: right -- 30%
• Econ: right, ident: right -- 23%
• Econ: right, ident: left -- 4%

About that last one,

“There's a corporate executive class that tends to have exactly this set of beliefs,” said David Hopkins, a political scientist at Boston College, “but it doesn't have much of a constituency with the public.

With those numbers, economic left = 73%, right = 27%; identity left = 47%, right = 53%.

I have a hard time believing that 73% of the country is economic left. But if it's even close to that, it just goes to show how weak the left is. The right kicks ass because they are loud and make their vote count.

 

[Jason Harvestdancer]

Fixing the debt by increasing taxes, especially taxes on people with plenty of money.

Actually, the scale of taxes necessary means raising taxes on everyone, all brackets, no exceptions. Sure you can try to milk the rich the most, but if you want to solve our budgetary problems everyone's got to take a hit.

 

[Horatio Parker]

Deficits and the national debt are red herrings. Schultz is the sort of guy to enable the GOP to win again. They don't worry about deficits when it comes to funding their initiatives.

 

[Jason Harvestdancer]

They're red herrings when you hear Republicans talking about them, but that doesn't mean we can ignore their actual detrimental economic impact.

 

[laughing dog]

What is the actual detrimental economic effect of federal deficits and the federal debt?

 

[Harry Bosch]

What is the actual detrimental economic effect of federal deficits and the federal debt?

It causes many to want to avoid extra government spending thinking that it can't be afforded.

 

[Horatio Parker]

The conventional view is that too many bonds issued will lower the price, thereby raising the yield until interest costs bring on a crash. But that ignores the fact that the govt can direct the Fed to buy up the issues, as it has in the past, until they get the yield they want.

Letting the market dictate the size of the deficit is a choice.

 

[laughing dog]

The conventional view is that too many bonds issued will lower the price, thereby raising the yield until interest costs bring on a crash. But that ignores the fact that the govt can direct the Fed to buy up the issues, as it has in the past, until they get the yield they want.

The conventional view has very little empirical backing. It is based on a partial equilibrium analysis (i.e. no change in demand for bonds) which ignores that there are segments of the loanable funds market that will only lend to the gov;t, and to demand of central banks which is based on macroeconomic considerations (which you mention).

Letting the market dictate the size of the deficit is a choice.

 

[SimpleDon]

The conventional view is that too many bonds issued will lower the price, thereby raising the yield until interest costs bring on a crash. But that ignores the fact that the govt can direct the Fed to buy up the issues, as it has in the past until they get the yield they want.

The conventional view has very little empirical backing. It is based on a partial equilibrium analysis (i.e. no change in demand for bonds) which ignores that there are segments of the loanable funds market that will only lend to the gov;t, and to demand of central banks which is based on macroeconomic considerations (which you mention).

Letting the market dictate the size of the deficit is a choice.

Not to mention that paying down the debt would be disastrous for the current economy, much worse than any possible impact from interest rates.

The national debt is also savings for the people who own the Treasury bills. Paying off the national destroys those savings. This is why no economist advocates paying off the debt.

Only if your country is running a balance of payments surplus can you pay down the national debt. But every country with such a surplus currently still issues debt instruments to control their interest rates and to satisfy the demand for the most stable of all "investments" (which are actually savings, not investments.)

So the first step in paying off the national debt would be to start running a large trade surplus.

It is also worth pointing out that a balance of payments deficit shows up as national debt, for the most part. If the foreign business is not interested in holding on to the dollars that it receives from the US, and most aren't because they have to have euros or yuan or yen to meet their own costs of production, they convert the dollars into their local currency. The dollars go to the Federal Reserve Bank through the other country's central bank. The US Treasury issues Treasury Bills to cover the foreign exchange amount and the dollars exchanged go into the Fed's shredder. The T-Bill allows the foreign central bank to issue the local currency that was created for the business.

Even if the business or the country is willing to keep the dollars there is a quantity of money problem with a balance of payments deficit. That quantity of money has left the domestic economy of the US. If it is not balanced out by the Federal government running a budget deficit this amount of money will be replaced by private debt or by reduced economic activity. Private debt is much more dangerous to the economy than public debt. Reference Irving Fischer's quantity of money and debt deflation.

 

[Horatio Parker]

The conventional view has very little empirical backing. It is based on a partial equilibrium analysis (i.e. no change in demand for bonds) which ignores that there are segments of the loanable funds market that will only lend to the gov;t, and to demand of central banks which is based on macroeconomic considerations (which you mention).

Not to mention that paying down the debt would be disastrous for the current economy, much worse than any possible impact from interest rates.

The national debt is also savings for the people who own the Treasury bills. Paying off the national destroys those savings. This is why no economist advocates paying off the debt.

Only if your country is running a balance of payments surplus can you pay down the national debt. But every country with such a surplus currently still issues debt instruments to control their interest rates and to satisfy the demand for the most stable of all "investments" (which are actually savings, not investments.)

So the first step in paying off the national debt would be to start running a large trade surplus.

It is also worth pointing out that a balance of payments deficit shows up as national debt, for the most part. If the foreign business is not interested in holding on to the dollars that it receives from the US, and most aren't because they have to have euros or yuan or yen to meet their own costs of production, they convert the dollars into their local currency. The dollars go to the Federal Reserve Bank through the other country's central bank. The US Treasury issues Treasury Bills to cover the foreign exchange amount and the dollars exchanged go into the Fed's shredder. The T-Bill allows the foreign central bank to issue the local currency that was created for the business.

Even if the business or the country is willing to keep the dollars there is a quantity of money problem with a balance of payments deficit. That quantity of money has left the domestic economy of the US. If it is not balanced out by the Federal government running a budget deficit this amount of money will be replaced by private debt or by reduced economic activity. Private debt is much more dangerous to the economy than public debt. Reference Irving Fischer's quantity of money and debt deflation.

I read somewhere that over 60% of global financial assets are denominated in dollars. The better part of the planet has an interest in maintaining the value of the dollar. IIRC it started with the Saudi oil price increases. We told them we were ok with the prices if they kept their dollars as dollar assets(I've read different versions - either we went hat in hand or threatened them with war, take your pick).

We have a current account deficit of dollars, but not of stuff.

In terms of trade, we have the most advantageous situation possible. Exports require real resources and real labor. The world is happy to give the US their real stuff in exchange for dollars which we create out of thin air. Americans think we're losing because our domestic policy uses global trade to oppress labor. But it doesn't have to be that way.

Schultz would pursue the same policies of social austerity and identity politics which got us to where we are now.

 

[Cheerful Charlie]

When Bush proposed his massive tax cuts, 400 economists including 10 Nobel Laureate economists warned these massive tax cuts would create massive debts and not do the positive things Bush claimed they would. They were correct. Under Bush, the national debt doubled. CBO estimated the tax cuts contributed 30% of these debts. Under Obama, the GOP refused to cut these taxes, and in fact wanted to make them permanent.

So much for financial responsibility and a balanced budget under the GOP. Now we get MORE big tax cuts and more future deficits.
Yet polls show that the majority of Americans think the GOP is more responsible than the Democrats when it comes to economic matters and balancing the budget. A nation of know-nothing fools.

 

[Underseer]

Democrats are economic conservatives who give lip service to social issues, but when it comes time to actually vote for or against something, demonstrate that they're just fine stepping on the necks of minorities, women, gays, etc.

Republicans are economic conservatives who are afraid that America isn't doing enough to step on the necks of minorities, women, gays, etc.

Anyone who is liberal and wants to help someone other than the economic elites is dismissed as an unelectable extremist like Bernie.

The Democrats are conservatives, and that's where America's center is right now. Republicans have gone fully fascist, which is fine because no matter how extreme they get, they can always count on mainstream centrists (such as the folks at the Daily Show) to use "both sides" arguments to make them seem less bad.