RADICAL

RADICAL

Time to go radical.

Reasonable is not working.

If I hear one more politician or ersatz journalist rail about the need to find bi-partisan common ground in the sweet spot of a centrism where immediate deficit reduction and job growth live in some sort of economic harmony, I am going to get sick.  It isn't going to happen.

It can't. 

Over the last thirty years, conservative orthodoxy has simply pulled too much demand out the economy.  That is what happens when (1) wages stagnate,  the result of unions collapsing and globalized wage arbitrage taking over, and (2) bankers get unregulated free rein to peddle "products" that put consumers in long term hock, which is what they accomplished when everyone was allowed  to use their home as a credit card.  Once those same bankers turned mortgages into cash for speculators via the now infamous mortgage backed securities, the con was complete.   The ensuing real estate bubble created the impression that there was a free lunch (in the form of ever rising asset values).

And then the bubble burst.

Today, consumers are still over leveraged (thanks to that explosion of private debt over the last decade), but banks can't lend enough (given the shakiness of their balance sheets -- where all those mortgage backed securities are still being held at par -- and the perceived need to adhere to credit standards that were ignored in the run up to 2008).  So private spending is still weak.

The March jobs report was a big disappointment.  The private sector produced a mere 120,000 jobs that month.  Wall Street (and just about everyone else) expected the number to be in the 200,000 range and it wasn't even close.  The recovery from 2008 continues unabated.  But its pace is anemic and uncertain.  In this world, conservatives continue to talk about immediate deficit reduction, business confidence and fears of inflation, certain that dealing with the first and the second is necessary to curb the third and produce jobs.  

All of this, however, is pure economic bunk.  

As Paul Krugman has continually pointed out to anyone willing to listen, we have not begun to put a dent in the job losses that came in the wake of 2008.  The percentage of "prime age" workers who are actually employed -- a real number, unlike the unemployment rate, which is distorted by failing to count those who stop looking -- went down by about five points during the collapse and has gone up by less than one in the "recovery."   At the same time,  our nominally low inflation rate  (about 2% overall, even with the recent gas price hike) shows no sign of precipitously rising any time in the near future.  Businesses are not hiring and producing because there is not enough demand (unemployed debtors don't have a lot of walking around money) , not because they are worried about the tax and regulatory environment.

The near term solution to all of this was a sufficient stimulus and some inflation.  The conservatives, however, made the former impossible, and the chattering classes (including a lot of professional economists who should know better) have scuttled the latter.  What we have, therefore, and have had for some time now, is an economic crisis that our political culture seems powerless to confront and solve.  

The problem here is not a lack of ideas.  We have known how to pull ourselves out of depressions and severe recessions for at least 80 years.  You do it by getting the government to increase consumer demand given that the private sector can't or won't.  This typically involves some form of government spending -- either on infrastructure (which creates both an immediate bump up in demand and also helps with long term productivity), welfare spending (food, housing, etc., which just increases demand), or targeted tax cuts (which increase demand so long as they are properly targeted to those who will spend the money rather than bank it).

None of this, however, is politically possible now.  A deficit which could create problems in the medium and long term is being used to eliminate any rational economic response to demand problems in the short term.  It is also being used to eliminate any policies which could devalue private debt, which is what inflation and/or various forms of foreclosure relief would do.  And the folks manning the barricades as deficit hawks circa 2012 are the same people who brought you the Bush tax cuts of 2001 and the two unpaid for wars of the last ten years, which cumulatively turned the Clinton surplus into Bush's sea of red ink. 

But hypocrisy has no cost in American politics. 

So it is practiced with abandon. 

I am a believer in incremental progress.  I understand that American federalism is very slow.  It is far easier to stop something than it is to pass anything.  And that was the Founders' collective intent.  Over our two hundred plus years of history, therefore, progressives have always had to fight a two-steps-forward-three-steps-back war against reactionaries and the status quo.  Their opponents changed -- from slaveholders to industrialists to stock speculators to sexists.  But the process rarely changed.

Except when it did.

Because, from time to time, progressives have abandoned the marble temples of incremental American federalism and . . . 

Gone radical.  

They've raised hell, hit the streets, jumped to the front of the bus, crossed the bridge, burned the draft cards, or camped out on the Mall.  Unable to change the conversation from within, they altered it from without.  Unwilling to defer to authority, they defied it.  And underestimated by a smug establishment, they created a new one.

That is where we are today.  The system isn't working.  Twenty years ago, in his Presidential campaign, former Massachusetts Senator Paul Tsongas made a point of admonishing unreconstructed New Dealers and trade unionists to stop bashing business.  And the Democrats heard him and stopped.  But now the other side has turned bashing labor . . . or women . . . or gays . . . into a cottage industry.  And that has to be stopped too.   Progressives have to hit the streets.  The kids have to vote like they did in 2008.  The Wall Street occupiers have to return to Zuccotti Park.  The conversation has to change.  

The people who change it will not be the bankers, hedge funders, or politicians checking out the "internals" on their polls.  Because we have to stop talking just about margin . . . or return on investment . . . or individual responsibility . . . or the swing voter.  And begin talking about redistribution . . . and economic fairness . . . and justice.   

We need to rediscover what it means to be a citizen in a democratic republic.

Rather than just a consumer in a capitalist economy.

We need to go radical.

E PLURIBUS UN(INFORMED)

E PLURIBUS UN(INFORMED)

Rick Santorum is the GOP's current flavor of the month.

In the national polls, he leads Romney by a slight margin and Gingrich and Paul by rather large ones.  His rise is attributed, depending on who is doing the analyzing, to either a no-nonsense and unapologetic social conservatism that fires up the right wing base or Romney's inability to get that same base to like him as he careens from one position to another all in the hopes that he can air brush his record as a former Massachusetts governor into something more conservative than it was (see Exhibit A, Romneycare).

As a Democrat, I am happy to see the Republicans eviscerate themselves, and therefore have a rooting interest in the continuation of their nominating contest up to (and even into) the Tampa convention this Summer.  It is very difficult for a sitting President to get reelected in the face of an 8-10% unemployment rate; in fact, it has never happened before, excluding FDR's re-election in 1936 (where the rate was north of that mark but had moved appreciably down).  The degree of difficulty, however, starts to decrease as perceptions of extremism and incompetence begin to stick to one's opponents.

And the more the Republican candidates talk this year , the stickier those perceptions get.

First there's the extremism.  Whether it's on tax cuts or de-regulation or birth control or Iran, the gang of four now vying for the nomination more or less stakes out positions far to the right of any post-New Deal Republicans, Reagan included.  The only exception to that rule is Ron Paul on foreign policy generally and Iran in particular.  He is consistently libertarian, and in shutting down most of the government while touting a so-called Founders' foreign policy of non-involvement, he would avoid any war in Iran (or elsewhere) and take a minimalist approach to the projection of American military might worldwide.  The others, however, worship at the false altar of a view of American exceptionalism that ignores democratic ideals in favor of empire.   When the Cold War ended in the late 1980s, America faced (or, perhaps more accurately, created) a choice between a super power extremism that projected world wide military strength on the one hand or a somewhat dialed down projection of military power in favor of the soft power of democratic ideals on the other.  Romney, Santorum and Gingrich chose the former.

This often gets them in trouble.  One of Gingrich's biggest applause lines has him swearing that no American president should ever "bow to a Saudi King," a reference to Obama's politesse that morphs in Newt's world into the obsequious subservience of one who won't "drill baby drill" America's way to energy independence.  This, of course, is not even possible, and while there are indigenous energy sources to exploit -- principally natural gas in the Marcellus shale deposits stretching from West Virginia all the way to western and central New York -- the environmental costs are only beginning to become known.  Moreover, this "King bowing" stuff is a bit difficult to take from a politician who has routinely subsidized the oil industry and thus given it over the years an enormous (and unfair) leg up on alternative energy like wind and solar.  

Perhaps no American president should ever again "bow to an oil company CEO."

Gingrich, of course, doesn't mean what he says.  He is perfectly happy to see an American president bow to Queen Elizabeth and is no doubt overjoyed when such respect is paid to the Pope.  These concessions to royal protocol are apparently less offensive when they occur in London or Rome rather than Riyadh.  The reality behind Gingrich's comments is the political return he gets in his party by appealing to its xenophobic nativism, another element of the extremism that has now come to characterize the GOP.

Indeed, in the face of the  financial meltdown of 2008 and the near depression it occasioned over the last four years, it appears that all the GOP has left is xenophobia.  That, at least, is the only rational conclusion one can draw from the combined reality that (1) the party has no new economic ideas, having chosen merely to recycle the failed mantra of tax cuts, deregulation and deficit reduction even in the face of the disaster occasioned by those first two policies and  the GOP's hypocritical  failure to control the deficit while it actually held power from 2000-2008, and (2) it couches its aversion to all things Obama --  and thus any really new ideas like infrastructure banks, re-regulation of the financial sector, mortgage relief or national health care -- as opposition to the President's putative love affair with European-style socialism.  In truth, even as the European Central Bank, Ireland, Italy, Spain, Greece (under protest) and Great Britain follow austerity policies more in keeping with what the Republicans want to do here, the GOP still pretends that Europe is being run by leftists that Obama wants to emulate.  If the Republicans were truly serious about criticizing European policy, they'd point out that austerity isn't working over there.  It's only making things worse.

But then they'd be agreeing with Obama.

The other perception now sticking to the GOP presidential field is incompetence and this could be their real killer.  The country is not so far removed from the era of George W. Bush that it has forgotten his failures.  From "no WMD in Iraq" to Katrina to the studied insouciance that let Wall Street invent worthless mortgage backed securities that took us all to the brink of imminent economic destruction, the picture of incompetence was breathtaking.  Now, however, the GOP's would be successors to W are simply crafting their own litany of outrageously stupid nostrums and apparently hoping that none of us will notice.

Ron Paul wants to abolish the Federal Reserve and return America to the gold standard,  a  policy "daily double" that will in one fell swoop eliminate our ability to create liquidity in times of recession or depression and return us to a 19th century economics where recessions were both more frequent and more severe.  For his part, Gingrich asserts that he will transform Washington on day one via executive order, which is emblematic of the pompous (and unrealistic) grandiosity  typical of  him, and Romney claims he will just produce jobs.  He never explains how, and if past is prologue, he won't be able to do it.  In fact, in his prior life as a leverage buy out specialist at Bain, Romney destroyed more jobs than he ever created, at least here in the USA.

And then there is Santorum, the gift that keeps on giving.

In the last month, he has told us that birth control is the root cause of America's moral decay, that environmentalism is somehow a "theology" at odds with Christianity, and that "e pluribus unum" -- the "out of many, one"  Latin inscription on the country's Great Seal, placed there around the time of the founding when the seal was created -- was meant to signify a unified commitment to Judeo-Christian morality.  Santorum, however, should either go back to school or demand an immediate refund.  And his children, who are being home-schooled, better start wondering about their teachers.

The birth control flap has now enveloped the whole field.  It started as a strategic  attack on the Health Care Reform Act when the Catholic hierarchy complained that its non-church institutions like hospitals and schools should have a conscience exemption from the requirement that insurance policies provide coverage for reproductive services including birth control.  The hierarchy's bona fides was open to question inasmuch as the rule to which they objected was in fact already being followed in a large number of states which had previously been imposing the same requirement.  But leaving that aside, the Obama Administration fashioned a compromise that ultimately relieved the Catholic church from having to pay for such services, imposing the cost instead on the insurance companies.

This, however, was not enough for Santorum, who attacked birth control as per se immoral, notwithstanding the fact that (1) it isn't and (2) the vast majority of Americans believe it isn't even if the Catholic hierarchy and Rick say it is.

There has always been a false equivalence at work on this issue.  Those who oppose birth control and inveigh against its ostensibly immoral consequences are really opposed to artificial birth control.  That, at least, is the Catholic hierarchy's position; in fact, it says that "natural family planning," which involves scheduling sex at times in the female cycle when the woman is not likely to get pregnant, is morally licit and sometimes even required.  To my mind, however, this basically kills any immorality claim given the fact that, in the case of natural family planning, the couple is no more open to getting pregnant than they are when using artificial contraception.  In both cases, the couple's motive is likely to be the same, namely, sex solely for purposes of  pleasure, and it is  a circle beyond squaring to condemn one while permitting or praising the other.

Santorum, however, is this month's non-Romney.  The first requirement of any non-Romney is that you never trim your sails, and Rick has that down cold.  Unlike Mitt, he doesn't wake up in the morning wondering what to say; he just goes on automatic pilot.  The only problem is that his ideological GPS is, to put it bluntly, wacky.  Calling  environmentalism a theology is silly.  And turning "e pluribus unum" into a commitment to Judeo-Christian morality is simply wrong.  None of the Founders believed that, and the phrase itself was meant to signify the Constitutional union of what had previously been thought of as thirteen independent states.  In short, it had nothing to do with religion or morality.

It is probably the case that Santorum knows all this but thinks his mistakes will never matter.  If he's betting this way, however, my view is that his odds are long.  America already took a chance, and quite recently,  on someone -- namely, W -- whose mistakes were routinely discounted.

We won't do that again. 

At least not right away.

SUPER BRAWL

SUPER BRAWL

It's Super Bowl Sunday and everyone here in New York is gaga over the Giants.  

As I write this, they haven't won yet, may not, and are actually a slight underdog.  But between New England fans and New York fans, the bounds of arrogance are more or less limitless.  Hence, the utter certainty with which each set of loyalists confidently anticipates a favorable outcome.

Regardless of the fact that both cannot -- logically -- be right, and one, therefore, will be demonstrably wrong.

It is in fact amazing how sport can generate so much irrationality.  It appears to be the consequence of  its not unique but nevertheless potent ability to combine utter contempt with sheer hatred.  A number of years ago, I was leaving Yankee Stadium with my son after a Yankee-Red Sox game.  We were at the old Yankee Stadium where one exited for the most part by gradually walking down a dozen or so ramps, and this naturally took a bit of time.

As we did so, the crescendo of expletives was deafening.  A native New Yorker, I pride myself on the fact that there probably are not any forms of the f-word I have not heard at one time or another in my 55 years.  Nor have the grammatical or syntactical constructions surrounding its use been limited.  It has come packaged as a noun, verb, adjective and gerund.  As a stand alone sentence . . . or in an expletive laced string.  But leaving Yankee Stadium that day was an education in the hatred behind this linguistic  creativity.  

One, in fact, that I had forgotten.

Until I started following this year's Republican  presidential primary campaign.

Somewhere between the comical and the incredulous,  the GOP has simply channeled its inner hatred.  There is, literally, nothing they will give Obama credit for and a whole host of fictive evils the responsibility for which they regularly lay at his feet.  If, as the saying goes, a lie rounds the world before truth can even get its boots on, the Republican onslaught this year has been multi-orbital by an order of magnitude. 

Obama is not a socialist, a Kenyan, or a foreigner.  But he has been tagged as all three at one time or another in the current campaign.  The Health Care Reform Act, which took some tentative steps in the direction of regulating insurance companies (so as to insure that they actually pay for medical care rather than invent new exclusions), creating competition (via state based exchanges that, it hopes, will end the monopolies or oligopolies which now describe the 50 state insurance markets), and eliminating free riders (by mandating that everyone have insurance, as is already the case for anyone who wants to operate a motor vehicle), is neither a job killer nor some sort of European style seed designed to replace our rugged individualism with their wussy communitarianism.

But Obamacare has been called all that as well.   Even in the face of the fact that it adopts as its central tenet the mandate that Romney passed in Massachusetts and  Gingrich proposed as Speaker.

On the economy, their mendacity knows no bounds.  On the one hand, they abhor TARP and the later stimulus, ignoring that the GOP itself was a party to the first (in the last months of W's Administration) and claiming, all evidence to the contrary notwithstanding, that the second was an utter failure.  (In fact, the only problem with the stimulus is that it was too small, as smart economists -- in particular, Paul Krugman -- presciently warned at the time; given its modest size, it made things significantly better than they otherwise would have been and in any case was not remotely the failure the GOP makes it out to be.)

On the other, they claim that more tax cuts for the wealthy and repeal of our recent anemic regulatory reforms (Dodd-Frank last year and Sarbanes-Oxley a few years back) will magically restore economic growth when, in fact, it was the absence (or, in the case of Glass-Steagall, repeal) of regulation that allowed Wall Street to create the 2008 financial downturn that nearly destroyed us in the first place, and the only thing now standing between us, and the full throttled recovery that Keynesian spending could provide, is lack of demand.

Not a socialist President.

In a rational world, these sorts of charges would be roundly derided.  In fact, there wouldn't be a nickel (let alone millions) spent advertising and repeating them.  But, as my walk down those old Yankee Stadium ramps a few years ago, and the pre-game hype of today's football extravaganza, reminds me . . .

We do not necessarily live in a rational world.

 

PRE-OCCUPIED

PRE-OCCUPIED

For two months, protesters have occupied a square block in lower Manhattan known as Zuccotti Park.

The park, named for the citizen who contributed to its creation more or less as a condition for developing other profitable property in the same neighborhood, is itself a misnomer. Most of it is made up of faux marble "benches" affixed to granite slabs. There are a few rows of thin trees that run diagonally across the venue and a couple of small roundabout flower gardens. But other than that, the "park" is hardly a green space.

It is also very small. It is sandwiched between one modern high rise office building on the north and a twenty-one story landmark built in 1905 on the south. To its immediate east is another modern office building and to its immediate west lies a Burger King and a hamburger cum pizzeria joint.

So, all things considered, calling it a park is the rough equivalent of calling Herman Cain a presidential candidate -- accurate perhaps as a technical matter but not particularly serious if one is interested in apt descriptions.

At somewhere in the neighborhood of 2 or 3 am today, the New York City Police Department cleared the "park" of those who had decided to sleep there. The ostensible reasons for this police action were that (1) the "occupiers" were somehow creating health and safety risks for themselves and others in the surrounding community and (2) the "occupiers" were effectively precluding others from "using" the park as the publicly accessible space it was intended to be.

I work about a half a block from the park and walk by it to and from my office and during lunch approximately half a dozen times a day. During the two months I have been observing the "occupation," I never noticed any "health and safety" problems. Virtually to a man and woman, the protesters were disciplined in respecting police instructions not to impede pedestrians and other passers-by, myself included. I never witnessed a fight or any violence. And the "occupiers" apparently understood the need to leave the park for other more appropriate facilities when mother nature called or personal hygiene demanded.

Nor were the protesters, by New York City standards at least, particularly loud. For some portion of every afternoon, a group on the western edge banged on ersatz drums, accompanied by an occasional saxophonist who tried to inject some harmony (musically, that is) into the drum beat. And late at night -- I am a lawyer who has occasional late nights -- the place was placid. If, as the Mayor says, businesses in the area were complaining, they could not have been the ubiquitous fast food and push cart vendors, who never had it so good. And, for the record, my firm never complained.

As for interfering with "others" who wanted to use the park, this too is a stretch. From about 11 pm to 6 am on a daily basis, the park was never used by anyone other than the occasional drunk stumbling through or couple making out. At other times, but really only in the good weather, it served as a venue for al fresco lunch goers and the occasional skateboarder, the latter of whom were risking far more as a matter of safety and health than any of the occupiers and presumably can begin doing so again.

In any case, it would have been far easier to suggest alternative neighborhood venues for those pre-occupation occasional users who sometimes showed up before Zuccotti became famous. In fact, if public use is the park's purpose, Zuccotti and Mayor Bloomberg should send the "occupiers" a thank you note for having finally brought some reality to what had previously been mere pretense. Because, put simply, for the first time in its lifetime, Zuccotti Park finally lived up to its billing and got a real workout.

Of course, Bloomberg and the Police Commissioner and the editorialists at the right wing New York Post are really just pulling our leg. They didn't clear the park out of concern for health, safety, skateboarders, neckers or the seasonal lunch crowd. They cleared it because, in the belly of the high finance beast that is Wall Street and from which this park sits mere blocks away, the occupiers were making a point.

In fact, they were making a number of them.

The gap between the rich and the rest has grown way too large. The dream of working hard and getting ahead is dying. Corporations are not people. They are creatures of the state. They have no inherent or natural rights. In fact they are not "natural" in any sense of that word. The government, which for years levelled the playing field and enforced some regulatory constraints on a culture of high finance that would literally create a depression before it sacrificed an opportunity for quick profit, has been captured and rendered powerless.

This is the "message" of "occupy Wall Street" or OWS. It has spread throughout the world. And it is not going away.

Because the kids and the hippies and the unemployed and the angry who camped out for two months on a city block in New York -- beating drums, annoying Mayors, and telling the truth -- didn't just occupy a park.

They occupied our mind.

BIG BOB

BIG BOB

My Dad died this week.

He loved martinis, women named Joan, a breaking news story, and books. In 1975, he had to give up the martinis, because, as it turned out, he loved them too much. Then, he loved God.

Which, I have discovered, can be just as intoxicating.

He was an over the top guy and made sure you knew it. He was not cool. He was hot. And like most non-cool, hot, over the top guys in this "too school for cool" era of phony understatement, he was teased for it.

Relentlessly.

Too bad.

We could use a little hot today. From a President, who is way too cool. And from a culture, which has turned cool into a synonym for smart.

Which it decidedly is not.

He had a high school education and about a year of college. He was what the old timers call a "newspaperman". Not a "journalist" or "broadcaster" or "personality" or, God forbid, "talking head." He worked for the Daily News, one of New York City's two remaining tabloid newspapers, for twelve years, from 1950 to 1962. And then for WNBC-TV in New York and NBC News for the next twenty-five.

He loved the news business. And it loved him back. He was the first newspaperman in NYC to report that Mafia kingpin Albert Annastasia had been killed. In the "if it bleeds, it leads" tabloids, this was a big deal. Most of us remember "Houston, we have a problem" because Tom Hanks said it in the movie "Apollo 13". Daddy actually heard it late one night over the Mission Control radio as he covered that space shot from the Johnson Space Center outside Houston.

He never won a Pulitzer. In fact, he probably gave one up. He crossed a police line at a murder scene in the '50s one day because, as a beefy Irish guy, everyone at that time thought he was a cop. When the real cops kicked him out, he grabbed the wrong trench coat. It belonged to one of the Chiefs at the NYPD's Division of Internal Affairs. In the pocket was a list of all the corrupt cops the NYPD was then investigating.

He gave the list back.

So long Pulitzer.

He was also over the top in his imperfections. Because he loved those martinis for too long, he missed Cub Scouts, Little League, most of his first marriage (to my Mom), and a good chunk of his pay check.

But he conquered that demon as well.

And then was passionate about the conquest.

To a defrocked, alcoholic priest who he sponsored to recovery in "the program", as all the AA guys and gals affectionately call it, he was that guy's Jesus.

Which, all teasing aside, is pretty amazing when you consider the source.

In my teens, long before Tim Russert wrote any books, he was "Big Bob". Not because he was all that big. He just couldn't be missed. He wouldn't let you.

Thank God.

Because . . .

Now he is.

WHAT BARACK SHOULD SAY

WHAT BARACK SHOULD SAY

The market is tanking.  The unemployment rate is still north of 9% and much higher when you count those who have stopped looking.  It is almost a given that we are on the verge of a second recession.  Corporations are sitting on mountains of cash, waiting for demand to re-emerge.  And governments here and in Europe are fixated on lowering deficits and debt in what has turned into an undisguised contest between creditors who insist on being paid and debtors who can't do it.

We are in big trouble.

And, better late than never, the President has to come out swinging.

Here is what he should say:

"Fellow Americans --

On a crisp fall day in November almost three years ago, you and I made history.  We proved the naysayers wrong and the optimists right. Instead of just talking about American exceptionalism, we demonstrated it. 

We relegated our two centuries plus compromise on Jefferson's promise that "all men are created equal" to the proverbial dustbin of history, elected the son of a Kenyan immigrant and Kansas student to our highest office, and reignited the American dream for many across the globe who wondered if it still truly existed.

Today, it is time to call on that exceptionalism once again.

Our nation and our world is hurting. 

Close to one fifth of our fellow citizens are unemployed or underemployed.  Economic growth across much of the world is now anemic as demand in developed countries -- our own included -- has stagnated.  Home values have plummeted.  And so have the retirement nest eggs in our 401k's.  The vast majority of you think  the nation is on the wrong track.  And you are right.

The reasons for this downward spiral are not all that mysterious.

From 2001 to 2008, we turned a federal surplus into our largest federal deficit.  We gave the rich and super rich tax breaks they didn't need and that many of them did not even want.  We fought two wars but paid for neither of them.  And we continued our now thirty year love affair with deregulation, allowing Wall Street to create worthless mortgage backed securities that it peddled the world over, armed with nothing more than Standard & Poor's phony assurances that these securities would never go under.

Well, and not for the first time, Wall Street was wrong.

And so was S & P.

The result was the financial crisis of September 2008, two months before I was elected and four months before I took the oath of office.

That crisis drove America and the world to the brink of Depression.  Huge financial houses collapsed or had to be substantially reorganized.  Their names are familiar to all of us -- Lehman Brothers, AIG, Bank of America, Merrill Lynch.  Much to the chagrin of many of you, the government was forced to bail out the banks, those same irresponsible parties who had brought the world to the brink in the first place.  But if we had not done that, all most assuredly would have been lost.  And we would have suffered the first Depression in almost eighty years.

There are not many of us alive who remember the 1930s.  And none of them seem to be in Congress.  But those who refuse to study history are condemned to repeat it.  So it behooves us to take a look back at that grim decade -- an America of 25-30% unemployment, whole families living in shanty towns in our public parks, children going to bed hungry at night, poverty on the rise, especially among the aged, and business at a standstill.  And it also behooves us to understand how we were able to end that Depression.

Because the answer may surprise many of us living in today's America.  And it will certainly surprise my opponents in Congress and on the Presidential campaign trail.  The answer is simple --

The Government did it. 

We called it the New Deal then, crafted and guided by a President -- Franklin Roosevelt -- who lifted himself from a wheelchair to lift this nation from its knees. Roosevelt's New Deal put people to work, stimulated demand, regulated finance capital to end the abuses that had caused the Depression, and ended poverty among the aged with Social Security.

And today we need to do much of that again.

So tonight I am proposing, and tomorrow I will send to Congress, a New Deal for the 21st Century.  Call it New Deal, 2.1. 

Instead of ignoring the weapons at our disposal in the current fight against unemployment and recession, it will enlist them.  Instead of pretending the private sector will magically renew itself, it will create the demand business needs to spend the money it is now sitting on and generate the growth and jobs we so desperately need. Instead of trusting Wall Street and the multi-nationals to behave themselves and pay their taxes, it will use the long arm of the regulatory state and the law to make them do it. And instead of assuming Government is the problem, it will use Government to solve the problem.

The centerpiece of today's New Deal will be a stimulus sufficient to the size of the problem at hand.  It is time to stop playing politics with our economy.  Without consumer spending, there can be no recovery.  And at this point, the only way to get consumers to spend is to lower their debt burdens and get them the jobs that will give them the money necessary to do so.  To do so, I will ask Congress to fund an additional $200 billion stimulus for this fiscal year and the next.  The only strings attached will be requirements that the money increase consumer demand.  It will not be used to shore up banks or enrich those who were so heavily favored over the past ten years.  It will be used to permit states to fund the projects now suspended due to their own budget crises, and to put money in the pockets of America's working class. 

Wall Street, of course, did not just nearly cripple the American economy in the last quarter of 2008. It also left us with a very painful hangover in the form of a housing market where values are going down, foreclosures are going up, and even willing buyers and sellers face difficult and often insurmountable barriers to completing their deals.  The central reason for this problem in the housing market is the glut of foreclosed properties.  In the past, I have proposed programs that were designed to incentivize private lenders to renegotiate existing loans in an effort to alleviate and ultimately resolve the foreclosure problem.  Those efforts have not been sufficient.  So tonight I am proposing the creation of a new Federal Housing Authority.  This FHA will have the power to write new mortgages with lengthened terms and lower interest rates so that properties in foreclosure can be re-financed and the housing market can recover.

And here too it is helpful to remember some history.  The 30-year mortgage Michele and I used to buy our home in Chicago was not some vehicle given to us by the ancients.  In fact, at the start of the Depression in the 1930s, it did not even exist.   Most of the properties foreclosed upon then were under mortgages containing much stricter terms -- typically five years of interest only payments with principal due in the form of a balloon payment at the end.  It was no wonder that those without jobs lost their homes and farms as the Depression continued.

President Roosevelt more or less invented the 30-year mortgage to fix that problem in the '30s. And today we should imitate his creativity and fashion a mortgage instrument sufficient to the challenges of today's housing market.

I know my opponents will oppose this New Deal for the 21st Century.  They will say we cannot afford it.  They will claim it is Government run amok and that I am a Socialist or worse.  They will embrace the rhetoric of our founders while they demonize the very Government those founders gave us.  In truth, as with the sorry recent spectacle in which necessary debt ceiling legislation was held hostage to the extreme views of the irresponsible and the uninformed, they will try to create a new crisis rather than solve any existing problems.

They, however, are not new to America or unique to this era.  They are merely the heirs to the plutocrats who denounced President Roosevelt in the 1930s. They have spent much of the last three years worrying more about my birth certificate than your jobs. And they have spent all of the last Congress avoiding the problems that you and I hired them to work on and solve.  Almost all their ideas -- from continued tax cuts for the rich to deregulation of the financial sector -- have been tried and have failed.  So, unable or unwilling to confront the reality of their own failures, they have simply taken to repeatedly, and often viciously, denouncing me.

This too, however, is an old song sung by deniers throughout our history.  Indeed, in the 1930s, those same sorts denounced President Roosevelt.  He knew it and so did everyone else.   As he put it then: "Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me. And I welcome their hatred."

Tonight, I  join my predecessor,  FDR.

I welcome their hatred as well.

It's time to put America to work again.  There is not a family among us that faces a problem by denying itself the tools necessary to solve that problem.  And neither will we.  A friend of mine once counselled that we should pray as if everything depends upon God but act as if everything depends upon us.  And so we will --

Beseeching the Almighty to give us the strength and wisdom necessary to reject outworn shibboleths.

Thanking our God for the plenty with which we still  are blessed.

But in the end echoing President Kennedy's understanding that, on this earth, God's work must truly be our own. "

INDEBTED

INDEBTED

Whatever happens next week as we approach our current rendezvous with destiny, also known as the debt ceiling crisis, one thing is certain.

Wall Street is getting what it wished for.

And apparently does not like it.

The stock market just closed for the day, suffering its worst weekly loss of the year. This was apparently caused by the double news whammy visited upon us in the last twenty-four hours -- a report on GDP which measured the growth rate in the last quarter at an anemic 1.3% for the year, and the continuing debt ceiling debacle in Washington.

The former came on top of revised figures for the first quarter, lowering the growth rate from a previously reported 1.9% to an actual 0.4%, which now makes the current "recovery" the weakest on record and puts us more or less on the brink of another recession.  The latter is a consequence of Tea Party madness, that uniquely dysfunctional blend of ideological extremism made possible by  the political ennui that kept large chunks of the 2008 electorate on their couches in 2010, thus allowing the patients to now run the asylum.

The current Speaker of the House, John Boehner, is by no means a happy camper.  Even his proverbial deep tan has begun to fade as he scurries to convince his caucus to support his plan to raise the debt limit.  It apparently does not matter, either to him or his caucus, that the  plan for which he still has not gotten a vote will be dead on arrival in the Senate.  The idea here is to get the right wing offering on the table so that the Senate and the Administration are forced to negotiate against it. 

Be that as it may, however, the plan itself is laughably inept.  It would "solve" the crisis for a few months so that it is timed to arise anew in the upcoming 2012 election year.  And it will weaken the economy by cutting spending and pulling demand down.

Boehner et al. do not care.

It is now an article of faith in their party that spending must be cut regardless of the consequences.  Though this intransigence ignores a solid century of economic data and history, no one in the current Congress actually remembers the Depression of the 1930s, even if the few octogenarians still serving might actually have been alive during some part of it.  Instead, the mantra that deficits will kill us rules the political roost.  The Tea Partiers universally assert that the 2009 stimulus package did no good and that TARP in 2008 was a failure as well. 

The facts belie both assertions. TARP rescued the financial system from certain implosion and the stimulus forestalled a second Great Depression where unemployment would have exceeded 20%.  Indeed, the only problem with the stimulus is that it was not large enough, and the only problem with TARP is that it did not exact nearly enough concessions from Wall Street in exchange for the bail out.  More to the (immediate) point, today's debt ceiling crisis is an entirely manufactured one.  We have repeatedly raised the debt limit over the last thirty years of conservative ascendancy, and we have done so for one and only one reason.

The alternative to doing so is stupid. 

Even their hero, Ronald Reagan, said as much in an earlier version of this same movie.  During his Presidency, the limit was raised seventeen times.  On one such occasion, Reagan betrayed an uncommon impatience with all the political bluster. "Congress consistently brings the government to the edge of default before facing its responsibility," he said. "This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility – two things that set us apart from much of the world."

Though Reagan's right wing heirs embrace their man, they ignore his words.

And not just on the debt ceiling.

Reagan also raised taxes eleven times while he was President, and he never submitted a balanced budget.  To ease the rhetorical pain,  he called those tax hikes "revenue enhancers," but today's GOP would have none of that.  In their world, if a tax cut is allowed to expire or sunset, those who do nothing to stop the eventuality are raising taxes nonetheless. 

In the current debt ceiling debate, some commentators claim that Reagan would endorse the Boehner plan.   If, however,  Reagan's actual conduct in office is  the measure of what he would now do, the far greater likelihood is that he would endorse Obama's plan.  The latter cuts more over a longer period of time, contains some "revenue enhancers" in the form of closed loopholes, and eliminates the repeated near term "brinkmanship" that the Boehner plan guarantees and that Reagan himself wearied of.

As noted, Wall Street's vote is already in, and while the Street liberally funded the GOP's mid-term ascendancy, it is in no mood for a replay of this sorry spectacle six months from now. 

So, Mr. Speaker, here's some advice. 

Cut your losses. 

Can the Tea Party.

Win one for the Gipper.