Bill Black’s take on why the Dems lost

Twitter: @rodgermitchell; Search #monetarysovereignty
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I respect and admire Professor Bill Black, which is why I am pleased by his recent article paralleling much of November 12th’s post: The one, very simple reason why Hillary lost.

Unfortunately, Black’s article misses one important point, which I will discuss.

Here are some excerpts from Black’s article:

Hillary Clinton, during the closing 40 days of her campaign, showcased repeatedly her promise to assault the working class with continuous austerity.

The assault on the working class via austerity was such a core belief of the New Democrats that their candidate highlighted that assault even as the polls showed massive, intense rejection of her candidacy by the white working class.

These were the people who enthusiastically crowded Trump’s speeches. As we said on November 12,

They were the Democratic base, though they didn’t realize it, and Trump was telling them what they wanted to hear.”

Black continued:

It is morally wrong, economically illiterate, and politically suicidal for the New Democrats to continue to assault the working class via austerity, “free trade” (sic) deals, and financial deregulation.

The only thing worse is to then insult the working class for reacting “badly” to being pummeled for decades by the Party that once defined itself as the party of working people.

We’ll never know how differently the politics would have played if Obama, instead of systematically echoing and giving credibility to all the arguments of the people who want to destroy him, had actually stood up for a different economic philosophy.

But we do know how his actual strategy has worked, and it hasn’t been a success.

We had said:

The new Democrats forgot about their base. The Bill Clinton, Barack Obama, Hillary Clinton Democrats were not Democrats at all. They were Republicans in Democratic clothing.

“They were conservatives.

“They were the Bill Clinton who ran a federal surplus, thereby guaranteeing a recession that cost his base their jobs, and afterward asked for, and received $200,000 per speech.

“They were the Barack Obama who wanted a “Grand Bargain,” which included cuts to Social Security and Medicare and cuts to the overall budget, all of which would impact the working class far more than the idle rich, thereby widening the Gap between the rich and the rest.

“They were the Barack Obama who refused to prosecute, and still refuses to prosecute, any of the wealthy banksters who caused the Great Recession that took the homes, jobs, and savings from the Democratic base.”

The Democratic liberal base, composed of ordinary, working class, compassionate Americans, is far, far larger than is the Republican conservative base of the rich, the bigots, and the religious extremists.

This massive majority would have voted for an “LBJ” Hillary, but instead were offered an “Obama” Hillary

Bill Black said:

Ever since the birth of the New Democrats, their adherents have embraced austerity.

This act of mutual economic and political self-destruction has become so core to their identity that Hillary unhesitatingly made it one her most important closing pitches during the last 40 days of her campaign against Trump.

At the very moment when her pollsters were warning her that she could lose due to working class hostility, she chose to showcase her hostility to the working class by promising to inflict eight more years of austerity on them.

Despite intense criticism from progressives of her austerity threats, Paul Krugman never urged her publicly to promise to end austerity’s assault on the working class.

Similarly, no one on her official campaign team had the courage and strength to tell her to stop and reverse her position.

A November 14, 2016 Krugman column revealed the hold his past dogmas still had on him.

Eight years ago, as the world was plunging into financial crisis, I argued that we’d entered an economic realm in which “virtue is vice, caution is risky, and prudence is folly.”

Specifically, we’d stumbled into a situation in which bigger deficits and higher inflation were good things, not bad. And we’re still in that situation — not as strongly as we were, but we could still very much use more deficit spending.

Many economists have known this all along. But they have been ignored, partly because much of the political establishment has been obsessed with the evils of debt, partly because Republicans have been against anything the Obama administration proposes.

Krugman still does not understand sovereign money. A budget deficit for a government with a sovereign currency is not a moral issue. Budget surpluses are not a “virtue” and deficits are not a “vice.”

The economic issue is strictly pragmatic – what size budget deficit or surplus is best for the overall economy?

Bernie Sanders’ economic stimulus proposals were far superior to (Clinton’s) proposals.

The 2009 fiscal stimulus was far too small; the federal government had made a dire mistake in moving toward austerity in 2010 rather than increasing substantially the size of the stimulus package.

Krugman was out to defeat Bernie’s candidacy for the nomination. Had Bernie won that nomination he would now be President-elect.

Sanders was the one candidate for the nomination that embodied what Krugman said the Democratic Party desperately needed – ending the hold of “the political establishment obsessed with the evils of debt.”

Krugman has been unable yet to summon the integrity and courage to admit how badly he served the Nation and the millions of Americans that rejected that “political establishment.”

Amen, brother.

Except . . .  Except, let’s not be too naive about Sanders. He didn’t tell the truth, either. In fact, he broadcast The Big Lie.

His signature “Medicare for All” proposal was to be “paid for” by taxes. He campaigned on the “the success of the Affordable Care Act,” that Rube Goldbergian plan that forces some Americans to pay the medical bills of other Americans.

Despite having Professor Stephanie Kelton on his team, and therefore understanding the truth, Sanders did not have the courage to explain why federal deficits are absolutely necessary for economic growth.

Nor did he have the courage to explain why federal taxes do not fund federal spending. He said:

GETTING HEALTH CARE SPENDING UNDER CONTROL
We outspend all other countries on the planet and our medical spending continues to grow faster than the rate of inflation. Creating a single, public insurance system will go a long way towards getting health care spending under control.

Bernie tacitly claimed that spending was a problem, that need to get “under control,” when in fact, more federal deficit spending benefits the entire economy.

When dollars are pumped into the economy (by paying doctors, hospitals and pharmaceutical companies) the economy is stimulated. Businesses that serve doctors, hospitals, and pharmaceutical companies prosper and hire more employees, whose increased income and spending benefits other businesses and employees.

That is how economies grow.

Sanders did not have the courage to say it.  Instead, he perpetuated the myth of “unsustainable” deficits just as much as the Republicans did.

See for yourself.  This was what Sanders said about his Medicare for All plan:

THE PLAN WOULD BE FULLY PAID FOR BY:

  • A 6.2 percent income-based health care premium paid by employers.
  • A 2.2 percent income-based premium paid by households.
  • Progressive income tax rates.
  • Taxing capital gains and dividends the same as income from work.
  • Limit tax deductions for rich.
  • The Responsible Estate Tax.
  • Savings from health tax expenditures.

No, Bernie. The plan would not be “paid for” by taxes. Federal taxes do not fund federal spending. Stephanie Kelton knows that. And you know that, because Stephanie surely must have told you.

So despite Bill Black’s kind words, Sanders did not “end the hold of ‘the political establishment obsessed with the evils of debt.'” Sanders didn’t even try.

In fact, he strengthened that “hold” by incorporating it into his own plan.

Oh, somewhere in this favoured land the sun is shining bright,
The band is playing somewhere, and somewhere hearts are light;
And somewhere men are laughing, and somewhere children
shout,
But there is no joy in the middle class; mighty Sanders has struck out.

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

17 thoughts on “Bill Black’s take on why the Dems lost

  1. “Sanders did not have the courage to say it. Instead, he perpetuated the myth of ‘unsustainable’ deficits just as much as the Republicans did.” ~ RMM

    You mean a Democrat was the same as Republicans? Wow! Who knew???

    And you are correct: Sanders was a weak leftist. Even so, Sanders would have won the White House if he had not been sabotaged by right-wing extremists (i.e. by Hilary and the Democrats).

    Far worse than the sabotage, however, was Sanders’ subsequent cheering for those same fanatical right-wingers (i.e. cheering for Hillary and the Democrats).

    The sabotage was “par for the course,” but the subsequent obsequiousness was disgraceful. It was embarrassing to see. It changed Sanders from a weak leftist to a fake leftist — i.e. to a right-winger who calls himself a “liberal.”

    Incidentally, Trump exposed the Big Lie, but that doesn’t count, since Trump is “evil.”

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  2. This is excellent news – democrats learnt nothing and the republicans aren’t far behind.

    The people have figured out that the free for nothing garbage is what is destroying the nation. That is what trump sold and thats the reason he won over hillary.

    What this tells me is that the democratic and republican parties are likely on their last legs.

    I cant figure out why someone with a college education (like you, black and kelton) would be spewing such nonsense. Well, i kind of do, perhaps black and kelton are interested in money and power? And maybe even you too?

    Not one of you can figure out what is wrong with your ideas yet you cant show how something could be “free”. I couldnt at one point of time and i figured out why, it is not true. Nothing is free. Nothing, nada, silch.

    I know you commiea will get whats due anyway, good riddance to the democrats, republicans and the far lefties (you, black and kelton) whom are nothing but a group of charlatan puppets for the democrats. The ironic part is that you all “studied” economics for nothing – you all know the truth and decided that your communist party goals are more important than humanity.

    God shall take care of you..

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      1. As I said, you cant find a single item that is free.

        I was a democrat once and I always had a notion of how money works – pretty close to what you believe. The only problem was, something as missing from the puzzle. Something did not make sense. I decided that I would stop being a blind sheep – and after reading up on the topic for years, I’ve come to the conclusion that nothing is free.

        You buy a car, medical services, food, energy, housing, etc.. all of those have cost and a price. Whether you chose to express the cost and price in dollar terms or labor hours, etc..it makes no difference – there is a cost.

        I know you know this because you are quick to pull the bigot/idiot/racist card – and I am quite sure it’s because hearing the truth hurts. You know and you chose to mislead the population just because to you, the more important thing is to have more leftists.

        I cringe when I see you and Elizabeth talk about banning / name calling item. That’ exactly what both of you do. And to have the audacity to call what Obama has done “austerity” and “right wing”? Amazing and insulting.

        As I said on my previous post, there is a god and both you and Elizabeth have it coming.

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        1. Apparently, your relationship with God is so intimate, you feel you can speak for Him. Impressive.

          As for “nothing is free,” I assume you didn’t read the link I sent you, so consider this: When you take out a mortgage with a bank, where does the bank obtain the money to lend you?

          Think carefully.

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          1. Actually both of you are correct, but Danny is right.

            There is such a thing as free lunch only if you are thinking in terms of money, is there strictly a monetary cost, otherwise there is no such thing as a free lunch. If you take out the monetary cost then that “lunch” still has to be produced and there are still costs associated with it. Even something as simple as taking a drink of water from a clean (think beer commercial), cold, river may not cost you anything monetarily but there are still “cost associated with getting that drink and the earth producing that drink…hell even something as simple/complex as breathing which the air we would all consider free has cost, just not monetary costs.

            Again if you just thinking in terms of money then yes, there is a free lunch, there is more going on than just money and there are cost associated with that “lunch”

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          2. Snerl,

            You know better than that.

            When was the last time you drank water right out of a river?

            But you would drink it if an organization spent millions on equipmemt and personel to purify that watet for you, wont you?

            Even if anyone can press a key and produce a quantity of money that could purchase the bottle of water, does that invalidate the cost that went into producing?

            You mention the materials that go into producing and you conviniently miss the process, the equipment and the labor that goes into producing beer. Of course we know those are all “free”.

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    1. Danny, all goods and services are derived from toil; the toil of one providing those to another is rewarded with the goods and services provided by others – yes, its not free; it is trade. The trick is to put aside the sophmoric static view of that trade and realize that the collective power of that trade is much much greater than just the sum of its parts. It’s not that the difference between the many parts and the whole is “free;” it’s that difference is far far from being anywhere close to being fully used.

      You’ve taken your thinking cap off far far to early.

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    2. I too typically respect and admire Black’s commentary, but I also took him to task for this particular article and it’s follow-up. I’m in agreement with you that his ode to Saint Bernie was short of merit. Sanders’ call for raising taxes not only counters how our monetary system actually works (and doing so even with Kelton on his committee staff!) but it would have been the deathkeel to his campaign if he had been the nominee instead of Clinton. His call for raising payroll taxes alone would have made the Dems’ lost to the White working class even greater – Trump’s victory would not have been a surprise on election night, it would have been a sure-thing weeks earlier. A person who doesn’t understand this really doesn’t understand our politics.

      So, I’m glad you too took him to task for his delusion over a successful Sanders’ candidacy. However, I also took Black to task for labeling Hilary as the devil-incarnate neoLiberal and not providing a single supporting argument. Instead, he whines on and on about 1990s Bubba, Rubin, Krugman, Obama, and a host of others – typical guilt by assoication. That’s not to say Hillary or the Dem platform could not be criticized, it can, but it should be speicifically taken to task. The reason for that is not doing so furthers the “false equivalency” meme – there’s litte or difference to what Trump offers. That gives support to the weak-minded’s scantimonious canard that they will not be persuaded by the “lesser evil.” We are all now going to learn the cost of of the greater evil. Those who promoted the false equivalency, intentionally or not, should remember what they did, and ask their kids and grandkids for forgiveness.

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  3. Smerls,

    Yes, nothing if free according to the First Law of Thermodynamics.

    So, if a banker touches a computer key, to create a billion dollars from thin air, I suppose one could claim that really isn’t free, because after all, his heart had to beat, and he had to expend a fraction of a calorie reaching for that key.

    Is that your point?

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  4. I don’t know if this thread is outdated but @Danny, what exactly should I know better than?

    I know I am not the most articulate person especially when I am commenting later at night but I think my point was mostly clear (maybe it wasn’t and maybe my example was not the greatest) but I believe we were saying mostly the same thing.

    Unless of course you believe everything in the world has a monetary cost (not sure if that is your point, which is why I asked the original question) but I don’t believe everything in the world has a monetary cost but as you mentioned and I tried to point out most things do have a cost associated with them, opportunity cost, labor cost…the economic notion of what is seen and unseen (which you should be familiar with) etc.

    Unfortunately from what I can tell MS see things mostly (only?) in terms of monetary cost and if there is no monetary cost then it is considered a “free lunch” but again even if we allow for something not having a monetary cost there are still other costs associated with it.

    Maybe that clears things up or is there still something i should know better about?

    @Rodger…yes that is my point in the same way your point about a free lunch is that everything just magically appears out of thin air, the banker and his decision to sit there and press that button along with the computer, the computer network and program the runs the computer, the energy needed to power the computer, everything that is needed to create those billions out of thin air is also created out of thin air, with a press of a button, boom it just appears…right?

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  5. This comment comes late, and likely never will be seen. I’ll try to find another opportunity to comment on something relevant but newer. That shouldn’t be too hard, if you keep posting articles by Bill Black – he apparently isn’t aware that Clinton lost the election and the GOP owns the entire government; either that, or he just likes beating dead horses, and the Dems are currently about as politically dead horse as you can get.

    Here’s the reality. Clinton got 66 million votes; Trump, 63 million (if that’s confusing, see Electoral College). Bernie, who is closer to the MS or MMT purity although still subject to your withering attack, only got 13.2 million. If you take every advocate of MS, MMT, MMR or anyone even espousing just Keynsian solutions, their total combined vote total in the election was ZERO.

    Don’t get me wrong, I believe it what you all are preaching, but I’m pretty sure more than enough voters would run away from you to assure an easy victory by anyone your running against. I don’t see anyone in the MS, MMT, MMR or even Keynsian worlds doing much about that except continuing to mutter about those actually playing in the political arena. We need someone in this community to go beyond muttering to one another and actually start coming up with some strategies/tactics that will make a difference.

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