FAIR USE NOTICE

FAIR USE NOTICE

A BEAR MARKET ECONOMICS BLOG

OCCUPY EVERYTHING

This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. we believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates
FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates

All Blogs licensed under Creative Commons Attribution 3.0

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 Unported License.

Sunday, April 21, 2013

Unbelievable! Bowles and Simpson Release New Deficit-Reduction Plan Based on Discredited Austerity Research by Rogoff and Reinhart




News & Politics  


 
 

The deficit duo tries to poison the public with more bad policy based on bad math.

 
 
 
The Campaign to Fix the Debt was founded by former White House official Erskine Bowles (R) and former senator Al Simpson, pictured here in 2011, whose deficit plan issued two years ago was not adopted by Congress and the White House.

 
 
On April 19, just after I had written about how the key academic research used to bolster austerity policies was exposed by a 28-year-old grad student at U Mass, Amherst, I got a surprise in my email box.

In the email, Erskine Bowles and Alan Simpson giddily announced their new deficit-reduction plan, which includes, among other things, a recommendation to increase the eligibility age for Medicare. Their plan would reduce debt as a share of GDP below 70 percent by 2023 and, as the Washington Postreports, “seeks far less in new taxes than the original, and it seeks far more in savings from federal health programs for the elderly.”

What’s incredible is that over the last week, the study by Harvard economists Carmen Reinhart and Ken Rogoff that famously warned of the dangers of government debt has been proven to be riddled with errors and questionable methodology. To recap: R&R’s paper purported to show that countries with public debt in excess of 90 percent of gross domestic product suffered negative economic growth. Austerity hawks everywhere used it to justify cuts that have cost people jobs and vital services. The original spreadsheet used by R&R was obtained by a U Mass grad student, who found that in addition to the mistakes already noted by several economists, there was a coding error in their Excel spreadsheet that significantly changed the results of their study.

As New York Magazine’s Jon Chait has pointed out, that same discredited research has been used by Bowles and Simpson to formulate their deficit-reducing austerity plans.

Let’s take a look at some ugly chronology.

January, 2010: Reinhart and Rogoff release their famous paper, “Growth in the Time of Debt” (early versions of the paper had been circulating since 2009) to widespread acclaim.

February, 2010: President Obama announces the “Bipartisan National Committee on Fiscal Responsibility” otherwise known as the “Simpson-Bowles Commission” (also the Catfood Commission), chaired by Erskine Bowles and Alan Simpson.

June, 2010: The notorious 2010 Toronto Summit takes place, in which G-20 leaders agree to pursue austerity policies instead of addressing the jobs crisis in the wake of the 2007-2008 financial meltdown.

December, 2010:  Bowles and Simpson release “The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform” which warned of increased government spending and called for cuts in benefits for the elderly, veterans, and many government employees.

There is no question that Bowles and Simpson were doing their dirty work as the influence of Rogoff and Reinhart’s paper had given rise to a misguided Washington consensus on deficit reduction.

There is also no question that Bowles and Simpson, two wealthy white men equipped with an outsized sense of their own entitlement, have always appeared shockingly out of touch as they have tried to foist “shared sacrifice” on the public (Simpson famously sneered that Social Security was a "milk cow with 310 million teats"). But do they not even turn on the news? Do they not employ some staff person who could warn them of beclowning themselves by sending out their package the same week as the austerity revelations?

Literally days after the news was full of reports of the faulty austerity research, Bowles and Simpson have launched a campaign to reignite congressional interest in a $2.5 trillion package of spending cuts and tax increases. Their plan represents the height of fiscal irresponsibility and moral insensibility given the current and growing retirement crisis Americans are facing, and it is particularly egregious given the new revelations about the academic underpinnings of their economic theory. There has never been any economic justification for their cynical attempts to rob ordinary people of more of their hard-earned money, but now, as the intellectual dishonesty of cutting government spending in the name of deficit hysteria is on full display, Bowles and Simpson should be booed off the national stage once and for all.

How many people have suffered, indeed, how many people have died, as a result of deficit hysteria promoted by the likes of Bowles and Simpson?

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.' She received her Ph.d in English and Cultural Theory from NYU, where she has taught essay writing and semiotics. She is the Director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

No comments:

Post a Comment