Ask a neoclassical economist this: Take any actually existing economy. What action would your model recommend and what result would make you abandon your model? Southern Europe was told by these intellectual clowns that their economy would magically heal once government spending was cut. And yet, somehow, taking money out of the economy made things worse, as even the IMF now acknowledges. After watching this take place, the politicians in the United States responded by cutting government spending and raising taxes on the poor (i.e., those who actually spend their money). In other words, knowing what came from austerity in Europe, our leaders decided they’d give us a taste of the recipe. Presumably, we’re to believe that everyone who recommends this policy now is hoping for a different result than it has had on nearly every observable occasion. Would it be too rash of us if we started to wonder at the goodness of our leaders’ intentions?
Indeed, it is difficult to deny the possibility that despite his effervescent protestations to the contrary, Obama is in on the shakedown. Whenever he so chooses, he can raise the debt ceiling by invoking the 14th amendment, as even a neoliberal as otherwise dedicated as Bill Clinton has recommended to him. The fact that Obama does not do so and instead goes along with the Republican charade means that he is enjoying scoring political points by portraying himself as the populist (if only by comparison) and/or he thinks that cutting social security is the right thing to do for neoliberal reasons and he appreciates having the political cover in order to do just that. Aside from the small issue of his complete and utter moral depravity, one certainly has to marvel at Obama’s artistry. (I won’t repeat here the argument concerning why the debt is not in fact the problem with the economy. Anyone who needs clarity on that point can read any of Paul Krugman’s columns for the last four years. And for an in-depth explanation of why cutting social security through chained CPI is both a bad idea and has nothing to do with the non-existent deficit problem, read Dean Baker’s excellent remarks on the subject.)