America and the Beltway - Parallel Universes

The President spoke Thursday night of the deep skepticism and disaffection many Americans feel for Washington when confronted with craziness like the debt ceiling brinksmanship.

But a big part of this problem is that too much of the rhetoric we hear, even from the White House and leading Democrats, puts cutting deficits before creating jobs and feeds the frustration and disbelief that our political system can help solve the worst of our problems.

If the main problem is posed as cutting government spending, the GOP's social nihilism has already won the day and prospect of promoting effective public policy has been severely diminished.

Former Chairman of the White House Council of Economic Advisors Lawrence Summers - set free from his official spokesmanship - stated unequivocally a few days ago,  "I think the biggest problem the country has right now is not the budget deficit. The biggest problem the country has right now is the jobs deficit." 

When Larry Summers and Paul Krugman agree that most of the Beltway politicians are barking up the wrong economic tree, one has what anyone to the left of David Brooks might well consider a compelling consensus. 

Robert Reich has more good commentary on the divide between Washington's political games and the realities most of us face:

We now live in parallel universes.

One universe is the one in which most Americans live. In it, almost 15 million people are unemployed, wages are declining (adjusted for inflation), and home values are still falling. The unsurprising result is consumers aren’t buying — which is causing employers to slow down their hiring and in many cases lay off more of their workers. In this universe, we’re locked in a vicious economic cycle that’s getting worse.


The other universe is the one in which Washington politicians live. They are now engaged in a bitter partisan battle over how, and by how much, to reduce the federal budget deficit in order to buy enough votes to lift the debt ceiling.


The two universes have nothing whatever to do with one another — except for one thing. If consumers can’t and won’t buy, and employers won’t hire without customers, the spender of last resort must be government. We’ve understood this since government spending on World War II catapulted America out of the Great Depression — reversing the most vicious of vicious cycles. We’ve understood it in every economic downturn since then.

Until now...


All of this is making the vicious economic cycle worse — and creating a vicious political cycle to accompany it.


As more and more Americans lose faith that their government can do anything to bring back jobs and wages, they are becoming more susceptible to the Republican’s oft-repeated lie that the problem is government — that if we shrink government, jobs will return, wages will rise, and it will be morning in America again. And as Democrats, from the President on down, refuse to talk about jobs and wages, but instead play the deficit-reduction game, they give even more legitimacy to this lie and more momentum to this vicious political cycle.


The parallel universes are about to crash, and average Americans will be all the worse for it.