Reports have circulated widely this week about unease in senior administration and Democratic Party circles – unease about the possibility of Elizabeth Warren heading the new Consumer Financial Protection Agency. Senator Chris Dodd has wondered publicly and aloud about her confirmability by the Senate;[1] and Treasury Secretary Timothy Geitner, when given an opportunity to support her possible nomination, visibly declined to take it. He chose to name instead other suitable candidates.[2] READ FULL POST

You might think, might you not, that policy-makers and those advising them are intelligent and caring human beings? Well, we are beginning to wonder whether in fact they are. We are beginning to wonder whether the intelligent ones really care, or if those who care are really intelligent.

Why?

Because all the talk these days is of deficit reduction: deficit reduction in the middle of the worst recession for more than six decades!

Cutting federal and state budgets is fast becoming the new Holy Grail. Republicans and blue-dog Democrats alike are insisting that budgets in the public sector be cut, as though it was public sector largesse, rather than private sector irresponsibility, that created the current recession.

• They advocate cutting budgets in the public sector when unemployment in the private sector is still stubbornly stuck (officially around the ten percent mark, more likely in reality nearer the twenty percent), and when that cutting is likely to generate a new round of lay-offs – this time among teachers, fire fighters and law enforcement officers.
• They advocate cutting budgets when the evidence is already clear from economies in which sharp deficit reduction is currently underway – the United Kingdom in particular – that a “slash and burn” approach to public spending not only undermines long-term economic growth by hitting key education and training budgets. It also deepens the recession it is supposed to alleviate – to the tune in the UK’s case of an additional 1.3 million jobs to be lost over a five-year period, on the UK Treasury’s own estimates![1]
• And while still advocating the extension of the Bush tax cuts for the wealthiest Americans, the Republican Party leadership has continued to oppose the extension of unemployment insurance to the long-term jobless.[2] Indeed some conservative commentators have even argued that with unemployment insurance “there will be less work and more unemployment”.[3]

Given the scale of involuntary unemployment now before us, and the prevalence of official warnings of only slow economic recovery to come,[4] this way of arguing is madness masquerading as sense.

Actually it is more than madness.

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