The Deficit-Witchhunt: The Long Depression.

“We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. And this third depression will be primarily a failure of policy.“

They used to tell me I was building a dream…In the NYT, Paul Krugman calls out the deficit peacocks one more time before the wheels come off around the world. “[This is] the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.“

In very related news, from the bowels of the Fed comes a taxpayer-paid response to Krugman, DeLong, and others sounding the alarm about the deficit witchhunt: Quiet, you nasty bloggers! You have not sufficiently mastered our economickal arts! “[W]riters who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy…[T]here is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback eﬀects, will oﬀer anything new.“

Having spent much of the past decade in academe, I’d like to point out that this is a pretty classic overreach by the writer here. I mean, you spend all those years chasing down a degree that’s not particularly useful anymore…there must be some upside to it, right? Am I not now part of the intellectual — in this case, macroeconomic — Elect? No, Mr. Athreya, I’m afraid not. Sometimes people spend so much time examining, say, the myriad variances in an oak leaf (or worse) they miss the forest for the trees.

Update: In an attempt to move past the entitlement-cutting hysteria out and about in DC at the moment, the Center for Economic Policy and Research offers up handy tool: The People’s Deficit Calculator. “The budget options in the calculator include ending the wars in Iraq and Afghanistan, adopting a carbon tax, reduction in the size of the health care subsidies created by the health care reform bill, progressive price indexing of Social Security, adopting a financial speculation tax and others.“

Update 2: James K. Galbraith reads the riot act to the deficit witchhunt tribunal. “You are plainly not equipped, either by disposition or resources, to take on the true cause of deficits now or in the future: the financial crisis.”

Barton Fink.

“According to a GOP leadership aide, Barton met with House Minority Leader John Boehner (Ohio) and Minority Whip Eric Cantor (Va.) Thursday afternoon, and was told, ‘Apologize, immediately. Or you will lose your [subcommittee] position, immediately. Now that he has apologized, we’ll see what happens going forward.“

Republican Rep. Joe Barton, the Ranking Member of the Energy & Commerce committee, decides to use the out-loud voice and genuflects before BP’s Tony Hayward, causing all kinds of messaging trouble for Republicans today. (Then again, if they had a problem with Barton openly professing his fealty to his biggest donor, maybe they shouldn’t have put it in today’s talking points.) In any case, this one was right over the middle of the plate for the WH today. [Pic via Greg Greene.]

The Invisible Victim…and the Ring of Power.

“No wonder President George W. Bush can now openly brag about the water-boarding policy he once denied even existed. The courts have become complicit in the great American cop-out on torture.” And let’s not forget the Obama administration in all this. Slate‘s Dahlia Lithwick surveys the wreckage from the Supreme Court’s recent capitulation on the Maher Arar case, wherein we, the United States of America, abducted, deported, and were ultimately responsible for the torturing of an innocent man, and are now trying to sweep it under the rug like it never happened. Look forward, not backward! (unless you’re a whistleblower)

In very related news, borrowing the riff from this great cartoon, The Daily Show‘s Jon Stewart finally drops the hammer on the Bushification of Obama on the civil liberties front. Like many progressives, I’m discontented for a lot of reasons with this administration at this moment, but Obama’s egregious record on this front still stands above them all. An end to imperial powers and civil liberties violations of the Dubya era should have been an absolutely non-negotiable aspect of “change we can believe in” — particularly coming from Obama “the constitutional scholar.” And a White House that will capitulate on these basic human rights will capitulate on anything. Which, when you get right down to it, they pretty much have.

The Deficit Witchhunt: Self-Immolation Time.

“The terms on which the U.S. government can borrow now are exceptionally advantageous. And because of high unemployment the benefits of boosting government purchases and cutting taxes right now are exceptionally large…[R]ight now, as best we can tell, an increase in federal spending or a cut in taxes will produce (in the short run) no increase in interest rates and hence no crowding-out of productivity — increasing private investment. Indeed, government spending that adds to firms’ current cash flow may well boost private investment and so leave us, dollar for dollar, richer after the effect of the stimulus ebbs.“

As the recent wave of deficit hysteria hits the G20, prompting a frightening and idiotic retreat back into Hooverism (As Krugman put it: “Utter folly posing as wisdom“), economist Brad DeLong explains once more the the case for deficit spending during a recession. THIS IS NOT ROCKET SCIENCE, people (which is why 3/4ths of voters already get it.)

Krugman: Enough with the Deficit Panic.

“What’s the greatest threat to our still-fragile economic recovery? Dangers abound, of course. But what I currently find most ominous is the spread of a destructive idea: the view that now, less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain.” The NYT’s Paul Krugman weighs in on the deficit hysteria afflicting Washington right now. Honestly, this is Keynes 101, people — you don’t dial back government spending at a moment of incipient recovery, or else you end up with things like the 1937 Roosevelt Recession.

FWIW, the deficit witchhunt may be rolling in DC, but the bond markets aren’t listening. “On Friday, they were willing to hand over their cash to the Treasury for 10 years for 3.3 percent interest, a level so low it implies they consider the United States among the safest investments in the world.“

GOP, meet 4chan.

“We need to train an army of Ninja Cats. Cats are natural born hunters and predators, and it is known that they indeed have 9 lives, many more than the typical human life (being one). They are also excellent at hiding themselves and would be ideal for sneaking into countries and assassinating communist leaders to lessen the ever growing threat of communism, finding key terrorist leaders and shattering the global terrorist network.”

As a highly entertaining Reddit thread well put it, “House Republicans turn to the Internets for suggestions on new legislation. Internets reacts exactly how you’d expect.” The lack of their own ideas aside, the fact that nobody on the GOP saw this egregious messaging #fail coming from a mile away speaks volumes about their Internet savvy. Series of tubes! (FWIW, here’s the counter-argument — More than anything, it’s a list-builder.)

The New “Black Hole”: Bagram.

“The bottom line is this: Current procedures under the CSRT are such that a perfectly innocent individual could be held and could not rebut the Government’s case and has no way of proving his innocence. I would like somebody in this Chamber, somebody in this Government, to tell me why this is necessary.” Me too, Senator Obama, me too.

In a decisive break with his campaign stances and the best indicator yet that this administration is now happily perpetuating deeply troubling Bush-era policies, the President wins the right to hold detainees indefinitely in Bagram — the difference from the Boumediene decision on Gitmo being that Bagram is a “war zone.” (And Ben Franklin’s admonition aside, that’s an excuse you hear quite a bit these days.)

FWIW, Politico’s Josh Gerstein — while bending over backwards, as per the Village norm, not to call torture “torture” — suggests civil liberties concerns are overblown here, but check out his reasoning: “The Obama administration…has, so far, resisted seeking a full-scale preventive detention law that would apply to future captives. Instead, it has pleaded with civil liberties and human rights groups not to oppose some legal mechanism to allow the continued detention of Al Qaeda captives, at least some of whom may be untriable because of aggressive interrogations many view as torture.“

Oh, please. We have to hold them forever because we tortured them? How utterly and completely effed up is that? As Stephen Colbert well put it: “It’s essentially the same stance taken by George Bush. With one important difference: Obama makes the kids like it.”

Spitting on a Gift Horse.

“They’re not accustomed to being engaged in politics this way,” says a private-equity investor. ‘Their skin isn’t toughened. They actually take [the attacks by Obama] personally. This is a profession with a lot of smart people, but who aren’t necessarily terribly introspective. They think they actually deserve to make all this money. So any attack on their livelihood is, ahem, unpleasant.’“

In the wake of the Senate’s 59-39 passage of financial reform last week (not to mention increasing evidence of rampant and pervasive fraud at Goldman, Morgan, and elsewhere), New York‘s John Heilemann surveys the bruised egos of Wall Street’s would-be robber barons. (In very related news, Paul Krugman and the WP note that Wall Street is now betting heavily on the GOP again.)

Keep in mind: Wall Street is angry with the administration despite the fact that “Geithner’s team spent much of its time during the debate over the Senate bill helping…kill off or modify amendments being offered by more-progressive Democrats.” [Change we can believe in!] Heilemann writes: “Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.“

Still, on the bright side and despite the ambivalence (or open opposition) from folks in high places, this bill did get significantly stronger on the Senate floor, and in some ways is now stronger than the House version passed last year. Let’s hope this welcome progressive trend continues in conference.

Cut Corners Kill Coasts.

“We had this gradual discovery during Hurricane Katrina, where a natural disaster eventually became seen as what it was, a man-made failure. And now, what was called an ‘act of God’ and a freak accident by the defenders of the pollution industry is now being labeled, proof positive, as the consequence of design failure. Not only did the blowout preventer under the Deepwater Horizon well have a leak in it, not only did it include a dead battery, not only were the tests on it falsified for years, but when engineers actually needed to use it and tried to activate it, they didn’t have the right schematics.“

As the Gulf runs black, it’s the same old story: FDL’s David Dayen brings us up-to-date on the idiotic and/or corrupt shenanigans coming to light in the wake of the (still-gushing) Deepwater Horizon gusher. “This is all a consequence of aggressive deregulation by industry, the maneuvers whereby powerful interests save billions in safety costs. They follow the rules at their discretion, they practically own the regulatory agency. It’s amazing how much this mirrors the problems on Wall Street. And just like with Goldman Sachs, the criminal justice system may get involved.” (Pic via TBP.)

Update: “‘We don’t have any idea how to stop this,’ Simmons said of the Gulf leak. Some of the proposed strategies — such as temporarily plugging the leaking pipe with a jet of golf balls and other material — are a ‘joke,’ he added. ‘We really are in unprecedented waters.’“

The Witchhunt is On.

“Is our huge deficit a problem today? Not if you think people should have jobs. Private sector demand has plunged because of the collapse of the bubble. If the public sector does not fill the demand gap with deficit spending, then we have less demand and fewer jobs. That’s worth saying a few hundred thousand times since the deficit hawks have filled the airwaves and cyberspace with so much nonsense.“

The CEPR’s invaluable Dean Baker rails anew at the deficit hysteria currently in Beltway vogue. I’ve said this several times already now, but I just cannot take anyone seriously who froths and frets about looming deficits, but then says nary a word about out-of-control defense spending. And right now, when it comes to such deficit peacocks, DC is a full-fledged menagerie.

Update: “The danger posed by the deficit ‘is zero. It’s not overstated. It’s completely misstated.’” Ezra Klein talks with James Galbraith, son of the venerable J.K. Galbraith and originator of the great witchcraft metaphor, about the deficit hysteria seizing Washington:

“[W]e should be focusing on real problems and not fake ones. We have serious problems. Unemployment is at 10 percent. if we got busy and worked out things for the unemployed to do, we’d be much better off. And we can certainly afford it. We have an impending energy crisis and a climate crisis. We could spend a generation fixing those problems in a way that would rebuild our country, too. On the tax side, what you want to do is reverse the burden on working people. Since the beginning of the crisis, I’ve supported a payroll tax holiday so everyone gets an increase in their after-tax earnings so they can pay down their mortgages, which would be a good thing.“