Monday, August 22, 2011

debt and deficits.

everything i know about macroeconomics tells me:

• you don't cut government spending during a fragile economic recovery
• you don't hold the u.s. credit rating hostage to defend a regressive tax code that favors millionaires and billionaires
• you don't block infrastructure spending (investment) that could sustain a recovery and increase revenue in the long-run
• and you don't do it all while the cost of government borrowing is at historic lows. (unless, of course, you're willing to make a gullible american public suffer so that you can blame the incumbent president in an upcoming election cycle.)

a couple two three questions answered:

1. where did the debt come from?
2. where did the deficits come from?
3. who owns the debt?

the debt is the cumulative amount of mostly recent budget deficits (as in costs greater than tax revenues within the last decade), which the government has funded by selling IOUs (aka u.s. treasuries), and the sudden increase is primarily due to the decrease in revenues caused by the recession (and not increased spending).




interesting tidbit: almost 40% of the debt is in theory interest-free, as in it's owned by federal agencies like the social security trust fund or the federal reserve which pays all its profits back to the u.s. treasury, so the government is just paying itself interest. also, it's only half related but i found this interesting: the fed can't go bankrupt.

Tuesday, August 16, 2011

everything means something. (at least for now.)

post-fact politics and the national debt.

circa 2003, my mass communications class taught the theory that media proliferation led to knowledge proliferation. access to information was access to the truth. the theory mirrored the jefferson quote engraved above the door to uva's cabell hall, "for here we are not afraid to follow truth wherever it may lead, nor to tolerate any error so long as reason is left free to combat it." but even at the time, the theory was falling apart. media wasn't just proliferating, it was fracturing. channels were proliferating, but they were also narrowing. narrowcasting was the name of the game and now, almost a decade later, i think it's safe to say that former theory is dead. so what happened? well jefferson was right, but it's all in the caveat: "so long as reason is left free to combat it."


media channels, in their quest for ever-narrower market segments, have put the normative before the positive without regard for truth in any objective sense. that crucial caveat "so long as reason is left free to combat it" has become the crux of a broken system, as information proliferates in the service of biases rather than reason. sure, everyone would like to think they're interested in the objective truth, (even fox news retains the slogan "fair and balanced,") but for anyone with a broader perspective and a remote awareness of the nuances that characterize liberal vs conservative reporting, it's easy to see how ridiculous the claims of objectivity have become. indeed, media channels like fox and msnbc increasingly filter out the factual positive statements that contradict their target audience's normative beliefs and biases, and focus exclusively on what reifies their narrow narrative. everything is delivered in a carefully crafted context, and what isn't an outright lie is often a strong but misleading implication.

(anddd gotcha.)

while no one wants to admit they're misled by their own biases, the tendency to get upset or uncomfortable when presented with contrary information steers people to media channels that tune out discomforting information and focus instead on what reifies their narratives. eventually it gets to a point where biases are so ingrained that completely contradictory narratives emerge, along with a defensiveness that twists even contradicting information into a greater belief in the narrative. the result is post-fact media and post-fact politics. narratives should be based on the facts, but facts are increasingly chosen to support the narratives. in situations where including the glaring omissions would result in a completely contrary narrative, this is done in spite of the truth, and the unfortunate truth is that as a society, we are afraid to follow truth wherever it may lead. the debt crisis has made this more apparent than ever, as the opposing sides seem to exist in totally mutually exclusive alternate universes.

here's a little study i dug up on just how skewed people's (mis)perceptions of reality really are: nyhan-reifler (skip to the appendix to get right to the point, and also there's some summarizing here). now here's a little interesting tidbit i noticed in the appendix: if 0 is the baseline, notice the skew on all those graphs. maybe it's just a function of the questions they chose, but maybe not. i've long had a theory that between liberals and conservatives, conservatives tend to have more widely accepted misperceptions. it's been an unscientific theory of mine, (now nominally supported by an academic study,) but i've just consistently noticed that amongst all the polls i've seen, conservative's misperceptions consistently seem to have broader acceptance than those of liberals. (see: birther movement.)

maybe something about conservativism, be it a religion-induced relaxation of skepticism or just being outright dumber, more effectively lends itself to biases and irrationality. i suppose in deference to objectivity and airing of any of my own possible biases, i should mention that i identify most with libertarian, neither liberal or conservative, nor democrat or republican. (though i increasingly prefer the term "classical liberal" if you'd like to go with that.) that said, as an observer it still seems to me that compared to conservatives, liberals tend to have an objectivity bias (oxymoron intended). ironically, objectivity is a distinct disadvantage in a post-fact environment, which might explain why liberals can't seem to play hardball half as well.

so now with all that in mind, how do you explain the advent of a group, full of a fervor typically reserved for muslim extremists, willing to hold the american government's credit hostage to their demands? it's post-fact politics. and who's more to blame for the debt crisis and subsequent downgrade? well as you might imagine, most partisans have already made up their mind, and in their alternate universes they're right, but they're wrong when it comes to the bigger picture. to some extent, either the liberal or conservative position can be supported because the debt crisis was basically a game of chicken, and it takes two to tango... but, which narrative is missing the more of the bigger picture? who is culling the objective truth most to fit their narrow narrative?

before i drop this truth bomb on you and potentially ruin your worldview, ask yourself where the debt came from. no seriously, ask yourself "where did the debt come from?" and then answer. got it? okay, keep that answer in mind. now think about if you've ever gone out and tried to objectively verify your beliefs. if you have, i'm impressed. but if you haven't, why is that? i mean you're probably not by any means an exception, but it's mind blowing when you think of how so many people have so many divergent impassioned beliefs about where the debt came from given that it's so objectively quantifiable and verifiable. okay, so now think about what i mean when i say post-fact politics...

(the objective quantifiable verifiable truth.)

now go ahead and attribute each of those to their political source. which of those programs were implemented by republicans, and which were by democrats? too lazy? okay here it is all done for you...

(also see: nyt. beware: liberal source, objectivity bias.)

i'm sure some post-fact conservatives will detect the threat to their narrative and try to question the source, but there's no disagreement between what the pew charitable trusts published and what the white house published other than the political attribution, and here's what the wall street journal had to say about the pew charitable trusts:

although today the pew charitable trusts is rigorously non-partisan and non-ideological, joseph pew and his heirs were themselves politically conservative. the mission of the j. howard pew freedom trust was to "acquaint the american people with the evils of bureaucracy and the values of a free market and to inform our people of the struggle, persecution, hardship, sacrifice and death by which freedom of the individual was won." joseph n. pew, jr., called franklin roosevelt's new deal, "a gigantic scheme to raze u.s. businesses to a dead level and debase the citizenry into a mass of ballot-casting serfs."

don't worry if you were wrong, even i wasn't rigorous enough. (hypocritical, i know.) i actually believed some bs i read about how obama is such a big spender because deficits skyrocketed in his budgets. but again, a conservative source culling the facts. the bigger picture is that deficits did skyrocket, but it had less to do with spending and more to do with recession-induced revenue decreases. in fact, obama's policies to date have cost roughly $1.4 trillion, while the downward revisions from the recession cost $3.6 trillion. (quantifiable fact. don't leave home without it.) so when someone says obama has "spent" up the debt, now you know they're either misleading you or they're misled. help them out. the obama administration, aka the u.s. treasury, has "spent" the deficits only in the sense that they're required by law to pay previously racked up bills with now decreased revenues, with the exception of the roughly 10% of the debt attributable to obama's policies, over half of which was stimulus spending.

(right wing liars!)

now let me get off my objective high horse for one second and divulge a few of my opinions (or biases if you'd prefer)... everything i know about basic economics tells me: you don't cut government spending during a fragile economic recovery; you don't hold the u.s. credit rating hostage to defend a regressive tax code that favors millionaires and billionaires; you don't block infrastructure spending (investment) that could sustain a recovery and increase revenue in the long-run; and you don't do it all while the cost of borrowing is at historic lows. (unless, of course, you're willing to make a gullible american public suffer so that you can blame the incumbent president in an upcoming election cycle.)

common sense? in a post-fact political environment, depends who you ask i guess. reviens, voltaire, ils sont devenus fous!

post-fact politics and the conservative narrative.

while researching and reading for my post on post-fact politics, i searched for "what caused the debt?" and i got the most hilarious results. amongst the headlines "left, right unite in criticism of obama?" and "should geithner resign?" i clicked on the the most promising link, "power play video: placing blame for debt downgrade" and was struck by another funny headline, "bad timing for president's vacation?" and then of course there's the content of the video. watch it, and keep in mind that this is what a fox news viewer likely sees when they wonder, "who's to blame for the debt?"

listen to the anchor's first question. of all the questions to ask, the question was basically, "is obama going to tank the markets further?" and the answer, paraphrased: "if he reaches out to republicans, markets will do well." (right, because reaching out to republicans has worked so well in the past.) and then the next guy comes on: "blaming the tea party won't work. the president is a loser. he's unpredictable and has no plan." and then the next guy... anchor: "as the republicans try to deal with the debt, but they're being blamed, what do they do?" (poor republicans.) answer: "the president doesn't take responsibility for anything. he needs to take ownership of the issue. but at least were making progress on the debt, which wouldn't have happened without the republicans." i mean... what? do you see the bias? because if you don't, you're either one of those aforementioned inhabitants of a parallel universe completely unaware of the narrative-crushing preponderance of contradictory facts out there, or you're just lying to yourself. and while the loyal viewers may be lying to themselves, it's not that anyone on the show is lying necessarily... but why is the anchor just setting up the commentators to spew hostile opinions? why ask those questions?

now look at some of the comments on recent political or economic articles. it's just a pure hate-fest. i'm talking, rough estimate, 90%+ jabs at obama and liberals, most of them absurdly baseless and indicative of ignorance. but with that video in mind, with the perspective of someone who has been presented these as the salient facts on the issues, can all the commenters (and commentators) really be blamed for thinking, basically, "it's all obama's fault"? honestly, maybe not. can they be blamed for selecting biased sources? can they be blamed for refusing to think critically about the narrative they're being presented? can they be blamed for being so defensive that contradicting information only reinforces their delusional worldview? sure. but would i come to the same conclusion were i stuck in the same bubble, oblivious of the bigger picture? probably.

i took a little look at a little unscientific fox news poll on the day of the debt ceiling vote, and the poll blew my mind. (don't vote, just go ahead and hit view results so a bunch of sane people don't taint the poll.) the poll asks, "would you vote to approve the deficit reduction plan approved by president obama and congressional leadership?" now think about what that question means, carefully. this was before the final plan was agreed on, so there were no specifics on the plan, but we know at least a couple things: it was a deficit reduction plan, meaning we could presume it would reduce the deficit, and the leadership of both parties approved of it, meaning that the republicans have approved it. ignoring the fact that democrats also approved it, it's a republican leadership approved plan to cut the deficit. why would someone disapprove of that? yet 72%... 72% of this self-selected sample of fox news consumers said they would disapprove, and the majority of them in the most extreme terms. (not just no, but "hell no!") so what the hell is going on here?

is it just because obama and the democratic leadership also approve of it? ok, now think about what that question means. can politics actually function when a movement will chain themselves to the ship's wheel in opposition just because the president approves? i mean, i think that's just it. i think that because the question contained the implication that it was approved by obama, the automatic answer was to disapprove. and that's the funniest thing, obama's policies are often in lockstep with reagan-era conservativism but there is absolutely no way he will ever be recognized for it in today's post-fact world. everything he says and does is damned before he says and does it. it's not that this hypothetical plan is bad, we don't even know what it is, just that obama approved it! and that's the narrative... obama is a socialist, (and maybe, just maybe a foreign-born muslim who fraternizes with terrorists,) so just about anything that comes out of him is set to destroy america.

the tea party is not a top-down movement. despite the typical positive connotations of grass-roots movements, i highlight that this is a grass-roots movement because it's a symptom of something terrifying. the tea party freshmen in congress that chained themselves to the ship's wheel until they got what they wanted are not rogue representatives. they represent a virulent strain of american politics that is alive and well within their constituencies. welcome to post-fact politics, where people are inundated in such tailored versions of reality that they might as well exist in another world altogether.

i turned on glenn beck the other day and heard him peddling the whole class warfare narrative as usual, and he was trying to shoot down the idea of higher taxes on the rich (because it's class warfare) by saying the rich already have the biggest tax burden, "the richest 5% pay over 50% of taxes!" but here's the thing... if you look at the whole picture, not just what conservative radio tells you, you would realize that the richest 5% paying 50% of taxes is only meaningful when you account for how much of the wealth is concentrated in the top 5%. the bigger picture is that "in the united states at the end of 2001, 10% of the population owned 71% of the wealth and the top 1% owned 38%. on the other hand, the bottom 40% owned less than 1% of the nation's wealth." now do you see why the rich are paying most of the taxes? that quote is nothing more than evidence of extreme income inequality, but it's being peddled as a culled fact to support the conservative narrative... and people just eat it up.

here's another little gem i found on after the debt ceiling crisis was over: "debt ceiling lifted and uncle sam's IOU soars another $238 billion, reaching 100 percent of the nation's gross domestic product — the total market value of america's goods and services." now anyone familiar with basic economics can see the glaring error in that sentence. let's see if you can spot it. (hint: define GDP.) as you might imagine, i'm not much of a conservative media outlet connoisseur, but picking off all these distortions (or outright lies depending on who you ask) is happening on an increasingly regular basis. i'm talking about the 20 minutes a week i happen to be bored enough to listen to conservative media channels, i'm hearing these things more and more.

so how do you spot these post-fact extremists? it's a question i've spent quite a bit of time on. it brings to mind a popular quote from the supreme court, "i shall not today attempt further to define the kinds of material i understand to be embraced within that shorthand description; and perhaps i could never succeed in intelligibly doing so. but i know it when i see it." —justice potter stewart, concurring opinion in jacobellis v. ohio 378 u.s. 184 (1964), regarding possible obscenity in the lovers.

that said, there's a couple litmus tests i've come up with over time. here's my favorite one: presented with the the same information, extremists will come to different judgements based on the source. for a conservative, first ask "obama believes in a balanced approach to reducing the deficit, and supports raising taxes. what do you think?" you might be able to guess at the result. now comes the test question... if you then ask "reagan believed in a balanced approach to reducing the deficit, and supported raising taxes. what do you think?" if their answer is consistent, you're probably talking to someone sane. on the other hand, if the answer is "well that must have made sense at the time" or some other such cop-out, you're probably talking to a someone there's no point in talking to. (for a liberal, try this in reverse, but be warned, liberals tend to have objectivity bias that makes this test way less fun.)

here's another test, though this one isn't so much an objectivity test as it is a test of whether or not someone is stuck in one of these divorced realities. just ask "where did the debt come from?" most conservatives are thoroughly divorced from reality on this one, and i ask that you try to maintain a light-hearted humorous appreciation for their responses. i try my best to do the same, because the absurd misinformation out there surrounding this one subject is essentially what inspired this entire post. that so many conservatives (and liberals, but to a lesser extent) blame the opposite end of the political spectrum for the vast debt and deficits, when the true origins are clear to any objective observer, is to me, the single biggest and best indicator that we live in a post-fact political climate.