EconomistMom.com

Concerning congressional negotiations over the extension of the payroll tax cut, this Washington Post story seems to offer a prediction as to how this impasse will be broken (emphasis added):

To pay for extending the cut, Democrats have pushed for a surtax on those making more than $1 million a year. Although the Senate has twice blocked bills that would fund the reduction with a millionaire tax, [Senate Majority Leader Harry] Reid said again Tuesday that the wealthy should be asked to fund the tax cut for middle-class workers. He also said Democrats would be willing to extend the tax cut without outlining a way to pay for it.

And of course, House Republicans are perfectly willing to extend the payroll tax cut as long as the construction of that (”job creating”) oil pipeline can be sped up and avoid the usual environmental impact scrutiny, and as long as long-term unemployment benefits are made less long term (and the recipients subjected to drug testing).  They would only partially pay for the payroll tax cut by cutting the pay and number of government workers.

It seems to me we’re headed for the typical “bipartisan compromise” agreement where the Republicans bully the Democrats, the Democrats call the Republicans bullies, and they ultimately all agree to just deficit-finance the whole thing, feeling good that the other side gave up their proposed offsets.

It wouldn’t be so bad (this payroll tax cut is supposed to be stimulus, after all) if it weren’t a scene played over and over again, not just for deficit-financed stimulus policy, but deficit-financed anything.

Here’s a blog post of mine just published over on Concord’s blog, The Tabulation; I’m cross-posting it here:

The current debate over extending the payroll tax cut well demonstrates that policymakers often mean different things when referring to policies that “help” or “expand” the economy. I often hear the words “stimulus” and “growth” used interchangeably, but when economists use them, we typically are making a distinction between different economic goals that apply to different circumstances.

“Stimulus” usually refers to short-term policies to increase demand for goods and services in an economy  operating at less-than-full capacity — i.e., an economy with high unemployment. In such a recessionary economy, the problem is not a lack of productive resources (capital and labor), but a lack of demand for the goods and services that those resources produce. Under such conditions, public sector deficits — whether through tax cuts or direct spending — can be an effective way to increase demand (consumption) and the level of economic activity.

“Growth” usually refers to the long-term expansion of the “supply side” of the economy — that is, the supply of capital and labor. When the economy is at “full employment,” the binding constraint on it is not the demand for goods and services, but the supply of inputs to production. Fiscal policies that are good at growing the economy over the longer term are therefore those that encourage greater educational attainment, labor force participation, and saving. Instead of the recessionary goal of increasing consumption, we want the opposite over the longer term: We want to increase saving. Reducing tax rates is often emphasized as a good “supply side” policy because raising the net-of-tax return to working or saving can improve the private sector’s incentives to supply these resources. But any deficit-financing of such policies is counterproductive in dollar-for-dollar reducing the public sector’s contribution to national saving.

In the debate over the payroll tax cut, we are hearing arguments from both sides that muddle the distinctions between short-term, demand-side stimulus and longer-term, supply-side growth. Many Republicans argue that the payroll tax cut is not an effective way to expand the economy, but they are probably measuring it against their favored supply-side yardstick. The Congressional Budget Office (CBO) shows that a payroll tax cut is one of the most effective tax cuts in stimulating demand for goods and services in a recessionary economy — not as effective as direct spending on unemployment benefits but still far more effective than high-end income tax rate reductions.

Both Democrats and Republicans seem torn about paying for the payroll tax cut, for probably different, yet both valid, reasons. Democrats don’t want to offset the cost with immediate spending cuts that could largely negate the short-term stimulative effect of the tax cut. If spending cuts are fairly immediate and significantly affect lower-income households, they would likely offset the stimulative effect of the tax cut. Republicans don’t want to offset the cost with other tax increases because they worry that supply-side incentives would worsen. These concerns are legitimate when the offsetting tax increases stretch into the longer term (after the economy gets back to full employment) and to the extent that the tax offsets adversely affect the returns to working or saving.

As the Concord Coalition has emphasized many times before, it is possible to effectively stimulate the short-term economy while being fiscally responsible about the longer term. Deficit financing should ideally be limited to short-term policies that have high “bang per buck” in increasing demand for goods and services. Longer-term policies designed to grow the supply side of the economy when it is back to full employment ought to be paid for in ways that protect the incentives  to work and to save. And any offsets to the cost of stimulus policies should be designed to have minimal damage to short-term demand — by steering the burdens toward higher-income households or stretching the offsets over the longer term.

_______________________

Postscript:  To these issues of the stimulative effect of the payroll tax cut and whether and how the costs are offset, I’ll be adding the additional confusing issue of how the payroll tax cut affects the Social Security program–short answer, “not”–in my next Tax Notes column.

(video from Mediaite.com)

Back in October, CNN’s Erin Burnett interviewed Sesame Street’s Elmo, getting his advice on how Congress might actually stop bickering and get their work done. (CNN replayed this interview recently following the super committee’s disappointing failure.) From the CNN transcript of the original airing:

ERIN BURNETT, HOST, CNN’S “ERIN BURNETT’S OUTFRONT”: Elmo, you could solve the world’s problem right now.

ELMO: Really? How?

BURNETT: OK. So, in Washington –

ELMO: Yes?

BURNETT: — everybody hates each other. Nobody will do anything together.

ELMO: Really?

BURNETT: And it’s hurting America. How do you fix it, Elmo?

ELMO: Play dates.

BURNETT: Play dates?

ELMO: Yes, everybody has play dates.

BURNETT: Like put a Democrat and Republican play date?

ELMO: Play dates.

BURNETT: Harry Reid, John Boehner, play dates?

ELMO: Yes, play dates. And everybody brings their own food.

BURNETT: OK. Yes.

ELMO: And they have to sing songs.

BURNETT: I think that might solve it. It’s better than anything we tried so far, Elmo.

This reminds me of the Concord Coalition’s new “Two by Two” initiative, where–as Bob Bixby explained, also back in October (anticipating, like Elmo, that the super committee in the end would not play so well together):

Just as they did for the State of the Union Address, members of Congress should pair up. They should join together in “two-by-two” fiscal forums in which they present agreed-upon facts and engage with each others’ constituents about policy options. Public engagement is of little value if it just means listening to people who already agree with you…

Any number of formats could work so long as the goal is to broaden understanding of the issues and seek consensus solutions – and not to score a partisan “victory.”

A good example was set earlier this year by Senators Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.), who held joint forums in Richmond and Atlanta. And this is just one model. Over the past six years, The Concord Coalition has brought together analysts and political leaders of diverse perspectives on our “Fiscal Wake-Up” and “Fiscal Solutions” tours.

Audiences across the country have been very receptive. They often express the wish that their political leaders would talk about the issues with the same appreciation of each other’s point of view. More importantly, audience members begin to accept the need for compromise.

The public is hungry for a nonpartisan dialogue on such big issues as the long-term fiscal challenges, and elected leaders need political cover to “do the right thing.” Two-by-two forums fit both needs. Indeed, if President Obama and Speaker Boehner had made their case for a “grand bargain” to the American people instead of vetting it with other party leaders, they surely would have found a more receptive audience.

In other words, playdates with “parallel playing” are not enough. You have to communicate and engage with your playmate–find out what toys and games he likes and what he does not, reconcile those preferences with yours, and find ways to play together that make both of you happy. As all parents and preschool teachers know, moving on from the parallel playing mode takes some maturity–getting beyond the “terrible twos” actually. We’ve been talking about the need for “adult conversation,” but maybe we can set the bar even lower for starters and just try to get past the temper tantrums!

Although the “super committee” was by all accounts a “super failure,” the U.S. is fortunate that we are not yet in full blown “crisis” mode.  Our fiscal situation–namely, the large and economically unsustainable mismatch between spending and revenues–is still just a “problem” that can be solved.  Our deficits are still being “sustained” at the moment, and U.S. Treasury bonds still look like the world’s safest investment, thank goodness.

But we’re on the path to the end of the fiscal sustainability cliff, the edge of which we won’t see until we’re likely past it, given how full-speed-ahead we seem to be running toward that unknown edge.  (Think Wile E. Coyote chasing the Road Runner.)  So it’s time to at least change the momentum, even if we can’t so easily just change direction.

The super committee’s failure was a political one.  The super committee’s task was, and still is, a rather uncomplicated economic one.  Given the political constraints and what we’ve learned about what doesn’t work (putting decisions in the hands of politicians currently in office), slowing down the race to the edge of the fiscal cliff will require getting the public more involved.

Here’s how Concord Coalition’s Bob Bixby explained what has to be done in a recent CNN-Money column:

Under current law, $1.2 trillion in spending cuts triggered by the super committee’s failure would take effect and $4.7 trillion in tax cuts would expire, raising government revenue by significant amounts and lowering future interest costs. According to the Congressional Budget Office, this would bring the budget into “primary balance” — meaning that revenues would cover all spending except for interest payments — by 2014. The national debt would come down somewhat from 67% to 61% of the economy. More would need to be done, but that’s not a bad start.

There are problems with sticking to the exact policies and timing of current law, including legitimate short-term economic concerns. Nor should the brunt of any deficit reduction plan be placed on those who can least afford it.

To accommodate those circumstances, Congress could make some changes in the mix and timing of policies but still aim to keep the 10-year deficit-reduction total from current law on track.

Government projections assume the $1.2 trillion in savings Congress intended to back up the super committee, and financial markets are counting on them. Repealing the trigger or reducing its impact would further erode congressional credibility and possibly lead to another downgrade of the nation’s credit rating.

There is still time for Washington to get things right before expensive, deficit-financed policies are extended. A commitment to a process that enforces strict pay-as-you-go rules and guides policies toward the deficit reduction in current law would help.

And how the public’s involvement is needed:

The Concord Coalition’s deficit-reduction exercises and other public engagement efforts in cities across the country have consistently shown that people of all ages and varied ideologies are willing to make hard budget choices — as long as there is shared sacrifice, with everything on the table.

Members of Congress with differing viewpoints should pair up for “two-by-two” fiscal forums in which they present agreed-upon facts and engage with each other’s constituents about budget options. Such forums would broaden understanding of the key issues and promote civic discourse about solutions.

A good example was set earlier this year by Senators Mark Warner, a Democrat from Virginia, and Saxby Chambliss, a Republican from Georgia. The two held joint forums in Richmond and Atlanta.

Back in Washington, members should also pair up in co-sponsoring bipartisan plans to address the deficit, with or without the support of congressional leaders. Efforts such as the Senate’s “Gang of Six” should be revived and expanded. The logical place to start is with the recommendations of the Bowles-Simpson and Rivlin-Domenici commissions.

Congress is now debating the extension of both unemployment benefits and payroll tax cuts.  Both policies are typically deficit financed because they are intended as policies that will stimulate the demand for goods and services–lack of demand being the binding constraint in an economy with high unemployment and other idle resources.  The current debate is less over the desire of politicians to extend those policies (most on both sides say “yes”) and more about whether these policies can be and should be paid for–if their cost can be offset with spending cuts or revenue increases that take place more slowly over the next ten years and do not “neuter” the stimulative effect of the original policies.  Yes, this is indeed possible, with some offsets making more sense than others.  Of course, the Republicans would prefer the offsets be spending cuts, while the Democrats would prefer they be tax increases on the rich.  So here we are, right back to the same old debate–and the same old (mostly political) “sticking point.”

My colleague Josh Gordon and I briefly discuss the “what now” in the video above.  Bob appeared live on C-SPAN on Thanksgiving morning with this excellent call-in interview, as well.

I plan to write a bit more about the payroll tax cut and proposed offsets within the next few days, so please stay tuned.

And if you like what you read/watch here about the Concord Coalition’s initiatives, please make me happy and “like” us (and follow our activities and join us in our efforts) on Facebook, and become a member/get on our mailing list here on our website. 

My latest “positive thinking” piece that came out in the Christian Science Monitor this week, just in time for Thanksgiving.  I have to admit I did a little live holiday shopping on Black Friday (but at the “safe” hour of 11 am) and will probably do a little online shopping before today (”Cyber Monday”) is over, but I’ll also be doing a lot of “shopping” for myself and others with the loads of good, but neglected, stuff I have right under my roof already.

In the CSM column, I also find reason why we should be grateful that our fiscal problem is indeed solvable, once we get our politics to cooperate.  (All hope is not yet lost with the super committee’s “failure.”)  I elaborated on that point in my column in Tax Notes (subscription only access) today as well, where I explain why Nobel laureate economist Peter Diamond is right when he says (and said at the National Tax Association meetings earlier this month) that the fiscal problem is just a “problem,” while the (lack of) jobs situation qualifies more as a “crisis.”  I’ll summarize my Tax Notes column for you all later.

I hope you readers had a very happy Thanksgiving holiday with your loved ones.   –Diane

Ezra Klein puts it well:

chart from the Concord Coalition on supercommittee goal

So, hey!–It’s 11/11/11, and we’re down to not much more than 11 days (ok, darn–it’s technically 12) until the Nov. 23 deadline for the “super committee” to come up with proposals that would achieve $1.5 trillion in deficit reduction–or as close to that while hopefully going over as possible.  The confusion on the goal is because the conditions for the triggered automatic cuts and debt limit increases differ depending on whether $1.5 trillion, $1.2 trillion, or less than $1.2 trillion in deficit-reducing policies are actually enacted by December 23.   The graphic above is a Concord Coalition slide from one of our chart talks; it is designed to help explain the goals and triggers of the super committee, although it isn’t as readable as a photo image here as it is as a huge powerpoint chart up on a big screen–sorry.

On Halloween Day I published a column in (subscription-only) Tax Notes, called “Tricks and Treats Handed to the Supercommittee.”  We reprinted the column on Concord’s (free) website this week, and it can be found here.  I already quoted from my conclusion earlier–that the super committee could and should propose a set of budget rules and instructions that would force the standing committees to come up with tax reform that would achieve the current-law baseline level of revenues.  To encourage bipartisan agreement on raising that much (”go big”) revenue relative to the “business as usual” policy extended baseline where expiring tax cuts get continually extended and deficit financed, the super committee could even dictate that a certain specific minimum percentage (up to 100%) of the added revenue raised be achieved by reducing tax expenditures as opposed to raising marginal tax rates.

I repeated this message in smaller space last weekend in the Milwaukee Journal-Sentinel, summarizing it this way:

The supercommittee could require that the tax-writing and budget committees come up with a combination of budget rules and tax reforms that would achieve the current-law baseline level of revenues.

There are many different policy paths to this same budgetary outcome:

“Do nothing” (let the Bush tax cuts expire as scheduled at the end of 2012), “do it big” (broaden the tax base by reducing tax expenditures and lowering tax rates), and “do it to the rich” (raising tax rates on millionaires and/or large corporations).

Each approach has different relative advantages regarding their economic effects and political attractiveness. We could do any combination of the approaches and all would be encouraged in practice with a commitment to strict, no-exceptions, pay-as-you-go rules - both on new or extended tax cuts and as well as spending increases.

Coupled with the spending-cuts-only approach taken in the first round of deficit reduction that arose from the debt-limit debate, the second-round supercommittee recommendation of sticking to current-law revenue levels would get us the big and balanced approach we need to set us on the path toward true fiscal sustainability and a strong economy in the decades to come.

Yet one of the first reader-commenters on the Milwaukee JS site wrote this:

No mention of revenue. Apparently she feels all taxes should be eliminated…So a “cuts only” approach is “balanced”? Yep, she does want to eliminate taxes altogether. How could one interpret her comments differently? We already have the lowest tax rates since the 1950’s.

I kid you not!  I advocate a second-round revenue-only approach, and it gets interpreted as precisely the opposite!

Is this not proof that the whole expiring tax cuts, current-law vs. policy extended (”business as usual”) baseline issues have gotten us all–not just the general public, but policymakers and the super committee included–terribly confused?

Some Republicans have urged in their letters to the super committee that this is why expiring tax cuts should never be allowed to actually expire!  I argue the opposite: that this is exactly why expiring tax cuts must be forced to expire–or at least not be extended without paying for them.

Perhaps we can use the confusion to our advantage.  The super committee could require the budget and tax-writing committees to get to some level of revenues anywhere between the $1.5 trillion goal (which is relative to the policy extended, business-as-usual baseline) and something that would better qualify as “going big.”  Anything less than the full difference between the two revenue baselines would still be something that relative to current law is a tax cut. What Republican could argue against a super committee policy that would dictate tax reform that must literally (under the letter of the law) reduce revenues?

The super committee has not the time nor the expertise to reform the tax system in (12) days.  But they have the capability and the authority to require the tax writing committees, with the help of the budget committee police, to reform the tax system in big and helpful ways over the next few years.  This can happen with tougher budget rules that are determined now and will have to be in place and enforced at the next expiration of the Bush tax cuts–so it won’t just be (bad) “business as usual” the next time around.

My column in today’s Halloween edition of Tax Notes (subscription only access) is called “Tricks and Treats Handed to the Supercommittee”–a reference to the variety of recommendations the select, bipartisan deficit-reduction “super committee” received from the various standing committees in Congress.  I will reprint the article in full next week (here and on the Concord Coalition’s website), but here’s a Cliff Notes version of the “tricks” and “treats” I listed:

Tricks:

• Trick #1:  Big things off the table. Senate Republican tax writers took revenues completely off the table by saying that revenues should not come up relative to the policy-extended (business-as-usual) baseline.  Meanwhile, House Democratic tax writers relied on “tax the rich” revenue-side approaches (exactly the type Republicans most detest) and took Social Security–and what sounds like most of Medicare–completely off the table (concurring with AARP).
• Trick #2:  The magic of economic growth. Republicans continue to suggest that cutting tax rates would grow the economy and hence reduce the deficit, ignoring the fact that dollar-for-dollar decreases in public saving caused by deficit-financed tax cuts are very rarely offset by anything close to the same amount in increased private-sector saving.  To this same old rhetoric, they have thrown in the claim that regulations on the financial sector should be weakened as well, for the sake of the economy.  Really?
• Trick #3:  If (only) I were a (budget) hammer. (And not just a paintbrush.)  The budget committees can’t seem to bring themselves around to saying they could be a big part of the solution.  The Senate Budget Committee offered a bipartisan recommendation that offered to “pretty up” the budget process a little bit, suggesting biennial budgeting and some procedural changes to make the “vote-arama” in the Senate less tortuous.  No mention of how strict pay-as-you-go rules, with no exemptions for tax cuts, would make a huge difference.

Treats:

• Treat #1:  Committees want to do their jobs. There were many letters from the committees of jurisdiction over spending programs, even bipartisan and bicameral letters (from the Agriculture and Veterans Affairs committees) emphasizing that they recognize that spending cuts are inevitable and that it would be far better to have the experts in charge of that spending recommend the best places to cut rather than have the cuts “brute forced” upon them, should the super committee fail to come up with the requisite recommendations.
• Treat #2:  Recognizing that it ain’t easy. Several letters made it clear that indiscriminate cuts in the deficit can be damaging to both the shorter-term economic recovery and longer-term economic growth (if crucial investments are axed).  The super committee has to be mindful that not all deficit-financed policies–or policies to reduce the deficit–are created equal. And even as the committees display a lot of defensiveness, defending their own particular “territories,” their letters also make clear how all Americans benefit from different parts of the federal budget, and thus how cutting the budget and reducing the deficit will ultimately involve sacrifices from all of us. (And yes, it is a treat to be told that truth.)
• Treat #3:  Still some common ground. There’s still a lot of quiet, behind-the-scenes discussion of the bipartisan ideas first developed within the Bowles-Simpson and Rivlin-Domenici commissions.  Revenue-raising, base-broadening, tax-expenditure-reducing tax reform that allows rates to stay low or even be reduced could be done in a progressive manner.  The Social Security and Medicare programs could be reformed such that the safety-net features of the program are actually strengthened and net benefits reduced only for the very highest-income households.  And we really could start paying for stuff “as we go along” if the budget process adopted some stronger rules with decent “teeth.”

And from my conclusion:

It seems clear that the deficit reduction supercommittee needs to direct the standing committees on what to do, not the other way around.

To spur action on bipartisan, deficit-reducing tax reform, the supercommittee needs to seek “reinforcements” in more than just the tax-writing committees. In particular, the budget committees and their oversight of strong budget process and rules should play a crucial role in setting a path for “big” and “super” deficit reduction in a limited amount of time.

The supercommittee needs to dictate a bipartisan, compromise position to the tax-writing committees, even before they get started really debating and drafting tax reform. The supercommittee needs to give the taxwriters a revenue-level target for tax reform, not just a top-rate goal or a competitiveness standard or even a Buffett rule. It needs to require taxwriters to treat tax expenditures as if they are the spending programs under their jurisdiction and require that those tax expenditures be more thoroughly scrutinized and debated. Tax provisions shouldn’t be given a free pass just because they’re already in the system. The supercommittee could also require that the revenue targets be achieved by a minimum amount of base broadening over statutory marginal tax rate increases, recognizing that reducing tax expenditures can easily be done in progressive ways and that raising revenue in those ways actually shrinks the size and scope of government…

[I]f the supercommittee creates hammer-like budget rules as part of its deficit reduction package, the budget committees would probably be happy to have an important role in tax reform. It will take active and forceful budget committees to change or advance policymakers’ thinking on what tax reform must be today — not just the old revenue-neutral variety, but the revenue-raising kind of reform.

So, there are candy-corn kernels of optimism to be found–at least in my mind–in the current state of affairs with the super committee.  Happy Halloween!

(photo from Talking Points Memo)

So what is this Occupy Fill-in-the-Blank movement all about?   I’ve been hearing the words “openness,” “honesty,” “engagement,” “dialogue,” “listening,” “attention,” and “responsibility” a lot.  Funny that these are words one often hears in relationship counseling or personal therapy sessions.  And that’s no coincidence.  Like the situations when we are having troubles in our relationships–our interactions with others–often we learn that the first place we have to look is within ourselves.  What’s our own role in this mess of a relationship?  We may want to pull our hair out over the bad behavior of others and blame them for our troubles, but usually at least part of the blame lies within ourselves, in our own part of the interaction and how we did or did not react to what the “other” did or did not do.

And that’s why I started thinking that the Occupy Fill-in-the-Blank movement should start with “Occupy Ourselves.”  I wrote about it this way in my latest column in the Christian Science Monitor (the online version now available here):

What started as the “Occupy Wall Street” demonstration has turned into an “Occupy fill-in-the-blank” movement – with the blank being anything we blame for our own economic troubles.

The main target seems to be the vaguely defined “1 percent” – that tiny minority of the wealthiest individuals and biggest corporations, the only ones those with economic and political power seem to serve. So the Occupy movement targets the big banks – the culprits that got us into the financial crisis. Or the millionaires, because income inequality is at an all-time high. Or Congress, the lobbyists, and others in power who have failed to do good. All of them – it’s their fault.

It’s not that the outrage isn’t justified. Policymakers catering to the oil and gas industry, to Wall Street, and to the rich and powerful deserve part of the blame. So do banks, ratings agencies, regulators, and others who set the stage for the financial crisis that triggered the recent ballooning of America’s debt. And as the wealthy have gotten wealthier, policymakers have chosen to only reduce their tax burdens.

Meanwhile, policymakers seem to care much less about the poor. The share of Americans living in poverty has steadily increased over the past decade to more than 15 percent – the highest percentage since 1993 and approaching where it was when LBJ launched the nation’s “war on poverty.” How is that fair?

But we also have to recognize that our economic problems began long before the financial crisis and that the boundary between the wealthy 1 percent and the 99 percent that the protesters claim to represent isn’t so crisp. Those big subsidies to the oil and banking industries also benefit the rest of Americans through lower gasoline prices and cheaper credit. And the majority of American voters went along with politicians who proposed very expensive deficit-financed tax cuts and deficit-financed prescription drug coverage, even though our young people – the very core of the Occupy movement – are the ones who will be stuck with the bill.

We all had a role in this, not just that 1 percent.

If there is a “change we believe in,” we can’t just complain about the status quo. We have to spell out the better life we want and the trade-offs we’re willing to make to get there.

These are difficult trade-offs we each need to contemplate. Doing better for the other 99 percent of us requires real money, and that money has to come from somewhere. Are we willing to steer more federal funds to the most effective forms of spending in terms of both short-term stimulus and longer-term economic growth – policies that would also benefit Americans more broadly – and away from the less effective, less beneficial forms?

Would we be willing to receive less generous benefits from Social Security or Medicare or have our tax deductions reduced? Would we be willing to let go of our portion of the Bush tax cuts rather than insist that only millionaires and billionaires need to sacrifice theirs? And most important, if we want our “occupying” to catalyze real change, would we be willing to speak up loud and clear about our willingness to make these specific trade-offs to our policymakers?

In the end, it’s easy to occupy Wall Street and protest what’s wrong. Far harder is to occupy ourselves with the tough choices that could move America away from its crisis path and toward surer footing as the world’s leading economy.

That’s the protest message we need to hear.

Some of the same idea comes through in this interview I gave to Talking Points Memo’s Kyle Leighton, in a column titled “Bipolar Inequality” (a phrase I accidentally coined while sitting in the Milwaukee airport on the phone with Kyle; apparently sleep deprivation sometimes inspires my creativity):

Diane Lim Rogers, Chief Economist at the fiscally hawkish Concord Coalition, made similar points about the more reckless economic policies of the past decade: Much of the distaste with both Washington and Wall Street comes back to fact that DC is simply unwilling to change course.

“The difference is that during the Clinton years the rising tide was lifting all boats,” Lim Rogers said in an interview with TPM. “Low-income households were still doing better. Even then, the rich did really well, despite their taxes being raised.”

But what’s different now is that income inequality isn’t a political tenet of the left: it’s truly hurting people. Lim Rogers said the poverty rate is actually of more concern than the rich doing better given the circumstances.

“The outrage is not that the rich are richer,” she said. “It’s that the poor have gotten poorer — the inequality has become bipolar.”

Which could help explain why when OWS [Occupy Wall Street] provided the spark, many Americans didn’t discount the movement as disaffected liberals who have no real point: it’s a real issue borne out by the numbers…

While Gallup showed that only 22 percent of Americans considered themselves supporters of OWS, other polls have shown larger amounts of support. Because, as Lim Rogers points out, the movement has centered on a more inclusionary focus.

“As the definition of the rich keeps shrinking, the movement feels like it gets more spirited,” she said. “OWS is getting the support of most americans, because how can you disagree with the fact the top 1 percent has done well, but that poverty is increasing. I’m not surprised that OWS is doing well, and I think it’s justified. What Americans may not have a grasp of is that we are all part of the problem, because we continue to support politicians that support these policies.”

My point is that even those of us who are not in the top 1 percent of the income distribution may actually benefit from and at least implicitly support the policies that are perceived as “those policies that cater to the top 1 percent.”  And the policies that we think are letting down just the bottom 99 percent are actually letting down all 100 percent of us.  It’s not ever going to be as easy as neatly sorting out the blame vs. the burden into the 1 vs. 99 percent.  We’ll have to sort it out within each of ourselves first.

(Like those “protesters” in the photo above appear to be doing, actually.  Just Say “Om.”)

I find this AARP ad campaign so offensive.  They threaten policymakers with their 50 million votes if any of them dares to include reforms to Social Security or Medicare as part of longer-term deficit reduction.  AARP’s point?  From their website touting the ad:

AARP’s new national television ad tells lawmakers to cut waste and tax loopholes, not Social Security and Medicare. It urges lawmakers not to treat seniors like line items in a budget and lets them know that 50 million seniors are counting on them to protect their benefits.

Cuts to Medicare and Social Security benefits could:

• dramatically increase health care costs for seniors and future retirees.
• threaten seniors’ access to doctors and hospitals.
• reduce the benefit checks seniors rely on to pay their bills.

Why do I hate this ad?  For the same reasons my entire organization, The Concord Coalition, explained today in this statement:

“This is the kind of tactic and rhetoric AARP has condemned in the past,” said former U.S. Senator Bob Kerrey, co-chairman of The Concord Coalition’s Board of Directors.  “Since hollowing out the rest of the budget to pay for expanding entitlements would result in more uninsured, undereducated and unemployed Americans, AARP has taken an approach which can only and honestly be described as generational warfare.  By its actions AARP has put at risk the strong inter-generational support for Social Security and Medicare.”

Concord Executive Director Robert L. Bixby added:“With its size and influence, AARP could be a powerful voice for reasonable reforms to establish a more sustainable fiscal path. Instead, it has chosen to be part of the problem by insisting that all sacrifices must be borne by someone else.

“AARP knows full well that benefits have been changed in the past and will have to change in the future. Most of the changes that have been widely discussed would not affect today’s seniors at all. Even worse, the ad perpetuates the false notion that our nation’s unsustainable fiscal outlook is merely a product of ‘waste and loopholes.’ AARP’s intransigent position will make realistic solutions all the more difficult.”

All options must be on the table to solve our nation’s fiscal problems. This includes domestic discretionary programs and defense, both of which have already been slated for cuts, as well as taxes and the major entitlement programs. Concord has long been critical of all attempts to exclude any part of the budget from scrutiny for two main reasons. First, exemptions increase the burden on those parts of the budget that remain on the table. Second, exemptions for some programs or taxes run counter to the concept of shared sacrifice and thus make necessary compromises more difficult to achieve.

Concord agrees that seniors should not be unfairly targeted in deficit reduction efforts. Any benefit changes should be phased in to prevent sudden disruptions for retirees and to give workers time to adjust and prepare for them. That, however, is a far cry from granting a blanket exemption to the nation’s two largest entitlement programs, which together comprise roughly one-third of the federal budget…

As the super committee considers its options, The Concord Coalition urges that all options remain on the table. Just as ignoring the need for more revenues is unrealistic, pretending that we can exempt important and popular programs like Social Security and Medicare from scrutiny is a good way to ensure that our fiscal problems will never be solved.

Oh, I also think it’s an offensive ad because I don’t believe most AARP members would actually agree with the AARP’s position to keep Social Security and Medicare completely “off the table” if they understood it was just insuring that even more of the burden of the debt and its negative effects on economic well-being would be shifted to their kids and grandkids.  We need a counterad to this one.  Instead of angry old, menacing people shaking their fists and threatening to vote against fiscally responsible politicians, let’s see some crying babies who have no political voice but through their parents and grandparents.

I still haven’t joined AARP (got my first invitation at 49 although I thought it wasn’t supposed to start until 50), but this certainly doesn’t endear them to me–discounts or no discounts.