Jacob Lew, Obama's nominee for Treasury Secretary, will be coming into office (assuming confirmation) at a time when the harpy forces on the right are gathering steam, to try to use the artificial debt ceiling as a weapon to push the Democrats to needlessly eviscerate the New Deal programs while the harpies claim to be focused on cutting the deficit.
The worry, of course, is that Lew was already involved in White House budget negotiations that appeared to buy that line, offering up COLA adjustments and age-eligibility extensions that cut back on benefits, rather than dealing with the resource issue (lifting or removing the Social Security cap; moving towards universal single-payer to cut back on the wasteful health care expenses generated by all of the rent-seekers in the health care chain of providers). See WPAA, Obama Picks Lew for Treasury as Fiscal Issues Loom, AP (Jan. 10, 2013).
Remember, readers. There is no evidence whatsoever that the right-wing really is interested in the well-being of the US economy. If they were, they would not threaten to use the archaic, artificial debt-ceiling limitation as an occasion to swing a cudgel at that very economy and send it reeling into another recession. They would more readily admit that once they have legislated X dollars of spending and Y dollars of revenue, any excess of X over Y has to be made up by debt. Given that debt is very very cheap right now, that's no big deal. Congress should simply eliminate the debt ceiling and authorize borrowing as needed to make pay for the spending they have already authorized in lieu of raising more revenues to do so. Even Ben Bernanke has finally said what is obvious--the debt ceiling has no fiscal value. See Ben Bernanke: Get Rid of the Debt Ceiling, The Examiner, Jan. 15, 2013 (hat tip to Naked Capitalism's Yves Smith).
Robewrt Pollin, another academic interested in the issues of employment, wages, fair benefits, workers rights and, yes, tax and debt policy, has a good blog on Lew and the need for clear statements about debt, deficits and the US economy: A Modest Proposal for Jacob Lew: Acknowledge Three Simple Facts about US Fiscal Reality (Jan. 15, 2013). The three facts are straightforward (and he has some good charts to support them).
1) The US is not facing a fiscal crisis: our interest payments as a percent of our expenditures are considerably lower now than they have been in the past (including the past under GOP presidents).
2) Interest rates on US bonds are at historic lows, making borrowing even cheaper today than it has been in the past and causing even less worry about a "fiscal crisis" than borrowing might have caused in the past. As Pollin notes, "[w]e should expect Jacob Lew to at least state the obvious here: that the deficit hawks have been wrong about an impending interest rate spike for four years running."
3) The deficits that we are running right now are due to the Great Recession, not to out-of-control spending. The spike (to 10.1% of GDP) occurred in 2009, right after we nearly went off the speculation cliff built by Wall Street, and the deficit has now fallen to around 8.5% of GDP in 2012.
Lew should be able to acknowledge each of these points. And if he could, it would help convince people like me that the Obama administration is finally really ready to fight the teaparty naysayers who seem prepared to destroy the economy in order to be able to bring down benefits under Social Security and Medicare.
Pollin has it right when he says the following:
"[T]he single most important thing we can do to lower the fiscal deficit further is to push unemployment down. This will generate increased government revenues with people paying more in income and sales taxes, and it will reduce government payments on unemployment insurance and supplemental aid for health care and family support. The U.S. has the capacity to pursue a stimulus agenda now quite easily, precisely because interest rates and interest payments to creditors remain historically low." Id.