Transcript: Everybody agrees we should let the economy stagnate

Watch out! EVERYBODY agrees we're in recovery, EVERYBODY agrees we need to cut government spending, EVERYBODY agrees social insurance has to be on the table, EVERYBODY agrees ... uh-oh ... that Obama will stand up for the middle class and the working class.

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At Demand Side, we find ourselves contrarians, not so much because of agoulish rebelliosness, but because we look out the window. What we see is a real economy that is disintegrating, infrastucture crumbling, education overpriced and badly designed at the upper end and decaying from cuts in spending at the critical lower end K-12. We see a health care system designed more to create corporate profits than to produce good outcomes. And we find a crisis in labor, with low incomes, poor jobs, skewed toward the least productive activities, robbing our present and seriously damaging our future. THIS is the structural problem.

Everybody AGREES we're in recovery? No. We are in stagnation, bouncing along a bottom and threatening to hit another hole. It is a virtual recovery, playing out on the video screens of numbers for the stock market and GDP, but only because those numbers are jinned up by the Fed's zero interest rates for now on four years and by huge deficits in the form of tax cuts, government essentially paying us to shop at Wal-Mart. This is no program for recovery. This is a program for drifting ever lower.

We have the industrial capacity, labor available, technology, and all the funding we need to do things that need to be done and employ our people to do them. That is the path to recovery, both short and long term. The fiscal cliff, or austerity bomb, as Paul Krugman calls it, is nonsense in a sideshow that ought to have been completely discredited by now. Instead it's barkers are in the seats of power.

Everybody AGREES we need to cut government spending. Almost everyvbody agrees we should use the Simpson-Bowles prescription. But here's Senator Bob Corker, Republican, Tennessee

CORKER

And here's Chris Van Hollen, House Democrat.

VAN HOLLEN

Oh, and everybody agrees the fiscal cliff is a looming disaster, especially Tom Keene and John Ryding

RYDING/KEEN

Ah, but the worst of it.

Tim Geithner, yes, Wall Street Timothy Geithner, is now in charge of negotiations.

Obama has caved again. Well, I guess, not caved. He is back supporting the wrong side. In thrall to the Robert Rubin narrative. We are in Trouble, that rhymes with Rubble that starts with R that does not stand for Recovery.

Cutting taxes didn't work, won't work, can't work. The only thing it will do is shrink government and hollow out the middle class.

Ah, that means it will work, at least for Grover Norquist

NORQUIST

Trouble, trouble, trouble

Today's podcast is brought to you as always by Demand Side the Book, Demandsidebooks.com, and today by anotehr contrarian, James K. Galbraith, speaking here in teh EPS symposium we've been featuring.

James K. Galbraith, one of those who was right. Too bad he can't get in the room.