Adding to the difficulties was the foolish and shortsighted decision to raid the Strategic Petroleum Reserve. The rationale was to lower prices to give another temporary aid to the economy, but the effect will be to damage producers and increase vulnerability in the event of a real oil shortage.

Gas prices are stable; they're even going down. There is no shortage in supply. To what end was this done? It makes no sense...

...well, I suppose if you are a president with absolutely no understanding of even the most basic economic principles it makes sense because it shows you are doing something. Heaven forfend the federal government not do things. Do anything. Just do, do, do. No wonder the economy is in such a mess.

Van Dyk appears to be unduly pessmistic concerning the prospects for further economic stimulus. Obama's impending political burial certainly qualifies as a shovel-ready project. It will lead directly to full-employment and prosperity for GOP hacks of every stripe and persuasion. I'm led to ponder that if the Republicans had been in charge of the Titanic, they surely would have looted it before it sank.

Of course going to a single payer health care system would lower the costs by 1/2 if Canada's and the UK's costs are similar. But GOP tea partiers won't have it, now that it's been branded creeping socialism by the conservative blog-o-sphere.

Still it's going to have to get worse before it can get better.

Oh, and it looks like QE-3 is the Fed's plan.

"Once the Fed sets an "explicit inflation target", then (if the CPI is below the target and rates are already at zero, as they are today) the Fed can buy as many bonds as they please until their goal is reached. If that sounds a lot like Quantitative Easing; it's because it's the same thing."

http://www.counterpunch.org/whitney06232011.html

And if the Republicans stick with their fix by cutting Social Security, Medicare & Medicaid, they'll be out of office come 2012.

Very muddled piece by TVD. He wants us out of Afghanistan, great, but then he worries about whether Obama is drawing out too many troops or not enough (and throws in a nasty and unfair comparison to Nixon, who flat out lied about his secret plan to end the war). He wants short-term stimulus but then bemoans the big federal deficit (and doesn't seem to realize Obama already has floated a payroll tax cut to encourage new hiring). He cites the huge potential savings in military spending but then goes back to his usual mode of bashing Social Security, Medicare, and Medicaid spending (and of course without telling us how hard-pressed working- and middle-class seniors are supposed to survive with significantly smaller pension and health care benefits). BTW, TVD, Harry Reid's warning is not demogoguery -- the Ryan Medicare plan really would end Medicare as we know it, just as the Bush Social Security plan would have ended Social Security as we know it. Oh, horrible of horribles, a partisan 2012 election battle. When there are profound policy differences between the two parties, what do you expect?

Obama and the D's need to challenge the Republicans on their no tax increases position. The Conservatives led by David Cameron won election in the UK by proposing and 80/20 ratio of spending cuts and tax increases to address their deficit. Some of the tax increases could be put off for a year or so until the economy begins to really recover. The Simpson-Bowles recommendations are another good place for the D's to take a stand. I don't believe the American people are so naive as to completely reject a balanced proposal to tackle the deficit.

Thanks for your comments. The piece was intended to give an accurate portrayal of the current state of things on war/peace issues and financial/economic policy. Not an endorsement, for instance, of the Ryan Plan or, at the other end of the spectrum, a single-payer health plan. Just my assessment of things as they are.

I agree with comments relating to the raid of the Strategic Petroleum Reserve. This conceivably could have been done several months ago, when oil prices were at their height. But they have been coming down and, moreover, there is no shortage of supply. A pointless action.

SteveC suggests Democrats might take a stand on behalf of the Simpson-Bowles reommendations. That also would have been a good idea several months back. But, in appointing the Simpson-Bowles commission, Obama specifically rejected the idea that a simple-majority commission vote would lead to an up-or-down vote in the Congress on the whole package. He instead specified that a weighted majority would be necessary and, then, appointed commission members whom he had to know could not reach a weighted majority.

There was consensus support on the Hill behind the Simpson-Bowles recommendations as a way around partisan disagreements on key issues. Had they been adopted, as was possible then, the crisis pre-Aug. 2 talks would not now be taking place. The issue mercifully would be behind us.

The partisan and ideological divides are now severe. However, as written, I continue to believe there is a good chance for a pre-Aug. 2 agreement, even if in the end it is limited to general statements of principle. Both Ds and Rs need an agreement sufficient to allow them to explain that a post-Aug. 2 default has been averted.

I'd say TVD greatly overestimates the "consensus support" for the Simpson-Bowles recommendations. Once both Republican and Democratic voters learned about the draconian Medicare cuts that would be required to bring Medicare spending growth down to 1% a year (Simpson-Bowles offered no methodology for doing that), the change in the mortgage deduction to a capped tax credit (in my opinion a good idea), and how their taxes would go up if corporate tax rates came down, there would have been an enormous political clamor. That debate is undoubtedly necessary, but don't fool yourself into thinking Simpson-Bowles would have been a quick or painless process and could have headed off the current deficit ceiling showdown.

Here's another view on what to do with the national debt.

http://market-ticker.org/akcs-www?post=188789

He talks about Iceland and Ireland but it could just as easily apply to the USA. A crisis of debt will force this discussion, along with the claims to go back to the gold standard.

But TVD does seem to endorse solutions, such as "stimulative tax cuts" to "jump-start the economy". What a propagandistic turn of phrase. Do tax cuts really stimulate anything except demands for more tax cuts?

Social Security is an intergenerational transfer program, where current workers pay for benefits to current retirees. Obama's cut in the payroll tax (sprung very suddenly without any public debate) violated the intergenerational compact. The current generation would like to have a better economy, so it prefers to pay less for the benefits of current retirees, replacing those funds by borrowed money to be repaid by a future generation.

Did the economy get better? No. Did it stimulate proposals for more cuts? Yes, such as this article, which suggests additional payroll tax cuts in the same paragraph in which it suggests benefit cuts for retirees.

Here's a link to a nice article with some perspective on the federal budget debate:
http://www.dailykos.com/story/2011/06/23/988055/-10-Things-the-GOP-Doesnt-Want-You-to-Know-About-the-Debt

Obama's "surge" in Afghanistan probably was prompted by some poorly chosen criticisms of then-President Bush ("we should be fighting Al Queda in Afghanistan rather than wasting treasure and lives in Iraq"). As President he may have felt compelled to at least make a show of trying to win in Afghanistan. I don't think he wanted to do it but he did not have the strength of character to just pull the plug in 2009; he would have endured a lot of criticism. But, given the choices he has now I think he's doing the right thing. I think what TVD is predicting will probably happen (an ugly, humiliating exit) but that's better than staying there for another decade. Obama is disappointing as President and I don't see the above comments from the left as really lauding Obama's accomplishments, or even his thinking; it sounds more like flailing at TVD because he is recording some unpleasant truths.

Your Vietnam parallel doesn't mean what you think it means. Nixon drew down the war in Vietnam, the North Vietnamese took over, and after much suffering, a peaceful country has emerged with a developing economy. We could have had the same outcome quicker and easier if Nixon had ended the war the way he promised to, rather than drawing it out endlessly. In the meantime the US spent billions of dollars and saw thousands of Americans killed and wounded for no benefit to anyone.

And now the generation that watched that on TV will condemn a younger generation to go through the same hell in the name of preventing a "new Vietnam." It would be funny if it weren't so sad.

Why not raise the taxes on the 50% of Americans who pay no income taxes rather than raising the taxes on the 10% top earners who pay 70% of the tax?

Taxes have consequences. Our tax rates are plenty high enough right now. Cut spending. I said, CUT SPENDING.

Ted's idea to raise the corporate tax makes no sense. The optimum corporate tax, where the government gets the most money, is estimated by a number of economists at 20% to 25%. We have the second highest corporate tax rate among the developed countries (after Japan, and they are reducing theirs). Our biggest problem is jobs (deficit is second). So do you think raising corp. taxes will help the job situation?

I think the oil thing was a political move and bad. The government should keep its nose out of the markets, all markets; meddling in markets is not what the government does best.

One more thing, why must everyone refer to Medicare "as we know it"? This is totally lame. You could say that about anything ... The Space Needle as we know it, I-5 as we know it, or the Alaska Viaduct as we know it, or Ken Griffy Jr. as we know him, this is ridiculous and nonsensical. And by the way, Medicare as we know it needs to change.

And one more thing, we do not need any more short term fixes, we need long-term solutions in America. Cut out the crap. No temporary payroll tax tricks. This does not help long-term employment. And it promotes gaming the system and jumping though hoops to get the credit for employees that you might want to hire anyway.

Responses to a couple of the later comments:

Nixon's late Vietnam strategy was exactly what I thought it was. That is,
by annnouncing regular U.S. troop drawdowns, and ending the draft, Nixon thought he was holding off domestic dissent and buying time. He only prolonged the war and, in the end, we got what we could have gotten by honoring the 1954 Geneva Accords and avoiding any Vietnam intervention. 58,000 U.S. dead and many more Asian dead for nothing. We cannot seem to realize that the locals know that, over time, we will tire and leave their countries. We should not undertake military interventions except in those few instances where our vital interests clearly are at stake.

On near-term stimulus and long-term debt reduction: We need to operate on both tracks. The Fed has done what it can toward near-term stimulus and will continue to maintain interest rates near zero. We do need a 2011 jump start. A temporary suspension of the payroll tax would provide that and could gain bipartisan acceptance whereas almost any other spending or taxing measure would not. For the long term, as noted, leaders of both parties must have the guts to address unsustainable Social Security, Medicare, and Medicaid spending. That is where the money is.

TVD, again, pray tell us how most seniors, who have very limited private incomes and assets, will survive with sharply lower Social Security benefits and Medicare and Medicaid benefits. Those programs already are quite a bit stingier than national pension and health care programs in other advanced countries. You need to climb down from your Olympian perch and visit some senior centers and Medicaid nursing homes, look and smell around, and talk to actual working- and middle-class people rather than making these august pronouncement about slashing benefits and raising eligibility ages. And don't tell us you can just "means test" those programs because they already are means tested, and just cutting benefits for wealthy people isn't going to save much money. Once again, health care spending growth absolutely needs to be cut but if you know anything about health care you know that you can't achieve that just by cutting Medicare and Medicaid. They are part of a larger system of unsustainable health care spending.