Fiscal tightening across the world

>>> all right. so should legislators give up on this project they're in?

>> i think what it represents, chris, is this fundamental fear of the future and fear of democracy. both things i think are pretty great actually. you've got the deficit redulkds imperative is really a preoccupation of the donor class. the wealthy are twice as likely to want to cut spending than the general public . we talk about icht if we're really at a point where there needs to be a whole new new deal but we're still responsive to the tale party moment of 2010 .

>> right. the sequester -- the budget control act has been kicked down the road enough that we're still trying to jump over it.

>> there's still a case. there's something to be sads for signaling well in advance if you're going to be changing things, if you're going to be changing the social security retirement age you may want to let people know that in advance. that's a weaker argument than the way it's presented in washington. we have to kilometer mitt ourselves to cutting future benefits which is a complete nonsense argument. it's really -- by and large it's turning into a bad thing because we're impairing the current government.

>> the other part of the story that's just basically false is we've had this long history of out of control spending. you just go where? you know, domestic discretionary pretty much is the share of the gdp. we deliberately raised that. that's because the economy collapsed. you know, it went in the right direction. but, you know, apart from -- we're getting older so social security will cost more. we knew that for 40 years. allen simpson discovered it when he was on the simpson-bowles commission. the other part is health care . you know, we're saying, one of the stories that hasn't gotten enough, they lowered their budget because they're a presuming they're going to see that.

>> we're all being moved to the right because of this donor class, because of the interest of the wealthy, and everyone else is being told we have to starve the beast of the government and we have to cut social programs and it's austerity forever and it seems to be what we see.

>> partly that's because, you know, it is this chicken and egg question about austerity, right? i don't think -- voters don't want it though some will say they want it, right? there's this way they talk about the deficit and it becomes a signifier for delocalized. i worry about the economy and deficit. those sort of run together. but we are -- what's remarkable to me is we're undergoing a lot of fiscal tightening because it got done in these little sequential ways, so here's fiscal tightening across the world from the institute. from least to most, russia has been -- has been implementing paul kruge man's plan. the has actually undergone a significant amount of austerity, right?

>> this was just for 2013 .

>> this is projected for just this year.

>> but if you look back, basically we started tightening at the beginning of 2010 and it's been significant. if you look at purchases of goods and services , actually government buying, it's back down to 2007 levels in the united states right now. it's sort of crept up on us. by the way, that's a demonstration. if you're worried about out of control spending, there was all this, the stimulus will never be undone. once you start spending, it never goes away. it went away with a vengeance.

>> i think what we're not talking about in interprets of the political valance is this. there's this great 1984 quote where he talks about how there were sort of three phases to the southern strategy . first is opposition to the voting rights act . second is opposition to integration and forced bussing . and then he starting talking about how at the time -- this is '84 ronald reagan 's brand would be the fiscal southern strategy because for many people, the idea of cutting government spending means cutting service, cutting investment, cutting the public to a public that does not look like me. the eye of the -- look like the person being targeted with this speech. so it's this great thing where you talk about being moved from forced bussing to cutting taxes and spending but you're still talking about race.

>> and the great cruelty of that is in the wake of financial crisis , we've seen minority households hit the worst. hispanic households lost 60% of their wealth and black households lost 53%.

>> i would focus much more on unemployment. i know the study well. i got really pissed at them. the reality is the kidnap cal african-american household didn't very any before the crisis. what matters much more is the --

>> you have people who own their homes outright.

>> i think the unemployment rate matters much more for the african-americans than the loss of wealth.

>> it's not just this. i looked back in the 1930s . in 1936 the american public poll polling showed they wanted deficit reduction.

>> and they got it in '37.

>> and it was a political disaster. so part of this is that politicians need to understand that governing by polls is actually a big mistake on economic policy because it has consequences and even in political terms that can matter much more.

>> and i will also say they walk up to cutting medicare but they never actually do it, right? the only cuts have been on the payment side but the republicans want nothing more than to goad democrats.

>> president obama was good at that.

>> i want to talk about the role inequality is playing in the recovery. we had joseph here last week. we'll play that when we get