Portside

A recent “Spreadsheet Scandal” has rocked the economics world. It has eliminated the last remaining technical argument in support of the President’s “chained CPI” Social Security cut. Earlier this year the IMF admitted they had made errors in their modelling of expenditure multipliers. Now, the darlings of the austerity cultists – Rogoff and Reinhart – has been exposed for errors in spreadsheet coding. Who is ever going to take responsibility for these travesties?

Self-righteous critics have portrayed Social Security as the profligate monster borrowing from the Treasury and sucking the life out of federal government. It's the other way around. The Treasury has been borrowing from the Social Security Trust Fund for 30 years, and the debt to beneficiaries now totals nearly $3 trillion. The financial barons and their media collaborators would like to get out of repaying the debt by cutting benefits over and over again. Count on it.

There isn't any evidence that the U.S., or other countries that borrow in currencies they control, face some debt tipping point after which borrowing costs spiral out of control. There isn't even much evidence this is true of Europe's troubled economies. Borrowing costs fell for the PIIGS in 2012 (one year after Greenlaw & Co.'s sample ended), not because those countries reduced their debt burdens, but because the ECB promised to do "whatever it takes" to save the euro.

Obama needs to do something that doesn't come easily to him. He needs to demolish the previous terms of debate, some of them partly of his own making - he needs to disavow earlier mistaken policies that he embraced. Otherwise he will preside over the worst eight-year economic record of any Democratic president, and the steepest rate of decline in social spending. He will leave an economy even more unequal than he inherited. He needs to find the audacity to restore hope