A few days ago, I took part in a meeting organized by the AFL-CIO to launch a new publication called "Exiting From The Crisis"–a roadmap for a new global economy. The main speaker at the small meeting was Joseph Stiglitz. He outlined some great points and realities about the economic crisis with the bottom line being: the economy is not healthy.

I offer these points Stiglitz made with the up-front observation that I, and others, have argued: there is no debt or deficit crisis. It’s manufactured–and the causes and solutions to any fiscal gaps are certainly not what too many Democrats are contemplating.

   If you’ve ever seen Stiglitz speak, it’s charming–he’s a genial guy and knows how to present some nuggets that boil things down pretty easily.

   One of his first points:

We have an unemployment system that’s geared to people who lose their jobs but quickly find a new job.

   And that is not a world we live in now–particularly with the phenomena of the 99ers and an economic picture in which 1 out of 6 people can’t get good-paying, full-time work.  Stiglitz underscored a point many of us have made–the official statistics don’t reflect the depth of the misery out there.

   Ok, so, how did we get the deficit and debt we now have? Ahem, not from Social Security (surprise!). The deficit and debt are a direct result of: [more below the fold]

   1. The economic downturn. Duh. As Stiglitz, tongue-and-cheek said:

The economic downturn caused the deficit, not the opposite.

   The opposite explanation–that all this terrible government spending is causing the crisis–being the one embraced by the Ryanites and dumb Democrats.

   2. Bush tax cuts for the rich. And, indeed, we know that if we simply did nothing and let those tax cuts expire, the deficit and eventually the long-term debt would become trivial issues.

   3. Unbridled military expenditures. Stiglitz has previously pegged the cost of the Iraq war at $3 trillion. He said the other day that Iraq and Afghanistan together–the former being George Bush’s war and the latter being principally Barack Obama’s war–will cost the economy $3-5 trillion. And those wars have added $1 trillion to the long-term debt.

   One thing he added a few days ago:

The unfunded liability for disability and long-term care for the troops is about $1 trillion.

   That is both an economic and moral cost–the latter being the cost to the broken bodies and souls of hundreds of thousands of men and women who should never have been sent into battle.

   His great succinct point:

We are spending hundreds of billions of dollars on weapons that don’t work against enemies that don’t exist.

   4. Health care costs.

If we had health care costs comparable to other European countries, we would have no deficit.[emphasis added]

   Oh, and by the way, the idiotic idea that we would not let the government negotiate drug costs for the Medicare plan–yeah, well, that abdication to the so-called "free market" costs us roughly ONE TRILLION DOLLARS over ten years.

   Now, distilling a variety of Stiglitz’s points, here is a way of thinking of how we got into this mess that I have poked at over a few years:

   We hammered down peoples’ wages for several decades. Instead of people getting decent paychecks, they were pushed to keep consuming via credit card debt and a sense of false wealth thanks to the housing bubble.

   If America was operating at full tilt, the deficit would be markedly smaller because we would have more revenue from taxes people paid from their wages. Duh.

   The deficit is not caused by government spending. In fact, government spending–a much bigger jobs program, for example–would reduce the deficit and debt because people would be working and…paying taxes…

   People who are poor spend all their income. Rich people don’t need to spend their income. So, redistributing income–higher taxes on the rich that, then, can create government jobs spending programs–is BETTER FOR THE ECONOMY because that strategy increases overall consumption (I leave aside the important larger question about whether it’s good to have  an economy where more than two-thirds of its activity is pushed by consumer spending–I don’t think so).

   So ends our short reality-based discussion.