This is a lecture that Paul Krugman gave at MIT recently — The Economic Meltdown: What Have We Learned, if Anything? Krugman tried to explain how we got here AND why it seems so hard to wrap our minds around strong policy to fix it. In many ways, he thinks that we never really learned the lessons of the Great Depression, including that for all of the risk that bankers put us in, the greatest risk may just be a government policy apparatus that will be happier with a political fix rather than a systemic one.

“What actually seems to be happening is that by avoiding real disaster, we also managed to avoid confronting our own intellectual failings. … It’s as if it were still 2007: we’ve gone back to it. People are espousing the same positions, the same rhetoric about private sector dynamism and the evils of big government. The same denunciations of Keynesian economics are right back in vogue. ”

This video is about an hour long, so get your wine or cognac or single malt before settling in to watch:

The Tea Partiers are just regular folks.

A tea party gathering in Asotin County, Washington turned more than a bit ugly on Saturday when a featured speaker actually called for the hanging of Sen. Patty Murray (D-Wash), the fourth ranking Democrat in the Senate and a vulnerable re-election candidate.

“How many of you have watched the movie Lonesome Dove?,” asked an unidentified female speaker from the podium. “What happened to Jake when he ran with the wrong crowd? What happened to Jake when he ran with the wrong crowd. He got hung. And that’s what I want to do with Patty Murray.”

He’s just practicing his freedom of speech, right?

After Evan Bayh announced his retirement yesterday, this is the soundbite (or at least portions of it) that I heard for the rest of the day (and this morning too):

“Two weeks ago, the Senate voted down a bipartisan commission to deal with one of the greatest threats facing our nation: our exploding deficits and debt. The measure would have passed, but seven members who had endorsed the idea instead voted ‘no’ for short-term political reasons,” he said. “Just last week, a major piece of legislation to create jobs — the public’s top priority — fell apart amid complaints from both the left and right. All of this and much more has led me to believe that there are better ways to serve my fellow citizens, my beloved state and our nation than continued service in Congress.”

If you hear this more than three or four times, it begins to sound like a fit of pique, or a temper tantrum. And as I kept hearing this, I starting thinking about Harry Reid’s spiking of the K Street Kickbacks in the Baucus/Grassley “jobs” bill. And while there were provisions in that bill that are designed to try to boost incentives to hire people, the lamenting of bipartisanship is coming because the opportunity to funnel alot of money to K Street interests have been set aside. Much of the features of the Baucus/Grassley boondoggle that are supposed to incentivize employment remain in Reid’s revision. What got spiked from this bill by Reid?

One of the top priorities of Big Business lobbyists is the “tax extender” issue, the extension of expiring tax credits worth tens of billions of dollars to major corporations, which is favored by Republicans. […]Tax extenders are basically a set of about 50 individual tax breaks that expire more or less every year, yet are continually renewed by Congress, says Howard Gleckman, senior research associate at the Washington, D.C.-based Tax Policy Center. They’re mostly for businesses and they tend to be very highly targeted. About $30 billion a year in tax revenue is transferred into the hands of a few special interests, Gleckman says. […]

Tax breaks that do little for employment except maybe among the lobbyist crowd. And the tax extender boondoggle is itself a bi-partisan effort:

“Congress has dozens of tax provisions that they have set out in their naked self-interests to expire automatically,” said Paul L. Caron, a tax law expert and professor at the University of Cincinnati College of Law.

It’s bad public policy, Caron argues, because it creates uncertainty for firms and essentially holds them hostage to members of Congress, who can shake them or their lobbyists down for campaign contributions when the annual bill comes up for a vote. “The public choice view of that, and the tax policy perspective on that, is it’s just naked extortion. Congress sets up these expiration dates so these things will expire or be in jeopardy of expiring to then extort campaign contributions from the affected folks,” said Caron, who also runs the TaxProf Blog. “It’s the benefit that keeps on giving.”

“As a policy matter, this is as bad as you could have it,” Caron said. “It’s just corporate welfare, and it’s keeping uncertainty out there” for the affected firms.

Congress does the same with corporate tax extenders as it does with policies that impact doctors and the poor. The American Medical Association must lobby each year to stave off a huge cut in Medicare reimbursements — the so-called doc-fix — which Congress refuses to make permanent. And Congress declines to index the minimum wage to inflation so unions must lobby for an increase in it and Democrats can take credit for raising it.

President Obama proposed in this year’s budget to make the tax credit for R&D permanent, and apparently Republicans don’t want that — they want a bigger tax credit and a continuation of the yearly tax extender scheme for it.

Using the failure of this bill, Bayh has been ale to whinge about a Congress that doesn’t get anything done. But given that Reid kept the jobs part of this bill and ditched the lobbyist giveaways, this means that Bayh is having on about the loss of bipartisanship in funneling taxpayer money to their lobbyist friends. And shame on Democrats for not shouting from the rooftops that they just killed alot of K St Pork. They should be pushing back on repubs dining out on the failure of this bill — and claiming some fiscal responsibility for not sending billions of dollars to lobbyists in this bill.

Piling on: A commenter from Balloon Juice says this:

Olbermann says a source in the Bayh camp cited “left bloggers” as a reason for his leaving. “People said mean things to me!” What a fucking loser.