This argument makes me crazy. There’s simply no evidence that concern about the current deficit is a significant factor limiting consumer spending or business investment. And government borrowing rates are at record lows, suggesting that financial markets are not worried about the deficit, either.
Moreover...the best evidence shows that fiscal austerity depresses growth and raises unemployment in the near term. That’s the experience of countries like Greece, Portugal and Britain, which have embarked on drastic deficit reduction plans over the last two years. Cut the current deficit and you will raise unemployment, not lower it.
Like many other countries, the United States has two terrible problems: a devastating lack of jobs right now and an unsustainable budget deficit over the longer run. The right question is not whether we can reduce unemployment by lowering the deficit (we can’t), but whether we can make progress on both problems.
With 14 million Americans unemployed and no prospect of rapid recovery on the horizon, we really have no choice: we must take additional measures to create jobs. What policy makers need to discuss is which measures will be most effective in putting people back to work, and in hastening the day when government support is no longer needed.
The Titanic sails at dawn - politics, economics & culture
Saturday, September 24, 2011
Austerity is not the answer...
Former CEA Chair Christina Romer on the notion that austerity, not stimulus, is the solution to current unemployment and economic stagnation:
How bad is it?
Here's a chart from "Calculated Risk" that puts the current Great Recession in context of all of the post-WWII recessions the US has faced:
As you can see...it's pretty bad. Far worse than anything since the Great Depression, as we now well know. Small comfort, but via Ezra Klein there is this: Even given the slow, staggering recovery and the prolonged unemployment, compared to big economic meltdowns that have hit comparable industrialized countries in recent decades, "the U.S. labor market has performed better than 4 of the previous Big 5 crises.”
Former President Bill Clinton put the Obama administration's performance managing the crisis in perspective last week:
As you can see...it's pretty bad. Far worse than anything since the Great Depression, as we now well know. Small comfort, but via Ezra Klein there is this: Even given the slow, staggering recovery and the prolonged unemployment, compared to big economic meltdowns that have hit comparable industrialized countries in recent decades, "the U.S. labor market has performed better than 4 of the previous Big 5 crises.”
Former President Bill Clinton put the Obama administration's performance managing the crisis in perspective last week:
Friday, September 23, 2011
President Obama on the American Jobs Act at the Ohio-Kentucky Brent Spence Bridge
The President took his case onto John Boehner's and Mitch McConnell's turf:
Thursday, September 22, 2011
More on tax fairness...
Paul Krugman:
40 percent of taxpayers with incomes between 30K and 40K pay more than 12.9 percent of their income in income and payroll taxes; meanwhile, 25 percent of people with incomes over $1M pay less than 12.6 percent of their income in these taxes.
This suggests that there are a lot of very-high-income guys paying a lower tax rate than their secretaries.
"Non-Labor Income" - it's even better than it sounds...
But the beauty of non-labor income isn't just that you make more money by already having money - rather than by working harder, working smarter, working longer hours or increasing the value of your labor through education, skills, experience and performance. The real beauty of this "non-labor" income is that you pay lower tax rates on it than on any income generated by actual work. Lots lower tax rates! This works out especially well the more money you make from your "non-labor."
Source: Tax Policy Center data - chart via Jared Bernstein
And lest we forget, any attempt to shift the tax rates so that "non-labor income" is treated the same way as income gained by actual work is Class Warfare, motivated by envy and resentment.
I don't know about the "warfare", but I'll admit to more than a little envy...no, make that "resentment"...of folks who make money from having money and for their efforts get to pay lower tax rates, on average, than the rest of us poor suckers. Frankly, it feels a bit like "class warfare" coming from their direction.
More Elizabeth Warren...and why her candidacy is important for American politics
Senatorial candidate Warren takes on the deficits, taxation and "class warfare":
Greg Sargent of WaPo "Plum Line" comments on Warren's political skills and message:
Greg Sargent of WaPo "Plum Line" comments on Warren's political skills and message:
Wednesday, September 21, 2011
Elizabeth Warren on Morning Joe
What a terrific candidate! Did you notice how deftly she handled the ridiculous Mark "The President's a Dick" Halperin's lame attempt at a "gotcha"? (What's that jerk doing on my TeeVee?)
HERE's her website, if you want to contribute or volunteer.
Tuesday, September 20, 2011
David Brooks laments Obama's "mean and intransigent" attacks on the super-rich and feels "used"
The fragile Mr. Brooks at NYTs:
The White House has clearly decided that in a town of intransigent Republicans and mean ideologues, it has to be mean and intransigent too...
(B)y God Obama’s going to raise taxes on rich people who give to charity! We’ve got to do something to reduce the awful philanthropy surplus plaguing this country!Tim Noah comments on Brooks' pain at TNR:
The president believes the press corps imposes a false equivalency on American politics. We assign equal blame to both parties for the dysfunctional politics when in reality the Republicans are more rigid and extreme. There’s a lot of truth to that, but at least Republicans respect Americans enough to tell us what they really think. The White House gives moderates little morsels of hope, and then rips them from our mouths. To be an Obama admirer is to toggle from being uplifted to feeling used.
Monday, September 19, 2011
Three quarters of Americans support higher taxes in most recent poll
I have previously posted a table showing that people support raising taxes as part of deficit reduction by a 2-to-1 margin over the Grover Norquist/Club for Growth/Tea Party position that the deficit must be reduced only by spending cuts without a penny of higher taxes.
In light of President Obama's new budget plan, which includes higher taxes, I am posting an updated table, including a poll on Friday showing that three-fourths of people support higher taxes and only 21 percent support the doctrinaire right-wing position.
Tax rates & job growth, aka "Class Warfare" deconstructed
Really?
Center for American Progress' Director of Tax and Budget Policy Michael Linden:
(I)f you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher. The top 10 years would share marginal tax rates at 50 percent or higher. The two worst years, on the other hand, were 2008 and 2009, when the top marginal tax rate was 35 percent. In the 13 years that the top marginal tax rate has been at its current level or lower, only one year even cracks the top 20 in overall job creation.
Sunday, September 18, 2011
Getting a handle on the scandal
As Governor, Rick Perry presides over a fund that has doled out over $200m in grants to private firms. While Obama is in trouble because his aides might have begged the Energy Department accelerate lending to one promising solar panel maker, Perry is laughing his boots off.
The Texas Emerging Technology Fund (ETF) is practically Perry’s own, personal multi-million dollar fundraising machine. When it comes to doling out money to private firms he doesn’t have to beg anyone for anything.
The fund, signed into law largely by and for Perry in 2005, is controlled by his office and operates largely in secret. Many states have similar investment programs, but the concentration of power in the Governor’s office under Perry’s program is unique.
Bernanke, inflation...and the GOP Crazies!
Mitt Romney attacked Bernanke for "over-inflating the amount of currency he's created" and Newt Gingrich, in their primary debates, asserted that Bernanke is "the most inflationary, dangerous and power-centered Fed Chairman in history." The entire GOP field wants Bernanke sacked.
The brief against Bernanke by Governor Good-Hair and the rest is that the Fed Chairman is stoking inflation by printing money, presumably to help "Obama" get some dollars flowing into the economy to secure re-election. More sober voices among professional economists who service the right-wing - but are as evidence-challenged in the real world as the GOP pols - simply decry the threat of inflation "inherent" in Bernanke's monetary expansions.
The truth, of course, is that Bernanke's monetary policies are nothing if not prudent. (Milton Friedman, conservative economics icon, argued that the biggest problem during the Great Depression was tight money. Bernanke's philosophy and policies as Fed Chair are influenced directly by his reading of Friedman.)
Just by the numbers, inflation is a phantom fear in the current economy. The chart below. from David Leonhardt at the New York Times, shows where Fed Chairmen rank in terms of the inflation during their tenure. Bernanke has been overseeing the lowest inflation in 40 years. The GOP Presidential aspirants are, true to form, making crazy stuff up...
Saturday, September 17, 2011
Swiss banking giant UBS loses a bunch of money
The world's greatest news source has the story:
In the wake of the UBS "rogue trading" loss, Barry Ritholtz argues the problem isn't "rogue traders," but "rogue banks" that are carelessly managed while operating inside the magic circle of "too big to fail":
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| Take a Billion, Leave a Billion | ||||
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In the wake of the UBS "rogue trading" loss, Barry Ritholtz argues the problem isn't "rogue traders," but "rogue banks" that are carelessly managed while operating inside the magic circle of "too big to fail":
Friday, September 16, 2011
Our hero hits the campaign trail
Jill Lawrence at The Atlantic reports on Warren's first round of outreach to voters:
Warren is by far the biggest name in the Democratic primary and is already pulling in national money from Democrats determined to oust Brown. By midday Thursday, she was the "busiest recipient" at the ActBlue.com fundraising clearinghouse, with more than $310,000 in contributions. EMILY's List sent out a fundraising email on her behalf headlined "It's on in Massachusetts," asking members to "stop Scott Brown and the Tea Party in their tracks."
Thursday, September 15, 2011
The GOP is selling "crazy" on climate change
NYTs columnist Thomas Friedman - who IMHO misses the mark more often than not - hits it dead on in discussing climate change and "the crazy" being sold by the GOP's presidential hopefuls, as well as the best path to sustainable green energy and green jobs:
Every time I listen to Gov. Rick Perry of Texas and Rep. Michele Bachmann of Minnesota talk about how climate change is some fraud perpetrated by scientists trying to gin up money for research, I’m always reminded of one of my favorite movie lines that Jack Nicholson delivers to his needy neighbor who knocks on his door in the film “As Good As It Gets.” “Where do they teach you to talk like this?” asks Nicholson. “Sell crazy someplace else. We’re all stocked up here.”
Thanks Mr. Perry and Mrs. Bachmann, but we really are all stocked up on crazy right now. I mean, here is the Texas governor rejecting the science of climate change while his own state is on fire — after the worst droughts on record have propelled wildfires to devour an area the size of Connecticut. As a statement by the Texas Forest Service said last week: “No one on the face of this earth has ever fought fires in these extreme conditions.”
Wednesday, September 14, 2011
The austerity agenda as path to more unemployment...
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| The Promise of Increased Unemployment |
Fiscal contractions raise both short-term and long-term unemployment, as shown in Chart 3, but the impact is much greater on the latter. Long-term unemployment refers to spells of unemployment lasting more than six months. Moreover, within three years the rise in short-term unemployment due to fiscal consolidation comes to an end, but long-term unemployment remains higher even after five years.
Fiscal consolidations thus add to the pain of those who are likely to be already suffering the most—the long-term unemployed. This is a particular worry today since the share of long-term unemployed increased in most Organization for Economic Cooperation and Development countries during the Great Recession. And even in countries where it did not increase—such as France, Germany, Italy, and Japan—the share had already been very high even before the recession.
Job loss is associated with persistent earnings loss, adverse impacts on health, and declines in the academic performance and earnings potential of the children of displaced workers (see “The Tragedy of Unemployment,” in F&D, December 2011). These adverse effects are exacerbated the longer a person is unemployed.
Tuesday, September 13, 2011
Capital gains & Capitol games - how the rich avoid paying fair taxes on money generated by...uh...being rich
Excellent primer on the capital gains tax, a loophole that exempts the wealthy from paying the same tax rates on income as ordinary folk pay on wages, by Steven Mufson and Jia Lynn Yang at The Washington Post:
The K Street office of Mark Bloomfield, president of the American Council for Capital Formation, is full of knickknacks collected in three decades of lobbying for cutting the capital gains tax.
"Dear Mark...Merry Christmas!"
The coffee table has campaign buttons that read “Capital Gains = Better Jobs.” One wall displays a blown-up cartoon retracing the steps that led President Jimmy Carter to reluctantly sign a cut in the capital gains tax rate. On a shelf sits a framed, handwritten note from President George W. Bush in December 2003 that says: “Dear Mark, I got your treatise on taxes — many thanks. I will look it over with keen interest. Merry Christmas.”
For the very richest Americans, low tax rates on capital gains are better than any Christmas gift.
As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle- class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically.
Monday, September 12, 2011
"Stop talking so crazy"
Jared Bernstein's appeal to reason:
I’d like to impose a new fiscal measure. Whenever you say either “America is Greece!” re our fiscal debt—or anything like that—or “Social Security is a Ponzi Scheme!” you have to send $10 to the US Treasury.
Today’s bond markets have the yield on the 10-year Greek bond at 23.54 and on the US ten-year note at 1.95. So enough about that…OK?
Social Security is pay-as-you-go.
Ponzi’s scheme was not as it depended on continuous doubling the ratio of contributors to investors (read this wonderful treatment by Social Security’s historian).
As the above link concludes: “The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi’s scheme lasted barely 200 days.”...
Sunday, September 11, 2011
"The magical world of voodoo economics"
If you came up with a bumper sticker that pulls together the platform of this year’s crop of Republican presidential candidates, it would have to be:
Repeal the 20th century. Vote GOP.
It’s not just the 21st century they want to turn the clock back on — health-care reform, global warming and the financial regulations passed in the wake of the recent financial crises and accounting scandals.
Reckless, Dumb and Scared: Growing Up in Dysfunction Post-9/11
Ezra Klein deconstructs the 9/11 Decade, in Washington Monthly:
You know how we know the terrorists didn’t win? It’s not because we killed Osama bin Laden. It’s because we killed him and we didn’t really care.
Which is not to say that we won, either. It’s more to say it’s been a weird decade.
According to the Gallup Poll, President Barack Obama’s “Osama bump” in his approval rating was about five points and lasted about five weeks. Think about that for a second: President Obama ordered a daring SEAL raid that ended in the execution of America’s deadliest foe and the president’s approval rose five points for five weeks. The president can get five points for five weeks by switching from white bread to whole grains. He could probably get twice that from a single appearance on “American Idol.”
Saturday, September 10, 2011
Channel-surfing we can believe in...
More people watched President Obama's jobs speech Thursday evening than tuned into the NFL's season kickoff game that followed.
Via Balloon Juice
Mark Zandi, founder of Moody's and an '08 advisor to John McCain, does the numbers on the Obama Jobs Act
This is useful analysis, given the "non-partisan," "business elite economist" resume of Moody's Analytics' chief Mark Zandi.
Jared Bernstein has it:
Jared Bernstein has it:
Here’s (Zandi's) projected impact of GDP and jobs:
–President Obama’s jobs proposal would help stabilize confidence and keep the U.S. from sliding back into recession.–The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.
Source: Zandi, Moody’s Analytics
The view from a moderately liberal Keynesian economist of good intentions who is filling in for "the Left" on America's bizarre, Tea Party-tilted political spectrum
Paul Krugman, long a leading liberal critic of the President on economic strategy, was both impressed by the jobs plan Obama laid out before Congress and depressed by a toxic political landscape that is likely to kill the legislative proposals:
I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.
Of course, it isn’t likely to become law, thanks to G.O.P. opposition. Nor is anything else likely to happen that will do much to help the 14 million Americans out of work. And that is both a tragedy and an outrage...
(I)t’s worth noting just how much that opposition has hardened over time, even as the plight of the unemployed has worsened.
Thursday, September 8, 2011
President Obama's Jobs Speech - 9/8/11
I was impressed with the speech and appreciated the fact that the package was about 50% larger than had been anticipated in early reports. The proposal falls short of the ideal, i.e. what is needed to recover quickly from the unemployment crisis - but the President was clearly trying to put a concrete legislative challenge to Congress on the table that would be realistic if a significant segment of the Beltway GOP was serious about anything other than sinking his chances for re-election. He was asking his opposition to put country before petty politics. Bitter experience, of course, suggests that they won't.
The speech was a substantive appeal to reason that could persuade moderate and/or confused voters that Obama is serious and his opposition is not, as well as offering the Democratic base some plausible agenda around which they can rally. The tone was passionate and convincing. It represents a turning point, both for uniting Democrats and setting a marker for the coming campaign.
"Taking the temperature" among restive Democrats, here's one early reaction from economist Mark Thoma, who has been an outspoken liberal critic of the President on these issues: "(T)he speech was bolder than expected, showed political savvy (though it will still face stiff resistance), and there appears to be a commitment to keep pushing new legislation until the unemployment problem is eased."
FDR on Unemployment
I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. FDR - 9/30/34
(Thoughts for a much-anticipated speech tonight by President Obama. Via "Freakonomics.")
"Republicans are crazy..."
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| "We're all Bozos on this bus!" |
Unfortunately, that's not true. Romney's crazy too...
Kevin Drum at Mother Jones:
Jared Bernstein notes that if he's elected president, Mitt Romney has promised to "immediately move to cut spending and cap it at 20 percent of GDP." That's crazy with the economy so sluggish, but in fact, it's even crazier than that. Here are budget projections for 2013 from the OMB:
Tuesday, September 6, 2011
The public supports, by large margins, a strong federal jobs program and tax increases on the economic elite
Think Progress:
President Obama will lay out his latest jobs plan before a joint session of Congress on Thursday, in the wake of a report that showed zero net jobs were created last month. Unemployment has remained above 9 percent, while unemployment amongst African Americans is at a 27-year high...
But while the GOP may be firmly against progressive job creation measures, the public is assuredly not. According to two polls released today, the public supports government-backed measures to bring down the unemployment rate.
"Should Democrats play by Republican rules?"
At NYTs "Economix" Former Reagan Treasury official Bruce Bartlett - a long-time Republican and moderate conservative who has defected from the reactionary radicalism of the GOP - offers some good advice to Democrats to counter The Crazy, i.e. ideological dominance of Tea Party fundamentalism:
Republicans are predisposed to blame government for every problem regardless of the circumstances, and Democrats tend to view government as necessary to deal with economic and social problems...
Right now, it is clear that the right side of the political spectrum is dominant. Virtually all policy debate these days is based on the premise that the conservative position is at least valid. For example, we have heard for months from Republicans that government regulation is a major, if not the primary, factor holding back economic expansion and employment growth.
Just last week, the House majority leader, Eric Cantor of Virginia, posted a memo to House Republicans detailing specific regulations whose repeal would create jobs.
Monday, September 5, 2011
President Obama's Labor Day Speech in Detroit
AUDIENCE: Four more years!
THE PRESIDENT: Thank you. Thank you, everybody...
I am honored, we are honored, to spend this day with you and your families -- the working men and women of America. This day belongs to you. You deserve a little R&R, a little barbecue -- (laughter) -- little grilling -- because you’ve been working hard. (Applause.) You’ve been working hard to make ends meet. You’ve been working hard to build a better life for your kids. You’ve been working hard to build a better Detroit. (Applause.) But that’s not all I’m going to talk to you about.
I also want to talk about the work you’ve been doing for decades: Work to make sure that folks get an honest day’s pay for an honest day’s work. (Applause.) Work to make sure that families get a fair shake. The work you've done that helped build the greatest middle class the world has ever known. (Applause.) I’m talking about the work that got us a 40-hour workweek and weekends, and paid leave and pensions, and the minimum wage and health insurance, and Social Security and Medicare -- (applause) -- the cornerstones of middle-class security. That's because of your work. (Applause.)
If you want to know who helped lay these cornerstones of an American middle class you just have to look for the union label. (Applause.)
Sunday, September 4, 2011
The ozone regs: job-killer or job-creator?
Let’s talk about the economics. Because the ozone decision is definitely a mistake on that front.
Saturday, September 3, 2011
The GOP has devolved into a dangerous, deadly cult
Reflections of Mike Lofgren, a recently-resigned, 28-year staffer for the Congressional GOP:
Barbara Stanwyck: "We're both rotten!"
Fred MacMurray: "Yeah - only you're a little more rotten." -"Double Indemnity" (1944)
Those lines of dialogue from a classic film noir sum up the state of the two political parties in contemporary America. Both parties are rotten - how could they not be, given the complete infestation of the political system by corporate money on a scale that now requires a presidential candidate to raise upwards of a billion dollars to be competitive in the general election? Both parties are captives to corporate loot. The main reason the Democrats' health care bill will be a budget buster once it fully phases in is the Democrats' rank capitulation to corporate interests - no single-payer system, in order to mollify the insurers; and no negotiation of drug prices, a craven surrender to Big Pharma.
But both parties are not rotten in quite the same way. The Democrats have their share of machine politicians, careerists, corporate bagmen, egomaniacs and kooks. Nothing, however, quite matches the modern GOP.
"Is austerity killing Europe's recovery?"
The Washington Post:
After more than a year of aggressive budget cutting by European governments, an economic slowdown on the continent is confronting policymakers from Madrid to Frankfurt with an uncomfortable question: Have they been addressing the wrong problem?
The campaign to reduce government deficits has come in response to a European debt crisis that could endanger the global banking system. And the budget cutting has been coupled with a reluctance by the the European Central Bank to stimulate economic growth like the Federal Reserve has in the United States; the ECB has instead raised interest rates twice this year to contain inflation.
Those steps have sucked hundreds of billions of dollars out of a European economy that may be edging towards recession.
Friday, September 2, 2011
The mortgage mess marches on...
New York Times:
The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.
Thursday, September 1, 2011
Gov. Good-Hair: "Government doesn't create any jobs!"
Except under his watch in Texas, where government jobs have grown faster than any other state, according to Think Progress:
Texas Gov. Rick Perry (R) has built the early stages of his presidential campaign on his state’s ability to create jobs during the last two years of his governorship. The “Texas Miracle,” Perry often says, is responsible for 40 percent of the net new jobs created in America since June 2009. The “Miracle” is no miracle at all — Texas has the nation’s worst job creation record when adjusted for labor force growth — but Republican voters have lapped up the message, pushing Perry to a double-digit lead in early primary polls.
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