President Obama unveils his long-term budget strategy

The complete speech

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Getting a handle on the scandal

While the White House is taking heat for the failure of one of solar panel company, originally green-flagged for assistance by the Bush administration and constituting 1.3% of the Department of Energy's green-energy investment guarantee portfolio, Governor Rick "Good-Hair" Perry of Texas has shown leadership in forging a path for true believers in Free Enterprise to encourage the development of emerging technologies in the Lone Star state.  Via the conservative Frum Forum:

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!

Federal Reserve Chairman Ben Bernanke - a Bush appointee held over by President Obama - has been attacked relentlessly by every Republican presidential aspirant.  Most notable was Rick Perry's calling Bernanke's monetary expansions "treasonous"  for supposedly doing damage to the dollar and for acting politically rather than prudently.  Perry - demonstrating his usual grace and sophistication - talked about "getting ugly" with Bernanke if he set foot in Texas.

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...

Swiss banking giant UBS loses a bunch of money

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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":

Our hero hits the campaign trail

Elizabeth Warren, the brain behind the new consumer protection bureau, is running for Ted Kennedy's old Massachusetts Senate seat, in an effort to oust Republican Scott Brown who was elected on the strength of Tea Party support at the height of the right- wing anti-"Obama health care" hysterics.

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."

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.”

The austerity agenda as path to more unemployment...

The Promise of Increased Unemployment

The International Monetary Fund issued a new report on the impact of austerity policies - i.e. cutting government spending during a recession - on increasing unemployment. This "prolonged unemployment through austerity" is the heart of the GOP's economic program.  According to the historical research of IMF economists, it is a recipe for making the existing disaster worse:

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.

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:

"Dear Mark...Merry Christmas!"

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.

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.

"Pass this bill!"

President Obama unveils the American Jobs Act:

"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.”...

"The magical world of voodoo economics"

Steven Pearlstein at WaPo:

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.”

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:

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.

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

No country, however rich, can afford the waste of its human resources.  Demoralization caused by vast unemployment is our greatest extravagance.  Morally, it is the greatest menace to our social order...

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..."

"We're all Bozos on this bus!"

In the wake of Willard "Mitt" Romney rejecting Governor "Good Hair" Perry's nutty Ponzi Scheme rhetoric regarding Social Security during last night's GOP debate, Romney is getting kudos from the Beltway punditry as the "not crazy" candidate hoping to hustle his way to the Republican Presidential nomination.

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:

The public supports, by large margins, a strong federal jobs program and tax increases on the economic elite

Whether they recognize it as such, the public supports a strong liberal economic agenda on key issues, according to major polls. Beltway politicians of both parties would do well to pay attention.

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.