What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.
So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.
For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.
What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.
How is that possible? Isn’t Mr. Obama a big spender? Actually, no; there was a brief burst of spending in late 2009 and early 2010 as the stimulus kicked in, but that boost is long behind us. Since then it has been all downhill. Cash-strapped state and local governments have laid off teachers, firefighters and police officers; meanwhile, unemployment benefits have been trailing off even though unemployment remains extremely high.
Over all, the picture for America in 2012 bears a stunning resemblance to the great mistake of 1937, when F.D.R. prematurely slashed spending, sending the U.S. economy — which had actually been recovering fairly fast until that point — into the second leg of the Great Depression. In F.D.R.’s case, however, this was an unforced error, since he had a solidly Democratic Congress. In President Obama’s case, much though not all of the responsibility for the policy wrong turn lies with a completely obstructionist Republican majority in the House.
That same obstructionist House majority effectively blackmailed the president into continuing all the Bush tax cuts for the wealthy, so that federal taxes as a share of G.D.P. are near historic lows — much lower, in particular, than at any point during Ronald Reagan’s presidency.
As I said, for all practical purposes this is already a Republican economy.
As an aside, I think it’s worth pointing out that although the economy’s performance has been disappointing, to say the least, none of the disasters Republicans predicted have come to pass. Remember all those assertions that budget deficits would lead to soaring interest rates? Well, U.S. borrowing costs have just hit a record low. And remember those dire warnings about inflation and the “debasement” of the dollar? Well, inflation remains low, and the dollar has been stronger than it was in the Bush years.
Put it this way: Republicans have been warning that we were about to turn into Greece because President Obama was doing too much to boost the economy; Keynesian economists like myself warned that we were, on the contrary, at risk of turning into Japan because he was doing too little. And Japanification it is, except with a level of misery the Japanese never had to endure.
So why don’t voters know any of this?
Part of the answer is that far too much economic reporting is still of the he-said, she-said variety, with dueling quotes from hired guns on either side. But it’s also true that the Obama team has consistently failed to highlight Republican obstruction, perhaps out of a fear of seeming weak. Instead, the president’s advisers keep turning to happy talk, seizing on a few months’ good economic news as proof that their policies are working — and then ending up looking foolish when the numbers turn down again. Remarkably, they’ve made this mistake three times in a row: in 2010, 2011 and now once again.
At this point, however, Mr. Obama and his political team don’t seem to have much choice. They can point with pride to some big economic achievements, above all the successful rescue of the auto industry, which is responsible for a large part of whatever job growth we are managing to get. But they’re not going to be able to sell a narrative of overall economic success. Their best bet, surely, is to do a Harry Truman, to run against the “do-nothing” Republican Congress that has, in reality, blocked proposals — for tax cuts as well as more spending — that would have made 2012 a much better year than it’s turning out to be.
For that, in the end, is the best argument against Republicans’ claims that they can fix the economy. The fact is that we have already seen the Republican economic future — and it doesn’t work.
By: Paul Krugman, Op Ed-Columnist, The New York Times, June 3, 2012
As Mike Allen of Politico explains today, the Romney campaign and American Crossroads are undertaking a sustained attack (uncoordinated, of course, since coordination would be illegal) on the Obama administration’s economy policies
Mitt Romney’s campaign events and the firepower of American Crossroads will both focus this week on President Barack Obama’s jobs record as a way to fight off charges about the Republican candidate’s private-sector experience, with a Romney aide attacking the stimulus as “the mother of all earmarks….”
A senior campaign aide said Romney will argue that Obama has actually subtracted jobs: “Were these investments the best return on tax dollars, or given for ideological reasons, to donors, for political reasons? He spent $800 billion of everybody’s money. How’d it work out?”
“It was the mother of all earmarks, not a jobs plan,” the aide said. “By wasting all of this money, you had the worst of all worlds: It destroyed confidence in the economy and makes people less likely to borrow money. Dodd-Frank has been a disaster for the economy. Where are the steady hands? Who’s in charge of energy? Where’s the strong, confident voice on the economy?”
At WaPo’s Plum Line, Greg Sargent makes the point that this offensive presents an almost impenetrable pack of lies:
So Romney will now go back to claiming Obama subtracted jobs. But there’s a new twist: Romney will claim that the effect of the stimulus has been to destroy jobs. As it has in the past, the Romney camp will justify this by pointing to a bogus metric — the net jobs lost on Obama’ watch. That includes the hundreds and hundreds of thousands of jobs lost before the stimulus went into effect. Really: The Romney camp’s claim is that we can calculate that the stimulus destroyed jobs overall with a metric that factors in all the jobs destroyed before the stimulus took effect. That’s not an exaggeration. It really is the Romney campaign’s position. It’s time to ask Romney himself to justify it.
The Romney camp will also begin claiming that Obama has “never created a job.” Will anyone ask Romney about the two dozen straight months of private sector job creation we’ve seen?
And that’s just the half of it, since the Romney campaign is also basing its attacks on the “confidence fairy” (Obama has killed jobs just by being a Democrat; Romney will generate them by his very aura, which makes other rich people feel like goin’ out and creatin’ them some jobs!), and on the phony premise that “the stimulus” (designed in no small part in response to Republican demands for more tax cuts and less direct public-sector spending) represented some sort of grand left-wing “industrial policy” instead of a demand-boosting effort to accelerate federal spending on projects and priorities already in the works.
It’s beginning to become apparent that Team Mitt will throw vast amounts of chum into the water to avoid the fundamental reality that its candidate’s own Economic Plan is basically deregulation plus the Ryan Budget. Perhaps if Romney is going to traipse around the country mocking individual federally-funded projects, someone should follow him around pointing out what the Ryan Budget would do to the same locales. It would not look pretty.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 29, 2012
Former Supreme Court Justice Stevens: “President Obama Right To Criticize Court Ruling On Citizens United”
President Barack Obama ruffled some feathers two years ago when he lambasted the Supreme Court for its Citizens United decision during a State of the Union speech. It was unusual for a president to criticize the justices as they sat before him.
Now, retired Justice John Paul Stevens has taken the equally unusual step of saying the president was right in challenging the court’s opinion.
Obama said the 5-4 ruling freeing corporations to spend unlimited sums on elections “reversed a century of law,” adding it would “open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”
“In that succinct comment, the former professor of constitutional law at the University of Chicago made three important and accurate observations about the Supreme Court majority’s opinion,” Stevens said in a speech Wednesday evening. “First, it did reverse a century of law; second, it did authorize unlimited election-related expenditures by America’s most powerful interests; and, third, the logic of the opinion extends to money spent by foreign entities.”
Stevens dissented from the 2010 decision, and he said again Wednesday that he could not understand why, if “corporations have no right to vote,” they should have the right to sway elections.
The justice also said he did not see why those with the most money should be permitted to dominate the airwaves during election campaigns. “During the televised debates among the Republican candidates for the presidency, the moderators made an effort to allow each speaker an equal opportunity to express his or her views,” he said, speaking in Little Rock, Ark. If there were six candidates, he said, they were given roughly the same amount of time to speak.
“Both the candidates and the audience would surely have thought the value of the debate to have suffered if the moderator had allocated the time on the basis of the speakers’ wealth, or it they had held an auction allowing the most time to the highest bidder,” Stevens said.
The 92-year old retired justice has reason to feel kindly toward Obama this week. He was awarded a Presidential Medal of Freedom at the White House on Tuesday, and Obama described his “signature style: modest, insightful, well-prepared and razor-sharp … always favoring a pragmatic solution over an ideological one.”
Stevens retired in 2010, and Obama chose Justice Elena Kagan to replace him.
By: David Savage, McClatchy-Tribune News Service, May 30. 2012
Mitt Romney, who secured the number of delegates needed for the Republican nomination last week, said early on that this election is a choice between President Barack Obama’s “entitlement society” in which people are dependent on government benefits, and his “opportunity society” where business is free to flourish.
But if you take Romney’s own life as representing a governing philosophy, he has the dichotomy backward. Romney is the one who has taken advantage of government entitlements — the ones that flow to the wealthy. And his interest in opportunity lies with rich investors who exploit government rules, often to the detriment of Main Street. Romney’s use of the federal bankruptcy courts to extinguish debts owed to suppliers, shops and service providers is a perfect example — more on that later.
For starters, let’s tick off some of Romney’s favorite government entitlements:
• Special tax rules allow him to pay federal income taxes of just 15 percent on his millions in “carried interest” profits, capital gains and dividends. The rest of us pay a rate of up to 35 percent on income from work.
• Bain Capital, the private equity firm Romney founded and ran from 1984 to 1999, only succeeded due to a major tax loophole. Bain was able to deduct the interest on the massive loans taken out to finance the purchase of its takeover targets — loans secured with the companies’ own assets. In 2008, Germany put limits on this kind of tax shenanigans, but don’t expect anything that enlightened to happen here.
• Romney’s firm also enjoyed government largess in the form of job creation tax breaks. Just the year before Dade Behring, a Bain company, closed its operations in Puerto Rico in early 1998, with nearly 300 workers losing their jobs, the company received federal tax break of $3 million for promoting jobs there and a $4.1 million tax exemption from Puerto Rico.
But there is no big government entitlement as magical or beloved by Romney and Bain than the get-out-of-debt-free card bestowed by federal bankruptcy court.
Dade Behring went bankrupt, leaving Main Street creditors empty-handed, but not before Romney’s firm took $242 million out of it. In fact, of Bain’s 10 top business investments that made up 70 percent of the $2.5 billion Bain made for investors, four eventually went bankrupt, according to the Wall Street Journal.
That’s called winning for losing, a game perfected by top 1 percenters.
For a closer look at one destructive bankruptcy, read “Romney Economics: Cheat Main Street,” a column by Leo Gerard in the Huffington Post (http://tinyurl.com/dylorbl).
Gerard documents the way Bain left Main Street businesses licking their financial wounds as it legally absconded with millions in management fees, dividends and other distributions. His featured example is American Pad and Paper Co. (Ampad) that Bain bought from Mead Corp. in 1992. Bain remained the company’s largest single shareholder through 1999, and three Bain executives sat on its board. In 2000, the company filed for bankruptcy, leaving debts to suppliers of more than $180 million. Even so, Bain came out smelling like money. It had invested $5 million and took out more than $100 million.
Eleven years after Ampad filed for bankruptcy, as Gerard points out, the company’s nearly 1,300 unsecured creditors finally got a pittance of what was owed: Green Bay Packaging Inc. was owed $75,500 and received $137; Lakeway Container Inc. was owed $47,100 and received $89; American Coffee Break Service was owed $1,300 and was paid $2.56. The bankruptcy trustee’s final report lists page after page of Main Street businesses receiving less than a penny on the dollar. Had that $100 million flowed to Ampad’s suppliers rather than Romney and Bain investors, it would have covered more than half the debts.
Romney desperately wants to convince the public that Bain operated in the best interests of Main Street and that he didn’t get fabulously rich under government-rigged rules. But the man exemplifies the special tax breaks and legal shields from creditors that the wealthy see as their right.
That’s Romney’s “entitlement society.”
By: Robyn E. Blumner, Columnist, Tampa Bay Times, June 3, 2012
In three weeks or so, the Supreme Court will rule on health care. Republicans have been discussing what they might do in the event that poor, beleaguered John Roberts manages to withstand that vicious assault of the liberals and to lead a majority that strikes down the individual mandate. This one is a classic, folks. After spending three years lying their eyes out about the bill and tearing this country apart over it, it now turns out that they may well want to keep several of its provisions. And of course they want to keep the easy and fun stuff and get rid of all that bad-bad-bad stuff, but what they don’t understand—or more likely do understand but refuse to acknowledge—is that the good doesn’t work without the “bad.” It’s breathtaking and ignorant—whether breathtakingly ignorant or ignorantly breathtaking I’m not quite sure. Call it the audacity of dopes.
Two weeks ago, John Boehner was insisting that “Obamacare” must be repealed lock, stock, and barrel. Some other Republicans wanted the slightly less radical approach of keeping some aspects of the law. A few days ago, some in the House warmed to this idea. Now, TPM is reporting that Senate Republicans are hopping on the piecemeal train.
The idea is to preserve the language that requires insurers to cover people with preexisting conditions, because everyone likes that; to continue to permit young people up to age 26 to stay on their parents’ insurance, because that’s helpful, especially in a rocky economy; and to press forward with eliminating the Medicare prescription drug “donut hole,” whereby seniors have to pay 100 percent of medication costs within a certain price range.
The last two are fine. But that first one is the gobsmacker. You cannot just make insurance companies cover really sick people. Sick people are expensive people, and insurers’ costs will shoot to the heavens, and those costs of course will be passed along to everyone else. Is there a solution to this problem? Yes. The solution is to get more people in the insurance pool—especially more healthy people, who don’t cost a lot to cover. Then, insurers have more money to use paying for the care of the sick people. But since you can’t just wish for more healthy people to buy insurance, you have to figure out some way to get them to do so. And hence … the individual mandate. It broadens the pool and brings premiums down. It’s how you manage to pay for all those people who need radiation and chemo and dialysis.
There are alternatives to the mandate, which I needn’t go into now because the mandate is what we have. Without the mandate, you have millions of sick people being added to insurance rolls but no healthy ones. What happens? You develop “high-risk pools,” in the argot, and Harold Pollack, a leading health-care expert from the University of Chicago (who advised the Obama campaign) says that high-risk pools don’t work: “Except as a temporary stopgap measure, the track records of high-risk pools is quite poor. Experience in state programs indicates that high subsidies are required to keep premiums affordable for this (by definition) high-cost group. Many states have ended up capping the program, charging high premiums, or both.”
As it happens, the ACA has started temporary high-risk pools, designed to try to help some people before the law fully takes effect. Pollack studied them and wrote up the results in the Journal of General Internal Medicine last year. He found that the program’s funding didn’t come close to matching the need. In other words, lots of money is required to serve these people properly—money that would come from premiums imposed by the individual mandate.
The Republicans’ “answer” to this is their answer to everything like this, tax-free saving accounts. But health-savings accounts, if they work at all, which is a serious question, work only for healthy people who break a leg tossing the Frisbee. Nobody can sock away $25,000 for an operation or $100,000 for end-of-life care; the very idea is crazy. The GOP would also subsidize care for high-risk people. But Pollack notes that these subsidies would have to be billions of dollars a year. Republicans aren’t throwing that kind of money around at anything. Except at ships the Navy doesn’t want and tax cuts really rich people don’t need.
It’s just a shockingly unserious approach to a very serious problem of roughly 4 million uninsured Americans who have cancer, diabetes, emphysema, and the like. Republicans don’t give a happy crap about any of these people. They have no interest whatsoever in trying to solve a public problem. See, this is the Democrats’ burden, and when you come down it, the true difference between the parties these days. Democrats are actually concerned with trying to address a public-policy problem in a responsible way. You can disagree with their way, but they’re at least trying to do something positive in the country—help those 4 million as best they can. This involves difficulty and choices because nothing meaningful in life doesn’t. It also requires the people to stop being selfish apes for five minutes and look at the larger picture.
The Republicans, on the other hand, are complete nihilists. They don’t care about solving any policy problems. They care about two things. They care about politics—advantage, winning, humiliating Obama. And they care about ideology, their drunken and medieval belief that the market can fix everything. But wait; it’s not even really a belief. They’re dumb, but they are not that dumb. They don’t fully believe it. Like Romney accidentally acknowledging to Mark Halperin that huge budget cuts cause recessions. It’s just the garbage they say because it sounds good. No pain! Nothing is complicated! Be selfish!
There is some question as to whether the Republicans will unite behind the three planks I mentioned. Because only the “moderates,” the sell-outs, really want to do it. “Real” Republicans, the Tea Party people, want to kill every aspect of the bill, strike its name from the very records of history. So we’ll see what they do. And of course it all depends on the Supremes tossing the mandate out, which they might not do.
But if this chain of events unfolds, you can bet on Paul Ryan and others going out there to talk about their “reform” of the high-risk pool problem with all the pious sincerity they can muster. And if, God forbid, the Republicans win the presidency in November? Then they’d enact some patchwork thing with about 1/20th of the money actually required, and millions would remain uninsured. But most Americans would never be the wiser because 4 million people just isn’t that many to begin with. That’s how the GOP will hope to get away with it. Here’s hoping little Johnny Roberts is as delicate a flower as conservatives fear he is.
By: Michael Tomasky, The Daily Beast, May 31, 2012