“Betraying His Ignorance”: Mitch McConnell Blames The Slow Recovery On Regulation Because He Doesn’t Understand How The Economy Works
On CNN’s “State of the Union” Sunday, incoming Senate Majority Leader Mitch McConnell said that Republicans in the 114th Congress will focus on blocking environmental and healthcare regulations: “We need to do everything we can to try to rein in the regulatory onslaught, which is the principal reason that we haven’t had the kind of bounce-back after the 2008 recession that you would expect.” But that is exactly the wrong lesson to take from the slow recovery. Rather than laying the foundation for the GOP’s agenda, McConnell is betraying his ignorance on economic issues.
After the financial crisis struck, consumers cut back on their spending and businesses stopped investing. This created a shortfall in aggregate demand—people weren’t buying enough stuff. As consumers stopped buying goods and services, businesses were forced to fire workers, who then cut back their purchases—a vicious cycle. The government’s role is to fill the shortfall in demand, which it can do either through fiscal or monetary stimulus. We’ve done both in the past few years. The stimulus pumped hundreds of billions of dollars into the economy through targeted tax cuts and spending programs. The Federal Reserve cut short-term interest rates to zero to spur investment and used unconventional monetary policy tools like large-scale asset purchases to lower long-term rates. All of this helped avoid a second Great Depression. In fact, as Paul Krugman explained in Rolling Stone in October, the current recovery is actually above average compared to recoveries from past financial crises.
It’s understandable that McConnell would think that this recovery has undershot expectations. Economic growth has been slow and wages haven’t rebounded for the majority of Americans. In fact, only recently—more than six years after the Great Recession—have Americans become more upbeat about the recovery. In other words, this recovery may be above average, but that doesn’t mean it’s been good.
McConnell’s real sin Sunday was his belief that “regulatory onslaught” has been the “principal reason” for the slow recovery. Republicans have made this argument throughout the Obama presidency. If we would only cut government spending, eliminate red tape, and cut taxes for the rich, they say, the economy would thrive. The problem is that these are all supply-side solutions intended to increase productivity and prevent government from crowding out investment. Yet, the economy has faced a demand problem. The GOP’s job agenda, or what they call a jobs agenda anyway, does little to address it.
That doesn’t mean that their agenda will always be unresponsive to the economy’s issues. As the recovery continues and the economy nears full employment, the demand problems will be much less of an issue. Then, Republican supply-side proposals will look more like a legitimate plan to boost growth. Those ideas still may not make sense for other reasons, but at least they could be considered an actual economic platform. Throughout the Obama presidency, though, they have failed to offer such a platform. By suggesting that excessive regulations are the primary driver of the weak recovery, McConnell is only revealing that the GOP hasn’t learned anything during that time either.
By: Danny Vinik, The New Republic, January 10, 2015
“Completely Deplorable, Yet, Totally Unsurprising”: Today’s GOP: Still Cool With Racist Pandering?
What Steve Scalise did in appearing before David Duke’s group—and in twice voting against a Martin Luther King holiday, and in reportedly referring to himself in a chat with a journalist as “David Duke without the baggage”—tells us a lot about Steve Scalise. But what the Republican Party is now doing—or not doing—with regard to Scalise tells us a lot about the Republican Party, and that’s a little more important.
I haven’t seen that one Republican of any note, from Reince Priebus on down, has uttered a word of criticism of the man. Plenty of conservative commentators have said he should step down from his leadership position. Even Sarah Palin sees the sense in this. But among elected Republicans and Priebus, it’s been defense, or silence.
It’s pretty clear what this tells us. Most of the time, institutions of all kinds—political, corporate, nonprofit, what have you—try to duck from scandals and hope they’ll blow over. But occasionally they don’t. Every once in a while, they act swiftly and acknowledge the problem. They do that when they know their bottom line is threatened—when the higher-ups are getting freaked out phone calls from key constituents or stakeholders who are making it clear that this one is serious, that it flies in the face of some basic principle they all thought they were working for, and won’t just blow over.
So the fact that Scalise still has his leadership gig tells us that the key stakeholders and constituencies within the GOP aren’t particularly bothered by the fact that he spoke to white supremacists and indeed might be one himself. They’re certainly embarrassed, I should think. Surely they see the problem here. But they see it as a public-relations problem, a matter to be damage-controlled, which is quite different from seeing it as being plainly and substantively wrong.
This is especially striking, though hardly surprising, in the case of Priebus, Mr. Outreach. As Joan Walsh noted, Priebus has been fond of saying that his GOP would “work like dogs” to improve its standing among the black citizenry, and the brown and the young and the gay and so on. He didn’t specify what breed of dog, but obviously it’s less Retriever and more Bassett Hound.
Here is the RNC’s idea of inclusion. Go to gop.com right now (I mean after you finish reading me!). If the homepage is unchanged from yesterday, when I was writing these words, here’s what you’ll see. Most of it is taken up by a graphic inviting the visitor to participate in the 2016 online presidential straw poll. There are four photos there of representative presidential candidates. Chris Christie and Scott Walker are two. Okay, fine, they’re probably running and are legit candidates.
Let’s see, who else? Jeb Bush? No. Rand Paul? Nyet. Mike Huckabee? Nope. Try Tim Scott and Nikki Haley. Now, Scott and Haley (the black senator and Sikh governor, respectively, from South Carolina) are likely presidential contenders in about the same sense that I’m on the short list for the Nobel Prize in Literature. But, as the Wizard said to the Scarecrow, they’ve got one thing I—and Bush and Paul and Huckabee—haven’t got: melanin. So, says Reince, throw their names in the poll so we can slap ’em up there on the homepage!
That’s just so very RNC, isn’t it? The people who bring you all the gospel choirs and so on at their conventions, which looking solely at the entertainment you’d think were Stax-Volt reunions. You’d never guess that only 2 percent of the delegates (36 out of 2,000, in 2012) were black.
As for elected Republicans, if any prominent one has called on Scalise to step down, it has escaped my notice and the notice of a lot of people I read; the farthest any have gone is to offer up some quotes on background about how Scalise is damaged goods, like this quote, which “a GOP lawmaker” gave to Politico: “As far as him going up to the Northeast, or going out to Los Angeles or San Francisco or Chicago, he’s damaged. This thing is still smoking. Nobody is really fanning the flames yet. … The thing that concerns me is that there are people who are still out there digging on this right now.”
Note: The thing that concerns this “lawmaker” is not that his or her party is being partially led by a sympathizer to white supremacists. It’s that the rest of us are still making a fuss about it, which in turn will damage Scalise’s ability to go prostitute himself before the party’s millionaires. If that’s not a near-perfect summation of contemporary conservative politics in America, then such doesn’t exist.
The media tend to frame situations like this as aberrations, but in this case, quite the opposite is the truth. This person who once said that David Duke’s biggest problem was not his racial views but the fact that he couldn’t get elected is who Scalise is. And this is what the Republican Party is—an organization that isn’t bothered in any meaningful way by the fact one of its top national leaders should hold these kinds of ideas in his head. And finally, this is who most of our political press is—gullible enough to be surprised by either of the first two.
By: Michael Tomasky, The Daily Beast, January 7, 2015
“Pitting Retirees Against The Disabled”: GOP Manufacturing A Social Security Crisis To Threaten Benefits For Millions Of Disabled Americans
When conservatives who like to whine about “welfare” are forced to be more specific, some go after the traditional if significantly less generous TANF program of cash assistance, or Medicaid, or those receiving subsidies under Obamacare. But more often these days, they attack either Disability Insurance or SNAP, programs that have experienced large increases in eligibility because of the economy or demographic trends or both.
Congressional Republicans failed last year to force the inclusion of a major reduction in SNAP eligibility in the 2014 Farm Bill. But now they appear to be going after DI, through the half-clever mechanism of pitting beneficiaries against the larger universe of Social Security retirement recipients. Here’s a quick description of the ploy from TPM’s Dylan Scott:
The incoming GOP majority approved late Tuesday a new rule that experts say could provoke an unprecedented crisis that conservatives could use as leverage in upcoming debates over entitlement reform.
The largely overlooked change puts a new restriction on the routine transfer of tax revenues between the traditional Social Security retirement trust fund and the Social Security disability program. The transfers, known as reallocation, had historically been routine; the liberal Center for Budget and Policy Priorities said Tuesday that they had been made 11 times. The CBPP added that the disability insurance program “isn’t broken,” but the program has been strained by demographic trends that the reallocations are intended to address.
The House GOP’s rule change would still allow for a reallocation from the retirement fund to shore up the disability fund — but only if an accompanying proposal “improves the overall financial health of the combined Social Security Trust Funds,” per the rule, expected to be passed on Tuesday. While that language is vague, experts say it would likely mean any reallocation would have to be balanced by new revenues or benefit cuts.
I have zero doubt Republicans will describe this rules change, now that it’s getting attention, as a measure to “protect Social Security,” even though DI is part of the same system, and the ploy may actually be aimed at producing “entitlement reforms” affecting retiree benefits as well as disability eligibility. But Democrats, led by Elizabeth Warren, do seem to be all over this with unusual alacrity:
“It’s ridiculous – but not surprising – that on the very first day of the new Congress, Republicans are manufacturing a Social Security crisis to threaten benefits for millions of disabled Americans – including 233,260 in Massachusetts alone,” Warren said on Facebook. “We can’t turn our backs on the promises we’ve made to our families, friends, and neighbors who need our help the most. House Republicans should stop playing political games to put America’s most vulnerable at risk.”
So we’ll probably see leading Republicans take a low profile on the issue for a while, as their friends in the conservative chattering classes probably ratchet up the talk about the freeloading bums on DI.
By: Ed Kilgore, Contributing Animal Blog, The Washington Monthly, January 7, 2015
“Playtime Is Over For Obamacare’s Foes”: And Still, Republicans Don’t Have A Serious Plan B
Friends of Obamacare, horrified that the Supreme Court has taken a case that could blow up the federal health insurance exchanges, should recalibrate their dread. While the health reforms were safely humming along, there was little political price for demanding their demise. Thanks to the Supreme Court, now there is.
Years of carpet-bombing assaults on Obamacare have left many Americans thinking that they don’t like the Affordable Care Act. But close down the federal exchanges covering 6 million people (so far) in 36 states and they may think otherwise. With a vengeance.
Here are the stakes in King v. Burwell: Should the justices strike down subsidies for coverage in the federal exchanges, only the very sick would hang in. That would be the end of the federal exchanges.
Donald Taylor, a health policy expert at Duke University, likens the Obamacare attackers to a dog chasing a car. “What’s the dog going to do if it catches the car?” he said to me.
Subsidies would be untouched in the 12 or 14 state-run exchanges (depends on how you define them), the majority of which are in blue states. Red-state politicians — oddly the biggest foes of a law that in effect transfers tax dollars from high-income liberal states to poor conservative ones — would have a mess on their hands.
“Some Southern states will be back up to 20 percent uninsured,” Taylor said, “and that doesn’t sound politically stable.”
The solution for Republicans would be a plan B. But they don’t have a serious plan B.
Republicans do have a proposal of sorts, composed early last year by three senators — Richard Burr of North Carolina, Orrin Hatch of Utah and now-retired Tom Coburn of Oklahoma. But it was written mainly as a political document with which to hit Obamacare over the head during the 2016 campaign — not as a ready-to-plug-in substitute.
Let’s look at the Republican plan that we aren’t supposed to examine too closely.
For starters, it would empower private insurers to play a bigger role in the relationship between you and your doctor — encouraging them to shrink the network of doctors and hospitals you may visit. So much for “choice.”
It also would cut government subsidies for many working stiffs who earn too much to claim poverty but too little to afford decent private coverage. And it would enable insurers to charge older people far more for their insurance. Obamacare lets them charge three times as much. The Republican plan would let them charge five times as much.
Gone would be the minimal coverage standards. That means the insurers could more easily deny payment for services that Obamacare considers basic. For all these gifts to private insurers, the industry actually prefers Obamacare because its subsidies create many more customers for their products.
The Republican replacement plan (as written so far) contains lots of other controversial elements pretty much ignored because few have taken it seriously. For example, it would tax employer-sponsored health benefits. (Obamacare’s “Cadillac tax” on luxurious coverage does some of that, for which it continues to take a beating.)
A group of conservative economists, led by Douglas Holtz-Eakin, has scored the Burr-Hatch-Coburn plan and claims that it would cut deficits by $1 trillion. These are reputable economists, Taylor says, but the text they were working with was “incredibly vague” on where the cap on the taxes would be put.
“The score is a number, and the text on which they did the score was ambiguous,” he said. “It shows just how hard this is.”
So now Obamacare won’t be the only piñata in town.
The Supreme Court will take up King v. Burwell in March. We do live in interesting times.
By: Froma Harrop, The National Memo, January 8, 2015
“Tiresome Assertions”: More Revisionist History About Clinton And Obama
I briefly mentioned Michael Gerson’s “Are Democrats Stuck in 1979?” column yesterday, but wasn’t in a big hurry to smack it down. It’s precisely Gerson’s history as the rare conservative willing on occasion to criticize his party’s extremism that probably makes this sort of claim that the other side is even more extreme inevitable.
But some editor or maybe even a history-conscious intern might have warned Gerson that choosing 1979 as the mythical apogee of Democratic liberalism was a bad idea. That’s a year in which a Democratic president began to prepare for a re-election campaign by pushing for a balanced budget and a big increase in defense spending, even as liberal icon Ted Kennedy headed for a humiliating defeat in the primaries.
In any event, here’s the tiresome assertion that really annoys me as a veteran of the New Democrat thing:
President Obama has now effectively undone everything that Clinton and the New Democrats did in the 1980s and ’90s.
Gerson’s not real specific about this claim, though I assume part of his argument would involve resuscitating the Romney-Ryan campaign’s lie that Obama had “gutted” welfare reform. But what else?
Since Gerson appears to assume that Clinton was strictly about appropriating conservative themes, I guess he cannot come to grips with the fact that the Affordable Care Act was based on the “managed competition” model that a lot of New Democrats preferred to Clinton’s own health care proposal, or that Obama’s “cap-and-trade” proposal was relentlessly and redundantly promoted by the New Democratic think tank the Progressive Policy Institute. Just about everything Obama has proposed on tax policy, education policy, infrastructure policy, trade policy and even national security policy has been right out of the Clintonian playbook. Has Gerson noticed that Obama’s not real popular with people on the left wing of the Democratic Party?
Well, never mind; I guess the Obama-the-lefty construct, threadbare as it is, was necessary for Gerson to set up the heads-we-win tails-you-lose proposition that HRC needs to move the Democratic Party to the right or accept that “the political achievements of her husband [have] been washed away.” I do believe Obama was the first Democrat since FDR to be elected twice with a majority of the popular vote; that ought to count for something.
By: Ed Kilgore, Contributing Writer, Political Animal Blog, January 7, 2014
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