“The Forever Slump”: The Debate Between The ‘Too-Muchers’ And The ‘Not-Enoughers’
It’s hard to believe, but almost six years have passed since the fall of Lehman Brothers ushered in the worst economic crisis since the 1930s. Many people, myself included, would like to move on to other subjects. But we can’t, because the crisis is by no means over. Recovery is far from complete, and the wrong policies could still turn economic weakness into a more or less permanent depression.
In fact, that’s what seems to be happening in Europe as we speak. And the rest of us should learn from Europe’s experience.
Before I get to the latest bad news, let’s talk about the great policy argument that has raged for more than five years. It’s easy to get bogged down in the details, but basically it has been a debate between the too-muchers and the not-enoughers.
The too-muchers have warned incessantly that the things governments and central banks are doing to limit the depth of the slump are setting the stage for something even worse. Deficit spending, they suggested, could provoke a Greek-style crisis any day now — within two years, declared Alan Simpson and Erskine Bowles some three and a half years ago. Asset purchases by the Federal Reserve would “risk currency debasement and inflation,” declared a who’s who of Republican economists, investors, and pundits in a 2010 open letter to Ben Bernanke.
The not-enoughers — a group that includes yours truly — have argued all along that the clear and present danger is Japanification rather than Hellenization. That is, they have warned that inadequate fiscal stimulus and a premature turn to austerity could lead to a lost decade or more of economic depression, that the Fed should be doing even more to boost the economy, that deflation, not inflation, was the great risk facing the Western world.
To say the obvious, none of the predictions and warnings of the too-muchers have come to pass. America never experienced a Greek-type crisis of soaring borrowing costs. In fact, even within Europe the debt crisis largely faded away once the European Central Bank began doing its job as lender of last resort. Meanwhile, inflation has stayed low.
However, while the not-enoughers were right to dismiss warnings about interest rates and inflation, our concerns about actual deflation haven’t yet come to pass. This has provoked a fair bit of rethinking about the inflation process (if there has been any rethinking on the other side of this argument, I haven’t seen it), but not-enoughers continue to worry about the risks of a Japan-type quasi-permanent slump.
Which brings me to Europe’s woes.
On the whole, the too-muchers have had much more influence in Europe than in the United States, while the not-enoughers have had no influence at all. European officials eagerly embraced now-discredited doctrines that allegedly justified fiscal austerity even in depressed economies (although America has de facto done a lot of austerity, too, thanks to the sequester and cuts at the state and local level). And the European Central Bank, or E.C.B., not only failed to match the Fed’s asset purchases, it actually raised interest rates back in 2011 to head off the imaginary risk of inflation.
The E.C.B. reversed course when Europe slid back into recession, and, as I’ve already mentioned, under Mario Draghi’s leadership, it did a lot to alleviate the European debt crisis. But this wasn’t enough. The European economy did start growing again last year, but not enough to make more than a small dent in the unemployment rate.
And now growth has stalled, while inflation has fallen far below the E.C.B.’s target of 2 percent, and prices are actually falling in debtor nations. It’s really a dismal picture. Mr. Draghi & Co. need to do whatever they can to try to turn things around, but given the political and institutional constraints they face, Europe will arguably be lucky if all it experiences is one lost decade.
The good news is that things don’t look that dire in America, where job creation seems finally to have picked up and the threat of deflation has receded, at least for now. But all it would take is a few bad shocks and/or policy missteps to send us down the same path.
The good news is that Janet Yellen, the Fed chairwoman, understands the danger; she has made it clear that she would rather take the chance of a temporary rise in the inflation rate than risk hitting the brakes too soon, the way the E.C.B. did in 2011. The bad news is that she and her colleagues are under a lot of pressure to do the wrong thing from the too-muchers, who seem to have learned nothing from being wrong year after year, and are still agitating for higher rates.
There’s an old joke about the man who decides to cheer up, because things could be worse — and sure enough, things get worse. That’s more or less what happened to Europe, and we shouldn’t let it happen here.
By: Paul Krugman, Op-Ed Columnist, The New York Times, August 14, 2014
“Losing Their Minds”: Why The Republican Freak-Out Over Obama’s Immigration Order Is Both Dumb And Inhumane
Like it or not, these are the facts: There are 11.7 million undocumented immigrants living in United States. The U.S. Immigrant and Customs Enforcement only has the capacity to remove about 400,000 per year. That’s less than 4 percent of the total undocumented population.
Keep these facts in mind as President Obama prepares to announce an executive action to protect certain classes of undocumented immigrants — and as Republicans lose their minds over it. Obama’s expected move isn’t a sinister example of “domestic Caesarism,” as Ross Douthat would have it, or “stealth amnesty,” in the words of Reihan Salam. It is an eminently reasonable response in the face of congressional inaction, while the conservative opposition puts them on the wrong side of both basic humanitarian instincts and public welfare.
The executive action is expected to expand deferred action to more undocumented immigrants. Deferred action provides an assurance to certain immigrants that they won’t be pursued for deportation. With it comes work permits, so those who won’t be deported can pursue legitimate work.
The legal basis for deferred action is grounded in prosecutorial discretion — the authority of law enforcement agencies to determine how and when to enforce the law. Such discretion is necessary given scarce agency resources. It’s why police and prosecutors devote most of their time to pursuing serious offenses rather than going after every crime on the books. It would be a waste of resources to charge and punish jaywalkers or adulterers, for instance.
Given these constraints, officials have prioritized certain classes of immigrants for removal. ICE specifically targets three categories of undocumented immigrants: those who present national security or public safety risks; those who have recently entered; and those who have reentered after being removed.
These targets guide immigration enforcement actions. In 2013, there were 368,644 removals. Ninety-eight percent met one of ICE’s three priorities. Of these, 235,093 were removed while trying to enter at the border. Among the 133,551 removed while living inside the United States, 82 percent had a previous criminal conviction.
Just as there are removal targets at the top of ICE’s list, there are non-targets at the bottom. These are classes of undocumented immigrants that agents opt to ignore. These categories, outlined in the 2011 Morton Memo, include U.S. military veterans, minors, elderly persons, and pregnant women, among others.
This list broadly tracks the immigrants that we may see benefit from expanded deferred action under Obama’s executive order. As Eric Posner argues, Obama’s order would in many respects do little more than bless preexisting policy. But it would also give some legal guarantee to peaceable immigrants at the distant, unreachable bottom of ICE’s priority list, allowing them access to aboveboard work in the process.
Conservatives will undoubtedly seethe over Obama’s unilateral action. But once they exhaust their procedural objections, any substantive opposition to the policy itself is either cruel or dangerous.
On the one hand, conservatives could object to a codification of ICE’s existing practices. Under this argument, it’s not selective enforcement of the law that’s the problem, but explicitly telling immigrants who arrived in the country illegally that they’re in the clear. Keeping the law hazy would subject law-abiding immigrants to an illusory fear, supposedly discouraging migrant flows.
This is a deeply inhumane tactic. Their preference would be for millions of immigrants to needlessly live with the specter of deportation hanging over their heads. This would condemn them to living in the shadows and working in tenuous, often-exploitative conditions — even though immigration officials have no interest in deporting them.
The other objection — rejecting prosecutorial discretion outright — isn’t any more heartening. This would involve ICE pursuing every undocumented immigrant with equal zeal.
This would be a policy that jeopardizes national security and public safety. Short of expanding enforcement capacity by a factor of 30, time spent expelling military veterans or parents would allow more gang members and felons to slip through the cracks of strained budgets. As John Sandweg, former Homeland Security general counsel, said, “If we eliminated all priorities, and treat [all undocumented immigrants] equally, you are going to make the country less safe, and make the border less secure.”
When he announces his executive action, Obama should remind the country that prosecutorial discretion in immigration keeps us safe. Deferred action is a fairly minor step to provide some peace of mind to those that our immigration system already doesn’t care about deporting, making it easier for them to live freely and work productively. If conservatives still object, it will be clear that they remain far from being fit to step in and lead as moral and protective stewards for our country.
By: Joel Dodge, Member of the Boston University School of Law’s Class of 2014; The Week, August 12, 2014
“The Entitlement Of The Very Rich”: Gutting Social Security And Medicare Far More Unthinkable Than Not Reauthorizing Ex-Im Bank
The very rich don’t think very highly of the rest of us. This fact is driven home to us through fluke events, like the taping of Mitt Romney’s famous 47 percent comment, in which he trashed the people who rely on Social Security, Medicare, and other forms of government benefits.
Last week we got another opportunity to see the thinking of the very rich when Jeffrey Immelt, the CEO of General Electric, complained at a summit with African heads of state and business leaders that there is even an argument over the reauthorization of Export-Import Bank. According to the Washington Post, Immelt said in reference to the Ex-Im Bank reauthorization, “the fact that we have to sit here and argue for it I think is just wrong.”
To get some orientation, the Ex-IM Bank makes around $35 billion a year in loans or loan guarantees each year. The overwhelming majority of these loans go to huge multi-nationals like Boeing or Mr. Immelt’s company, General Electric. The loans and guarantees are a subsidy that facilitates exports by allowing these companies and/or their customers to borrow at below market interest rates.
As a practical matter, whether the bank is reauthorized or not will have no noticeable impact on the economy. If the government took away the subsidy on this $35 billion in exports, it would probably lead to a decline of between 10 and 30 percent in these exports ($3.5 billion to $10.5 billion), while costing Boeing, GE, and the rest some of their profit margin on the portion they continued to export.
The loss of exports would be in the range of 0.2 percent to 0.5 percent of total exports or 0.02 percent to 0.06 percent of GDP. (This assumes that none of the exports include imported parts, which is obviously not the case.) In short the impact on the economy of ending the subsidies from the Ex-Im Bank would be almost invisible.
If the folks pushing for the Ex-Im Bank reauthorization were really concerned about jobs created through trade, we could generate far more jobs with even a modest decline (e.g. 1 percent) of the dollar against other currencies. This would make our exports cheaper to people in other countries and would reduce the price of domestically produced goods relative to imports, thereby leading consumers to purchase more U.S. made goods.
While ending the Ex-Im Bank would have little impact on trade and jobs it would be a big deal to Mr. Immelt’s company and presumably to Mr. Immelt’s compensation. Therefore it is not surprising that he might find it “just wrong” that we should even have to argue about it.
For some additional context, it is worth noting that Mr. Immelt is one of the members of the Peter Peterson initiated group, Fix the Debt. In that capacity he has gone around the country arguing for the need to cut Social Security and Medicare benefits. So we have someone who makes $25 million a year, at least in part from taxpayer handouts, who runs around the country complaining about retired workers getting $1,300 a month from Social Security, whining because he has to argue to continue the handouts he receives.
It would be nice if Immelt were just another crazed one percenter who had no credibility outside of his country club, however this is not the case. It was not an accident that Mr. Immelt was at this summit. He is a highly respected business leader and apparently is close enough to president Obama to have been made head of his Council on Jobs and Competitiveness.
The reality is that the Immelts of the world are able to put muscle behind their sense of entitlement because politicians need their campaign contributions to be credible candidates. For this reason, they are almost certain to secure the reauthorization of the Ex-Im Bank, which has the support of most of the leadership of both parties.
The rest of us just have our votes. But if the public has a clear understanding of the agenda of the Immelts of the world, and their political allies, it will be better positioned to protect the entitlements that workers depend on and have paid for. Gutting Social Security and Medicare should be far more unthinkable than not reauthorizing the Ex-Im Bank.
By: Dean Baker, Co-Director, CEPR; The Hufington Posst Blog, August 12, 2014
“Fear Factor”: Iowa Summit Serves Reminder Of Why Religion, Politics Don’t Mix
Of everything coming out of this year’s Iowa Family Leadership Summit, the fear factor is what stayed with me.
It was a constant, discomfiting undercurrent, like a loose nail poking up in your shoe. It was organization President Bob Vander Plaats declaring this a time of “spiritual warfare,” and speaker Joel Rosenberg announcing America is “on the road to collapse” and “implosion,” and former Arkansas Governor Mike Huckabee, warning grimly, “We are living in some very dangerous times.”
The third year of the event sponsored by the self-described Christ-centered organization that seeks to influence policy and elections, brought big name politicians Bobby Jindal, Rick Santorum, Ted Cruz and Rick Perry to Ames, Iowa, this past weekend. They were there to rally the Republican base in the lead-off caucus state. But the upbeat, love-God-and-country tone of previous events appeared at times to have been replaced by a somber, calamitous note of foreboding. Even Satan got a few mentions.
Projected onto a giant screen to punctuate Vander Plaats’ remarks was a video filled with haunting images of Osama bin Laden, Adam Lanza and the Boston marathon bombings. It depicted a rising national debt, marijuana, Boys Scouts, gay rainbow flag and a woman holding up a “Keep abortion legal” sign. It ended with someone yelling, “God is dead. Hail Satan!”
Sponsors and speakers still exalted matrimony and procreation in heterosexual relationships, called for putting God back in the classroom and government, and called abortion murder. But this year’s message was: The nation is in moral decline. Ignore it at your own peril. That was even carried into foreign policy.
Rosenberg, an evangelical Christian born to a Jewish father, said the United States must not support a two-state solution in Israel because a sovereign Palestinian state “defies the biblical mandate.” Interesting that a Christian American would presume to tell Palestinian Muslims they don’t deserve a homeland because of what the Bible says. This follows an evangelical belief that Jews from around the world will gather in Israel, where the second coming of Christ will occur, and — though Rosenberg didn’t spell this out — be converted to Christianity.
“God loves you but if we don’t receive Christ, there are consequences,” Rosenberg warned.
Is fear a new strategy for the Family Leader and its affiliated Family Research Council and Focus on the Family? Is it a response to flagging interest and political losses? Organizers said there were 1,200 attendees, and that there has been steady growth in three years. But many seats were empty. Is it a concession they’re losing the battle over abortion and gay rights? Abortion has not been completely outlawed, even under a conservative U.S. Supreme Court majority. Having succeeded in getting three justices of the Iowa Supreme Court voted out over same-sex marriage, a few years ago, the Family Leader failed in its more recent campaign against a fourth. Same-sex couples are celebrating wedding anniversaries with children and grandchildren, and the planet has survived.
What the planet might not ultimately survive — global warming — wasn’t on the agenda. In fact, if this were a true gathering of faith leaders, one might have expected some commitment to keeping the environment healthy, some compassion for the poor and immigrants. There were calls for abolishing the entire tax system that sustains the poor in times of need. There were calls for boosting border patrols to turn back young asylum seekers before their cases are heard. Iowa’s governor, Terry Branstad, boasted of having cut 1,400 state employees and cut property taxes, which fund education, more than ever in Iowa history.
But if it were a political forum to vet candidates, a Jewish, Muslim, agnostic or atheist one would have had no place there. In one video, Billy Graham’s daughter, Anne Graham Lotz, said, “The only place you get right with God is at the foot of the cross of Jesus Christ.”
Outside in the parking lot, some protestors from Iowa Atheists and Freethinkers, which describes itself as a social and educational organization, objected. “The summit is attempting to define legislation through Christian dogma,” said protestor Jason Benell. “They want to blur the line between church and state. That’s not what Iowans want.”
He also objected to the idea that faith was necessary to have a good family. His group sees a ramping up of religious rhetoric in response to the Family Leader’s “fear of losing its base.”
Everyone will, of course, vote according to their own priorities. But America is not a theocracy, so it’s alarming to see politicians, by attending and playing to the sponsors, play into the notion that worshiping Jesus should be a prerequisite for federal or state office. America also cannot base its Mideast policy on some biblical interpretation about Israel. Whatever our religious affiliation or lack of it, I’d guess most voters have better explanations for Sept. 11 or the Sandy Hook shootings than God’s revenge – and would like to practical, reason-based solutions from those seeking office.
By: Rekha Basu, Columnist, The Des Moines Register; The National Memo, August 14, 2014
“A New Test For Conservatives On Ferguson”: We All Should Care About The Pathologies That Affect Policing In America
Just when we thought the news out of Ferguson, MO was getting more hopeful, the Ferguson PD, apparently trying to confirm their reputation as America’s worst police department, has now endeavored to make this situation even more rancid than it already was. As expected, they finally released the name of the officer who killed Michael Brown on Saturday. They did not, however, release any information on the shooting. No description of the officer’s story, no synopsis of accounts of the multiple witnesses, nothing about the shooting at all.
But there was something else they released: a report on a robbery that occurred at a convenience store some time before. They now claim that Michael Brown was a suspect in that robbery. That they are saying this for the first time is more than a little strange. But it threatens to pull this case back into a familiar pattern, just when it looked like liberals and conservatives could agree on some things.
If you watched the news last night, you would have seen something incredibly heartening in Ferguson. After nights of tear gas and rubber bullets, law enforcement officers stood amid protesters, talking to them, listening to them, even hugging them. There was no violence. And it happened because the Missouri governor told the inept Ferguson police to stand the hell down, and brought in the state highway patrol to bring a little sense to the situation.
Meanwhile, there were signs that a cross-ideological effort to address some of the problems the case highlighted might be a real possibility. Even some conservatives were talking not just about the militarization of law enforcement, but also about the unequal treatment of black people by the police. Rand Paul wrote an op-ed about it. Conservative pundit Erick Erickson, not ordinarily anybody’s idea of a conciliator, wrote a piece essentially pleading with his white audience to care about this (“just because Michael Brown may not look like you should not immediately serve as an excuse to ignore the issues involved”).
That isn’t to say that some conservatives out there weren’t taking a different tack. Fox News’ coverage offered clips of looting on the first night after the shooting running on an endless loop, along with plenty of talk about “riots” and “violent protesters.” However, there was a division among conservatives, with more than a few rejecting the storyline of violent, threatening black people out of control.
But today, after the geniuses at the Ferguson PD put out their new information, plenty of conservatives on Twitter are saying, essentially, “See? Michael Brown was no innocent kid!” (If you want to read some, Jamelle Bouie has been retweeting them.) The same message is no doubt going to show up on talk radio this afternoon. The implication is clear: he had it coming.
We don’t yet know whether the person who took the cigars from that convenience store was Michael Brown. The police officer didn’t know either — if indeed the reason he confronted Brown was because Brown matched a description he had been given of the suspect. But the point is, that’s utterly irrelevant. Being suspected of shoplifting isn’t grounds for a roadside execution.
We have to give credit to the conservatives who were able to step out of the usual divide we so often see in cases like this one, and say clearly that we all should care about the pathologies that affect policing in America. Now that some of their brethren are going to be trying to convince the country that Michael Brown was a thug who got what he deserved, they’ll face a test. Can they stand up for the principles they’ve already articulated, even as the debate gets uglier? Let’s hope so.
By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, August 15, 2014
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