“The Historical Trends Could Hardly Be Clearer”: Strong February Job Numbers Underline Obama’s Performance — And GOP Failure
When Republicans complain about economic policy under President Obama – and especially job growth, as Jeb Bush does almost every day – someone might inquire how they think he compares with the last couple of presidents from their party (both of whom happened to bear the surname Bush). Underlined by February’s data released today, Obama’s record is outstanding and continues to smash the idiotic economic predictions promoted by Republicans (and their Fox News echoes) about the stimulus, the deficit, the Affordable Care Act, the auto bailout, the federal budget, and nearly every policy of this administration.
Perhaps someday a television personality on a Sunday chat show will muster the tiny amount of courage needed to pose the question to a guest like Jeb: Why do Democratic administrations result in so many more jobs than Republican administrations? This bold interrogation wouldn’t require much research effort. Helpful information that contrasts the success of recent Democratic presidents — and the abject failure of the GOP presidents who preceded them — may easily be found here, for instance (h/t Eclectablog and our friend @LOLGOP). And many other places, too.
The short version is that under Barack Obama (6.7 million so far) and Bill Clinton (22.6 million), we saw the creation of nearly 30 million net jobs; under George H.W. Bush (2.6 million) and George W. Bush (1.3 million), just short of 4 million net jobs. Even if you award Bush 41 another couple of million jobs for the second term he never won, the essential point should not be lost on even the dimmest voter.
Overall, the historical trends could hardly be clearer. Even Democratic presidents who aren’t named Clinton or Obama tend to score far better than their Republican counterparts, whether named Bush or otherwise – and the consequences can be devastating.
By: Joe Conason, Editor in Chief, Editor’s Blog; The National Memo, March 6, 2015
“Cranking Up For 2016”: Pledging Allegiance To Charlatans And Cranks
Scott Walker, the governor of Wisconsin, is said to be a rising contender for the Republican presidential nomination. So, on Wednesday, he did what, these days, any ambitious Republican must, and pledged allegiance to charlatans and cranks.
For those unfamiliar with the phrase, “charlatans and cranks” is associated with N. Gregory Mankiw, a professor at Harvard who served for a time as George W. Bush’s chief economic adviser. In the first edition of his best-selling economics textbook, Mr. Mankiw used those words to ridicule “supply-siders” who promised that tax cuts would have such magic effects on the economy that deficits would go down, not up.
But, on Wednesday, Mr. Walker, in what was clearly a rite of passage into serious candidacy, spoke at a dinner at Manhattan’s “21” Club hosted by the three most prominent supply-siders: Art Laffer (he of the curve); Larry Kudlow of CNBC; and Stephen Moore, chief economist of the Heritage Foundation. Politico pointed out that Rick Perry, the former governor of Texas, attended a similar event last month. Clearly, to be a Republican contender you have to court the powerful charlatan caucus.
So a doctrine that even Republican economists consider dangerous nonsense has become party orthodoxy. And what makes this political triumph especially remarkable is that it comes just as the doctrine’s high priests have been setting new standards for utter, epic predictive failure.
I’m not talking about the fact that supply-siders didn’t see the crisis coming, although they didn’t. Mr. Moore published a 2004 book titled “Bullish on Bush,” asserting that the Bush agenda was creating a permanently stronger economy. Mr. Kudlow sneered at the “bubbleheads” asserting that inflated home prices were due for a crash. Still, you could argue that few economists of any stripe fully foresaw the coming disaster.
You can’t say the same, however, about postcrisis developments, where the people Mr. Walker was courting have spent years warning about the wrong things. “Get ready for inflation and higher interest rates” was the title of a June 2009 op-ed article in The Wall Street Journal by Mr. Laffer; what followed were the lowest inflation in two generations and the lowest interest rates in history. Mr. Kudlow and Mr. Moore both predicted 1970s-style stagflation.
To be fair, Mr. Kudlow and Mr. Laffer eventually admitted that they had been wrong. Neither has, however, given any indication of reconsidering his views, let alone conceding the possibility that the much-hated Keynesians, who have gotten most things right even as the supply-siders were getting everything wrong, might be on to something. Mr. Kudlow describes the failure of runaway inflation to materialize — something he has been predicting since 2008 — as “miraculous.”
Something else worth noting: as befits his position at Heritage, Mr. Moore likes to publish articles filled with lots of numbers. But his numbers are consistently wrong; they’re for the wrong years, or just plain not what the original sources say. And somehow these errors always run in the direction he wants.
So what does it say about the current state of the G.O.P. that discussion of economic policy is now monopolized by people who have been wrong about everything, have learned nothing from the experience, and can’t even get their numbers straight?
The answer, I’d suggest, runs deeper than economic doctrine. Across the board, the modern American right seems to have abandoned the idea that there is an objective reality out there, even if it’s not what your prejudices say should be happening. What are you going to believe, right-wing doctrine or your own lying eyes? These days, the doctrine wins.
Look at another issue, health reform. Before the Affordable Care Act went into effect, conservatives predicted disaster: health costs would soar, the deficit would explode, more people would lose insurance than gain it. They were wrong on all counts. But, in their rhetoric, even in the alleged facts (none of them true) people like Mr. Moore put in their articles, they simply ignore this reality. Reading them, you’d think that the dismal failure they wrongly predicted had actually happened.
Then there’s foreign policy. This week Jeb Bush tried to demonstrate his chops in that area, unveiling his team of expert advisers — who are, sure enough, the very people who insisted that the Iraqis would welcome us as liberators.
And don’t get me started on climate change.
Along with this denial of reality comes an absence of personal accountability. If anything, alleged experts seem to get points by showing that they’re willing to keep saying the same things no matter how embarrassingly wrong they’ve been in the past.
But let’s go back to those economic charlatans and cranks: Clearly, failure has only made them stronger, and now they are political kingmakers. Be very, very afraid.
By: Paul Krugman, Op-Ed Columnist, The New York Times, February 20, 2015
“An Incredible Ignorance About The Economy”: Rand Paul Has The Most Dangerous Economic Views Of Any 2016 Candidate
Kentucky Senator Rand Paul has had better weeks. On Monday, he suggested there could be a link between vaccines and autism in a CNBC interview. Later on in that interview, he actually shushed—as in, pressed one finger to his lips—the female CNBC anchor. On Tuesday, a New York Times article linked him to a medical group that promotes anti-vaccine theories. But Paul’s dumbest comments came in Iowa on Friday night—and they show why Paul has the most dangerous economic views of any presidential candidate.
Speaking in front of more than 150 Iowa activists, Paul ripped into the Federal Reserve and promoted his “Audit the Fed” bill, which he introduced earlier this week. “I think there needs to be some sunshine,” he said, according to reports of the event. “I’m going to fight ’em, and we’re going to get a vote on audit the Fed.” I’m not sure if Paul will get that vote—ultimately, that’s up to Senate Majority Leader Mitch McConnell. But I do know that “Audit the Fed” is a terrible idea. First, the Fed already is extensively audited by the Government Accountability Office (GAO), the Office of the Inspector General (OIG) and even private sector auditors like Deloitte. Each week, the central bank also releases its balance sheet and even has an interactive guide of its balance sheet available for further explanation.
However, the GAO and OIG audits exclude a few parts of the Fed’s policymaking, including transactions by the Federal Open Market Committee. Paul’s bill removes those exclusions and requires “recommendations for legislative or administrative action” from the Comptroller General. Sounds innocuous, right? It’s not. That would significantly damage the Fed’s independence, which exists so that politicians cannot influence the central bank for their own political purposes. In other words, “Audit the Fed” would lead legislators to interfere with monetary policy matters and put the entire economy at risk. For further explanations why the legislation is so dangerous, see the Roosevelt Institute’s Mike Konczal and the Washington Post’s Catherine Rampell.
With President Barack Obama in office, Paul’s legislation stands no chance of becoming law. It’s hard to imagine it overcoming a filibuster in the Senate, and even if it did, the president would veto it. If Paul were to win the presidency, “Audit the Fed” would still face long odds in the Senate since, even in the best case scenario, Republicans likely won’t have a filibuster-proof majority in the next Congress. So while “Audit the Fed” is theoretically dangerous, it’s not much of an actual threat to Fed independence.
But a Paul presidency would still have disastrous effects on the U.S. economy, for other reasons that were on wide display in Iowa on Friday night.
“Once upon a time, your dollar was as good as gold,” he said. “Then for many decades, they said your dollar was backed by the full faith and credit of government. Do you know what it’s backed by now? Used car loans, bad home loans, distressed assets and derivatives.” Paul’s comments make very little sense. When Paul asks what backs the U.S. dollar now, he’s effectively asking what makes it valuable. When the U.S. used a gold standard, it meant that a dollar was worth a certain amount of gold. Economists overwhelmingly agree that that was a terrible idea, but the connection seemed to explain why dollars had value. The real reason dollars had value is the same today as it was back then: It’s the only currency the government accepts to pay taxes. Businesses and consumers thus have an incentive to carry out transactions using dollars. Paul’s quip about dollars being backed by “used car loans, bad home loans, distressed assets and derivatives” may sound good to Iowa conservatives but it betrays an incredible ignorance about the economy.
What Paul and his followers are concerned about is the purchasing power of the dollar. They want to return the U.S. to the gold standard to ensure that inflation doesn’t undermine the actual purchasing power of the dollar. Over the long run, a gold standard would guarantee that price stability. But over the short run, prices would still fluctuate violently, as happened when the U.S. used the gold standard.
In terms of current policy, goldbugs, as they are often called, think the Fed’s recent decisions—its zero interest rate policy and bond-buying program—will cause skyrocketing inflation and reduce what you can buy with dollars. Those warnings look more foolish by the day. Inflation over the past year was just 0.7 percent, 1.3 percent if you remove volatile food and energy prices. Inflation expectations for the next 10 years are also very low. You would think that these low inflation rates would convince Paul and his followers to rethink their economic theory.
Paul’s economic ignorance doesn’t end there. “[The Fed’s] liabilities are $4.5 trillion; their assets are $57 billion. Do the math,” he said in Iowa. “They are leveraged 80-1. They are leveraged three times greater than Lehman Brothers was when Lehman Brothers went bankrupt. Why do we give ‘em a pass? Because they’ve got a printing press, and they can print up some more money.” Paul apparently can’t read the Fed’s balance sheets, because as of November, its assets were $4.487 trillion and its liabilities were $4.430 trillion. Where did the $57 billion figure come from? That’s its total capital. But as Cullen Roche, the founder of financial services firm Orcam Financial Group, points out, Paul also ignores the fact that the Fed remits most of its profits to the Treasury Department. In 2013, they gave Treasury nearly $80 billion. “The Federal Reserve isn’t just a profitable entity,” Roche writes. “It is perhaps the most profitable entity on the face of the planet.”
As all this shows, Paul’s views on monetary policy are profoundly misguided. As long as he’s in the Senate, that doesn’t really matter. He can spout his nonsense without having any effect on the Federal Reserve. But if he became president, he would be responsible for choosing the next Fed Chair when Janet Yellen’s term expires in 2018 and for nominating board members to the FOMC. That doesn’t give Paul unlimited power, since the Senate would still have to confirm his nominees. But as president, Paul would be the leader of the GOP, with an even greater ability to dictate its position on monetary policy and convince Republican senators to support his nominees.
Of course, the Republican Party itself has an incredibly misguided position on monetary policy. In 2012, its platform included returning to the gold standard. That’s a good reason why just about any Republican nominee would be a dangerous president. But Paul is far more open about his disdain for the Fed, and given his ideological bent, he’s far less likely to listen to conservative economists who reject his monetary policy views. At least on the economy, that makes Rand Paul by far the most dangerous candidate in the 2016 field.
By: Danny Vinik, The New Republic, February 8, 2015
“Efforts To Reposition Themselves”: Can Republicans Create Their Own Credible Economic Populism In Time For 2016?
When Republicans trooped to Iowa over the weekend for Steve King’s “Freedom Summit,” it was as much of a dash to the right as you would have expected from an event hosted by perhaps the most fervently anti-immigrant member of Congress, in a state whose presidential caucus was won by Rick Santorum in 2012 and Mike Huckabee in 2008.
But something else was going on, even there: the search for an economic populist message that might resonate with the general electorate.
Republicans haven’t yet figured out how to present this message, or exactly what policy proposals it ought to be based on. But they’re obviously trying. Here’s part of the New York Times’ report from the event:
A few candidates advanced a concern about income inequality that is percolating within the party, discussing wage stagnation, an issue that has largely belonged to Democrats. Mr. Christie spoke of the anxiety of the middle class. He said that any Republican coalition needed to include the “proud yet underserved and underrepresented working class in this country.”
“The rich are doing just fine,” Mr. Christie said.
Rick Santorum, the winner in the 2012 Iowa caucus, noted that for years Republicans had extolled entrepreneurs and business owners, adding that it made more sense politically to “be the party of the worker.”
“What percentage of American workers own their own businesses?” he asked. “Less than 10.”
Former Gov. Mike Huckabee of Arkansas, who won the 2008 caucus here, stressed that the falling unemployment rate did not represent an economic recovery for many people. “A lot of people who used to have one good-paying job with benefits now have to work two jobs,” he said.
You may notice that none of these critiques are about Barack Obama, unless you’re arguing that he failed to make things better. That’s because when you start to talk about persistent economic anxiety, you inevitably reach back beyond this administration to problems that developed over decades. Santorum’s message is perhaps the most bracing for Republicans to hear; after years of holding up business owners as the most virtuous and admirable among us, the ones for whose benefit all government policy should be made, it would be awfully difficult for Republicans to decide that bosses aren’t the ones they should be advocating for.
And of course, Democrats are going to do what they can to make any populist turn impossible for Republicans. President Obama and his congressional allies will be releasing a steady stream of executive actions and new proposals on things like paid sick leave, boosting overtime pay, and other measures, which Republicans will inevitably oppose, leaving them arguing against benefits for workers.
Which is why it’s important for Republicans to have their own policy proposals if they’re to convince voters that they’re the ones to trust on economics. Republican arguments used to always be about growth, as though that were all that mattered: cut taxes and regulations, the economy will grow, and we’ll all live happily ever after. But with the economy growing steadily and economic anxiety persisting, they have to argue that growth is not enough.
The current Republican efforts to reposition themselves on economic questions remind me a little of how Democrats used to talk about national security before the Iraq War went south and discredited Republican wisdom on the issue. Democrats were always defensive about it, and when they tried to come up with a new message for whatever campaign was looming, the point was never to win the argument over national security. They just wanted to minimize the damage the issue could do to them, or at best, fight to a draw so that the election would hinge on issues where they were stronger.
If Republicans are to do that now on economics, it isn’t a bad start to say their focus has to shift to what people who aren’t wealthy or business owners (or both) care about. Now they just have to come up with an answer to this question: Okay, so what are you going to do about it?
Many Republicans would probably prefer to stick to a populism without economics, one that uses issues like immigration or the latest culture war flare-up to convince voters that Democrats are part of a hostile “elite,” while the GOP is the party of the common man and woman. This has certainly worked before. But the problem for them is that they are now on the wrong side of majority opinion on many of those cultural issues. Which only means that, when it comes to their new-found economic populism, there will be, if anything, more pressure to get specific.
By: Paul Waldman, Senior Writer, The American Prospect; The Plum Line, The Washington Post, January 27, 2015
“GOP Thinks The 47 Percent Aren’t Trying Hard Enough”: News Flash, Middle-Class Rowboats Are Taking On Water
Remember the “47 percent”?
During his 2012 campaign for the presidency, Mitt Romney was caught on tape describing nearly half the country in disparaging terms, labeling them moochers who want handouts. They are voters “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it,” he said.
Romney’s remarks — and he stood by them immediately after his election defeat — didn’t just damage him; they also sullied the entire Republican Party, reinforcing its image as the lapdog of the very rich. Even now, as some of its strategists push hard for the GOP to reach out to ordinary working folks, its congressional leaders continue to protect the 1 percent.
If President Obama has no hope for passage of his ambitious program of “middle-class economics,” as he called it during last week’s State of the Union speech, at least he has a plan. His proposals for free community college, increasing the minimum wage and providing tax cuts to families in the middle of the economic spectrum have the advantage of recognizing the reality of income inequality.
So far, his GOP critics continue to resist that reality, sticking to the old Reagan-era bromide that a “rising tide lifts all boats.” Perhaps that’s true, but those middle-class rowboats are taking on water even as the rich float along comfortably in their yachts.
The growing gap between the haves and the have-nots is one of the most critical issues of our time, a dispiriting trend that has struck most Western economies. Because of complex forces, especially globalization and technology, the incomes of ordinary workers are falling further and further behind, even as the rich get, well, richer.
That’s not the fault of Democrats or Republicans, Libertarians or Socialists. Nor did this growing inequality start with the Great Recession. It started way back in the 1970s, as the factories that had powered the middle class started to shut down. American steel mills closed; textile mills went away; automotive plants moved out. The trends have simply accelerated since then, as robots power assembly lines and low-wage workers in places like Bangladesh sew garments once made in Maine and North Carolina.
Even now, in a resurgent economy, many families haven’t regained their footing. Their savings accounts have evaporated. They can’t replace the house they lost to foreclosure. They work two or three part-time jobs without benefits. And even those with full-time jobs aren’t living it up. According to The New York Times, the median weekly wage for full-time workers at the end of 2014 was $796, below the levels in 2009, when the expansion began.
Those workers are hardly moochers. They are struggling to find their way in a world where their skills have less value. They need help from a government that knows its role is to lend a hand, to steady the ladder, to help them find a toehold.
Even Romney, who is making noises about running again, has finally gotten the message. He has at least called for an increase in the minimum wage.
But most Republicans can’t get over the notion that those who haven’t made it simply aren’t trying hard enough, that if you’re stuck on the economic margins, it’s your own fault. Their allegiance to the very rich — people like the billionaire Koch brothers — overrides any concern for the vast middle.
Take their insistence on resisting tax increases for the 1 percent — a plan proposed by Obama to pay for tax cuts for the middle and working classes. Republicans claim any tax hikes would kill the recovery. But that’s not so. George W. Bush’s tax cuts led to no new job growth, while Bill Clinton, who raised taxes, presided over a period of widespread prosperity.
So what do Republicans propose? So far, they’ve pushed building the Keystone pipeline, which would create about 42,000 jobs over a period of two years, but only about 35 permanent jobs. And, of course, the GOP still wants to kill Obamacare, a strategy that would create zero jobs.
That’s not much better than dismissing the 47 percent.
By: Cynthia Tucker, The National Memo, January 24, 2015
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