“Boehner Rejects Amtrak Question As ‘Stupid'”: U.S. Investment In Infrastructure Has Become A National Embarrassment
It became clear yesterday that congressional Republicans came up with one talking point in response to the deadly Amtrak derailment in Philadelphia: “human error.”
The point, of course, is obvious. If the Amtrak 188 tragedy was the result of a person making a mistake, then there’s no need for federal policymakers to act, there’s no need for Congress to make additional investments in infrastructure, and there’s no need for Republicans to be embarrassed by slashing Amtrak’s budget just hours after the accident.
This morning, as National Journal noted, House Speaker John Boehner (R-Ohio) didn’t hold back on this point.
Boehner downright dismissed claims that underfunding for the rail system was responsible for the derailment in Philadelphia that killed at least seven people and injured 200 on Tuesday night.
“Are you really gonna ask such a stupid question?” Boehner said during his Thursday morning press conference when a reporter began to ask about Democratic concerns that Amtrak was underfunded because of Republicans. “They started this yesterday: ‘It’s all about funding. It’s all about funding.’ Well, obviously it is not about funding. The train was going twice the speed limit.”
House Ways and Means Chairman Paul Ryan (R-Wis.) sounded a similar note on Fox News this morning, dismissing those who want to increase “the size of government programs,” all in response to an accident he said was “human error.”
The congressman added that he hopes “people won’t seize on political opportunities out of tragedies like this” to spend more money.
Let’s set the record straight.
Just on a surface level, even without consideration of the tragedy in Philadelphia, U.S. investment in infrastructure has become a national embarrassment. The United States used to lead the world in infrastructure innovation and development, and the more Republicans decided public investment in “government programs” is necessarily bad, the more other countries have surpassed us.
But specifically on this week’s Amtrak disaster, to dismiss this as nothing more than a tragic case of “human error” is to overlook the relevant details.
According to Boehner, “obviously it is not about funding.” In reality, it’s also obvious that a Positive Train Control system could have prevented the accident.
It’s equally obvious that PTC is not free. If Congress wanted to invest in the system, it could have. Indeed, it can make those investments now. At least for now, however, Boehner and his party don’t see it as a priority.
This might make the Speaker uncomfortable, but it’s anything but “a stupid question.”
By: Steve Benen, The Maddow Blog, May 14, 2015
“Deliberate And Systemic”: Inequality Isn’t Inevitable, It’s Engineered. That’s How The 1% Have Taken Over
Who will look after the super-rich and think about their needs? It’s not easy for them: the 1% of the world’s population who by next year will own more global wealth than the 99%. Private security costs a fortune, and with the world becoming an increasingly unequal place a certain instability increases. It could be dangerous!
Very smartly, Oxfam International is raising such questions at the World Economic Forum at Davos, where the global elite gather to talk of big ideas and big money. Oxfam executive director, Winnie Byanyima, is arguing that this increasing concentration of wealth since the recession is “bad for growth and bad for governance”. What’s more, inequality is bad not just for the poor, but for the rich too. That’s why we have the likes of the IMF’s Christine Lagarde kicking off with warnings about rising inequality. Visceral inequality from foodbanks to empty luxury flats is still seen as somehow being in the eye of the beholder by the right – a narrative in which poverty is seen as an innate moral failure of the poor themselves has taken hold. This in turn sustains the idea that rich people deserve their incredible riches. Most wealth, though, is not earned: huge assets, often inherited, simply get bigger not because the individuals who own them are super talented, but because structures are in place to ensure this happens.
Most of us – I count myself – are economically inept. The economic climate is represented as a natural force, like uncontrollable weather. It’s a shame that the planet is getting hotter, just as it’s a shame that the rich are getting richer. But these things are man-made and not inevitable at all. In fact, there are deliberate and systemic reasons as to why this is happening.
The rich, via lobbyists and Byzantine tax arrangements, actively work to stop redistribution. Inequality is not inevitable, it’s engineered. Many mainstream economists do not question the degree of this engineering, even when it is highly dubious. This level of acceptance among economists of inequality as merely an unfortunate byproduct of growth, alongside their failure to predict the crash, has worryingly not affected their cult status among blinkered admirers.
Even the mild challenge of Thomas Piketty, with his heretical talk of public rather than private interest being essential to a functioning democracy, is revolutionary in a world which buys the conservative idea that the elixir of “growth” simply has to mean these huge extremes in income distribution.
That argument may now be collapsing. The contortions that certain pet economists make to defend the indefensible 1% are often to do with positing the super-rich as inherently talented and being self-made. The myth is that everyone is a cross between Steve Jobs and Bono; creative, entrepreneurial, unique. The reality is cloned inherited wealth and insane performance-related pay, eg the bankers who continue to reward themselves more than a million a year after overseeing the collapse of the industry.
There are always those who will side with the powerful against the powerless, and economists specialise in this. No wonder Prof Gregory Mankiw’s Harvard students walked out of his class following his ludicrous insistence that the system is not gamed for the rich. Such “theorists” flatter the rich by granting them some superpower, which is why they like rock star comparisons. In fact, international finance is peopled by interchangeable guys who are essentially just paying themselves double what they were 10 years ago. They may need to think of themselves as special. We don’t have to.
When we talk of neoliberalism, we are talking about something that has fuelled inequality and enabled the 1%. All it means is a stage of capitalism in which the financial markets were deregulated, public services privatised, welfare systems run down, laws to protect working people dismantled, and unions cast as the enemy.
Oxfam’s suggestions at Davos are attempts to claw back some basic rights, with talk of tax, redistribution, minimum wages and public services. But isn’t it rather incredible that a charity has to do this? The Occupy movement has dissipated, but we are seeing in Europe, primarily in Greece and Spain, a refusal to accept the austerity narrative that we appear to have wolfed down here in the UK.
Oxfam can appeal to the vanity of billionaires, but the truth is that’s not enough. The neoliberal project may fail not because of huge protest, but because reduced income means reduced demand. Never mind the angry proletariat, a disappointed middle-class is something all politicians fear. To stem inequality, it is imperative to stop seeing it as inevitable. It’s a choice. A choice very few of us have any say in. The poor are always with us. And now the deserving and undeserving super-rich are too? That’s just the way things are? No. This climate can also change.
By: Suzanne Moore, The Guardian, January 20, 2015
“It’s More Than Romney Promised”: What Would Republicans Say If Mitt Romney Were President And The Economy Was This Strong?
Imagine if Mitt Romney were president right now.
Imagine if, 722 days after winning the election, President Romney were presiding over an economy growing at five percent a year, an unemployment rate dipping beneath six percent, and gasoline that was less than $2-a-gallon.
This is, after all, what Romney promised. Hell, it’s more than Romney promised.
“I can tell you that over a period of four years, by virtue of the policies that we’d put in place, we’d get the unemployment rate down to six percent, and perhaps a little lower,” he told Time during the campaign. December’s tumble to 5.6 percent unemployment is, thus, two years ahead of schedule.
As for the five percent growth rate and the sub-$2 gas — that’s more than Romney dared ask the electorate to expect. Tim Pawlenty — remember him? — promised to nudge growth to five percent and was roundly mocked for his troubles. And to find anyone promising $2-a-gallon gas, you need to dig up Michelle Bachmann’s campaign lit (even Newt Gingrich didn’t dare predict gas under $2.50, and he wanted to use space mirrors to light highways).
If Mitt Romney were president right now, he would be seen as the second coming of Ronald Reagan. There would be parades in the streets. The kids would have “severely conservative” tattoos. Men would be saying “gosh.”
This is the problem with how Washington — Democrats and Republicans alike — interpret economic news. If Mitt Romney was president right now the economic numbers would be seen as proof that he was a remarkable success. They would appear to show that his agenda — repealing Obamacare, cutting taxes, deregulating the economy, greenlighting the Keystone XL pipeline — was precisely what had been needed to unleash the awesome growth engine that is the American economy. Conservatism would be ascendant. Liberalism would be discredited.
But Barack Obama won the election. The Affordable Care Act hasn’t been repealed. Taxes were raised in 2013. Regulation has proceeded apace. The Keystone XL pipeline is no closer to being built. And yet the economy is roaring. The ambitious economic promises the GOP field made for their conservative policies have been achieved despite the continuation of liberal policies.
There is an easy liberal interpretation here: President Barack Obama is great. Liberalism is great. And it’s simply entrenched media narratives and the GOP’s relentless resistance to giving Obama credit for anything that has left his approval rating stuck at 44 percent.
But I come not to praise President Obama. I come to bury the lazy economic thinking that infects American politics and, particularly, political campaigns.
Washington tends to think of itself as the cause and everything that subsequently happens in the world as the result. A booming economy is proof that Bill Clinton is a genius, or that Ronald Reagan is a genius. A crappy economy is proof that Barack Obama is a naif, or that George H. W. Bush can’t govern. It’s a view of causality usually found in five-year-olds, but it is pervasive in American politics. It is also false.
Policy matters, of course. And, particularly in 2008, 2009, and 2010, it was, arguably, the driver of our economic fortunes. But, for the most part, the economy is driven by much beyond what happens in the White House and the Congress (caveat: the Federal Reserve is an immensely powerful actor, but come campaign time, politicians tend to pretend it doesn’t exist).
It’ll be some time yet before we know whether the economy is truly beginning to roar or the engine is about to sputter out. But the $2 gas that’s left economists so optimistic isn’t the fault of anyone in Washington; it’s a mixture of technological innovation leading to more supply, falling global demand leading to yet lower prices for that supply, and Saudi Arabia refusing to slow production because it wants to choke America’s nascent shale-gas industry (Brad Plumer has an excellent look at the causes behind the cheap gas here).
The reasons unemployment has fallen below six percent are varied, and some of them are problematic (like the reduction in labor-force participation). Government policy has played a role, and my read of the evidence is that premature austerity, particularly at the state and local government level, did a lot to slow the recovery. Nevertheless, anyone suggesting that the job gains over the last two years are the clear result of anything Congress did, or didn’t do, is fooling themselves.
It’s an unhappy fact of political life that the direction of the economy tends to decide elections even though it isn’t actually driven by political decisions. Politicians tend to get around that by pretending otherwise: they take more credit than they deserve when the labor market is doing well, and they receive more blame than they deserve when it’s flagging.
By the normal rules of politics — the rules we would be playing under if Mitt Romney had won the election — the recent economic news proves Barack Obama is a magnificent leader and liberal policies an economic boon. But the normal rules of politics, at least when it comes to interpreting the economy, are dumb.
By: Ezra Klein, Vox, January 12, 2015
“Rock Bottom Economics”: The Inflation And Rising Interest Rates That Never Showed Up
Six years ago the Federal Reserve hit rock bottom. It had been cutting the federal funds rate, the interest rate it uses to steer the economy, more or less frantically in an unsuccessful attempt to get ahead of the recession and financial crisis. But it eventually reached the point where it could cut no more, because interest rates can’t go below zero. On Dec. 16, 2008, the Fed set its interest target between 0 and 0.25 percent, where it remains to this day.
The fact that we’ve spent six years at the so-called zero lower bound is amazing and depressing. What’s even more amazing and depressing, if you ask me, is how slow our economic discourse has been to catch up with the new reality. Everything changes when the economy is at rock bottom — or, to use the term of art, in a liquidity trap (don’t ask). But for the longest time, nobody with the power to shape policy would believe it.
What do I mean by saying that everything changes? As I wrote way back when, in a rock-bottom economy “the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly.” Government spending doesn’t compete with private investment — it actually promotes business spending. Central bankers, who normally cultivate an image as stern inflation-fighters, need to do the exact opposite, convincing markets and investors that they will push inflation up. “Structural reform,” which usually means making it easier to cut wages, is more likely to destroy jobs than create them.
This may all sound wild and radical, but it isn’t. In fact, it’s what mainstream economic analysis says will happen once interest rates hit zero. And it’s also what history tells us. If you paid attention to the lessons of post-bubble Japan, or for that matter the U.S. economy in the 1930s, you were more or less ready for the looking-glass world of economic policy we’ve lived in since 2008.
But as I said, nobody would believe it. By and large, policy makers and Very Serious People in general went with gut feelings rather than careful economic analysis. Yes, they sometimes found credentialed economists to back their positions, but they used these economists the way a drunkard uses a lamppost: for support, not for illumination. And what the guts of these serious people have told them, year after year, is to fear — and do — exactly the wrong things.
Thus we were told again and again that budget deficits were our most pressing economic problem, that interest rates would soar any day now unless we imposed harsh fiscal austerity. I could have told you that this was foolish, and in fact I did, and sure enough, the predicted interest rate spike never happened — but demands that we cut government spending now, now, now have cost millions of jobs and deeply damaged our infrastructure.
We were also told repeatedly that printing money — not what the Fed was actually doing, but never mind — would lead to “currency debasement and inflation.” The Fed, to its credit, stood up to this pressure, but other central banks didn’t. The European Central Bank, in particular, raised rates in 2011 to head off a nonexistent inflationary threat. It eventually reversed course but has never gotten things back on track. At this point European inflation is far below the official target of 2 percent, and the Continent is flirting with outright deflation.
But are these bad calls just water under the bridge? Isn’t the era of rock-bottom economics just about over? Don’t count on it.
It’s true that with the U.S. unemployment rate dropping, most analysts expect the Fed to raise interest rates sometime next year. But inflation is low, wages are weak, and the Fed seems to realize that raising rates too soon would be disastrous. Meanwhile, Europe looks further than ever from economic liftoff, while Japan is still struggling to escape from deflation. Oh, and China, which is starting to remind some of us of Japan in the late 1980s, could join the rock-bottom club sooner than you think.
So the counterintuitive realities of economic policy at the zero lower bound are likely to remain relevant for a long time to come, which makes it crucial that influential people understand those realities. Unfortunately, too many still don’t; one of the most striking aspects of economic debate in recent years has been the extent to which those whose economic doctrines have failed the reality test refuse to admit error, let alone learn from it. The intellectual leaders of the new majority in Congress still insist that we’re living in an Ayn Rand novel; German officials still insist that the problem is that debtors haven’t suffered enough.
This bodes ill for the future. What people in power don’t know, or worse what they think they know but isn’t so, can very definitely hurt us.
By: Paul Krugman, Op-Ed Columnist, The New York Times, November 23, 2014
“The Same Supply-Side Ideas”: Republicans Have Known All Along That Their Jobs Plan Wouldn’t Work That Well
If you’ve read my work over the past few months, you’ve probably heard me argue that Republicans don’t have a jobs plan. I’ve said it a few times. Never has that point been clearer than in the New York Times Thursday morning, where economists on both sides of the aisle—and even House Speaker John Boehner’s spokesman—admit that the Republican “jobs” plan wouldn’t actually help the economy very much.
“Some of those things will help,” Matthew J. Slaughter, who served on President George W. Bush’s Council of Economic Advisers, told the Times about Republican economic ideas, “but, it just struck me as sort of a compendium of modest expectations. If you ask me, ‘What’s your ballpark guess for how many jobs are going to be created?,’ it’s just not many.” Douglas Holtz-Eakin, a conservative economist and former director of the Congressional Budget Office said, “I don’t think any of these are particular game changers.”
The traditional Republican ideas to boost the economy—cutting spending, reducing regulations, and reforming the tax code—represent a misunderstanding of the underlying problems with the economy. Those are all supply-side policies, intended to boost investment and improve productivity. Those aren’t bad goals, of course, but they don’t solve the demand-side issues that are actually holding back growth.
When the Great Recession struck, households cut back on their spending, forcing businesses to fire workers, who then cut back their own spending—thus, a lack of demand. This creates a nasty cycle of reduced spending and job losses. The government’s role in these situations is to fill the hole in demand by using fiscal or monetary policy. We did both and they were moderately successful. But they weren’t sufficient to fill the entire hole in demand and we’ve had a lackluster recovery as a result, made even worse by a premature turn to austerity.
The most revealing quotation in the Times article came from Kevin Smith, a spokesman for Boehner. When asked about the 46 bills that Boehner has outlined as the Republican jobs package—most of which would cut regulations and taxes—Smith said that the bills were not “a cure-all, but they would be a good start for our economy; we need to do more.” In other words, after six years of critiquing Obama’s economic policies, House Republicans still don’t have an economic agenda to fix the economy’s ills.
In some sense, that’s OK right now. The recovery has taken a step forward this year and we no longer need a big jobs package to save the economy (although more infrastructure spending would help). But during the beginning of the Obama presidency that wasn’t the case. Then, we did need a big jobs plan, but Republicans offered the same supply-side ideas they’re proposing now. Based on Smith’s comments, it seems the GOP was aware of this too.
By: Danny Vinik, The New Republic, October 23, 2014
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