“Focus Should Be On Jobs”: Ben Bernanke Clearly Explained What’s Still Wrong With The Economy
In recent congressional testimony, Federal Reserve Chairman Ben Bernanke clearly explained what’s still wrong with the economy, outlined the Fed’s thinking on monetary policy and strongly implied that fiscal policy is still off base. His account and policy recommendations reflect mainstream economic thinking – and, thus, run counter to much of the economic doctrine that’s driving Republican budget policies.
Here’s how Bernanke sees the economy: though payroll employment has expanded by about 6 million jobs since its low point and unemployment has dropped by about 2.5 percentage points from its peak, the job market remains weak overall. I couldn’t agree more.
Bernanke points to the same indicators I would. The unemployment rate is still too high, too many of the unemployed have been looking for work for more than six months, too many people have stopped looking at all while job prospects remain dim, and nearly 8 million people are working part time even though they’d prefer full-time work. I’m glad to see him emphasize how “extraordinarily costly” this situation is:
Not only do [high levels of unemployment and underemployment] impose hardships on the affected individuals and their families, they also damage the productive potential of the economy as a whole by eroding workers’ skills and – particularly relevant during this commencement season – by preventing many young people from gaining workplace skills and experience in the first place. The loss of output and earnings associated with high unemployment also reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur.
While unemployment is still a major concern, inflation isn’t. Therefore, the Fed is appropriately interpreting its “dual mandate” to foster both “maximum employment” and “price stability” as requiring “a highly accommodative monetary policy.” That means keeping its short-term interest rate target as low as possible until unemployment falls closer to normal long-term levels and monitoring its program of purchasing longer-term assets – as long as inflationary expectations remain low. As the Fed notes, this policy carries some risks, but the risks and costs of continuing high unemployment are far greater.
Republicans, in contrast, want to remove “maximum employment” from the Fed’s policy concerns. They seem to see our most pressing problem as the possibility of future inflation, not the reality of current high unemployment. The Republican chairman of the Joint Economic Committee, where Bernanke testified, wants to replace the dual mandate with a single mandate for long-term price stability. Even some conservatives recognize that, during major recessions, that’s a recipe for disaster. An even more extreme policy – a return to a gold standard – made it into the 2012 Republican platform.
On fiscal policy, Bernanke recognizes that recent policy decisions have tilted too far toward short-term budget austerity, while largely ignoring longer-term budget challenges. He neither shared Republicans’ disdain for stimulus policies nor endorsed their flirtation with “expansionary austerity” arguments.
Federal fiscal policy, taking into account both discretionary actions and so-called automatic stabilizers, was, on net, quite expansionary [emphasis added] during the recession and early in the recovery. However, a substantial part of this impetus was offset by spending cuts and tax increases by state and local governments, most of which are subject to balanced-budget requirements, and by subsequent fiscal tightening at the federal level.
While too much fiscal restraint has hampered the economic recovery, policymakers have done little to address longer run fiscal challenges that will begin to reappear later in the decade. Bernanke’s counsel:
Importantly, the objectives of effectively addressing longer-term fiscal imbalances and of minimizing the near-term fiscal headwinds facing the economic recovery are not incompatible. To achieve both goals simultaneously, the Congress and the Administration could consider replacing some of the near-term fiscal restraint now in law with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run.
By contrast, the House Republican budget goes full bore on deficit reduction, starting immediately – jobs be damned.
By: Chad Stone, U. S. News and World Report, May 24, 2013
“Republican Rebranding”: Recent History Tells Us That Victory Isn’t Born Of Subtle Ideological Repositioning
The Republican “rebranding” effort may be on temporary hiatus as all the party’s factions come together in the vain hope that they may finally have something to impeach Barack Obama over, but as soon as these various non-scandals, faux-scandals, and mini-scandals fade, the GOP will surely get back to bickering over how it can pull itself out of its electoral doldrums. In wondering where they might go, The Atlantic‘s Molly Ball does the logical thing and seeks out some veterans of a prior party rebranding, the Democratic effort of the late 1980s and early 1990s, centered around the Democratic Leadership Council. Their take isn’t too surprising—they think what the GOP needs now is to do what they did then. But I think there’s an important point missing from this discussion and the way we talk about this history. The story everyone tells is that there are two paths to take, one of which leads to failure and one to success, and the argument is over which is which. Should the party be more true to its philosophy and sell that philosophy better, or should it reorient itself to respond to changing times? Here’s how Ball’s article closes:
Watching the GOP’s struggles, former DLCers say they recognize all the old symptoms—the alibis, the search for a procedural panacea, the party committee dominated by diehards. But on the question of whether the Republican Party has just been through its version of 1988, they’re not so sure. As Will Marshall put it: “They know they have a political problem—that’s obvious. But I don’t think they’ve come to grips with the fundamental issue, which is their governing philosophy. I think they’re going to have to lose one more.”
Sounds reasonable enough. But I think the degree to which political success comes from the public agreeing with you on issues is being dramatically overstated. If you look at the ups and downs of the parties over the last 20 years, a couple of other factors—timing, and what your opponents do—matter a whole lot more.
Let’s quickly run over this history, starting with the Democrats’ first revival, with the election of Bill Clinton in 1992. Was it important that Clinton was a centrist Democrat who sought to neutralize the party’s electoral problems on being seen by white voters as too solicitous of black people and too soft on crime?1 Sure. But had the country not been in a recession in 1992, that wouldn’t have been enough. And if that was a Democratic revival that went beyond one guy getting elected, it didn’t last very long; two years later, Republicans took over both houses of Congress.
That brings us to the opposition factor. After the Gingrich Revolution, voters got to see the new version of the Republican party, and they were completely turned off. In 1996, Clinton ran one ad after another featuring pictures of Bob Dole and Newt Gingrich together to taint Dole with the stain of the unpopular House Speaker. But what got him re-elected, more than anything else, was the humming economy. We could argue about how much credit he deserved for it, but the importance it had was undeniable, and it wasn’t a judgment voters were making about his New Democrat philosophy that got him a second term.
Then four years later, despite all that New Democrat repositioning, George W. Bush gets elected and the Democratic Party is back in the toilet. And what brought them back? Was it yet another repositioning? Nope. It was George W. Bush. The abysmal failure of his presidency was what allowed Democrats to win back both houses of Congress in 2006. Then in 2008, Barack Obama got elected because of both a continued rejection of Bush and the economic meltdown.
My point is, all of this back-and-forth happened despite any ideological movement that was going on within each party. Right now the Republicans are indeed grossly out of step with the public on issues. But they were just as out of step in 2010, when they won a huge victory in the midterm elections. It isn’t that issues don’t matter, but a lot of the ideological judgments voters make are relative. The Democratic party is benefiting from the fact that Republicans look like (and are!) a bunch of reckless, irresponsible extremists. Could they benefit from becoming more sane? Sure. But given the right circumstances, they can win even if they get no less crazy than they are right now. If you’re in the opposition and the president’s policies fail, you’ll be rewarded; if they succeed, you’ll be in trouble (which, of course, is why Republicans have worked so hard to make sure Obama’s policies fail). Nobody is going to be hailed as a brilliant party strategist for saying, “We just need to wait for things to turn in our favor, and everything will be OK.” But that’s probably the truth.
1If you’re too young to remember the 1992 campaign, Google “Ricky Ray Rector” and “Sister Souljah” to see what I’m talking about.
By: Paul Waldman, Contributing Editor, The American Prospect, May 24, 2013
“Rewarded With Media Attention”: Code Pink Heckler Was Just Plain Rude And Disrespectful
It says something when the president’s handling of a heckler becomes a story in and of itself, especially when that story is a sideline to a very important and substance-filled speech about the future prosecution of terrorists and the use of unmanned drones. And what it says isn’t good.
President Obama was interrupted several times by a woman (later identified with being with the left-leaning group Code Pink) who badgered him with questions about closing the detention facility at Guantanamo Bay. This is an important question, to be sure, and Obama has yet to follow through on a campaign promise to close it. But yelling at the chief executive – no matter who he is or what you think of him – in the middle of a speech is just rude. The fact that she did it while he was in the middle of addressing that very question is even more irritating. And it exposes what the true motivation was on the part of the protester: to draw attention to herself.
Obama handled it well, acknowledging her presence and her questions (an unnecessary concession to anyone who disrupts for the sake of disrupting) and finally reminding her that free speech means that she needs to listen, as well, while he is talking. The woman undermined her own legitimate cause by making it more about herself and the theater of it all than about the issue itself. And that is a theme that is becoming increasingly pervasive.
Court-watchers are horrified that convicted murderer Jodi Arias was allowed to give interviews while the jury was still deliberating on her (yet undetermined) penalty. That’s an understandable emotion – who wants to hear from someone found guilty of a brutal killing? But when the media (and viewers) turn the criminal justice system into a three-act play, we can’t be shocked if one of the main characters wants to deliver a closing soliloquy.
The hearings on Capitol Hill over a series of controversies – some far more serious than the others – have also become low-grade theater, with the accusations, rhetoric and character assessments dominating the process. The sheer soap opera tone of it all threatens to overshadow the very serious and important role of Congress in overseeing the executive branch. But the setup of the modern system, in which everything is televised, 24/7, promotes the idea of government as theater.
As for Obama and his heckler, how sad that the issue has become not why an adult person would behave so rudely, denying the president the right to speak in the name of the First Amendment, but how the president handled the situation. It’s unfortunately become acceptable – or at least, accepted – for grown people to scream at hosts at town hall meetings, shout over people espousing opposing viewpoints on TV, and even to interrupt the president of the United States while he is delivering a formal speech on a deadly serious topic. Most of us learned at the age of about four that such behavior would be punished, and so stopped doing it. Such behavior is now rewarded with media attention.
By: Susan Milligan, U. S. News and World Report, May 24, 2013
“Crossing The Line”: Tea Party Group Protesting IRS Has History Of Questionable Political Involvement
Tea Party Patriots, originally formed as a 501(c)(4) non-profit corporation in 2009, has a history of questionable electoral activity. Nevertheless, as one of the largest of the movement’s national factions, it is taking advantage of the so-called IRS scandal to re-ignite the anger of Tea Partiers, encourage their (false) sense of victimhood, and increase their ranks.
Dubbed “Rein in the IRS,” nationwide rallies were organized to protest IRS scrutiny of Tea Party non-profit applications. The announcement, posted on the group’s website Monday, called for “anyone and everyone to protest the IRS’ complete abuse of power” at noon local time on Tuesday. Dozens of local Tea Party Patriots chapters around the country emailed their members about the protests.
The Tea Partiers claim that “the IRS has waged a three-year war against the Tea Party, harassing our groups and even auditing our individual members. This abuse of power is unacceptable and un-Constitutional, and it must stop.” No mention was made of the Inspector General’s findings that that not a single Tea Party group has been denied 501(c)(4) non-profit status, and that more than two thirds of the scrutinized Tea Party-like groups had engaged in political activity that would usually disqualify them.
The effort is also being used to fuse anger over several different political issues, from the Affordable Care Act to immigrants. For instance, in sample Letters to the Editor they distributed, the group links the IRS controversy with their attack on comprehensive immigration reform. “The IRS’s abuse of power highlights why the Senate needs to slow down with its amnesty bill. We simply cannot trust bureaucrats to make the right decisions. Immigration policy is too complex and too important for us to delegate to a group of bureaucrats who may be pursuing an agenda that doesn’t match Americans’ best interest.”
It should be noted that until late Monday, the Tea Party Patriots were using the official group website listed on their IRS form 990, and the resources of their 501(c)(4), plus their network of local groups—many of which have filed for 501(c)(3) or 501(c)(4) status)—to organize the protests against the IRS. Suddenly Monday evening, after a day of soliciting volunteers to organize anti-IRS protests, all traffic to the group’s domain name teapartypatriots.org was directed to the group’s political action committee, The Tea Party Patriots Citizen Fund (http://teapartypatriotscitizensfund.com), which features a “protest the IRS” page alongside a photo of Tea Party Patriots co-founder, Jenny Beth Martin.
The new PAC was formed in January 2013. Despite the current enmeshing of the 501(c)(4) and the PAC on the IRS protests, forms filed with the Federal Elections Commission curiously state that the PAC has no connected organization.
The sudden crossover to the group’s political action committee may be at least a tacit omission of questionable activity for a 501(c)(4) non-profit organization. It also begs the question as to why any Tea Party groups so focused on politics would want to be a non-profit rather than a PAC.
Such concern about crossing the line and engaging in political activity was absent from the Tea Party Patriots, Inc. a year ago when the group threw its support behind Wisconsin governor Scott Walker in his recall election.
As IREHR noted last year, Tea Party Patriots, Inc., which registered with the IRS as a 501(C)(4) non-profit organization, may have run afoul of its tax exempt status with this electoral activity. Federally registered non-profit organizations with a 501c4 status are prohibited from devoting a majority of their energy and resources to support electoral campaigns.
On April 29, 2012, local Tea Party Patriots groups across the country voted 98 percent to 2 percent to throw all their energy and resources into Wisconsin for the recall elections. “We are deploying hundreds of volunteers into each of the targeted recall districts,” noted Tea Party Patriots co-founder Jenny Beth Martin in an email to supporters. “That’s 4,000 patriots going door to door and making phone calls” she added.
Tea Party Patriots brought activists to Wisconsin and did door-to-door canvassing, and had others make calls from their homes and spread the word on social media. Some of those activists were sponsored, with their costs covered by Tea Party Patriots.
At times, Martin and other Tea Party Patriots leaders have tried to suggest that the group was just engaged in GOTV (Get Out the Vote) efforts or some form of civic engagement, other times they’ve told their supporters that they’re directly intervening politically: “Tea Party Patriots—in conjunction with other local and national Tea Party groups—will spearhead efforts to help Walker and other candidates.”
There is also a question as to whether the funds of the group are going to “social welfare” as required. In 2010, the organization raised $12 million in fiscal 2010. But only about $3 million of that went to its “social welfare” mission, according to an IRS 990 form filed in May 2012. For fiscal year ending May 31, 2012, Tea Party Patriots raised over $20 million, but spent just $5.9 million on program service. Millions of dollars went to pay professional telemarketing firms, extensive travel costs, and legal fees from suing other Tea Party groups over control of the “Tea Party” brand.
Tea Party Patriots leader Martin has had her fair share of troubles with the IRS before. As noted in Tea Party Nationalism, according to court documents, Martin and her husband, Lee Martin (who served at the group’s “assistant secretary” and was intimately involved in the group’s financial matters), owed over $680,000 in tax debt, including over half a million dollars to the Internal Revenue Service, when the pair filed for bankruptcy in August of 2008.
Whether or not Tea Party Patriots, one of the largest national factions, can turn this scandal into a chance to regain lost ground will, in some measure, depend on the reception their protests receive by an informed public.
By: Devin Burghart, The National Memo, May 23, 2013
“Pulitzer Prize Creative Fiction”: Thomas Pickering Dissects Congressional Follies, Media Coverage, And ‘Cover-Up’ Charges
No doubt the degraded quality of congressional oversight astonishes Thomas Pickering, the distinguished American diplomat who oversaw the State Department’s Benghazi review board — although he tries not to say so too directly. For his demanding and difficult effort – only the most recent in a long history of public service under both Republican and Democratic administrations — Pickering has found himself under sustained attack by Rep. Darrell Issa (R-CA), the excitable partisan who chairs the House Government Reform Committee.
Last Friday, Issa subpoenaed Pickering to deliver a taped deposition to the committee behind closed doors, without offering a public chance to answer the charges already lodged by Republicans against the Accountability Review Board report authored by Pickering and retired admiral Mike Mullen.
Immediately prior to this latest skirmish, Pickering spoke with The National Memo about the ARB report, political maneuvering by the administration’s adversaries, and media coverage of the Benghazi “scandal.” Asked whether he had ever experienced or seen anything resembling Issa’s conduct, Pickering said, “No, I haven’t.…I suspect that on this particular issue, this guy [Issa] is driven by whatever will maximize his capability to be tough on the administration. This seems to be one effort he’s kind of landed on to make that happen. But I’m only guessing here,” he added.
Meanwhile, Pickering hasn’t noticed much attention being given on Capitol Hill to the extensive recommendations that he and Mullen made to improve security in dangerous posts around the world. “I can’t tell you whether anyone [in Congress] has sat down and examined them and wanted to have hearings on [the recommendations]” – instead of the notorious “talking points” developed by the White House last September. “So far I haven’t seen any evidence of that.”
For Pickering, the subpoena issued by Issa must be especially confusing. Ever since the Government Reform committee announced its planned hearings on Benghazi last winter, its leadership has repeatedly failed to establish a time when the review board chairman — perhaps the most important witness – could testify. Although at first Pickering says he thought they were “genuinely interested” in getting his testimony, he became “increasingly less inclined” to appear before the committee “as the thing became more politicized.”
Before the May 8 hearing, he made a final effort to arrange to testify publicly. But via the White House and the State Department, he learned that his presence was not desired. Before Issa issued his subpoena to Pickering on Friday, he and Mullen had sent a letter requesting an opportunity to testify publicly – and said that they are “not inclined to give testimony in a closed hearing before that [happens].”
Having listened to Issa and others take potshots at him, Mullen, and their report for several weeks, Pickering wants to rebut some of the misinformation they have propagated, for the record. He wants to address claims that the military “could have relieved or in fact changed the situation by sending men or equipment or both the night of the event” – and specifically assertions by Gregory Hicks, the former Deputy Chief of Mission in Libya, that four Special Forces soldiers should have been dispatched to Benghazi from Tripoli. Pickering says those four officers would have arrived in Benghazi too late to help and were needed in Tripoli anyway to treat the wounded, who were brought there after the Benghazi attack.
“The third question that has come up,” said Pickering, “is why we didn’t investigate the Secretary of State” and her deputies. The “simple and straightforward answer” is that “they played no role in the decision making which was relevant to the preparations for meeting the security crisis in Benghazi,” and the role they did play on the night of September 11 “was fairly clearly portrayed to us by other people who attended the meetings, and we had no questions about it. We thought that what they did made sense and fit exactly what should have been done.”
What Pickering may mention, if and when he does testify in public, is the role of Congress, which he considers primarily responsible for underfunding the protection of diplomatic posts abroad. Fortunately, legislative idiocy has not prevented the redirection of almost $1.5 billion in funds to improve security in dozens of posts, both physically and with additional security officers and Marine guards.
Aside from the weak oversight of Congress, Pickering also seems critical of the media coverage of Benghazi. In preparing to chair the Accountability Review Board, Pickering said, he “asked for, received, and read all of the press reporting that the State Department could find and put together for me, covering the events in Benghazi and the aftermath, from the initial attack right through to the day we submitted our report.”
He undertook this required reading because “I thought there would be useful ideas, leads, analyses that had to be taken into account. What I found in general was a very significant amount of wild, and I think fictionalized, made-up kind of information…
And in effect much of this alleged a kind of betrayal of those people, in one way or another, all of which I thought bordered on Pulitzer Prize creative fiction but didn’t bear any relationship to what we were able to determine, both from the documentary evidence, from the extensive film footage that we had an opportunity to review carefully, and of course the interviews we had with people who were on the spot.” Indeed, Pickering believes that the ARB report is “the best compilation I’ve seen of what actually took place.”
Pickering won’t comment on the “talking points” controversy, which wasn’t relevant to the ARB investigation. But he resents broader allegations by the Republicans and their allies in the media — in particular “the allegation that I would be engaged in a cover-up…I hope people feel that I’m a more honest and hopefully more dedicated public servant than that. “
“Our interest was to do everything we could to find out what happened,” Pickering said, “and then on the basis of that [investigation] to make as clear recommendations as we could to help the State Department and other agencies so that it wouldn’t happen again. That was our motive, that was the driver, and that’s where we went. Any effort to cover up would have been a betrayal… We did everything we could in terms of the national interest in saving future lives.” He believes it is vital to defend the credibility of the report and prevent it from being undermined. “That’s why I’m interested in talking to the American public now, because I think the report is a good report. And so far I haven’t heard anything that I believe we didn’t consider carefully.”
As for his critics, “I would hope they would read the report. If they have, maybe they need to read it again.” He laughed. “Both Mike Mullen and I believe that it’s important that we have this opportunity, either through Chairman Issa or some other committee, to deal with the people who have concerns about the report and tell them how we were thinking and why we reached the conclusions we did.”
By: Joe Conason, The National Memo, May 19, 2013
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