“Uh Oh”: With GDP Growing Strongly, Republicans’ Economic Dilemma Gets More Complicated
We got the latest quarterly economic growth numbers today, and they’re pretty striking:
The U.S. economy grew at its fastest rate in more than a decade between the months of July and October, helped by a surge in consumer spending, according to government data released Tuesday morning.
The Commerce Department said gross domestic product growth hit an annualized rate of 5 percent in the third quarter, revised upward from the previous estimate of 3.9 percent. Not since 2003 has the economy expanded so quickly.
The third quarter performance, coupled with 4.6 percent growth in the second quarter, amounts to the best sign since the Great Recession that the U.S. recovery has hit its stride.
The simple way to look at the political implications of these numbers is to say that it’s good for Democrats, since there’s a Democrat in the White House. And though it’s extremely unlikely for growth to stay over 5 percent for any length of time — it’s been 30 years since we had more than two consecutive quarters at that level — if both growth and job creation remain strong for the next two years, it’ll be somewhere between difficult and impossible for a Republican to win the White House in 2016, since the state of the economy swamps every other issue in presidential campaigns.
That’s the simple way to look at it, and it’s not wrong. But there’s another layer to the state of the country’s economy that could make things more complicated for both parties. It has to do with the difference between the two numbers that get the most attention — job creation and GDP growth — and the rest of how Americans experience their economic and working lives.
If you listen to the way President Obama talks about the economy these days, you’ll notice that he always says both that things are going well and that “we have more work to do.” It’s a way to assure people that he understands that they don’t feel secure and that many may not have gotten back to where they were before the Great Recession. On the other side, for a long time Republicans would say, “Where are the jobs, Mr. President?” But they can’t say that anymore, nor can they complain about growth being weak.
The economic debate of 2016 will start in about a year from now. While there could certainly be a downturn between now and then, let’s assume for the moment that the momentum continues. How could Republicans make a case that although growth and job creation are strong, all is still not well? Even if that’s what Americans feel, it would be a difficult case for Republicans to make, because those top-line figures are what they generally point to when they discuss the economy. What else can they build their case on? They aren’t going to talk about the stock market or corporate profits, not only because those have both performed spectacularly during the Obama presidency, but because they know that ordinary people don’t much care.
And they aren’t going to talk about the things that really make people worried. The most important fact of the American economy in the past few decades may be its failure to produce rising wages, but that’s not something Republicans are particularly concerned with. Their economic focus is usually on business owners — the taxes they pay, the regulations they have to abide by, and so on. Even if you believe that helping those owners is the best way to help the people who work for them, you’re going to have a hard time finding Republicans who want to talk about something like wage stagnation.
And the arguments Republicans always make against Democratic proposals aimed directly at workers, like increasing the minimum wage or expanding health coverage, are that the proposals will cost jobs and hinder growth. So they can’t turn around and say, “OK, so growth and job creation may look good, but the real problem is what people earn and how they’re treated on the job.” That’s just not in the Republican DNA.
If there’s an accompanying problem for Democrats, it’s that voters could look at the Obama years and say that yes, it’s now a lot easier to find a job, but the jobs don’t pay what they should or offer the same security and dignity they used to. The American economy is a much crueler place than it once was, and two terms of a Democratic administration haven’t done enough to reverse that evolution.
That could be a genuinely biting critique. But fortunately for Hillary Clinton (or whoever the 2016 Democratic nominee is), Republicans are the last ones who are going to make it.
By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, December 23, 2014
“Who Gets Overtime Pay”: The Next Policy To Help The Middle Class That Republicans Will Oppose
Lately, Democrats have been searching for new ways to appeal to working class and middle class voters on economic issues. They know their basic economic perspective is popular, but they worry that the few specific policies they advocate, like increasing the minimum wage, don’t touch enough people’s lives. They also worry about being seen as advocates for the poor but not the middle class. So they’re looking for ideas.
But there’s one policy change already in the pipeline that looks as though it could be the next big Democratic economic push. It’s got everything: the potential to affect millions, guaranteed opposition from business groups, and the specter of another executive action from President Obama. That last point means that the change can be made as soon as the administration wants, and that Republicans will be apoplectic when it happens.
It’s about who gets overtime pay, which has all but disappeared from American workers’ paychecks. But maybe not for long.
A little background: Under the Fair Labor Standards Act, workers are supposed to be paid overtime (time and a half) if they work more than 40 hours a week. That doesn’t apply to executives and managers, or workers whose salaries exceed a certain threshold. The threshold is what’s at issue; it has only been raised once since 1975. The current threshold is $455 a week, or $23,660 a year — under the poverty level for a family of four. If you make more than that, you’re ineligible for overtime pay. Today only around one in ten American workers is eligible for overtime pay, compared to 65 percent of workers who were covered in 1975.
So what some are proposing is to raise the threshold back to something like what it used to be. Raising it to what it was in 1975, adjusted for inflation, would mean a level of $984 a week, or $51,168 per year, which is close to the median family income. According to the Economic Policy Institute, at that level over six million Americans would become eligible for overtime pay. Raise it a bit higher and you could cover millions more.
This March, President Obama instructed the Labor Department to reexamine the rules and propose a revision, and the department’s decision should be coming some time soon. And an organized campaign to promote it looks to be developing. Today in The Hill there’s an op-ed arguing for changing the overtime rules by Nick Hanauer, a liberal billionaire venture capitalist who could become an important figure in the economic arguments we have over the next few years. Unlike many other major political funders like the Koch brothers, Hanauer doesn’t just give other people money — he’s putting himself out as an advocate.
Many people first heard of Hanauer a few months ago when he wrote an open letter addressed to “my fellow filthy rich,” challenging the notion that the wealthy got where they are because of their unusual virtue and telling them that they had to start working to combat inequality in America). It looks like Hanauer wants to be a player in this debate, and he has the money to make an impact.
So don’t be surprised if a lot of elected Democrats suddenly start talking about overtime rules. This issue is more than an arcane piece of labor law. It gets to the heart of the insecurity and dissatisfaction Americans feel with their economic lives and prospects. It’s been repeated to the point of cliché that Americans feel like they’re working harder but not getting ahead. The lack of overtime is one key reason why. It’s one thing to work 50 or 60 hours a week and know that it means you’ll have extra money in your pocket. But if your boss tells you to come in on Saturday to finish up those TPS reports and you get nothing from it, it’s hard not to feel powerless and exploited.
For Democrats looking for specific policy moves that will demonstrate their desire to help middle-class Americans, the overtime pay issue looks like an excellent candidate, not only because it would mean more money for regular people but also because it would push the dynamics of power, compensation, and dignity a little bit back in the direction of workers.
Republicans will argue that raising the threshold infringes on the prerogatives of business owners, and that Obama is a tyrant for using the regulatory process to make the change. But I’m guessing Democrats would be happy to have that debate, so they can show that they’re trying to help the middle class. And at the end of the debate, the administration can issue the rules, and there’s nothing Republicans will be able to do to stop it.
By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, December 18, 2014
“Our Democracy Is Dying”: For All Intents And Purposes, Our Government Is Merely The Handmaiden Of Corporations
In case anybody hasn’t noticed, democracy in America is dying now. This isn’t an overstatement; it’s a fact. Corporate interests dominate our politics so much at this point that our government, for all intents and purposes, is merely its handmaiden. Whatever Wall Street wants, Wall Street gets. Corporatism is the new order of the day. One political party stands for it; the other political party won’t stand against it.
The word inertia means the tendency of an object to move in whatever direction its been moving until and unless there’s the introduction of a counterforce, and the Democratic Party is simply not providing the necessary counterforce to the corporatist agenda so exalted by the Republicans. Such a possibility is undermined by Democrats with corporatist agendas of their own. Watch them trying to sideline Elizabeth Warren as I write this. It’s all gotten so terribly predictable.
Some people are pussyfooting around the word, but others are realizing it’s time to say it: we need a peaceful revolution in America. In the words of President John F. Kennedy, “Those who make peaceful revolution impossible make violent revolution inevitable.” The American people have simply got to stand up now. This isn’t the time for any of us to go mute – whether it’s those who feel there’s no point in saying anything, or those who feel there’s too big a risk in saying anything. And you know who you are.
The social revolution we need is comprised of two major categories: What we say No to, and what we say Yes to. In the American Revolution, with the Declaration of Independence we said no to what we would no longer accept (living under British rule). In ratifying the Constitution, we said yes to what we would do instead (form our own system of government). The template was genius then, and it’s genius now. Today, we need to say no to a situation in which our government is bought and paid for, and yes to a return to democracy. Nothing short of an historic, nothing namby-pamby-about-it, serious social movement will take us out of our free fall and set America back on the track to real liberty. Today, lobbyists – not the people – are in control. And that is not freedom.
The situation has shaken out – and thank you, Senators McConnell and Reid for adding to the disaster of Citizens United by upping the amount people can contribute to political parties; that really helps (not) – in such a way that nothing short of a Constitutional Amendment will stop the big money flowing into our political campaigns like poison into the veins of our democracy. The best bet now — given the resistance within both major parties to seriously taking down the dastardly “For Sale” sign posted on the front yard of our government — is for the people ourselves to call for a Constitutional Convention, state by state. And that’s what has started to happen.
If something inside you says, “That’s true,” then I hope you get active. We’re in serious straits now and things won’t get better by themselves. In denial about this? Go stand over there. Too cynical to think we can change things? Go stand over there. Too sedated to be upset yet? Go stand over there. An apologist for the system? Go stand over there. Ready to kick ass? Go to http://www.wolf-pac.com/ and express yourself big time. Work with that organization, or with any other you like. But this isn’t a time to sit on the sidelines. Our democracy is sick – it is really, really sick — and all of us are needed now to nourish it and make it well.
By: Marianne Williamson, The Blog, The Huffington Post, December 14, 2014
“Congress, Deal-Making, And How The Sausage Gets Made”: If You Want Bipartisan Cooperation, This Is What It Looks Like
The closer one looks at the $1.1 trillion spending package that barely cleared the House last night, the easier it is to notice its flaws. The so-called “CRomnibus” is filled with giveaways, rollbacks, and handouts that almost certainly don’t belong there.
Kevin Drum made a compelling case yesterday that many critics have overlooked an important, big-picture detail: if you want bipartisan cooperation, this is what it looks like.
This is one of those things that demonstrates the chasm between political activists and analysts on the one side, and working politicians on the other. If you take a look at the bill, it does indeed have a bunch of objectionable features. People like me, with nothing really at stake, can bitch and moan about them endlessly. But you know what? For all the interminable whining we do about the death of bipartisanship in Washington, this is what bipartisanship looks like. It always has. It’s messy, it’s ugly, and it’s petty. Little favors get inserted into bills to win votes. Other favors get inserted as payback for the initial favors. Special interests get stroked. Party whips get a workout.
That’s politics. The fact that it’s happening right now is, in a weird sense, actually good news. It means that, for a few days at least, politics is working normally again.
I think that’s largely correct. The old line about no one wanting to see how the sausage gets made applies to lawmaking for a reason – neither process is pretty. For many Americans – including plenty of Beltway pundits – there’s a sense that Democrats and Republicans can get stuff done if they just sit in a room and agree to work out a deal.
And here we have an excellent example of what happens when the parties do exactly that.
But I think there’s one other relevant detail to this that I’d add to the mix.
While it’s never pretty when these bipartisan, bicameral talks produce a thrown-together solution, what’s a little different about 2014 is that Congress, by historical standards, really is broken to an unusual degree. The legislative branch still exists, of course, but its capacity for governing has atrophied to a level with no modern precedent.
That’s relevant in this context for one simple reason: lawmakers realized that this spending bill was an extremely rare opportunity to advance their policy goals. Some of those goals had merit, and some were ridiculous, but in either case, members of Congress saw something unusual: a shortcut.
We all know that the usual legislative process is long and arduous. It involves a series of choke points – hearings, committees, amendments, chambers, etc. – all of which make failure easy. Apply that to the contemporary Congress, which struggles to complete even routine tasks, and members understand that their proposals are almost certain to die, regardless of popularity or merit.
But if a lawmaker can get that proposal squeezed into a spending package like this, all of a sudden, the choke points disappear. If the shortest distance between two points is a straight line, the “CRomnibus” is, in legislative terms, the shortest distance between drafting and law.
To be sure, this isn’t an entirely new phenomenon, but my point is, the need to take advantage of these rare opportunities is more acute when the usual legislative process has broken down to such a farcical degree.
This was members’ only chance to advance their ideas. Are we surprised they exploited it?
By: Steve Benen, The Madow Blog, December 12, 2014
“The Problem Of Political Precedents”: When Failure Is Rewarded, It Encourages More Failure
In a democracy, fear is supposed to be a powerful motivator for policymakers. There’s a constant realization that there’s always another election coming, and those who want to keep their jobs – and avoid voters’ wrath – will have to be responsible stewards of the public trust.
But what if these norms start to break down? What if the incentives baked into the cake prove to be faulty?
Kevin Drum made a comment last week that struck a chord, noting that Americans seemed inclined to blame Democrats, not Republicans, “for the rising dysfunction of the federal government.”
[This] is especially galling for Democrats, but it’s a win for Republicans and yet another sign of change in the way Washington is likely to work in the future. Republicans have discovered that a sufficiently united party can obstruct everything and anything but largely escape blame for the resulting gridlock.
This lesson has not been lost on Democrats, and it bodes ill for the future regardless of who wins our next few elections.
I think that’s correct and it’s a point that’s not repeated nearly enough.
In a democratic model, the last couple of years have been a mess of historic proportions. Republicans, consciously or not, decided to roll the dice – they would ignore the 2012 election results, refuse to govern, and kill measures regardless of their merit, popular support, or bipartisan appeal. They would shut down the government. They would eschew compromise. They would ignore calls to present policy solutions of their own. They would create the least productive Congress in modern American history.
And then they would wait for the American people to give them a reward.
Which voters delivered yesterday with a lovely bow on top.
When there is no accountability in a political system, there is no incentive for even well-intentioned policymakers to behave responsibly. It seems quite twisted: an unpopular party with unpopular ideas failed miserably at basic governance, and was rewarded handsomely for its efforts. The process isn’t supposed to work this way, and yet we now know it works exactly this way.
The resulting precedent is more than a little discouraging. When failure is rewarded, it encourages more failure. When obstruction is rewarded, it encourages more obstruction. When radicalism is rewarded, it encourages more radicalism. When a refusal to compromise is rewarded, it means politicians will be led to believe they, too, should refuse to work on bipartisan solutions.
It’s not a recipe for sound governance.
By: Steve Benen, The Maddow Blog, November 7, 2014
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