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“A Marco Rubio Administration During A Recession? Depressing”: A Rudderless Economy Drifting Onto The Rocks

Since the seventh anniversary of the American Recovery and Reinvestment Act – the “stimulus” – was this week, it was a good time to ask, “Who Do You Want In The White House When The Next Recession Comes?”

On Friday, Ed Dolan, writing in Nouriel Roubini’s EconomMonitor, answers: Definitely not Marco Rubio.

Dolan fleshes out the argument that our post made earlier this week about the kind of economic decision-making any rational person would want to have in the White House in the event of an economic downturn. And he concludes that in the case of Rubio (and other Republicans, for Dolan notes Rubio’s views are “widely shared” within the GOP), “the federal government would be legally bound to allow the economy to drift rudderless onto the rocks.”

That’s because Rubio – and for that matter all of the Republican presidential candidates – don’t have a firm grasp of Economics 101.

If you remember your basic college econ course, you’ll know that the first line of defense against a recession is fiscal policy. When the economy goes into a slump, spending rises on unemployment compensation, food stamps, and other benefits. At the same time, tax receipts, which are linked to income, decrease. Because the spending increase plus the tax decrease automatically cushion the slump, economists call them automatic stabilizers.

If you’re a true Keynesian, automatic stabilizers aren’t enough. You add some discretionary fiscal stimulus in the form of road projects and maybe a temporary tax rebate. If the timing is right, that softens the recession even more and speeds the recovery.

But Rubio, as Dolan notes, is a staunch supporter of a balanced budget amendment to the Constitution. (So is Ted Cruz, Jeb Bush, Ben Carson and John Kasich.)

It sounds like a sensible idea, until you think about it. But then, you see that the idea of balancing the federal budget every year is nuts. It would mean that when the economy went into a slump, pulling tax revenues down, Congress would have to enact across the board emergency spending cuts to keep a deficit from emerging. The cuts would quickly hit jobs and household budgets. Consumer spending would fall, firms would cut output to fight ballooning inventories. Without the automatic stabilizers, a mild recession would turn into a tailspin.

But Rubio would not stop there, Dolan goes on to write. Rubio also wants to constrain the ability of the Federal Reserve to stimulate job creation – one half of its dual mandate to keep both unemployment and inflation low.

Here is what [Rubio] said about the Fed in this week’s South Carolina town hall:

That’s not the Fed’s job to stimulate the economy. The Fed is a central bank, it is not some sort of overlord of the economy. They’re not some sort of special Jedi Counsel that can decide the best things for us.

The Fed is a central bank. Their job is provide stable currency and I believe they should operate on a rules based system. They would have a very simple rule that determines when interest rates go up and when interests rates go down.

So just what is this “simple rule” Rubio is talking about? He provides the details elsewhere. His rule would replace the Fed’s dual mandate with a single mandate to prevent inflation. The Fed would be required to raise rates to stop inflation during a boom, but it would be barred from doing anything when unemployment soars during a recession.

That is why it behooves us to ask pointed questions of the presidential candidates about what they would do if the U.S. faced an economic downturn on their watch. Chances are, if they are reading from the same economic playbook that Marco Rubio uses, they would turn the next recession into the next Great Depression.

 

By: Isaiah J. Poole, Editor of OurFuture.org, Campaign For America’s Future, February 19, 2016

February 22, 2016 Posted by | Balanced Budget Amendment, Economic Policy, GOP Presidential Candidates, Marco Rubio | , , , , , , , , | Leave a comment

“Habitual Cruelty To Others”: Ranting On Robin Williams, Limbaugh Exposed A Hole In His Own Soul

Having infuriated millions of Robin Williams fans with insensitive remarks on the late actor’s suicide, Rush Limbaugh now blames the “liberal media” and “despicable leftists” for distorting his innocent message.

This is an old dodge for Limbaugh. Yet however he parses his language, there can be no doubt that he sought to exploit a tragic event for what he likes to call “political education.”  His attempt to brand Williams’ suicide with “the leftist worldview” was perfectly plain. And as usual, his alibi is plainly false.

In his original commentary on Williams, Limbaugh quoted Fox News – hardly a “liberal media” source even by his elastic definition – about the great comic’s possible motivations for taking his own life:

I mean, right here there’s a story on the Fox News website.  Do you know, it says right here, that the real reasons that Robin Williams killed himself are he was embarrassed at having to take television roles after a sterling movie career….He’d had some divorces that ripped up his net worth, and he had a big ranch in Napa that he couldn’t afford any longer and had to put up for sale, and a house in Tiburon that he couldn’t afford anymore.  This is all what’s in the Fox News story.

He had it all, but he had nothing.  He made everybody else laugh but was miserable inside.  I mean, it fits a certain picture, or a certain image that the left has.

Pursuing this tendentious theme, Limbaugh went on to mention the “survivor’s guilt” that Williams reportedly suffered over the early deaths of three close show-business friends, Christopher Reeve, John Belushi, and Andy Kaufman. “He could never get over the guilt that they died and he didn’t. Well, that is a constant measurement that is made by political leftists in judging the country,” he harrumphed, concluding with a few incomprehensible sentences about “outcome-based education.” (Even more oddly, Limbaugh promoted a wonderful appreciation of Williams in the Guardian by Russell Brand — an actor with very strong left-wing opinions.)

Still, his point was unmistakable: If you’re concerned about life’s unfairness – as Robin Williams, a dedicated lifelong liberal, certainly was – then you probably suffer from a dark and pessimistic worldview that may very well lead you to kill yourself.

Insofar as Limbaugh pretends to be educating the public, let’s school him by turning around his exploitative blather and putting him in the place of his rhetorical victim. A decade ago, when the radio talker’s addictive dependency on prescription painkillers was first exposed, it would have been easy enough to lampoon his behavior as an expression of his right-wing worldview.

Popping mouthfuls of oxycontin? He thought he could get away with it because of his wealth and status, like so many other millionaire crooks. Violating the narcotics code? He hates government and thinks he can ignore laws that inconvenience him, just like the Bundy Ranch gang. Publicly urging criminal prosecution of drug addicts while indulging the same weakness? He is just another moral hypocrite, like so many of his cronies on the right, from William Bennett to Newt Gingrich to… Rush Limbaugh.

As America watched Limbaugh struggle with his own personal issues, nobody tried to claim that he became a junkie because of his political attitudes. Indeed, most liberal commentators wished him a full recovery, even while noting his frequent failures of empathy. A few even suggested that he seize the opportunity to contemplate his habitual cruelty to others — and try to change.

Sadly, that never happened. If it had, then Limbaugh might have come to understand depression and substance abuse, which evidently killed Robin Williams, as illnesses rather than political or moral failing – exactly like the addiction that harmed Rush’s hearing and could have claimed his life. He might even have experienced an emotion so often mocked as “liberal” and too often absent from conservative moralizing:

Compassion.

 

By: Joe Conason, Editor in Chief, The National Memo, August 15, 2014

August 16, 2014 Posted by | Mental Health, Rush Limbaugh | , , , , , , , , | Leave a comment

“Who Wants A Depression?”: The Rich Believe That What’s Good For Them Is Good For America

One unhappy lesson we’ve learned in recent years is that economics is a far more political subject than we liked to imagine. Well, duh, you may say. But, before the financial crisis, many economists — even, to some extent, yours truly — believed that there was a fairly broad professional consensus on some important issues.

This was especially true of monetary policy. It’s not that many years since the administration of George W. Bush declared that one lesson from the 2001 recession and the recovery that followed was that “aggressive monetary policy can make a recession shorter and milder.” Surely, then, we’d have a bipartisan consensus in favor of even more aggressive monetary policy to fight the far worse slump of 2007 to 2009. Right?

Well, no. I’ve written a number of times about the phenomenon of “sadomonetarism,” the constant demand that the Federal Reserve and other central banks stop trying to boost employment and raise interest rates instead, regardless of circumstances. I’ve suggested that the persistence of this phenomenon has a lot to do with ideology, which, in turn, has a lot to do with class interests. And I still think that’s true.

But I now think that class interests also operate through a cruder, more direct channel. Quite simply, easy-money policies, while they may help the economy as a whole, are directly detrimental to people who get a lot of their income from bonds and other interest-paying assets — and this mainly means the very wealthy, in particular the top 0.01 percent.

The story so far: For more than five years, the Fed has faced harsh criticism from a coalition of economists, pundits, politicians and financial-industry moguls warning that it is “debasing the dollar” and setting the stage for runaway inflation. You might have thought that the continuing failure of the predicted inflation to materialize would cause at least a few second thoughts, but you’d be wrong. Some of the critics have come up with new rationales for unchanging policy demands — it’s about inflation! no, it’s about financial stability! — but most have simply continued to repeat the same warnings.

Who are these always-wrong, never-in-doubt critics? With no exceptions I can think of, they come from the right side of the political spectrum. But why should right-wing sentiments go hand in hand with inflation paranoia? One answer is that using monetary policy to fight slumps is a form of government activism. And conservatives don’t want to legitimize the notion that government action can ever have positive effects, because once you start down that path you might end up endorsing things like government-guaranteed health insurance.

But there’s also a much more direct reason for those defending the interests of the wealthy to complain about easy money: The wealthy derive an important part of their income from interest on bonds, and low-rate policies have greatly reduced this income.

Complaints about low interest rates are usually framed in terms of the harm being done to retired Americans living on the interest from their CDs. But the interest receipts of older Americans go mainly to a small and relatively affluent minority. In 2012, the average older American with interest income received more than $3,000, but half the group received $255 or less. The really big losers from low interest rates are the truly wealthy — not even the 1 percent, but the 0.1 percent or even the 0.01 percent. Back in 2007, before the slump, the average member of the 0.01 percent received $3 million (in 2012 dollars) in interest. By 2011, that had fallen to $1.3 million — a loss equivalent to almost 9 percent of the group’s 2007 income.

That’s a lot, and it surely explains a lot of the hysteria over Fed policy. The rich are even more likely than most people to believe that what’s good for them is good for America — and their wealth and the influence it buys ensure that there are always plenty of supposed experts eager to find justifications for this attitude. Hence sadomonetarism.

Which brings me back to the politicization of economics.

Before the financial crisis, many central bankers and economists were, it’s now clear, living in a fantasy world, imagining themselves to be technocrats insulated from the political fray. After all, their job was to steer the economy between the shoals of inflation and depression, and who could object to that?

It turns out, however, that using monetary policy to fight depression, while in the interest of the vast majority of Americans, isn’t in the interest of a small, wealthy minority. And, as a result, monetary policy is as bound up in class and ideological conflict as tax policy.

The truth is that in a society as unequal and polarized as ours has become, almost everything is political. Get used to it.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, July 10, 2014

July 12, 2014 Posted by | Economic Recovery, Economy, Monetary Policy | , , , , , , | 1 Comment

“Cruel Sanctimony”: Bugnut So-Called Reporter Makes Mental Health A Political Issue

I cannot write this the way I want. Doing so would invade the privacy of too many people. But I can’t be silent, either.

Last week, you see, President Obama spoke before a conference of mental-health advocates at the White House. It is necessary, he said, to remove the stigma of mental illness and make sure “people aren’t suffering in silence,” that they know they are not alone, but are supported by the rest of us as they face this challenge.

It would seem a plain vanilla thing to say. But in this endless era of smash-mouth politics, nothing is plain vanilla anymore.

So one Neil Munro, a “reporter” for the right-wing Daily Caller website, duly took exception. Under the headline, “Obama urges public to use government mental-health programs,” Munro in essence accused mental health professionals of making up illnesses. “In recent decades,” he wrote, “the professionals have broadened the definition from severe, distinct and rare ailments, such as schizophrenia and compulsive behavior, to include a much wider set of personal troubles. Those broader problems include stress and sadness, which are medically dubbed ‘anxiety’ and ‘depression’ by professionals.”

Munro was having none of that. “Americans,” he wrote, “have typically responded to stress and sadness by urging stoicism, hard work, marriage, prayer and personal initiative. …”

In other words, we were self-reliant. We toughed it out. And if I could write this the way I want, I would tell you in detail about a friend who was self-reliant. She toughed it out. Right up until she shot herself.

If I could write this the way I want, I would gather people I know who suffer from the types of diseases Munro finds “real” — dissociative identity disorder, bipolar disorder, schizophrenia — and I’d let them describe for you the stigma that attaches even to those sicknesses. The notion that mental illness — any mental illness — should be toughed out is asinine. Would you tough out diabetes? Would you tough out cancer?

It is a statistical matter of fact (one in five of us suffers mental illness in any given year, said the president) that this touches many of us. So I suspect I am not the only one who has stories he cannot tell and names he cannot call. On behalf of those unnamed people, our family members and friends who daily struggle with crippling disorders they did not cause and do not deserve, let us call Munro’s writing what it is: cruel sanctimony.

If his name sounds familiar, it is because last year, he made news for heckling the president during a Rose Garden address. Though ostensibly a “reporter,” Munro was shown in photographs with his hands in his pockets and neither notepad nor tape recorder in evidence.

Which made it hard to see how he was “reporting,” and suggested he was less a member of the Fourth Estate than another ideologue playing dress-up, a fresh emblem of political divisions so broad they can no longer be bridged. So broad that even things we once all agreed upon — for example: reporters don’t heckle presidents during speeches — can no longer be taken for granted.

But what the ideologue play-acting at journalism either does not know, or does not care, is that this is not a game. There is a real-life consequence to spreading ignorance about matters of health. As the military deals with record suicide rates, one shudders to think of the soldier, afflicted with post-traumatic stress disorder, who will read Munro’s scribblings and feel affirmed in his belief that seeking help is somehow unmanly. As our parks fill with the homeless mentally ill, one sighs at the thought of some daughter reading this and believing her dad chose to be that way.

These are our people, said the president, and we should support them. Self-evident truth. Plain vanilla.

And Lord have mercy. Even that’s controversial now.

 

By: Leonard Pitts Jr., The National Memo, June 10, 2013

June 11, 2013 Posted by | Mental Health | , , , , , , , , | Leave a comment

“The Story Of Our Time”: The Most Crucial Thing To Understand Is The Economy Is Not Like An Individual Family.

Those of us who have spent years arguing against premature fiscal austerity have just had a good two weeks. Academic studies that supposedly justified austerity have lost credibility; hard-liners in the European Commission and elsewhere have softened their rhetoric. The tone of the conversation has definitely changed.

My sense, however, is that many people still don’t understand what this is all about. So this seems like a good time to offer a sort of refresher on the nature of our economic woes, and why this remains a very bad time for spending cuts.

Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family.

Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too.

And that’s what happened after the financial crisis of 2008. Many people suddenly cut spending, either because they chose to or because their creditors forced them to; meanwhile, not many people were able or willing to spend more. The result was a plunge in incomes that also caused a plunge in employment, creating the depression that persists to this day.

Why did spending plunge? Mainly because of a burst housing bubble and an overhang of private-sector debt — but if you ask me, people talk too much about what went wrong during the boom years and not enough about what we should be doing now. For no matter how lurid the excesses of the past, there’s no good reason that we should pay for them with year after year of mass unemployment.

So what could we do to reduce unemployment? The answer is, this is a time for above-normal government spending, to sustain the economy until the private sector is willing to spend again. The crucial point is that under current conditions, the government is not, repeat not, in competition with the private sector. Government spending doesn’t divert resources away from private uses; it puts unemployed resources to work. Government borrowing doesn’t crowd out private investment; it mobilizes funds that would otherwise go unused.

Now, just to be clear, this is not a case for more government spending and larger budget deficits under all circumstances — and the claim that people like me always want bigger deficits is just false. For the economy isn’t always like this — in fact, situations like the one we’re in are fairly rare. By all means let’s try to reduce deficits and bring down government indebtedness once normal conditions return and the economy is no longer depressed. But right now we’re still dealing with the aftermath of a once-in-three-generations financial crisis. This is no time for austerity.

O.K., I’ve just given you a story, but why should you believe it? There are, after all, people who insist that the real problem is on the economy’s supply side: that workers lack the skills they need, or that unemployment insurance has destroyed the incentive to work, or that the looming menace of universal health care is preventing hiring, or whatever. How do we know that they’re wrong?

Well, I could go on at length on this topic, but just look at the predictions the two sides in this debate have made. People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out.

Is the story really that simple, and would it really be that easy to end the scourge of unemployment? Yes — but powerful people don’t want to believe it. Some of them have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.

What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was. And maybe, just maybe, that sudden exposure will give us a chance to start doing something about the depression we’re in.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 28, 2013

April 29, 2013 Posted by | Economy | , , , , , , , , | Leave a comment

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