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
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February 22, 2016
Posted by raemd95 |
Balanced Budget Amendment, Economic Policy, GOP Presidential Candidates, Marco Rubio | Automatic Stabilizers, Depression, Economic Recovery, Federal Reserve, Fiscal Discretionary Stimulus, Inflation, Jobs, Recession, Wage Stagnation |
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Over the coming weeks and months, Democrats in caucuses and primaries around the country will choose between Hillary Clinton and Bernie Sanders to be the party’s nominee. Some are now casting the decision as one between “continuity” and “change,” with Clinton representing a continuation of President Obama’s agenda and Sanders representing a shift toward the transformational change that escaped Obama.
This binary is completely false.
Ours is a historical era in which continuity and change are one and the same. Obama ended the wars of the George W. Bush administration, normalized relations with Cuba, and prevented the ascent of an Iran armed with nuclear weapons. In the last week alone, his administration declined to renew licenses to coal mining operations on federal lands, declared a ban on solitary confinement of minors in federal penitentiaries, and ordered police departments around the country to give back military surplus equipment being misused by law enforcement. And on Tuesday, news came of the White House preparing to issue an executive order that would require any firm doing business with the federal government — virtually all giant corporations — to disclose its campaign contributions.
We need more of the same. We need the unbroken continuation of Obama’s domestic and foreign policies to bring about the laws, rules, and regulations that advance progress. It may not be “transformational,” but real change is rarely that sexy. It may not feel all kumbaya, but politics almost never does.
Let’s remember the Democrats saved the economy, passed the Affordable Care Act, and reformed Wall Street — with nearly unanimous opposition from Congressional Republicans. Since 2010, we have seen more job growth since no one remembers. More Americans have health insurance. And, while it took a while, the Dodd-Frank financial reforms are now being felt.
That’s real change.
Yes, wages are not what they used to be, health care is still run by private insurance companies, and Wall Street still rakes in more money than God. But those are not reasons to break the chain of real progress. Change takes continuity.
Consider Bernie Sanders’ call for “Medicare for all.”
In the hours before the final Democratic debate, Sanders released a plan for creating a single-payer health care system of the kind found in rich European countries that have managed to keep costs down while ensuring the right of all citizens to access to quality health care. Ever since Obama proposed health care reform that kept intact the role of private health insurance companies, the Democratic Party’s left wing has demanded nothing short of “Medicare for all.”
That’s fine. Most left-liberals would prefer that. But it doesn’t represent change so much as wishful thinking.
Hillary Clinton was not, during the debate, just wrapping herself in Obama. She was speaking the truth: Democrats can’t go back and restart the fight over universal health care because they have no hope of winning. Now is the time, however, for policy reforms addressing rising costs, insurance exchanges, and private profit. Yes, this is change by a thousand tweaks, but it is still change.
Is there a risk in voting for Clinton? Yes, of course. You don’t really know what kind of president you’re getting until she’s elected. But Hillary Clinton may be the exception. She’s long been in the public eye. We know her strengths as well as her weaknesses. Most important, we know she can be forced to listen to progressive demands. That cannot be said of Republicans.
I like Bernie Sanders and would support him in another context, and I don’t personally like Hillary Clinton. But my dislike isn’t as important as my country transcending the long conservative malaise that began before I was born.
By: John Stoehr, The Week, January 29, 2016
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February 2, 2016
Posted by raemd95 |
Bernie Sanders, Democratic Primary Debates, Hillary Clinton | Affordable Health Care, Cuba, Dodd-Frank, Economic Recovery, Iran Nuclear Agreement, Iraq and Afghanistan Wars, Medicare for All, Single Payer, Wall Street Reform |
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Until very recently, nobody had any cause to regret Bernie Sanders’s presidential campaign. Sanders is earnest and widely liked. He has tugged the terms of the political debate leftward in a way both moderates and left-wingers could appreciate. (Moderate liberals might not agree with Sanders’s ideas, but they can appreciate that his presence changes for the better a political landscape in which support for things like Mitt Romney’s old positions on health care and the environment were defined as hard-core liberalism.) Sanders’s rapid rise, in both early states and national polling, has made him a plausible threat to defeat Hillary Clinton. Suddenly, liberals who have used the nominating process to unilaterally vet Clinton, processing every development through its likely impact on her as the inevitable candidate, need to think anew. Do we support Sanders not just in his role as lovable Uncle Bernie, complaining about inequality, but as the actual Democratic nominee for president? My answer to that question is no.
Sanders’s core argument is that the problems of the American economy require far more drastic remedies than anything the Obama administration has done, or that Clinton proposes to build on. Clinton has put little pressure on Sanders’s fatalistic assessment, but the evidence for it is far weaker than he assumes. Sanders has grudgingly credited what he calls “the modest gains of the Affordable Care Act,” which seems like an exceedingly stingy assessment of a law that has already reduced the number of uninsured Americans by 20 million. The Dodd-Frank reforms of the financial industry may not have broken up the big banks, but they have, at the very least, deeply reduced systemic risk. The penalties for being too big to fail exceed the benefits, and, as a result, banks are actually breaking themselves up to avoid being large enough to be regulated as systemic risks.
It is true that the Great Recession inflicted catastrophic economic damage, and that fiscal policy did too little to alleviate it. The impression of economic failure hardened into place as the sluggish recovery dragged on for several years. Recently, conditions have improved. Unemployment has dropped, the number of people quitting their job has risen, and — as one would predict would happen when employers start to run short of available workers — average wages have started to climb. Whether the apparent rise in the median wage is the beginning of a sustained increase, or merely a short-lived blip, remains to be seen. At the very least, the conclusion that Obama’s policies have failed to raise living standards for average people is premature. And the progress under Obama refutes Sanders’s corollary point, that meaningful change is impossible without a revolutionary transformation that eliminates corporate power.
Nor should his proposed remedies be considered self-evidently benign. Evidence has shown that, at low levels, raising the minimum wage does little or nothing to kill jobs. At some point, though, the government could set a minimum wage too high for employers to be willing to pay it for certain jobs. Even liberal labor economists like Alan Krueger, who have supported more modest increases, have blanched at Sanders’s proposal for a $15 minimum wage.
Sanders’s worldview is not a fantasy. It is a serious critique based on ideas he has developed over many years, and it bears at least some relation to the instincts shared by all liberals. The moral urgency with which Sanders presents his ideas has helped shelter him from necessary internal criticism. Nobody on the left wants to defend Wall Street or downplay the pressure on middle- and working-class Americans. But Sanders’s ideas should not be waved through as a more honest or uncorrupted version of the liberal catechism. The despairing vision he paints of contemporary America is oversimplified.
Even those who do share Sanders’s critique of American politics and endorse his platform, though, should have serious doubts about his nomination. Sanders does bring some assets as a potential nominee — his rumpled style connotes authenticity, and his populist forays against Wall Street have appeal beyond the Democratic base. But his self-identification as a socialist poses an enormous obstacle, as Americans respond to “socialism” with overwhelming negativity. Likewise, his support for higher taxes on the middle class — while substantively sensible — also saddles him with a highly unpopular stance. He also has difficulty addressing issues outside his economic populism wheelhouse. In his opening statement at the debate the day after the Paris attacks, Sanders briefly and vaguely gestured toward the attacks before quickly turning back to his economic themes.
Against these liabilities, Sanders offers the left-wing version of a hoary political fantasy: that a more pure candidate can rally the People into a righteous uprising that would unsettle the conventional laws of politics. Versions of this have circulated in both parties for years, having notably inspired the disastrous Goldwater and McGovern campaigns. The Republican Party may well fall for it again this year. Sanders’s version involves the mobilization of a mass grassroots volunteer army that can depose the special interests. “The major political, strategic difference I have with Obama is it’s too late to do anything inside the Beltway,” he told Andrew Prokop. “You gotta take your case to the American people, mobilize them, and organize them at the grassroots level in a way that we have never done before.” But Obama did organize passionate volunteers on a massive scale — far broader than anything Sanders has done — and tried to keep his volunteers engaged throughout his presidency. Why would Sanders’s grassroots campaign succeed where Obama’s far larger one failed?
Sanders has promised to replace Obamacare with a single-payer plan, without having any remotely plausible prospects for doing so. Many advocates of single-payer imagine that only the power of insurance companies stands in their way, but the more imposing obstacles would be reassuring suspicious voters that the change in their insurance (from private to public) would not harm them and — more difficult still — raising the taxes to pay for it. As Sarah Kliff details, Vermont had to abandon hopes of creating its own single-payer plan. If Vermont, one of the most liberal states in America, can’t summon the political willpower for single-payer, it is impossible to imagine the country as a whole doing it. Not surprisingly, Sanders’s health-care plan uses the kind of magical-realism approach to fiscal policy usually found in Republican budgets, conjuring trillions of dollars in savings without defining their source.
The Sanders campaign represents a revolution of rising expectations. In 2008, the last time Democrats held a contested primary, the prospect of simply taking back the presidency from Republican control was nearly enough to motivate the party’s vote. The potential to enact dramatic change was merely a bonus. After nearly two terms of power, with the prospect of Republican rule now merely hypothetical, Democrats want more.
The paradox is that the president’s ability to deliver more change is far more limited. The current occupant of the Oval Office and his successor will have a House of Representatives firmly under right-wing rule, making the prospects of important progressive legislation impossible. This hardly renders the presidency impotent, obviously. The end of Obama’s term has shown that a creative president can still drive some change.
But here is a second irony: Those areas in which a Democratic Executive branch has no power are those in which Sanders demands aggressive action, and the areas in which the Executive branch still has power now are precisely those in which Sanders has the least to say. The president retains full command of foreign affairs; can use executive authority to drive social policy change in areas like criminal justice and gender; and can, at least in theory, staff the judiciary. What the next president won’t accomplish is to increase taxes, expand social programs, or do anything to reduce inequality, given the House Republicans’ fanatically pro-inequality positions across the board. The next Democratic presidential term will be mostly defensive, a bulwark against the enactment of the radical Ryan plan. What little progress liberals can expect will be concentrated in the non-Sanders realm.
So even if you fervently endorse Sanders’s policy vision (which, again for the sake of full candor, I do not), he has chosen an unusually poor time to make it the centerpiece of a presidential campaign. It can be rational for a party to move away from the center in order to set itself up for dramatic new policy changes; the risk the Republican Party accepted in 1980 when Ronald Reagan endorsed the radical new doctrine of supply-side economics allowed it to reshape the face of government. But it seems bizarre for Democrats to risk losing the presidency by embracing a politically radical doctrine that stands zero chance of enactment even if they win.
By: Jonathan Chait, Daily Intelligencer, New York Magazine, January 18, 2015
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January 19, 2016
Posted by raemd95 |
Bernie Sanders, Democratic Presidential Primaries, Hillary Clinton | Affordable Care Act, Big Banks, Economic Recovery, Healthcare, House Republicans, Middle and Working Class Taxes, Single Payer, Socialism, Vermont, Wall Street |
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It was unexpectedly convenient to have the State of the Union address and a Republican presidential debate occur in the same week, scheduled just 48 hours apart. The bookends offered the public an opportunity, not just to hear two competing visions, but also to confront two entirely different versions of reality.
Because anyone who listened to President Obama on Tuesday night, and then the GOP presidential candidates on Thursday night, might find it hard to believe they all live in the same country at the same time.
The president made an impassioned case that Americans have reason to stand tall. We have the strongest economy on the planet, the strongest military in the history of the planet, and an unrivaled position as a global superpower. Job growth is strong, our enemies are on the run, our civil rights are a model for the world, and our insured rate is the best it’s ever been.
Obama has heard the naysayers, but he believes we’d be wise to ignore their campaign to exploit anxiety to advance their own partisan or ideological goals. We can aim higher – we can even cure cancer! – and make the future our own.
That was Tuesday night. Just two days later, the Republican Party’s national candidates were simply flabbergasted, baffled by the president’s optimism. Jeb Bush, apparently unaware of the state of the nation when his brother left the White House, insisted, “[T]he idea that somehow we’re better off today than the day that Barack Obama was inaugurated president of the United States is totally an alternative universe.”
And in a way, there’s some truth to that: the president and the Republican presidential field don’t seem to occupy the same place on the space-time continuum. Obama thinks the American dream is alive and well; the GOP thinks it’s dead. The president wants the public to feel hopeful; Republicans want Americans to feel existential dread. “Alternative universes” isn’t a bad summary, all things considered.
The trouble is, Obama’s the one who seems to live in the same reality as the rest of the public.
Mother Jones’ Kevin Drum noted this morning that it’s “remarkable just how apocalyptic Republicans are this year.” As a public service, he collected the “most ominous” statements from each of the GOP candidates from last night’s debate. The list is worth checking out in its entirety, but some of my personal favorites:
Donald Trump: Our military is a disaster. Our healthcare is a horror show…. We have no borders. Our vets are being treated horribly. Illegal immigration is beyond belief. Our country is being run by incompetent people.
Marco Rubio: This president is undermining the constitutional basis of this government. This president is undermining our military. He is undermining our standing in the world…. The damage he has done to America is extraordinary. Let me tell you, if we don’t get this election right, there may be no turning back for America.
Chris Christie: When I think about the folks who are out there at home tonight watching….They know that this country is not respected around the world anymore. They know that this country is pushing the middle class, the hardworking taxpayers, backwards, and they saw a president who doesn’t understand their pain, and doesn’t have any plan for getting away from it.
Can’t you just feel the sunny, Reagan-esque optimism?
It’s worth emphasizing that nearly every word of these assessments is plainly wrong, and that matters, but the broader point is that Americans saw seven candidates last night who were effectively encouraging us to hide under a table.
I suppose the natural response is to highlight the underlying circumstances: we’re talking about the GOP field running to replace a Democratic president in his eighth year. Of course they’re going to spend time making the case that the status quo is unacceptable. It’s not like they have an electoral incentive to promise more of the same.
The point, however, is how they choose to make this case. Eight years ago at this time, Barack Obama was facing the same situation in reverse – a Democratic candidate running to replace a Republican president in his eighth year – but his message was rooted entirely in optimism. Obama’s entire campaign message was ultimately summarized in one, four-letter word: Hope.
It’s not because Democratic voters were satisfied about the state of the nation in 2008 – they really weren’t – but rather, it was because Obama saw value in being a positive, hopeful, confident candidate.
Eight years later, Republicans’ collectively are pushing a message that also can ultimately be summarized in one, four-letter word: Doom.
Politico’s Michael Grunwald wrote last week, “America is already great, and it’s getting greater. Not everything is awesome, but in general, things are even more awesome than they were a year ago. The rest of the world can only wish it had our problems.”
It’s the kind of uplifting, can-do message that would have been roundly booed in Charleston last night.
By: Steve Benen, The Maddow Blog, January 15, 2016
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January 16, 2016
Posted by raemd95 |
GOP Presidential Candidates, GOP Primary Debates, State of the Union | Chris Christie, Donald Trump, Economic Recovery, Fearmongering, Foreign Policy, George W. Bush, Jeb Bush, Marco Rubio |
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What did the men who would be president talk about during last week’s prime-time Republican debate? Well, there were 19 references to God, while the economy rated only 10 mentions. Republicans in Congress have voted dozens of times to repeal all or part of Obamacare, but the candidates only named President Obama’s signature policy nine times over the course of two hours. And energy, another erstwhile G.O.P. favorite, came up only four times.
Strange, isn’t it? The shared premise of everyone on the Republican side is that the Obama years have been a time of policy disaster on every front. Yet the candidates on that stage had almost nothing to say about any of the supposed disaster areas.
And there was a good reason they seemed so tongue-tied: Out there in the real world, none of the disasters their party predicted have actually come to pass. President Obama just keeps failing to fail. And that’s a big problem for the G.O.P. — even bigger than Donald Trump.
Start with health reform. Talk to right-wingers, and they will inevitably assert that it has been a disaster. But ask exactly what form this disaster has taken, and at best you get unverified anecdotes about rate hikes and declining quality.
Meanwhile, actual numbers show that the Affordable Care Act has sharply reduced the number of uninsured Americans — especially in blue states that have been willing to expand Medicaid — while costing substantially less than expected. The newly insured are, by and large, pleased with their coverage, and the law has clearly improved access to care.
Needless to say, right-wing think tanks are still cranking out “studies” purporting to show that health reform is a failure. But it’s a losing game, and judging from last week’s debate Republican politicians know it.
But what about side effects? Obamacare was supposed to be a job-killer — in fact, when Marco Rubio was asked how he would boost the economy, pretty much all he had to suggest was repealing health and financial reforms. But in the year and a half since Obamacare went fully into effect, the U.S. economy has added an average of 237,000 private-sector jobs per month. That’s pretty good. In fact, it’s better than anything we’ve seen since the 1990s.
Which brings us to the economy.
There was remarkably little economic discussion at the debate, although Jeb Bush is still boasting about his record in Florida — that is, his experience in presiding over a gigantic housing bubble, and providentially leaving office before the bubble burst. Why didn’t the other candidates say more? Probably because at this point the Obama economy doesn’t look too bad. Put it this way: if you compare unemployment rates over the course of the Obama administration with unemployment rates under Reagan, Mr. Obama ends up looking better – unemployment was higher when he took office, and it’s now lower than it was at this point under Reagan.
O.K., there are many reasons to qualify that assessment, notably the fact that measured unemployment is low in part because of a decline in the percentage of Americans in the labor force. Still, the Obama economy has utterly failed to deliver the disasters — hyperinflation! a plunging dollar! fiscal crisis! — that just about everyone on the right predicted. And this has evidently left the Republican presidential field with nothing much to say.
One last point: traditionally, Republicans love to talk about how liberals with their environmentalism and war on coal are standing in the way of America’s energy future. But there was only a bit of that last week — perhaps because domestic oil production has soared and oil imports have plunged since Mr. Obama took office.
What’s the common theme linking all the disasters that Republicans predicted, but which failed to materialize? If I had to summarize the G.O.P.’s attitude on domestic policy, it would be that no good deed goes unpunished. Try to help the unfortunate, support the economy in hard times, or limit pollution, and you will face the wrath of the invisible hand. The only way to thrive, the right insists, is to be nice to the rich and cruel to the poor, while letting corporations do as they please.
According to this worldview, a leader like President Obama who raises taxes on the 1 percent while subsidizing health care for lower-income families, who provides stimulus in a recession, who regulates banks and expands environmental protection, will surely preside over disaster in every direction.
But he hasn’t. I’m not saying that America is in great shape, because it isn’t. Economic recovery has come too slowly, and is still incomplete; Obamacare isn’t the system anyone would have designed from scratch; and we’re nowhere close to doing enough on climate change. But we’re doing far better than any of those guys in Cleveland will ever admit.
By: Paul Krugman, Op-Ed Columnist, The Washington Post, August 10, 2015
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August 17, 2015
Posted by raemd95 |
Affordable Care Act, Economy, Energy, GOP Primary Debates | Domestic Policy, Donald Trump, Economic Recovery, Environment, Jobs, Marco Rubio, Unemployment Rate |
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