“A Word To The Not So Wise”: You Come At The King, You Best Not Miss
If you want a sense of how remarkable Barack Obama’s re-election victory is, think back to last summer. At the time, the president was struggling to reach a deal with House Republicans, who were threatening not to raise the debt ceiling and plunge the economy into a second recession. Unemployment was high—9.2 percent—Obama’s approval had dipped to the low 40s, and to anyone paying attention, the first African American president looked like a one-term failure.
But beginning in the fall, Obama began to reassert himself. With the American Jobs Act, he outlined a viable plan for generating economic growth and kick-starting the recovery. With his widely praised speech in Kansas, he outlined a populist agenda of greater investment and higher taxes on the wealthiest Americans. Over the course of 2012, he built good will with important communities, from LGBT Americans with an endorsement of same-sex marriage to Latino immigrants and their families with a measure meant to emulate the DREAM Act. What’s more, the economy began to pick up: Job growth increased, unemployment dropped, and the overall economic picture began to brighten.
Together with one of the most hard-nosed campaigns of recent memory, Obama managed to bounce back from the nadir of 2011 to one of the broadest re-election victories since Reagan’s 1984 landslide. At this point, news networks have called New Hampshire, Iowa, Wisconsin, Colorado, Nevada, Virginia, and Ohio for President Obama. Only Florida has yet to be called, where the remaining votes are in traditionally Democratic areas of the state. Compared with 2008, Obama lost only two states: North Carolina and Indiana. When all is said and done, Barack Obama will have won re-election with 332 electoral votes—a much larger margin than the last president to win re-election, George W. Bush
Over the next week, I’ll write about the details of Obama’s victory, in particular his huge advantage with nonwhite voters—without historic margins (and turnout) among African Americans, Latinos, and Asian Americans, it’s likely Obama would have failed in his quest for a second term. Indeed, it should be said that Republicans have themselves to blame for a good deal of this. If not for their categorical opposition to health-care reform, the Affordable Care Act would have never been passed in its current form. If not for their harsh approach to immigration, they might have won greater Latino support over the last four years. If not for their embrace of misogyny, they might have closed the gender gap. If not for their willingness to indulge the worst conspiracies about Obama, they might have made inroads with young people and college-educated voters.
In the meantime, it’s worth noting what Obama’s victory means for the next four years of public policy.
Obamacare will be implemented in full, and the United States will begin its journey toward universal health-care coverage. Millions of Americans will be covered by the bill’s Medicaid expansion, and millions more will—for the first time—have access to affordable health insurance. Likewise, Dodd-Frank will survive, and the federal government will begin to craft regulations that will—with any luck—prevent a repeat of the 2008 financial collapse. Obama’s re-election shields core liberal commitments—on social insurance, anti-poverty policy, and environmental regulation—from conservative assault, and gives Democrats a chance to reshape the Supreme Court and the federal judiciary writ large.
Thanks to last night’s results, liberals have four years to cement a host of policies and achievements that could prove as transformative as the Great Society or even the New Deal. And this is on top of an economic recovery that will almost certainly boost Democrats’ standing with the public.
It’s still far too early to make a judgment about Barack Obama’s overall historical standing. But by virtue of winning re-election, he has become the most successful Democratic president since Lyndon Johnson, and one of the most successful of the 21st century.
Not bad for the skinny Hawaiian kid with a funny name.
By: Jamelle Bouie, The American Prospect, November 7, 2012
“The Secret Of Our Non-Success”: Mitt Romney Will Make Policy Based On Fantasies Rather Than Grappling With Reality.
The U.S. economy finally seems to be recovering in earnest, with housing on the rebound and job creation outpacing growth in the working-age population. But the news is good, not great — it will still take years to restore full employment — and it has been a very long time coming. Why has the slump been so protracted?
The answer — backed by overwhelming evidence — is that this is what normally happens after a severe financial crisis. But Mitt Romney’s economic team rejects that evidence. And this denialism bodes ill for policy if Mr. Romney wins next month.
About the evidence: The most famous study is by Harvard’s Carmen Reinhart and Kenneth Rogoff, who looked at past financial crises and found that such crises are typically followed by years of high unemployment and weak growth. Later work by economists at the International Monetary Fund and elsewhere confirmed this analysis: crises that followed a sharp run-up in private-sector debt, from the U.S. Panic of 1893 to the Swedish banking crisis of the early 1990s, cast long shadows over the economy’s future. There was no reason to believe that this time would be different.
This isn’t an after-the-fact rationalization. The Reinhart-Rogoff “aftermath” paper was released almost four years ago. And a number of other economists, including, well, me, issued similar warnings. In early 2008 I was already pointing out the distinction between recessions like 1973-5 or 1981-2, brought on by high interest rates, and “postmodern” recessions brought on by private-sector overreach. And I suggested that the recession we were then entering would be followed by a prolonged “jobless recovery” that would feel like a continuing recession.
Why is recovery from a financial crisis slow? Financial crises are preceded by credit bubbles; when those bubbles burst, many families and/or companies are left with high levels of debt, which force them to slash their spending. This slashed spending, in turn, depresses the economy as a whole.
And the usual response to recession, cutting interest rates to encourage spending, isn’t adequate. Many families simply can’t spend more, and interest rates can be cut only so far — namely, to zero but not below.
Does this mean that nothing can be done to avoid a protracted slump after a financial crisis? No, it just means that you have to do more than just cut interest rates. In particular, what the economy really needs after a financial crisis is a temporary increase in government spending, to sustain employment while the private sector repairs its balance sheet. And the Obama administration did some of that, blunting the severity of the financial crisis. Unfortunately, the stimulus was both too small and too short-lived, partly because of administration errors but mainly because of scorched-earth Republican obstruction.
Which brings us to the politics.
Over the past few months advisers to the Romney campaign have mounted a furious assault on the notion that financial-crisis recessions are different. For example, in July former Senator Phil Gramm and Columbia’s R. Glenn Hubbard published an op-ed article claiming that we should be having a recovery comparable to the bounceback from the 1981-2 recession, while a white paper from Romney advisers argues that the only thing preventing a rip-roaring boom is the uncertainty created by President Obama.
Obviously, Republicans like claiming that it’s all Mr. Obama’s fault, and that electing Mr. Romney would magically make everything better. But nobody should believe them.
For one thing, these people have a track record: back in 2008, when serious students of history were already predicting a prolonged slump, Mr. Gramm was dismissing America as a “nation of whiners” experiencing a mere “mental recession.” For another, if Mr. Obama is the problem, why is the United States actually doing better than most other advanced countries?
The main point, however, is that the Romney team is willfully, nakedly, distorting the record, leading Ms. Reinhart and Mr. Rogoff — who aren’t affiliated with either campaign — to protest against “gross misinterpretations of the facts.” And this should worry you.
Look, economics isn’t as much of a science as we’d like. But when there’s overwhelming evidence for an economic proposition — as there is for the proposition that financial-crisis recessions are different — we have the right to expect politicians and their advisers to respect that evidence. Otherwise, they’ll end up making policy based on fantasies rather than grappling with reality.
And once politicians start refusing to acknowledge inconvenient facts, where does it stop? Why, the next thing you know Republicans will start rejecting the overwhelming evidence for man-made climate change. Oh, wait.
By: Paul Krugman, Op-Ed Columnist, The New York Times, October 21, 2012
“Reality”: A Product Of The Vast Left-Wing Conspiracy
“Reality,” Stephen Colbert once famously said, “has a well-known liberal bias.”
It was one of those jokes that isn’t, one of those barbs that captures something painfully true, allows you to see it with clarity you never could if viewing straight on. It’s worth noting that Colbert said this years before that jump-the-shark moment last week when conservatives accused the Labor Department of conspiring against them. In case you missed it, it happened when the government released figures showing the unemployment rate has tumbled to 7.8 percent.
Most of us considered this good news. Because it validates President Obama’s narrative of a slowly-improving economy, many conservatives did not. They called the figure a fraud — “monkey business,” in the words of Donald Trump. Former GE CEO Jack Welch saw it as evidence of malfeasance from “these Chicago guys.” Fox “News” asked, “Is the number real?”
And so it goes in the conservative War on Reality.
Not that this was the first salvo in said war. Just before the numbers came out, conservatives were working to discredit polls that showed President Obama leading Mitt Romney. “Bogus,” said Rush Limbaugh.
You see, the war goes back a ways. Back to Sen. Jon Kyl saying that 90 percent of Planned Parenthood’s activities are abortion-related and, when called on that lie, issuing a statement that what he said was “not intended to be … factual.” Back to Sarah Palin sounding the alarm about death panels, back to Glenn Beck saying conservatives started the Civil Rights Movement, back to people pretending there is some mystery over the president’s birthplace.
Heck, it goes back to the Bush administration cutting inconvenient facts from government reports, back to Bush brushing aside a pessimistic report on Iraq by saying the intelligence community was “just guessing.”
The point here — this cannot be overemphasized — is not ideology. Rather, it is about the fact that we cannot effectively debate ideology if we do not have a body of facts in common.
Under such circumstances, political discourse must devolve into incoherence. We cannot discuss what color to paint the room if we cannot agree on what constitutes red or green — or the room. We literally have no shared language with which to even have the discussion.
This is the legacy of the War on Reality. Some of us live under a new ethos, fueled and abetted by Fox, the Internet and talk radio, which holds that facts are optional and reality, multiple choice — and that anyone who questions this is part of the conspiracy against you. The results have not been pretty. When, in the history of American political discourse, have conservatives — some, not all — seemed more paranoid, put-upon and ready to believe themselves the victims of outlandish plots?
Hillary Clinton was rightly derided for saying a “vast right-wing conspiracy” was out to get her husband. But if that one-time utterance made her sound ridiculous, what shall we make of this constant drumbeat from the political right? What shall we make of a mindset in which the answer to every criticism, the response to every unwelcome fact, is to point to a conspiracy of bias that exists mostly in their minds?
Now, we reach a sobering watershed. Who knew even the professional numbers crunchers in the Labor Department were part of this vast left-wing conspiracy?
Hearing that, one must believe one of two things: either math also has a liberal bias, or, it is time to ask ourselves what becomes of a country where problem-solving is paralyzed because problem solvers cannot agree on a common reality?
Math, should it need saying, has no liberal bias. So give that question some hard thought. After all, we have only the one country. We may not share the same reality, but we will certainly share the same fate.
By: Leonard Pitts, The National Memo, October 10, 2012
“Romney’s Optimism Cure”: Are You Feeling Reassured By The Confidence Fairy?
Mitt Romney is optimistic about optimism. In fact, it’s pretty much all he’s got. And that fact should make you very pessimistic about his chances of leading an economic recovery.
As many people have noticed, Mr. Romney’s five-point “economic plan” is very nearly substance-free. It vaguely suggests that he will pursue the same goals Republicans always pursue — weaker environmental protection, lower taxes on the wealthy. But it offers neither specifics nor any indication why returning to George W. Bush’s policies would cure a slump that began on Mr. Bush’s watch.
In his Boca Raton meeting with donors, however, Mr. Romney revealed his real plan, which is to rely on magic. “My own view is,” he declared, “if we win on November 6, there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see — without actually doing anything — we’ll actually get a boost in the economy.”
Are you feeling reassured?
In fairness to Mr. Romney, his assertion that electing him would spontaneously spark an economic boom is consistent with his party’s current economic dogma. Republican leaders have long insisted that the main thing holding the economy back is the “uncertainty” created by President Obama’s statements — roughly speaking, that businesspeople aren’t investing because Mr. Obama has hurt their feelings. If you believe that, it makes sense to argue that changing presidents would, all by itself, cause an economic revival.
There is, however, no evidence supporting this dogma. Our protracted economic weakness isn’t a mystery; it’s what normally happens after a major financial crisis. Furthermore, business investment has actually recovered fairly strongly since the official recession ended. What’s holding us back is mainly the continued weakness of housing combined with a vast overhang of household debt, the legacy of the Bush-era housing bubble.
By the way, in saying that our prolonged slump was predictable, I’m not saying that it was necessary. We could and should have greatly reduced the pain by combining aggressive fiscal and monetary policies with effective relief for highly indebted homeowners; the fact that we didn’t reflects a combination of timidity on the part of both the Obama administration and the Federal Reserve, and scorched-earth opposition on the part of the G.O.P.
But Mr. Romney, as I said, isn’t offering anything substantive to fight the slump, just a reprise of the usual slogans. And he has denounced the Fed’s belated effort to step up to the plate.
Back to the optimism thing: It’s true that some studies suggest a secondary role for uncertainty in depressing the economy — and conservatives have seized on these studies, claiming vindication. But if you actually look at the measures of uncertainty involved, they’ve been driven not by fear of Mr. Obama but by events like the euro crisis and the standoff over the debt ceiling. (O.K., I guess you could argue that electing Mr. Romney might encourage businesses by promising an end to Republican economic sabotage.)
You should also know that efforts to base policy on speculations about business psychology have a track record — and it’s not a good one.
Back in 2010, as European nations began implementing savage austerity programs to placate bond markets, it was common for policy makers to deny that these programs would have a depressing effect. “The idea that austerity measures could trigger stagnation is incorrect,” insisted Jean-Claude Trichet, then the president of the European Central Bank. Why? Because these measures would “increase the confidence of households, firms and investors.”
At the time I ridiculed such claims as belief in the “confidence fairy.” And sure enough, austerity programs actually led to Depression-level economic downturns across much of Europe.
Yet here comes Mitt Romney, declaring, in effect, “I am the confidence fairy!”
Is he? As it happens, Mr. Romney offered a testable proposition in his Boca remarks: “If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy.” How’s that going? Not very well. Over the past month conventional wisdom has shifted from the view that the election could easily go either way to the view that Mr. Romney is very likely to lose; yet markets are up, not down, with major stock indexes hitting their highest levels since the economic downturn began.
It’s all kind of sad. Yet the truth is that it all fits together. Mr. Romney’s whole campaign has been based on the premise that he can become president simply by not being Barack Obama. Why shouldn’t he believe that he can fix the economy the same way?
But will he get a chance to put that theory to the test? At the moment, I’m not optimistic.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 23, 2012
“Hating On Ben Bernanke”: Mitt Romney Takes Up Residence In The Right’s Intellectual Fever Swamps
Last week Ben Bernanke, the Federal Reserve chairman, announced a change in his institution’s recession-fighting strategies. In so doing he seemed to be responding to the arguments of critics who have said the Fed can and should be doing more. And Republicans went wild.
Now, many people on the right have long been obsessed with the notion that we’ll be facing runaway inflation any day now. The surprise was how readily Mitt Romney joined in the craziness.
So what did Mr. Bernanke announce, and why?
The Fed normally responds to a weak economy by buying short-term U.S. government debt from banks. This adds to bank reserves; the banks go out and lend more; and the economy perks up.
Unfortunately, the scale of the financial crisis, which left behind a huge overhang of consumer debt, depressed the economy so severely that the usual channels of monetary policy don’t work. The Fed can bulk up bank reserves, but the banks have little incentive to lend the money out, because short-term interest rates are near zero. So the reserves just sit there.
The Fed’s response to this problem has been “quantitative easing,” a confusing term for buying assets other than Treasury bills, such as long-term U.S. debt. The hope has been that such purchases will drive down the cost of borrowing, and boost the economy even though conventional monetary policy has reached its limit.
Sure enough, last week’s Fed announcement included another round of quantitative easing, this time involving mortgage-backed securities. The big news, however, was the Fed’s declaration that “a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.” In plain English, the Fed is more or less promising that it won’t start raising interest rates as soon as the economy looks better, that it will hold off until the economy is actually booming and (perhaps) until inflation has gone significantly higher.
The idea here is that by indicating its willingness to let the economy rip for a while, the Fed can encourage more private-sector spending right away. Potential home buyers will be encouraged by the prospect of moderately higher inflation that will make their debt easier to repay; corporations will be encouraged by the prospect of higher future sales; stocks will rise, increasing wealth, and the dollar will fall, making U.S. exports more competitive.
This is very much the kind of action Fed critics have advocated — and that Mr. Bernanke himself used to advocate before he became Fed chairman. True, it’s a lot less explicit than the critics would have liked. But it’s still a welcome move, although far from being a panacea for the economy’s troubles (a point Mr. Bernanke himself emphasized).
And Republicans, as I said, have gone wild, with Mr. Romney joining in the craziness. His campaign issued a news release denouncing the Fed’s move as giving the economy an “artificial” boost — he later described it as a “sugar high” — and declaring that “we should be creating wealth, not printing dollars.”
Mr. Romney’s language echoed that of the “liquidationists” of the 1930s, who argued against doing anything to mitigate the Great Depression. Until recently, the verdict on liquidationism seemed clear: it has been rejected and ridiculed not just by liberals and Keynesians but by conservatives too, including none other than Milton Friedman. “Aggressive monetary policy can reduce the depth of a recession,” declared the George W. Bush administration in its 2004 Economic Report of the President. And the author of that report, Harvard’s N. Gregory Mankiw, has actually advocated a much more aggressive Fed policy than the one announced last week.
Now Mr. Mankiw is allegedly a Romney adviser — but the candidate’s position on economic policy is evidently being dictated by extremists who warn that any effort to fight this slump will turn us into Zimbabwe, Zimbabwe I tell you.
Oh, and what about Mr. Romney’s ideas for “creating wealth”? The Romney economic “plan” offers no specifics about what he would actually do. The thrust of it, however, is that what America needs is less environmental protection and lower taxes on the wealthy. Surprise!
Indeed, as Mike Konczal of the Roosevelt Institute points out, the Romney plan of 2012 is almost identical — and with the same turns of phrase — to John McCain’s plan in 2008, not to mention the plans laid out by George W. Bush in 2004 and 2006. The situation changes, but the song remains the same.
So last week we learned that Ben Bernanke is willing to listen to sensible critics and change course. But we also learned that on economic policy, as on foreign policy, Mitt Romney has abandoned any pose of moderation and taken up residence in the right’s intellectual fever swamps.
By: Paul Krugman, Op-Ed Contributor, The New York Times, September 16, 2012
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