“Debt, Depression, DeMarco”: How Economic Policy Has Been Crippled By Unyielding, Irresponsible Republican Opposition
There has been plenty to criticize about President Obama’s handling of the economy. Yet the overriding story of the past few years is not Mr. Obama’s mistakes but the scorched-earth opposition of Republicans, who have done everything they can to get in his way — and who now, having blocked the president’s policies, hope to win the White House by claiming that his policies have failed.
And this week’s shocking refusal to implement debt relief by the acting director of the Federal Housing Finance Agency — a Bush-era holdover the president hasn’t been able to replace — illustrates perfectly what’s going on.
Some background: many economists believe that the overhang of excess household debt, a legacy of the bubble years, is the biggest factor holding back economic recovery. Loosely speaking, excess debt has created a situation in which everyone is trying to spend less than their income. Since this is collectively impossible — my spending is your income, and your spending is my income — the result is a persistently depressed economy.
How should policy respond? One answer is government spending to support the economy while the private sector repairs its balance sheets; now is not the time for austerity, and cuts in government purchases have been a major economic drag. Another answer is aggressive monetary policy, which is why the Federal Reserve’s refusal to act in the face of high unemployment and below-target inflation is a scandal.
But fiscal and monetary policy could, and should, be coupled with debt relief. Reducing the burden on Americans in financial trouble would mean more jobs and improved opportunities for everyone.
Unfortunately, the administration’s initial debt relief efforts were ineffectual: Officials imposed so many restrictions to avoid giving relief to “undeserving” debtors that the program went nowhere. More recently, however, the administration has gotten a lot more serious about the issue.
And the obvious place to provide debt relief is on mortgages owned by Fannie Mae and Freddie Mac, the government-sponsored lenders that were effectively nationalized in the waning days of the George W. Bush administration.
The idea of using Fannie and Freddie has bipartisan support. Indeed, Columbia’s Glenn Hubbard, a top Romney adviser, has called on Fannie and Freddie to let homeowners with little or no equity refinance their mortgages, which could sharply cut their interest payments and provide a major boost to the economy. The Obama administration supports this idea and has also proposed a special program of relief for deeply troubled borrowers.
But Edward DeMarco, the acting director of the agency that oversees Fannie and Freddie, refuses to move on refinancing. And, this week, he rejected the administration’s relief plan.
Who is Ed DeMarco? He’s a civil servant who became acting director of the housing finance agency after the Bush-appointed director resigned in 2009. He is still there, in the fourth year of the Obama administration, because Senate Republicans have blocked attempts to install a permanent director. And he evidently just hates the idea of providing debt relief.
Mr. DeMarco’s letter rejecting the relief plan made remarkably weak arguments. He claimed that the plan, while improving his agency’s financial position thanks to subsidies from the Treasury Department, would be a net loss to taxpayers — a conclusion not supported by his own staff’s analysis, which showed a net gain. And it’s worth pointing out that many private lenders have offered the very kinds of principal reductions Mr. DeMarco rejects — even though these lenders, unlike the government, have no incentive to take into account the way debt relief would strengthen the economy.
The main point, however, is that Mr. DeMarco seems to misunderstand his job. He’s supposed to run his agency and secure its finances — not make national economic policy. If the Treasury secretary, acting for the president, seeks to subsidize debt relief in a way that actually strengthens the finance agency, the agency’s chief has no business blocking that policy. Doing so should be a firing offense.
Can Mr. DeMarco be fired right away? I’ve been seeing conflicting analyses on that point, although one thing is clear: President Obama, if re-elected, can, and should, replace him through a recess appointment. In fact, he should have done that years ago. As I said, Mr. Obama has made plenty of mistakes.
But the DeMarco affair nonetheless demonstrates, once again, the extent to which U.S. economic policy has been crippled by unyielding, irresponsible political opposition. If our economy is still deeply depressed, much — and I would say most — of the blame rests not with Mr. Obama but with the very people seeking to use that depressed economy for political advantage.
By: Paul Krugman, Op-Ed Columnist, The New York Times, August 2, 2012
“Generic Dubya”: Mitt Romney’s Innovative Economic Plan
When pressed for details on his economic plan, the former governor has only GOP boilerplate.
I’ll be honest: There are a few things about Mitt Romney that I find annoying. One of the biggest has to be that there is probably no sentence he has repeated more often in this campaign than “I know how the economy works,” but he never actually explains what he knows that nobody else does, or how that hard-won knowledge translates into a unique set of policy moves that only he could bring about and that would pull America from its economic doldrums.
There are really two sets of questions that absolutely must be asked of Romney in the area of economics, given the rationale he offers for his candidacy. The first is, “What specifically did you learn as a businessman that policymakers haven’t known up until now?” As far as I know, he has only been asked this question once, and the result wasn’t encouraging. (After repeating over and over that he “understands how the economy works,” Romney finally allowed that businesses spend money on energy, so if energy were cheaper, they’d have more money. Brilliant, I know.) The second question that Romney needs to be asked is, “What are you proposing to do, and how is that different than what we’ve done before?”
The natural way to ask this is the way Brian Williams asked it in an interview with Romney yesterday: “The major planks of your job plan, lower taxes, both corporate and marginal rates, and reduce regulation. Explain how that would be different from what George W. Bush tried to push through?” Republicans might say this is a “gotcha” question, since it brings up George W. Bush, whom today’s Republicans like to pretend was not actually president for eight years. But it’s a reasonable way to ask, since Bush’s presidency was pretty recent, and he did in fact implement the entire Republican economic agenda, with the exception of drastic cuts in the size of government, though that’s something Republicans are committed to in rhetoric only. So how did Romney respond?
Well, let me describe—actually, there are five things that I believe are necessary to get this economy going. One, take advantage of our energy resources, particularly natural gas, but also coal, oil, nuclear, renewables. That’s number one. A huge opportunity for us, and doing so is gonna bring manufacturing back, because low-cost, plentiful energy is key to manufacturing, in many industries.
Number two, trade. I want tre– to dramatically increase trade and particularly with—with Latin America. Number three, take action to get America on track to have a balanced budget. Now those three things, by the way, are things which we have not been doing over the last few years, which I think are essential to getting this economy going again.
Number four, we’ve got to show better training and education opportunities for our current re– workers and for coming workers. And then finally what I call restoring economic freedom. That means keep our taxes as low as possible, have regulations modern and up to date, get health care costs down. These things will restore economic freedom.
So my policies are very different than anything you’ve seen in the past. They’re really designed for an America which has some new resources, energy being one of them, trade with Latin America being another, and the need for a balanced budget now more urgent than ever before.
To review: The way Mitt Romney’s economic plan differs from what George W. Bush did is that Romney favors exploiting energy resources, free trade, having a good education system, balancing the budget (something every candidate in both parties says they’ll do, but only Bill Clinton actually did), tax cuts, and less regulation. In short, Romney’s program is exactly the same as what George W. Bush did. Yet Romney says, “My policies are very different than anything you’ve seen in the past.” Right.
It isn’t necessary that every presidential candidate come up with a set of policies that are absolutely new and unique. After all, politicians are largely creatures of their parties, and those parties have relatively consistent agendas, so no party nominee is going to offer an agenda that’s unlike anything we’ve seen before. But Romney is presenting a case for his candidacy that is an unusual synthesis of the personal and the policy. Other candidates have centered their candidacies on a personal argument—Bush was a “different kind of Republican” who would deliver us from the bitter partisanship of the 1990s, Obama was the embodiment of hope and change—but Romney’s two-fold claim is that the election is all about the practical problem of improving the economy and that because of who he is, but not because of what he wants to do, only he can solve that practical problem. When he’s forced to get specific, his solution to the practical problem is the standard Republican agenda.
It’s entirely possible that this argument, hollow though it is, could work. Polls seem to indicate that Romney has an advantage on which candidate voters believe would do a better job managing the economy, which is not the same as them thinking all we need to do is cut taxes for the wealthy and remove regulatory constraints on corporations. Indeed, the appropriate follow-up to the question Williams asked is, “George W. Bush did just about everything you’re proposing to do. If it didn’t work then, why is it going to work now?” But nobody has asked Romney that either, so the most advantageous thing for him to do is to keep repeating “I understand how the economy works” and hope he doesn’t have to answer too many questions about what he actually wants to do.
By: Paul Waldman, Contributing Editor, The American Prospect, July 26, 2012
“The Inheritance”: George W. Bush, The Last Guy Mitt Romney Wants In The News
Maybe there’ll come a time somewhere in the future when a Republican presidential candidate jumps at the chance to associate himself with George W. Bush, but we’re not anywhere near that point yet.
In 2008, John McCain kept as much distance from the then-president as possible, appearing with him for a brief, perfunctory endorsement announcement at the White House and relegating him to a pre-taped video appearance at the GOP convention in St. Paul. This time around, Bush was absent when his parents offered a high-profile show of support to Mitt Romney in March, confirming his backing of the presumptive GOP nominee weeks later in a quick, off-camera comment to a reporter while boarding an elevator.
But by the minimal standards of his post-presidency, Bush is really stepping out this week. First, he unveiled a new book that purports to offer a road map to sustained 4 percent economic growth. Then he agreed to an on-camera interview with the Hoover Institution’s Peter Robinson, who wrote speeches for George H.W. Bush and Ronald Reagan in the 1980s. The presidential race came up only once during their hour-long chat, with Bush explaining that he doesn’t want to be in the political game anymore, but that “I’m interested in politics. I’m a supporter of Mitt Romney. But, you know, he can do well without me.” Still, that’s more than Bush has previously had to say on the subject, guaranteeing that it will make news.
In fairness, Bush’s low profile since 2009 isn’t entirely attributable to his pariah status. His father made a point of stepping back from politics after leaving the White House in 1993 and not publicly weighing in on his successor’s administration. In part, W is simply affirming this tradition. But in the 1996 presidential election, the elder Bush was granted a prominent prime time role at the GOP’s national convention, and Bob Dole made a point of conferring with him at the height of the general election campaign.
By contrast, Romney and his fellow Republicans have spent the last three years doing their best to pretend W’s presidency never happened, acknowledging him only when they’re forced to and changing the subject as quickly as possible. The politics are understandable: The GOP’s strategy since 2009 has been to channel the public’s intense economic anxiety into a backlash against Obama that will restore control of the legislative and executive branches to the GOP. That much of the country’s suffering can be linked to the epic economic meltdown that came on W’s watch in 2008 is not something they’d prefer anyone to dwell on.
But, polls show, most voters do remember what happened in 2008 and who was president at the time. This offers President Obama a potential opening to win reelection under economic conditions that you might think would doom an incumbent president. As I’ve noted before, there is research that suggests Obama’s approval rating and standing in head-to-head match-ups with Romney is significantly better than it should be based on the state of the economy – evidence, it would seem, that the uniquely catastrophic circumstances under which he came to power are affording him the benefit of the doubt from some voters.
In that sense, Bush’s reemergence this week is only bad news for Romney, and only good news for Obama. So it’s not surprising that the president scheduled a campaign swing through Texas this week, playing the Bush card without actually mentioning his predecessor’s name:
“We spent almost a decade doing what they prescribed,” Mr. Obama said. “And how did it turn out? We didn’t see greater job growth. We didn’t see middle-class security. We saw the opposite. And it all culminated in the worst financial crisis in our lifetimes, precisely because there were no regulations that were adequate to the kinds of recklessness that was being carried out.” He added, “I don’t know how you guys operate in your life. But my general rule is, if I do something and it doesn’t work, I don’t go back to doing it.”
It’s possible the Obama campaign’s attacks on Romney’s Bain background or his own tax return stonewalling will end up costing Romney a critical point or two (and thus the election) in November. But if Obama survives this campaign, it seems far more likely it will be because voters remembered exactly what he inherited in 2009 and exactly whom he inherited it from.
By: Steve Kornacki, Salon, July 18, 2012
“The Job Creator”: Repeat After Me, Mitt Romney Doesn’t Care About Jobs
If you’re running a campaign against an incumbent president when the economy’s persistently sluggish and unemployment is over 8%, you are naturally going to harp on said president’s failure to create more jobs. This is true even if you are the nominee of the Jewish Anti-Abortion Isolationist Foodie Party (just to make something up), and really just care about “your issues.”
As it happens, Mitt Romney is the nominee of a party whose activist base and elite opinion-leaders alike mainly care about relieving businesses and the wealthy from taxes and regulations, paring back or eliminating the New Deal/Great Society social safety net (along with resisting extensions of it like the Affordable Care Act), and reversing most of the cultural trends of the late twentieth century. Do they think their agenda will generally produce a stronger society and economy, making Americans healthier, wealthier and wiser? Probably, though the “constitutional” wing of the conservative movement tends to treat small government, laissez-faire capitalism, and a patriarchal culture as having been divinely ordained via the Declaration of Independence, and thus as normative regardless of the practical consequences. Would they think that regardless of the current GDP and employment statistics? You betcha, because they were advancing much the same agenda during the late 1990s and throughout the 2000s. Would they support the same agenda if the federal budget were balanced? Absolutely, as we know from their argument prior to enactment of the Bush tax cuts that the federal government was in danger of running surpluses so large that it would have to start buying up assets to soak up the excess revenues.
I mention these familiar if oft-forgotten facts by way of presenting this snippet at The Hill from recent conservative semi-apostate Juan Williams, who is wondering what the Mitt Romney’s actual agenda might be to boost employment:
[F]ixing the economy is the entire basis of Romney’s campaign. So what plans does the GOP candidate have to rev up the economy?
His best-known idea is cutting taxes. But there is no way to specify how many jobs that will create. After-tax profits for corporations are already high.
His most concrete idea for creating jobs is to approve construction of the Keystone XL oil pipeline from Canada to the Gulf of Mexico. The idea has political potency because President Obama, citing environmental concerns, denied a permit for TransCanada Corp. to construct the 1,700-mile pipeline.
However, the number of jobs that would be created by Keystone could generously be described as modest.
That number, according to a study Williams cites, is 1,400. He also goes on to report that less than half of Republicans think Romney has an actual plan for the economy.
While the search for a Romney/GOP “jobs plan” is, to put it mildly, elusive, they do have very concrete ideas for reshaping the tax code and the federal government. It’s called the Ryan Budget, and whatever its long-term effect via the alleged moral tonic to the poor and the liberating impact on “job creators,” the most immediate and by far the most certain consequences for jobs are negative. I mean, you may rhetorically say that public-sector jobs aren’t “real” or “good” or that they pay too much, but they are jobs, not turnips. Combined with the restrictive monetary policies virtually all Republicans favor these days, the short-term prognosis for Republican rule is higher, not lower, unemployment.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, July 17, 2012
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 