“It’s Ryan’s Party”: Movement Conservatives Openly Control GOP At Last
I’m not sure I believe in Freudian slips, and Barack Obama made a similar mistake when he introduced Joe Biden four years ago, but what the hell: When Mitt Romney slipped up this morning and introduced Paul Ryan as “the next president of the United States,” he spoke the truth. The premise of my April profile was that Ryan had become the leader of the Republican Party, with the president himself relegated to a kind of head-of-state role, at least in domestic affairs. As Grover Norquist put it, the only requirement for a nominee was enough working digits to sign Ryan’s plan. Ryan’s prestige within the party is unassailable. If he doesn’t want something to happen, it won’t happen (say, several bipartisan deals to reduce the deficit that he squashed.) If he wants something to happen, however foolhardy (like putting the entire House GOP caucus on record for his radical budget plan despite a certain veto) it will happen. It is Ryan’s party.
The only real question left was how to handle the optics of this reality. The original operating plan of the Romney campaign was to run against the bad economy, and then implement the Ryan Plan, which of course is a long-term vision of government unrelated to the current state of the labor market. Romney’s campaign had been bravely insisting for weeks that the plan was working, or that it was due for a 1980-like October leap in the polls, but clearly Romney did not believe, or had come to disbelieve, its own spin.
So Romney is conceding that the current track of the campaign is headed for a narrow defeat and has decided to alter its course. Obama has successfully defined Romney as an agent of his own economic class, a ploy that was clearly designed to make the attacks on Romney’s policy agenda hit home. (Focus groups had previously found that undecided voters found literal descriptions of Romney’s plan so radical they didn’t believe them.)
Romney has made the risky but defensible calculation that, if he is to concur with most of his party’s ideological baggage, he might as well bring aboard its best salesman. And Ryan is that. During his rise to power he has displayed an awesome political talent. He is ambitious but constantly described by others as foreswearing ambition. He comes from a wealthy background but has defined himself as “blue collar,” because he comes from a place that is predominantly blue collar. He spent the entire Bush administration either supporting the administration’s deficit-increasing policies, or proposing alternative policies that would have created much higher deficits than even Bush could stomach, but came away from it with a reputation as the ultimate champion of fiscal responsibility.
What makes Ryan so extraordinary is that he is not just a handsome slickster skilled at conveying sincerity with a winsome heartland affect. Pols like that come along every year. He is also (as Rich Yeselson put it) the chief party theoretician. Far more than even Ronald Reagan, he is deeply grounded is the ideological precepts of the conservative movement — a longtime Ayn Rand devotee who imbibed deeply from the lunatic supply-side tracts of Jude Wanniski and George Gilder. He has not merely formed an alliance with the movement, he is a product of it.
In this sense, Ryan’s nomination represents an important historical marker and the completion of a 50-year struggle. Starting in the early sixties, conservative activists set out to seize control of the Republican Party. At the time the party was firmly in the hands of Establishmentarians who had made their peace with the New Deal, but the activists regarded the entire development of the modern regulatory and welfare states as a horrific assault on freedom bound to lead to imminent societal collapse. In fits and starts, the conservatives slowly advanced – nominating Goldwater, retreating under Nixon, nominating Reagan, retreating as Reagan sought to govern, and on and on through Gingrich, Bush, and his successors.
Over time the movement and the party have grown synonymous, and Ryan’s nominations represents a moment when the conservative movement ceased to control the politicians from behind the scenes and openly assumed the mantle of power.
By: Jonathan Chait, Daily Beast, August 11, 2012
“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
“Polarized, Inefficient and Unproductive”: Congressional Brinkmanship Threatens Economic Recovery
Congress’s job approval rating has slowly ticked up over the past six months—reaching a whopping 16 percent in the first half of July, with 78 percent disapproving. However, even these dismal numbers may be giving Congress too much credit, especially if legislators don’t act soon to avoid the looming fiscal cliff.
The scenario is eerily reminiscent of last spring, when political deadlock over the federal budget threatened a government shutdown before an 11th-hour deal was struck. Such political wrangling risked the loss of 800,000 jobs and the curtailment of crucial public services such as mortgage, passport, and loan processing—not to mention a massive disruption of a fragile economic recovery.
And another similar scenario just a few months later was the battle over the federal debt ceiling, gambling the possibility of another government shutdown. The haphazard deal reached during that policy fight, which failed to produce long-term practical solutions, laid the groundwork for what the country faces today.
The risks of the impending fiscal cliff are similar, if not graver. If current fiscal policy is allowed to take effect, the United States economy will simultaneously experience across-the-board income tax hikes and deep, automatic spending cuts of billions of dollars at the end of this year. According to the nonpartisan Congressional Budget Office, these policies combined will contribute to lower incomes and higher unemployment numbers, slowing economic growth in 2013 to a mere 0.5 percent—and sending America into a double-dip recession.
The general assumption is that lawmakers will not let it get to that point; spending measures will be passed and tax cuts will be extended—though how much and for whom remains undecided. We all need to be asking when this is going to happen.
The 112th Congress has been called the most polarized, inefficient, and unproductive Congress in the 236-year history of the United States; and if they’re trying to fight that image, it sure is hard to tell. Legislators have shown little political will to act before the November presidential elections, dangerously close to the December 31 deadline when the first of a series of tax cuts will expire.
Such political brinkmanship is detrimental to the business environment and to a weak economic recovery. Small businesses are particularly hard hit by the uncertain climate created by Washington, and the threat of substantial tax increases has done nothing to ease fears. According to a Chamber of Commerce poll in July, over half of small business owners cite economic uncertainty as their top concern. Only 20 percent of those surveyed expected to hire in 2013.
This is bad news—with real implications for American prosperity. Small businesses are the key to economic recovery, spurring the majority of job creation. But to hire, business owners need the assurance of a stable investment environment in which they can secure returns. Regardless of whether America falls off the fiscal cliff, Congress’s behavior is already having detrimental effects on business and employment expectations. Amid discouraging jobs and industry reports, this political game is not something we can afford.
Lawmakers must realize that their gridlocked partisanship is hurting a nation already struggling. The 112th Congress has five months left in its term. Is it too naïve to hope things might change?
By: Steve Zelnak, U. S. News and World Report, August 3, 2012
Government Spending Is Just What Our Economy Needs
Our nation’s economy is approaching a precipice. The continuing housing market crisis has stripped about $10 trillion from families’ assets, and nearly 1 in 10 workers are unemployed. Nearly 1 in 10 others are either working less than they want or have given up their job search. Family income is now back where it was in 1996, in inflation-adjusted dollars.
This all means there is less money flowing through our economy. That’s just math.
The lingering consequences of the Great Recession—the housing crisis, the jobs crisis, the fear among businesses to invest their earnings despite record profits—continue to pull against faster economic growth and job creation. Because customers have less money to spend due to the collapse of the housing bubble and the ensuing high unemployment, businesses have little incentive to hire and invest.
Even Federal Reserve Chairman Ben Bernanke says there is a role for fiscal policy. Monetary authorities have already pushed interest rates down to zero. And they have few levers left to spur growth, although there are some steps that would continue to help on the margin.
In short, the economy continues to suffer from a lack of demand.
The federal government can help with this. We know that government spending can help restart an economy. Over the past two years, increased investments in infrastructure have saved or created 1.1 million jobs in the construction industry and 400,000 jobs in manufacturing by March 2011. Almost all of these jobs were in the private sector.
Money targeted toward the long-term unemployed helped not only those individual families hardest hit by the Great Recession but also kept dollars flowing into their local communities, keeping an average of 1.6 million American workers in jobs every quarter during the recession. But now, the threat of jobs again disappearing looms large.
Unless Congress acts, the private sector will continue to generate insufficient demand. A sweeping consensus of economists and forecasters across the political divide now calls for the government to forcefully intervene in precisely this way, to create demand for goods and services, which will in turn boost hiring and business growth. Goldman Sachs, for example, said the positive effect of the president’s American Jobs Act would increase U.S. gross domestic product by 1.5 percent in 2012.
Conservatives want us to believe that America’s broke, that we cannot afford to address our most pressing issue—mass unemployment and stagnating incomes. The reality is that there are clear steps that we can take to pave the way for economic growth. Congress just needs to act.
By: Heather Boushey, Economist-Center for American Progress, Published in U. S. News and World Report, September 27, 2011
Ten Reasons Why Immigration Reform Is Important To Our Fiscal Health
All eyes in Washington these days are on the new congressional super committee. The 12 members from both parties in both chambers of Congress have been assigned the task of developing a plan to reduce the federal deficit by $1.5 trillion over the next decade or risk setting off deficit-cutting triggers that will force sharp cuts to both defense and domestic spending.
There are many ways the members of this committee can reach the $1.5 trillion target between now and their Thanksgiving week deadline. We at the Center for American Progress understand that comprehensive immigration reform is not among the deficit reduction options on the table but want to urge the super committee to consider it. Comprehensive immigration reform is one key to boosting economic growth and thus helping to solve our nation’s fiscal problems.
Here are the top 10 reasons why immigration reform, or the lack thereof, affects our economy.
Additions to the U.S. economy
1. $1.5 trillion—The amount of money that would be added to America’s cumulative gross domestic product—the largest measure of economic growth—over 10 years with a comprehensive immigration reform plan that includes legalization for all undocumented immigrants currently living in the United States.
2. 3.4 percent—The potential GDP growth rate over the past two years if comprehensive immigration reform had gone into effect two years ago, in mid-2009. (see Figure 1)
3. 309,000—The number of jobs that would have been gained if comprehensive immigration reform had gone into effect two years ago, in mid-2009. A GDP growth rate of 0.2 percent above the actual growth rate translates into, based on the relationship between economic growth and unemployment, a decrease in unemployment by 0.1 percent, or 154,400 jobs, per year.
4. $4.5 billion to $5.4 billion—The amount of additional net tax revenue that would accrue to the federal government over three years if all undocumented immigrants currently living in the United States were legalized.
Revenue generated by immigrants
5. $4.2 trillion—The amount of revenue generated by Fortune 500 companies founded by immigrants and their children, representing 40 percent of all Fortune 500 companies.
6. $67 billion—The amount of money that immigrant business owners generated in the 2000 census, 12 percent of all business income. In addition, engineering and technology companies with at least one key immigrant founder generated $52 billion between 1995 and 2005 and created roughly 450,000 jobs.
Taxes generated by immigrants
7. $11.2 billion—The amount of tax revenue that states alone collected from undocumented immigrants in 2010.
Negative consequences of mass deportation
8. $2.6 trillion—The amount of money that would evaporate from cumulative U.S. GDP over 10 years if all undocumented immigrants in the country were deported.
9. 618,000—The number of jobs that would have been lost had a program of mass deportation gone into effect two years ago, in mid-2009. A mass deportation program would have caused GDP to decrease by 0.5 percent per year, which, based on the relationship between economic growth and unemployment, translates to an increase in unemployment by 0.2 percent, or 309,000 jobs, per year.
10. $285 billion—The amount of money it would cost to deport all undocumented immigrants in the United States over five years.
The upshot
Most Americans and their elected representatives in Congress would be pleasantly surprised to learn about the substantial benefits of comprehensive immigration reform to our nation’s broad-based economic growth and prosperity, and thus our ability to reduce our federal budget deficit over the next 10 years. Given how difficult a challenge the super committee faces, we cannot afford to ignore any viable options for strengthening our economy. We hope the super committee takes these top 10 economic reasons into account as they move forward with their deliberations.
By: Angela M. Kelley and Philip E. Wolgin, Center For American Progress, September 29, 2011
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