“Economic Facts Get In The Way”: For Republicans, Pretending That ‘Up Is Down’ Won’t Cut It
Uh-oh. Now that the economy is doing well, what are Republicans – especially those running for president – going to complain about? And what are Democrats willing to celebrate?
Last week’s announcement that the economy grew at a 5 percent rate in the third quarter of 2014 – following 4.6 percent second-quarter growth – was the clearest and least debatable indication to date that sustained recovery is no longer a promise, it’s a fact.
Remember how Mitt Romney painted President Obama as an economic naïf, presented himself as the consummate job-creator and promised to reduce unemployment to 6 percent by the end of his first term? Obama beat him by two full years: The jobless rate stands at 5.8 percent, which isn’t quite full unemployment but represents a stunning turnaround.
Since the day Obama took office, the U.S. economy has created well over 5 million jobs; if you measure from the low point of the Great Recession, as the administration prefers, the number approaches 10 million. It is true that the percentage of Americans participating in the workforce has declined, but this has to do with long-term demographic and social trends beyond any president’s control.
Middle-class incomes have been flat, despite a recent uptick in wages. But gasoline prices have plummeted to an average of $2.29 a gallon nationwide, according to AAA. This translates into more disposable income for consumers; as far as the economy is concerned, it’s as if everyone got a raise.
The stock market, meanwhile, is at an all-time high, with the Dow soaring above 18,000. This is terrific for Wall Street and the 1 percenters, but it also fattens the pension funds and retirement accounts of the middle class.
All this happy economic news presents political problems – mostly for Republicans but to some extent Democrats as well.
For Rand Paul, Jeb Bush, Chris Christie, Marco Rubio and other potential GOP presidential contenders, the first question is whether to deny the obvious, accept it grudgingly or somehow embrace it.
For years, a central tenet of the Republican argument has been that on economic issues, Obama is either an incompetent or a socialist. It should have been clear from the beginning that he is neither, given the fact that he rescued an economy that was on the brink of tipping into depression – and did it in a way that was friendly to Wall Street’s interests. But the GOP rarely lets the facts get in the way of a good story, so attacks on Obama’s economic stewardship have persisted.
The numbers we’re seeing now, however, make these charges of incompetence and/or socialism untenable. Even the Affordable Care Act – which Republicans still claim to want to repeal – turned out not to be the job-killer that critics imagined. All it has done, aside from making it possible for millions of uninsured Americans to get coverage, is help hold down the cost of medical care, which is rising at its slowest rate in decades.
GOP candidates face a dilemma. To win in the primaries, where the influence of the far-right activist base is magnified, it may be necessary to continue the give-no-quarter attacks on Obama’s record, regardless of what the facts might say. But in the general election, against a capable Democratic candidate – someone like Hillary Clinton, if she decides to run – pretending that up is down won’t cut it.
Likewise, the Republican leadership in the House and now the Senate will confront a stark choice. Do they collaborate with Obama on issues such as tax reform, infrastructure and the minimum wage in an attempt to further boost the recovery? Or do they grumble on the sidelines, giving the impression they are rooting against the country’s success?
Democrats, too, have choices to make. The fall in gas prices is partly due to a huge increase in U.S. production of fossil fuels. “Drill, baby, drill” may have been a GOP slogan, but it became reality under the Obama administration. Is the party prepared to celebrate fracking? Will Democratic candidates trumpet the prospect of energy independence?
Likewise, Elizabeth Warren charges that the administration’s coziness with Wall Street helps ensure that the deck remains stacked against the middle class. Warren says she isn’t running for president but wants to influence the debate. She has. Clinton’s speeches have begun sounding more populist, in spite of her long-standing Wall Street ties.
You know the old saying about how there’s no arguing with success? Our politicians are about to prove it wrong.
By: Eugene Robinson, Opinion Writer, The Washington Post, December 20, 2014
“The Obama Recovery”: You Shouldn’t Conclude That Hitting Yourself In The Head Is Smart Because It Feels So Good When You Stop
Suppose that for some reason you decided to start hitting yourself in the head, repeatedly, with a baseball bat. You’d feel pretty bad. Correspondingly, you’d probably feel a lot better if and when you finally stopped. What would that improvement in your condition tell you?
It certainly wouldn’t imply that hitting yourself in the head was a good idea. It would, however, be an indication that the pain you were experiencing wasn’t a reflection of anything fundamentally wrong with your health. Your head wasn’t hurting because you were sick; it was hurting because you kept hitting it with that baseball bat.
And now you understand the basics of what has been happening to several major economies, including the United States, over the past few years. In fact, you understand these basics better than many politicians and commentators.
Let’s start with a tale from overseas: austerity policy in Britain. As you may know, back in 2010 Britain’s newly installed Conservative government declared that a sharp reduction in budget deficits was needed to keep Britain from turning into Greece. Over the next two years growth in the British economy, which had been recovering fairly well from the financial crisis, more or less stalled. In 2013, however, growth picked up again — and the British government claimed vindication for its policies. Was this claim justified?
No, not at all. What actually happened was that the Tories stopped tightening the screws — they didn’t reverse the austerity that had already occurred, but they effectively put a hold on further cuts. So they stopped hitting Britain in the head with that baseball bat. And sure enough, the nation started feeling better.
To claim that this bounceback vindicated austerity is silly. As Simon Wren-Lewis of Oxford University likes to point out, if rapid growth after a gratuitous slump counts as success, the government should just close down half the economy for a year; the next year’s growth would be fantastic. Or as I’d put it, you shouldn’t conclude that hitting yourself in the head is smart because it feels so good when you stop. Unfortunately, the silliness of the claim hasn’t prevented its widespread acceptance by what Mr. Wren-Lewis calls “mediamacro.”
Meanwhile, back in America we haven’t had an official, declared policy of fiscal austerity — but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments. The good news is that we, too, seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result. We are finally starting to see the kind of growth, in employment and G.D.P., that we should have been seeing all along — and the public’s mood is rapidly improving.
What’s the important lesson from this late Obama bounce? Mainly, I’d suggest, that everything you’ve heard about President Obama’s economic policies is wrong.
You know the spiel: that the U.S. economy is ailing because Obamacare is a job-killer and the president is a redistributionist, that Mr. Obama’s anti-business speeches (he hasn’t actually made any, but never mind) have hurt entrepreneurs’ feelings, inducing them to take their marbles and go home.
This story line never made much sense. The truth is that the private sector has done surprisingly well under Mr. Obama, adding 6.7 million jobs since he took office, compared with just 3.1 million at this point under President George W. Bush. Corporate profits have soared, as have stock prices. What held us back was unprecedented public-sector austerity: At this point in the Bush years, government employment was up by 1.2 million, but under Mr. Obama it’s down by 600,000. Sure enough, now that this de facto austerity is easing, the economy is perking up.
And what this bounce tells you is that the alleged faults of Obamanomics had nothing to do with the pain we were feeling. We weren’t hurting because we were sick; we were hurting because we kept hitting ourselves with that baseball bat, and we’re feeling a lot better now that we’ve stopped.
Will this improvement in our condition continue? Britain’s government has declared its intention to pick up the baseball bat again — to engage in further austerity, which does not bode well. But here the picture looks brighter. Households are in much better financial shape than they were a few years ago; there’s probably still a lot of pent-up demand, especially for housing. And falling oil prices will be good for most of the country, although some regions — especially Texas — may take a hit.
So I’m fairly optimistic about 2015, and probably beyond, as long as we avoid any more self-inflicted damage. Let’s just leave that baseball bat lying on the ground, O.K.?
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 28, 2014
“There’s A New Twist This Time”: To GOP Congress, As Usual, It’s Welfare On The Chopping Block
Congress loves to be Scroogey when it comes to helping the poor at Christmastime. Last year, it let an unemployment extension for the long-term jobless expire during the holidays. That was right after food-stamps were cut. This year, a bare-bones welfare program will continue into the New Year without being updated. For some, it’s a mixed blessing: This Congress would likely cut the program even more rather than fix its problems.
In late 2010, Tea Party Republicans first stormed into the House of Representatives with their budget-cutting agenda, one of the first items they nominated for the chopping block was a component of the program once known as welfare.
The program was a $25 billion emergency fund that passed in the stimulus act and encouraged employers to hire low-income workers by subsidizing their salaries through welfare-to-work funds. Throughout 2009 and 2010, it had created 250,000 jobs in 37 states, including conservative states like Mississippi, and was widely popular because it helped bolster employment during the economic downturn.
Despite the program’s popularity, Congress let it die in September 2010. So it was ironic a couple of months later when the Tea Partiers were railing against it—it had already expired.
And that’s how fights over virtually all aspects of the program once known as welfare go. Welfare recipients have had to meet work requirements to receive their checks ever since President Bill Clinton signed the welfare reform law in 1996, and those paychecks are meager: in most states, the average family will receive between $200 and $400, clocking in between 20 and 30 hours of work activities and applying for as many as 20 jobs a week. Yet stereotypes of the program as a large handout to moochers who don’t have jobs remain, and the program is always among the first that the public and conservatives would sacrifice to budget cuts.
And so as the year ends, Temporary Assistance for Needy Families, as what we call welfare is officially known, is not being reauthorized again this year. The bill expired way back in 2010. Congress keeps funding it through continuing resolutions, but TANF’s existence has been year-to-year, and supporters of the social safety net have always preferred full reauthorization.
But there’s a new twist: Now, many progressives and policymakers who care about the poor are ironically happy that TANF isn’t being reauthorized again this year. The reason? These folks fear that reauthorizing the bill will hand Republicans who control the house—and as of January, the Senate—the opportunity they’ve been waiting for—to gut it.
The program already operates at a minimum level. In 1997, the first year after the law was passed, state governments spent 70 percent of the funds provided through the program on cash assistance for families. Now they only spend about a quarter of their money by directly helping families, and they send the rest of the money on other welfare-related programs or use it to close holes in their own budgets. Critics noted this led to the program’s lackluster response to the economic crisis. In 2011, only 27 percent of families living in poverty were receiving welfare assistance.
Among the fears are that House Republicans will try to eviscerate funding—which in 2013 totaled about $16.5 billion for the welfare program. The House budget chair, the Wisconsin Republican Paul Ryan, wants to turn all safety-net programs into a giant block grant to the states—he says it would maintain the programs’ current levels of funding but most experts believe funding would ultimately dwindle and serve fewer families.
Republicans showed their gleeful willingness to go after safety-net programs when they tried to slash food stamps by more than half. And when President Barack Obama attempted to provide waivers to states so that they could be more flexible in how they administered welfare-to-work and do less paperwork for the federal government, Republicans accused him of gutting the work requirements. So not only are Republicans likely to cut funding, but they would also resist any changes that might actually make the program run better.
This is why progressives are just as happy to see TANF not be reauthorized. However, there’s a downside to that. Only eight states have raised the amount of money that families get to keep pace with inflation, which is why so many families in so many states get so little money. Reauthorizing the bill could force states to readjust the formulas they use to determine benefits so that families get more.
The stimulus program that helped low-income Americans find employment during the recession—the one the Republicans were so proud to claim credit for cutting—could be reauthorized as well. While the economy has been inching toward recovery, the long-term unemployed and low-income Americans are still struggling to find good jobs that pay well, and increased welfare funds designed to employ them could bolster the economy again.
There are other programs, including those designed to help states serve their clients better, that have expired or gotten lost in the shuffle. Many advocates want those changed, adjusted, or bolstered, and the only way to do that is to open up the bill and reauthorize it.
Instead, conservatives still view the fact that Americans need help from the government as a disaster, and are more likely to cut benefits than to think about helping them. It was a Republican Congress working with a Democratic president that succeeded in passing the welfare reform bill the first time. But this time around, advocates are too worried Republicans will do something unprecedented, like they did with food stamps—which is try to tear the program completely apart.
By: Monica Potts, The Daily Beast, December 26, 2014
“Destructive In The Long Run”: The Red State Economic Miracle That Wasn’t
For years progressives in blue states have had to put up with listening to conservatives in red states bray about their supposed economic “miracles” of low-tax, low-investment paradises of low employment in places like Texas and North Dakota.
The fact that these economies were creating mostly minimum-wage jobs with terrible safety nets and awful infrastructure fell on deaf ears. So did the response that those jobs were temporary and fossil-fuel based, and would not last. Undiversified economies based on a single natural resource tend to fare poorly over time.
And indeed it looks like progressives are getting the last laugh due to low oil prices:
States dependent on oil and gas revenue are bracing for layoffs, slashing agency budgets and growing increasingly anxious about the ripple effect that falling oil prices may have on their local economies. The concerns are cutting across traditional oil states like Texas, Louisiana, Oklahoma and Alaska as well as those like North Dakota that are benefiting from the nation’s latest energy boom.
“The crunch is coming,” said Gunnar Knapp, a professor of economics and the director of the Institute of Social and Economic Research at the University of Alaska Anchorage.
Michael Hiltzik at the L.A. Times had more on the topic earlier this week:
A greater danger to the state’s boom-era reputation is that the receding tide may expose a lot of economic wreckage to public view. One consequence of the state’s low-tax, low-service credo is that infrastructure spending has been starved, just at the moment when it’s most needed. As the Texas Tribune reported last year, local roads have become so damaged by heavy oil-patch traffic that in some districts the only option has been to convert paved roads to gravel — there’s no money for repaving, despite the state’s burgeoning wealth.
That shows how little pressure has been placed on the oil industry to carry its fair share of the public cost of the boom or contribute adequately to public investment. When the boom becomes a bust, there will be even less money, and you can bet that the oil industry will be pleading poverty.
When it isn’t simply padding the bottom lines of the wealthiest Americans, most conservative economic policy tends to be about taking the easiest, most aggressive and short-sighted approach to any problem. Eliminating taxes so you can entice corporate grifters may net some immediate transitory gains, but it’s destructive in the long run. Similarly, putting your eggs into the fossil fuel basket doesn’t just destroy your local environment and add to the climate change already ravaging your state, it also puts you at severe risk of economic seizures if fossil fuel prices decline.
By: David Atkins, Political Animal Blog, The Washington Monthly, December 27, 2014
“Tidings Of Comfort”: On Multiple Fronts, Government Wasn’t The Problem; It Was The Solution
Maybe I’m just projecting, but Christmas seemed unusually subdued this year. The malls seemed less crowded than usual, the people glummer. There was even less Muzak in the air. And, in a way, that’s not surprising: All year Americans have been bombarded with dire news reports portraying a world out of control and a clueless government with no idea what to do.
Yet if you look back at what actually happened over the past year, you see something completely different. Amid all the derision, a number of major government policies worked just fine — and the biggest successes involved the most derided policies. You’ll never hear this on Fox News, but 2014 was a year in which the federal government, in particular, showed that it can do some important things very well if it wants to.
Start with Ebola, a subject that has vanished from the headlines so fast it’s hard to remember how pervasive the panic was just a few weeks ago. Judging from news media coverage, especially but not only on cable TV, America was on the verge of turning into a real-life version of “The Walking Dead.” And many politicians dismissed the efforts of public health officials to deal with the disease using conventional methods. Instead, they insisted, we needed to ban all travel to and from West Africa, imprison anyone who arrived from the wrong place, and close the border with Mexico. No, I have no idea why anyone thought that last item made sense.
As it turned out, however, the Centers for Disease Control and Prevention, despite some early missteps, knew what they were doing, which shouldn’t be surprising: The Centers have a lot of experience in, well, controlling disease, epidemics in particular. And while the Ebola virus continues to kill many people in parts of Africa, there was no outbreak here.
Consider next the state of the economy. There’s no question that recovery from the 2008 crisis has been painfully slow and should have been much faster. In particular, the economy has been held back by unprecedented cuts in public spending and employment.
But the story you hear all the time portrays economic policy as an unmitigated disaster, with President Obama’s alleged hostility to business holding back investment and job creation. So it comes as something of a shock when you look at the actual record and discover that growth and job creation have been substantially faster during the Obama recovery than they were during the Bush recovery last decade (even ignoring the crisis at the end), and that while housing is still depressed, business investment has been quite strong.
What’s more, recent data suggest that the economy is gathering strength — 5 percent growth in the last quarter! Oh, and not that it matters very much, but there are some people who like to claim that economic success should be judged by the performance of the stock market. And stock prices, which hit a low point in March 2009, accompanied by declarations from prominent Republican economists that Mr. Obama was killing the market economy, have tripled since then. Maybe economic management hasn’t been that bad, after all.
Finally, there’s the hidden-in-plain-sight triumph of Obamacare, which is just finishing up its first year of full implementation. It’s a tribute to the effectiveness of the propaganda campaign against health reform — which has played up every glitch, without ever mentioning that the problem has been solved, and invented failures that never happened — that I fairly often encounter people, some of them liberals, who ask me whether the administration will ever be able to get the program to work. Apparently nobody told them that it is working, and very well.
In fact, Year 1 surpassed expectations on every front. Remember claims that more people would lose insurance than gained it? Well, the number of Americans without insurance fell by around 10 million; members of the elite who have never been uninsured have no idea just how much positive difference that makes to people’s lives. Remember claims that reform would break the budget? In reality, premiums were far less than predicted, overall health spending is moderating, and specific cost-control measures are doing very well. And all indications suggest that year two will be marked by further success.
And there’s more. For example, at the end of 2014, the Obama administration’s foreign policy, which tries to contain threats like Vladimir Putin’s Russia or the Islamic State rather than rushing into military confrontation, is looking pretty good.
The common theme here is that, over the past year, a U.S. government subjected to constant bad-mouthing, constantly accused of being ineffectual or worse, has, in fact, managed to accomplish a lot. On multiple fronts, government wasn’t the problem; it was the solution. Nobody knows it, but 2014 was the year of “Yes, we can.”
By: Paul Krugman, Op-Ed Columnist, The New York Times, December 25, 2014
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 