“Austerity’s End Strengthens U.S. Recovery”: Speechless, Republicans Fall Back To Peddling More Nonsense
For a variety of partisan and ideological reasons, the right finds it necessary to believe austerity helps the economy. Conservatives, on Capitol Hill and off, remain wedded to the idea that taking capital out of the economy and weakening demand will lead to more growth, all evidence to the contrary notwithstanding.
In an amusing twist, as the U.S. economic recovery gains strength, some on the right actually feel vindicated.
Grover Norquist would like Republicans to shut up about how bad the economy is, and instead take credit for the recovery.
The prominent anti-tax crusader hasn’t turned into a bullhorn for President Barack Obama’s economic policies; he still thinks they’re a drag on jobs and wages. But he’s also grown critical of his fellow Republicans for making poor strategic and messaging decisions on several key issues. Rather than tying the economic recovery to spending cuts ushered in by the sequester and to the continuation of 85 percent of the Bush tax cuts, he said, some in the party have insisted their own leaders fumbled those items.
It’s an interesting course correction for the right. In recent years, Republicans have said the combination of the Affordable Care Act, federal regulations, and higher taxes on the wealthy are crushing the economy. That argument obviously doesn’t make any sense in light of the strongest growth and job creation in over a decade.
So Norquist is suggesting his party flip the script: sure the economy is starting to soar, he says, but that’s only because deep spending cuts like “the sequester” gave the nation a big boost. Austerity took capital out of the system, some conservatives are now arguing, and just look at how great the results are!
It’s important to understand the degree to which Norquist has the story backwards. Recent developments haven’t bolstered conservative economic theories; they’ve done the opposite.
First, the national economy hasn’t improved as a result of spending cuts, but rather, the end of spending cuts.
For a long stretch, government spending cutbacks at all levels were a substantial drag on economic growth. Now, finally, relief is in sight. For the first time since 2011, local, state and federal governments are providing a small but significant increase to prosperity. […]
Across the nation, state and local governments, Democratic and Republican alike, are spending on projects that were stalled. Teachers, who were laid off in droves in recent years, are being hired again. Even federal spending in some sectors is on the rise.
The more the public sector starts to reinvest, as opposed to scaling back, the stronger economic growth becomes. This is the polar opposite of Republican economic theory, and yet, the laws of supply and demand don’t much care about politicians’ ideology.
Second, as Danny Vinik explained, “one of the big reasons that the economy kicked into gear in the latter half of this year is that the Murray-Ryan budget deal alleviated much of sequestration. Fiscal policy, finally, is largely not standing in the way of stronger growth.”
Paul Krugman last week seemed to anticipate Norquist’s argument, and preemptively destroyed it.
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. […]
[I]n 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.
I can appreciate the dilemma facing Norquist and his allies when it comes to explaining the sudden economic surge. Indeed, after the strongest economic growth in 11 years, Republicans greeted the news with total silence – literally.
And if I were in their shoes, I’d probably be speechless, too. But that’s no excuse for peddling nonsense – those hoping to credit austerity for a healthy recovery clearly have no idea what they’re talking about.
By: Steve Benen, The Maddow Blog, January 2, 2014
“It’s Not My Job”: Scott Brown, “I Am Not Going To Create One Job”
Former Sen. Scott Brown (R-Mass.), on the campaign trail in New Hampshire, appeared on a local radio show this week and caused a bit of a stir. Specifically, he suggested his supporters in neighboring states should come to the Granite State, take advantage of same-day registration, and vote for him, in effect calling for voter fraud on a massive scale.
The problem, of course, was that Brown was kidding. If you listen to the audio, it seems he probably wasn’t serious about the scheme, though given his personal circumstances, this is an odd thing for Brown to joke about.
But a day later, the former senator was entirely serious when he made these comments to a group of voters:
“Here’s the thing. People say, ‘What are you going to do to create jobs?’ I am not going to create one job, it is not my job to create jobs. It’s yours. My job is to make sure that government stays out of your way so that you can actually grow and expand. Obamacare’s a great example. The number one job inhibitor right now is Obamacare…. We have to repeal it.”
As is too often the case, Brown seems a little confused about public policy. On health care, there’s literally nothing to suggest the Affordable Care Act is undermining job growth, just as there’s literally nothing to suggest unemployment will improve if Scott Brown takes health care benefits away from millions of Americans. The very idea is bizarre.
But that, of course, is secondary to the Republican’s boast that he is “not going to create one job.” This is so misguided, it’s the kind of comment that’s likely to linger for a while.
Note, for example, Brown is simply wrong on the basics of economic policy. The public sector creates jobs all the time. How a former U.S. senator can fail to understand this is a bit of a mystery.
Also, when he was in Massachusetts, Brown used to say that he could, in fact, create jobs through government policymaking. What caused the former GOP lawmaker to change his mind when he changed states? Why did he think he could create jobs in Massachusetts, but not in New Hampshire?
For that matter, just as a matter of rudimentary political competence, what kind of candidate tells voters, “I am not going to create one job”?
By: Steve Benen, The Maddow Blog, September 4, 2014
“Greed Has Not Been So Good”: The Private Sector Does Not Produce Public Virtue
Ever since he first proposed it in the same year Thomas Jefferson declared all men to be created equal, people have been delighted and beguiled by the hidden workings of Adam Smith’s famous “invisible hand.”
For a millennia or more, humans who marveled at the orderly movements of the heavens sought to invent some system to explain and predict the comings and goings of the planets. And so, it was entirely inevitable that in the fullness of time people would seek to impose the cosmic reliability of celestial mechanics onto more terrestrial phenomenon as well, like economics.
“Let the market decide!” That has been the battle cry of free market aficionados from the day Adam Smith first suggested that private avarice might transubstantiate into public virtue right through to the unspoken suppositions buried deep within Congressman Paul Ryan’s god-awful budget that tax cuts pay for themselves and the whole point of national fiscal policy is to lift from the minds of America’s job-producing investor class the dark clouds of “uncertainty.”
But what if the laissez faire conception of the free market doesn’t hold up any better than did the Ptolemaic vision of an earth-centered solar system that very nearly got Galileo burned at the stake for contradicting?
What if private vice doesn’t produce public virtue at all, as Adam Smith surmised, but rather invites a heedless and reckless pursuit of private profit that leads inexorably to public catastrophe? That was the conclusion which the Chicago-school conservative Richard Posner reluctantly reached after sifting through the rubble following the collapse of capitalism in 2008.
In his 2009 diagnosis of the most recent financial crisis, The Failure of Capitalism, Posner concluded that the fundamental problem with free market capitalism is that behavior which is perfectly rational when pursued by individuals, and individual firms, is disastrous when that behavior is aggregated across the entire society.
The micro-economic laws of supply and demand that tell an economic participant how to use the price mechanism to maximize profits, in other words, are worse than worthless as a macro-economic guide for the national policymaker whose aim is, not profits, but the productivity and prosperity of the economy as a whole.
It makes perfect sense for the consumer to buy when the market is strong and save when it is weak, “but by doing this they make the downturn worse,” says Posner, since from the standpoint of the overall society “we want people to save when times are good and spend when times are bad.”
Likewise, it can be rational to ride one of the serial economic bubbles that have become all too commonplace since high finance replaced making things as America’s signature industry — even if you know it is a bubble — since the individual investor can never know when that bubble will burst. And until it does, says Posner, there are lots of profits to lose if one climbs off the bubble too soon.
As a former Citigroup CEO put it: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing you got to get up and dance. And we’re still dancing.”
Because risk and return are positively correlated, Posner says a firm that plays it safe is, paradoxically, “courting failure because investors will turn elsewhere.”
Likewise, while a “cascade” of bank failures could bring the economy to a halt, Posner says “no individual bank has an incentive to take measures to avoid such a consequence.”
That is why, he says, it may be risky to follow the herd, but it is not irrational.
Since the 2008 collapse, the media has been on high alert (unlike the government) for the scoundrels and knaves who brought our economy to grief. But in apportioning blame, Posner says “there is no need to bring cognitive quirks, emotional forces, or character flaws into the causal analysis.”
The “rational maximization” of businessmen and consumers all legally pursuing their self-interest, together and intelligently, within a framework of property and contract rights, was all it took to “set the stage for economic catastrophe.”
It’s this “rational indifference” to the consequences of one’s own business and consumption behavior — an indifference baked into the very nature of the “free” market itself — that explains why government has a duty to do more than merely prevent fraud, theft and other infringements of property and contract rights, even though this “is the only duty that libertarians believe government has,” as Posner says.
Government also has an obligation to regulate financial behavior, says Posner, for without such regulation “the rational behavior of law abiding financiers and consumers can precipitate economic disaster.”
Given the structural deficiencies of the free market and the perverse, self-destructive incentives it creates, it was probably smart for conservatives to shift the focus of their cheerleading away from capitalism’s economic performance and towards laissez faire’s imagined moral underpinnings instead — freedom, liberty, individualism and all of that. That’s because, as an economic incentive that promises broad-based prosperity, greed, it turns out, has not been so good.
By: Ted Frier, Open Salon Blog, Salon, March 21, 2013
“Our Authentic Tradition”: Here’s To A Kinder, Gentler 2013
The boardwalk where generations strolled along one of the world’s great urban beaches is gone, twisted and then tossed into neighborhood streets by an unforgiving storm called Sandy.
Off-season devotees of the Atlantic are bound together in homage to the waves even after the temperatures have dropped and bathing suits have given way to fleece. But now, the joy of a winter’s day walk along the ocean between Beach 120th and 130th streets quickly gives way to sorrow at the sight of collapsed roofs, mounds of rubble, front porches warped into unnatural shapes and homes blown from their foundations now perching at perilous angles.
Still, the human spirit cannot be blown away. The highlight of my beach walk was etched on a plywood barrier protecting an empty lot. Someone had scrawled the words: “NO retreat. NO Surrender. Not now. Not Ever. Rockaway 4ever.”
For political junkies, the meaning of 2012 was defined by an electoral verdict rendered by a richly diverse electorate on behalf of President Obama. History may well judge the election as the year’s decisive event, a turning point in our national argument.
Yet it was also a year that ended in twin tragedies.
First came the devastation of Hurricane Sandy in Rockaway, and in New Jersey, Long Island, Staten Island, Manhattan and Connecticut. Sandy taught me something troubling about the limits of my own empathy. Of course I felt for those elsewhere whose lives were wrecked and whose communities were torn apart in other natural disasters. Televised reports seared New Orleans, and especially its Lower Ninth Ward, into the consciousness of all Americans.
But television pictures are less powerful than ties to a particular place and to the people who live there. My mother-in-law, Helen Boyle, and the families of two of my brothers-in-law, Brian and Kevin Boyle, were all displaced by the storm. They inspire my love for Rockaway, a place that was also home to so many firefighters, police officers and others who perished in the Twin Towers on Sept. 11, 2001.
We can’t forget Rockaway’s times of sadness, but these cannot wipe away so many moments of delight. Whenever we arrive for one of our frequent visits, my wife, Mary, our three kids and I are immediately drawn in as if we have spent our whole lives here. Old-fashioned places are like that. Community is not a philosophical abstraction in the blocks of the Belle Harbor neighborhood where my extended family lives.
An experience like Sandy dissolves ideology. My sister-in-law Kathy Boyle, part of the management team that helped keep South Nassau Communities Hospital open during the storm, offered a view of the role of private and public action so filled with common sense that it would never enter Washington’s debate.
In politics, we debate, uselessly, whether government agencies or nonprofits are “better.” Her conclusion is that not-for-profits with ties to people and neighbors — Catholic Charities and a slew of other religious groups, Team Rubicon, local charitable organizations such as Rockaway Wish, Rockaway Help and the Graybeards — were absolutely vital in the earliest days after the storm, before government help was up and running.
Then, government could kick in with larger-scale aid and basic services, notably a New York City Sanitation Department that cleared away mountains of sand and debris.
Kathy, more conservative than I, has no illusions about government, yet she also has no illusions that we can live without it. At the same time, none of us should pretend that government, without community, religious and nonprofit associations, can solve our problems all by itself. Our authentic tradition is to bring the public and voluntary spheres together, not divide them.
And surely government has no more important role than in protecting its citizens, young children above all, from violence. However much we identify with Sandy’s victims, we can probably never fully fathom the desolation felt by the parents in Newtown, Conn. A hurricane has no face. Nature has no conscience. The loss of a child to random violence committed by another human being is an inexplicable evil.
We must act forcefully to contain gun violence, and that is a political matter. But a year that ended on notes of heroism in response to natural disaster and endurance in response to human horror brings to mind George H.W. Bush’s challenge: We need to become “a kinder, gentler nation.” That seems a worthy resolution for 2013.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, December 30, 2012
“Truth Be Told”: Hey Mitt, The American Jobs Act Still Exists
Mitt Romney is back to accusing President Obama of having no plan for economic growth:
The president’s policies have not gotten America working again. And the president is going to have to stand up and take responsibility for it. I know he’s been planning on going across the country and celebrating what he calls ‘forward.’ Well, forward doesn’t look a lot like forward to the millions and millions of families that are struggling today in this great country. It doesn’t have to be this way. The President doesn’t have a plan, hasn’t proposed any new ideas to get the economy going—just the same old ideas of the past that have failed. [Emphasis added]
The political world has all but forgotten the American Jobs Act, but it remains on the table as Obama’s plan for juicing the economy. If passed in full, the Jobs Act would cut payroll taxes for businesses, double the size of the payroll tax cut for individuals, give aid to states to prevent public sector layoffs, and increase infrastructure spending. All together, the Jobs Act would create 1.9 million jobs over the next year.
Romney, on the other hand, doesn’t have a plan for generating demand and creating short-term economic growth. What he has is a plan designed for long-term problems; he wants to expand domestic energy production, sign new trade agreements, cut the corporate tax rate and confront China over currency manipulation. What’s more, he wants to dramatically reduce the size of government and shrink the federal workforce. As Greg Sargent pointed out last month, this agenda—particularly the plans to cut federal spending—would have a negative shock on the economy. If you assume Romney intends to implement the Ryan budget—which he has said on multiple occasions—his plan would cost the economy 1.3 million jobs, according to the Economic Policy Institute.
The only jobs plan on the table right now is the one proposed by the Obama administration. Republicans should be pressured to pass it, and Romney should be challenged on his assertion that the White House has nothing to offer.
By: Jamelle Bouie, The American Prospect, July 6, 2012
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