“Emerging From The Ferment”: The Real Irony Of Scott Walker’s Messy Personal Finances
The finances of Wisconsin Gov. Scott Walker got a rather stern once-over from National Journal on Monday.
“Walker has two credit-card debts of more than $10,000 apiece on separate cards and is paying an eye-popping 27.24 percent interest rate on one of them,” the Journal harrumphed, before quickly lasering in on the irony. “The Republican presidential candidate has cast himself as both a fiscal conservative leader and a penny-pinching everyman on the campaign trail, often touting his love of Kohl’s, the discount department store.”
Walker isn’t the first Republican presidential hopeful to get this treatment either. Back in June, The New York Times took Sen. Marco Rubio of Florida to task for a “strikingly low savings rate” and some household purchases of questionable wisdom.
This is a deeply silly genre of journalism. It treats troubles the vast majority of Americans grapple with as vaguely scandalous. And it implicitly assumes the same rules of thumb that should guide household budgets should also guide the federal budget, which is catastrophically wrong.
More to the point, other details in the Journal piece offer a brief look at a presidential candidate of relatively modest means.
“Walker listed only six investments worth between $1,000 and $15,000, a whole life insurance plan worth between $15,000 and $50,000, and a deferred compensation plan from Milwaukee County worth between $15,000 and $50,000,” the Journal continued. Walker received a $45,000 advance for a book in the last year, and it looks like his annual salary since assuming the governorship in 2011 has been around $140,000. That’s certainly a lot of income compared to most Americans — it puts Walker just below the threshold for the top 10 percent — but it’s obviously nothing compared to the fortunes Jeb Bush and Hillary Clinton have amassed.
This gets at something poignant about Walker the politician, and by extension Walker the man. While most all presidential candidates and politicians have a significant amount of socioeconomic distance from the median American, Walker has less than most. Besides his income and wealth, Walker came from modest beginnings as a preacher’s kid in a small Wisconsin manufacturing town. He attended Marquette University in Milwaukee, but didn’t finish his degree — passing on one of the key status symbols that American elites use to separate themselves from the pack.
And yet few Republicans, and certainly no other Republican presidential candidate, has been so ferociously focused on grinding everyday workers into the ground.
Like any good conservative, Walker pushed massive tax cuts for the well-to-do through Wisconsin’s state budget, creating a hole he’s now trying to fill by slicing education spending. But he also drove a blistering and brutally successful push to crush Wisconsin’s public-sector unions, followed by “right to work” laws that will likely cripple the state’s private unions as well.
Nor does it look like Walker did this because Republican and business interests were demanding it — he did it because he wanted to, as a matter of ideology.
An explanation probably lies in the unique and poisonous way the history of race and class intersected in the Milwaukee political milieu Walker came from. In the early 20th century, large numbers of black Americans migrated from the South to northern urban centers. But no sooner had they put down roots than the mid-century collapse of manufacturing arrived, sucking away jobs and bringing poverty to the cities.
Black Americans had never been permitted to build up the wealth that white Americans had: Along with the aftereffects of slavery and the social consequences of segregation, they were initially excluded from policies like Social Security and the G.I. Bill, which helped build the white middle class. And racist policies like redlining and the construction of the highway system destroyed many of their neighborhoods and prevented them from accessing areas of economic vibrancy.
So when the white middle class fled to the suburbs, the poorer black populations could not follow. That set up Reaganite white suburbs, which surrounded and disdained the urban interiors of impoverished African-Americans, and all the vicious politics that followed. The funny thing, as Alec MacGillis laid out in a 2014 profile of Walker, was that this process came a few decades late to Milwaukee. The future governor cut his political teeth as a member of Milwaukee’s fleeing white upper-middle class, just as this conflict was reaching its apex.
So it should come as no surprise that those public-sector jobs Walker helped crush have also been one of the great economic havens where black Americans can actually earn a decent living.
For decades, American macroeconomic policy has done a terrible job providing enough work to keep everyone employed. That’s introduced a bottom-up desperation that’s trickled higher and higher over the years. On top of that, while America has a hidden welfare state for the rich and the upper-middle class, its explicit social safety net is skimpy and targeted at the poorest Americans. This creates a perverse circumstance in which many Americans in the middle of the pack feel left behind, while they see people with different skin colors and alien cultural habits — habits often shaped by poverty — receiving aid (however grossly inadequate).
More and more, American society is becoming a brute contest, in which the groups of varying power must trample one another for the scraps that fall from the elite table. This sort of divide-and-conquer effect, in populations that should be uniting over common interests and common foes, has a long history in U.S. labor struggles.
When people find themselves outside the elite inner circle, and see themselves as in a zero-sum economic game with impoverished subcultures that look and act different from them, the likes of Scott Walker is often what emerges from the ferment.
By: Jeff Spross, The Week, August 5, 2015
“Greece’s Economy Is A Lesson For Republicans In The U.S.”: The Toxic Combination Of Austerity With Hard Money
Greece is a faraway country with an economy roughly the size of greater Miami, so America has very little direct stake in its ongoing disaster. To the extent that Greece matters to us, it’s mainly about geopolitics: By poisoning relations among Europe’s democracies, the Greek crisis risks depriving the United States of crucial allies.
But Greece has nonetheless played an outsized role in U.S. political debate, as a symbol of the terrible things that will supposedly happen — any day now — unless we stop helping the less fortunate and printing money to fight unemployment. And Greece does indeed offer important lessons to the rest of us. But they’re not the lessons you think, and the people most likely to deliver a Greek-style economic disaster here in America are the very people who love to use Greece as a boogeyman.
To understand the real lessons of Greece, you need to be aware of two crucial points.
The first is that the “We’re Greece!” crowd has a truly remarkable track record when it comes to economic forecasting: They’ve been wrong about everything, year after year, but refuse to learn from their mistakes. The people now saying that Greece offers an object lesson in the dangers of government debt, and that America is headed down the same road, are the same people who predicted soaring interest rates and runaway inflation in 2010; then, when it didn’t happen, they predicted soaring rates and runaway inflation in 2011; then, well, you get the picture.
The second is that the story you’ve heard about Greece — that it borrowed too much, and its excessive debt led to the current crisis — is seriously incomplete. Greece did indeed run up too much debt (with a lot of help from irresponsible lenders). But its debt, while high, wasn’t that high by historical standards. What turned Greek debt troubles into catastrophe was Greece’s inability, thanks to the euro, to do what countries with large debts usually do: impose fiscal austerity, yes, but offset it with easy money.
Consider Greece’s situation at the end of 2009, when its debt crisis burst into the open. At that point Greek government debt was near 130 percent of gross domestic product, which is definitely a big number. But it’s by no means unprecedented. As it happens, Greece’s debt ratio in 2009 was about the same as America’s in 1946, just after the war. And Britain’s debt ratio in 1946 was twice as high.
Today, however, Greek debt is over 170 percent of G.D.P. and still rising. Is that because Greece just kept on borrowing? Actually, no — Greek debt is up only 6 percent since 2009, although that’s partly because it received some debt relief in 2012. The main point, however, is that the ratio of debt to G.D.P. is up because G.D.P. is down by more than 20 percent. And why is GDP down? Largely because of the austerity measures Greece’s creditors forced it to impose.
Does this mean that austerity is always self-defeating? No, there are cases — for example, Canada in the 1990s — of countries that slashed their debt while maintaining growth and reducing unemployment. But if you look at how they managed this, it involved combining fiscal austerity with easy money: Canada in the ’90s drastically reduced interest rates, encouraging private spending, while allowing its currency to depreciate, encouraging exports.
Greece, unfortunately, no longer had its own currency when it was forced into drastic fiscal retrenchment. The result was an economic implosion that ended up making the debt problem even worse. Greece’s formula for disaster, in other words, didn’t just involve austerity; it involved the toxic combination of austerity with hard money.
So who wants to impose that kind of toxic policy mix on America? The answer is, most of the Republican Party.
On one side, just about everyone in the G.O.P. demands that we reduce government spending, especially aid to lower-income families. (They also, of course, want to reduce taxes on the rich — but that wouldn’t do much to boost demand for U.S. products.)
On the other side, leading Republicans like Representative Paul Ryan incessantly attack the Federal Reserve for its efforts to boost the economy, delivering solemn lectures on the evils of “debasing” the dollar — when the main difference between the effects of austerity in Canada and in Greece was precisely that Canada could “debase” its currency, while Greece couldn’t. Oh, and many Republicans hanker for a return to the gold standard, which would effectively put us into a euro-like straitjacket.
The point is that if you really worry that the U.S. might turn into Greece, you should focus your concern on America’s right. Because if the right gets its way on economic policy — slashing spending while blocking any offsetting monetary easing — it will, in effect, bring the policies behind the Greek disaster to America.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 10, 2015
“Scott Walker Picks A Fight He Can’t Win”: Walker’s Boast About His State’s “Dramatic” Economic Recovery Is Belied By, Well, Reality
Neither President Obama nor anyone on his team have spoken publicly about who they think might win the Republican presidential nomination. It’s not, however, unreasonable to think they have one candidate on their minds.
In March, for example, Obama raised eyebrows by taking a not-so-subtle shot at Wisconsin Gov. Scott Walker’s (R) far-right agenda, and a month later, the president did it again, calling out Walker – by name – as a candidate who needs to “bone up on foreign policy.”
Today, the president will be in Wisconsin, where Walker will greet him at the airport, before Obama fleshes out his new overtime policy at a University of Wisconsin campus. Politico reported that Walker has “become the White House’s bete noire” – the conservative governor is the one Republican “the president’s aides always hold up as an example of exactly what’s wrong with politics.”
And it’s equally clear the president is on Walker’s mind, too. Today, the Wisconsin Republican has a new piece, published by Real Clear Politics, suggesting Obama could learn a few things from GOP policymakers in the Badger State.
Bright spots in the Obama economy are few and far between, as opportunities for small businesses and entrepreneurs are often quashed by a federal government that has grown too large, powerful and pervasive. That’s why it’s telling that the president is scheduled to be in La Crosse, Wis., this week for an event focusing on the economy.
To be sure, Wisconsin’s economy has enjoyed a dramatic recovery over the last few years. But our fortunes have improved in spite of – not because of – the president’s big-government policies.
Walker’s piece added that he intends to tell the president how great far-right governance is, and “for the sake of hard-working taxpayers across the country, I hope he will listen.”
Whether he realizes it or not, the governor is picking a fight he’s unprepared to win.
Let’s put aside, at least for now, the fact that President Obama has a pretty amazing record on job creation and ending the Great Recession. Let’s instead focus on his critic because Walker’s boast about his state’s “dramatic” economic recovery is belied by, well, reality.
Just last week, the Chicago Tribune published a report with this headline: “Wisconsin economy lags after Walker’s spending and tax cuts.”
In 2011, new Republican Gov. Scott Walker set the creation of 250,000 jobs as the benchmark for success of his new administration. Walker missed that goal by a wide margin over his first term despite an embrace of sweeping tax cuts aimed at stimulating growth. Instead, the cuts helped dig a more than $2 billion hole in the state budget.
Wisconsin ranked 36th among the states and District of Columbia in the pace of private-sector job growth during Walker’s term, trailing all Rust Belt states and all but one other state in the Midwest.
More specifically, when it comes to job creation, Wisconsin ranked 35th in the nation in 2011, 36th in 2012, 38th in 2013, and 38th in 2014. Walker not only failed to keep his promise about creating 250,000 in his first term, he barely made it to 129,000.
In May, the Washington Post reported that the state’s rate of private-sector job growth “is one of the worst in the nation” and Wisconsin’s middle class “has shrunk at a faster rate than any other state in the country.”
It’s against this backdrop that the state is also struggling badly with a major budget shortfall, which Walker still doesn’t know how to close.
This is the guy who wants to brag about his economic record? The one who hopes to teach Obama a few things?
Seriously?
By: Steve Benen, The Maddow Blog, July 2, 2015
“Basically Impossible”: Chris Christie Promised To Tell It Like It Is. Here’s What That Would Actually Sound Like
In his presidential campaign announcement Tuesday, the reliably brash and blunt Chris Christie vowed that “telling like it is” would be both his campaign motto and his promise to voters.
Even for Christie, whose entire political persona is based on no-nonsense candor, consistently “telling it like it is” is basically impossible. Can you imagine if the New Jersey governor — or any of the other Republican candidates — really told it like it is about the most important issues and challenges facing America? What would that even sound like? Well, maybe something like this:
“…and that’s why I am announcing my candidacy for president of the United States! [Applause.] Thank you! Thank you! Now during my campaign, I’m going to tell it like it is. I’m going to let ‘er rip! [Applause.] Hard truths need to be spoken, and I will speak them.
‘What are these truths?’ you ask. For starters, we Republicans are way too focused on President Obama. Trust me, I’ll have a lot to say during this campaign about the president’s mistakes. Heaven knows, there’s been a lot of them. [Extended applause.] But he’s gone in a year and half. [Extended applause.]
Here’s the thing: The U.S. economy didn’t run into trouble the day Barack Obama took the oath of office. Even before the Great Recession, there were signs something wasn’t quite right. The economy grew by 4 percent annually and created 20 million new jobs during both the Reagan and Clinton booms. But in the [candidate makes air quotes] “Bush boom” of the 2000s, we couldn’t even hit 3 percent growth. And we created only about seven million jobs. Income growth was also a lot slower. I could go on and on. Productivity growth has been terrible during Obama’s Not-So-Great Recovery, but the slowdown started in 2006, when we had a Republican president. We’ve had problems with jobless recoveries and middle-income job lag since the early 1990s. Heck, the new business startup rate in this country has been falling for 30 years!
You can’t blame ObamaCare or Dodd Frank for all that. [Confused murmurs from audience.] The truth is technological automation and global competition are presenting new challenges to American workers. To meet those challenges and to turn them into opportunities means embracing new approaches, not recycling old ones. Certainly tax reform is part of the answer. I mean, we’re Republicans after all. Tax cuts are what we do. But you have to be savvy about cutting taxes when you’re already $18 trillion in the red. You need to pick your spots and get the most bang for your buck, like tax cuts and credits that boost working-class incomes — a rising tide is not lifting all boats right now — and spur business investment.
You want to do deep, across-the-board tax cuts like President Reagan did? Fine. God bless you. But keep in mind that for every percentage point you cut from those tax rates, you lose about $70 billion a year in revenue. And don’t expect to make up anywhere near that in economic growth. Even the Reagan tax cuts lost money, and the tax code was in far worse shape back then. [Unintelligible shouts from audience.] Heck, 40 percent of Americans don’t even pay income taxes.
Oh, and while we’re thinking about tax reform, keep in mind the federal tax burden will almost certainly need to rise in the future because we’ll have a lot more old folks. [Booing.] And we’ll have to pay for their pensions and healthcare. Smart entitlement and healthcare reform can reduce that tax increase — in that way it’s like a future tax cut — but it’s highly unlikely to eliminate it. Democrats need to accept that projected future benefits will need reduction, and Republicans need to accept a higher tax burden. [Extended booing.] Republicans should also be in favor of spending less money on rich people through tax breaks for homes and health insurance. [Several fist-shaking audience members stomp out.]
There’s just too much short-term thinking in this country. I mean, I’m no scientist, but we are doing something new to our planet and it hardly seems crazy to take out some insurance against a worst-case outcome. [Boos continue, get louder.] Let’s invest more in basic clean-energy research and remove regulatory barriers to more nuclear power. Maybe also eliminate the corporate income tax and replace it with a carbon tax. I note that even my friends on the Wall Street Journal editorial page said the other day that might be a good idea. And let’s not let Corporate America off the hook here. Too much short-termism there, as well, not just in Washington. Too much cash being returned to investors rather than going to fund new investment and innovation.
Now turning to foreign policy… Wait, where did everybody go?”
By: James Pethokoulis, The Week, July 2, 2015
“Voodoo, Jeb! Style”: Mr. Bush Imagines That He Is Privy To Secrets That Have Evaded Everyone Else
On Monday Jeb Bush — or I guess that’s Jeb!, since he seems to have decided to replace his family name with a punctuation mark — finally made his campaign for the White House official, and gave us a first view of his policy goals. First, he says that if elected he would double America’s rate of economic growth to 4 percent. Second, he would make it possible for every American to lose as much weight as he or she wants, without any need for dieting or exercise.
O.K., he didn’t actually make that second promise. But he might as well have. It would have been just as realistic as promising 4 percent growth, and considerably less irresponsible.
I’ll get to Jeb!onomics in a minute, but first let me tell you about a dirty little secret of economics — namely, that we don’t know very much about how to raise the long-run rate of economic growth. Economists do know how to promote recovery from temporary slumps, even if politicians usually refuse to take their advice. But once the economy is near full employment, further growth depends on raising output per worker. And while there are things that might help make that happen, the truth is that nobody knows how to conjure up rapid productivity gains.
Why, then, would Mr. Bush imagine that he is privy to secrets that have evaded everyone else?
One answer, which is actually kind of funny, is that he believes that the growth in Florida’s economy during his time as governor offers a role model for the nation as a whole. Why is that funny? Because everyone except Mr. Bush knows that, during those years, Florida was booming thanks to the mother of all housing bubbles. When the bubble burst, the state plunged into a deep slump, much worse than that in the nation as a whole. Taking the boom and the slump together, Florida’s longer-term economic performance has, if anything, been slightly worse than the national average.
The key to Mr. Bush’s record of success, then, was good political timing: He managed to leave office before the unsustainable nature of the boom he now invokes became obvious.
But Mr. Bush’s economic promises reflect more than self-aggrandizement. They also reflect his party’s habit of boasting about its ability to deliver rapid economic growth, even though there’s no evidence at all to justify such boasts. It’s as if a bunch of relatively short men made a regular practice of swaggering around, telling everyone they see that they’re 6 feet 2 inches tall.
To be more specific, the next time you encounter some conservative going on about growth, you might want to bring up the following list of names and numbers: Bill Clinton, 3.7; Ronald Reagan, 3.4; Barack Obama, 2.1; George H.W. Bush, 2.0; George W. Bush, 1.6. Yes, that’s the last five presidents — and the average rate of growth of the U.S. economy during their time in office (so far, in Mr. Obama’s case). Obviously, the raw numbers don’t tell the whole story, but surely there’s nothing in that list to suggest that conservatives possess some kind of miracle cure for economic sluggishness. And, as many have pointed out, if Jeb! knows the secret to 4 percent growth, why didn’t he tell his father and brother?
Or consider the experience of Kansas, where Gov. Sam Brownback pushed through radical tax cuts that were supposed to drive rapid economic growth. “We’ll see how it works. We’ll have a real live experiment,” he declared. And the results of the experiment are now in: The promised boom never arrived, big deficits did, and, despite savage cuts to schools and other public services, Kansas eventually had to raise taxes again (with the pain concentrated on lower-income residents).
Why, then, all the boasting about growth? The short answer, surely, is that it’s mainly about finding ways to sell tax cuts for the wealthy. Such cuts are unpopular in and of themselves, and even more so if, like the Kansas tax cuts for businesses and the affluent, they must be paid for with higher taxes on working families and/or cuts in popular government programs. Yet low taxes on the rich are an overriding policy priority on the right — and promises of growth miracles let conservatives claim that everyone will benefit from trickle-down, and maybe even that tax cuts will pay for themselves.
There is, of course, a term for basing a national program on this kind of self-serving (and plutocrat-serving) wishful thinking. Way back in 1980, George H.W. Bush, running against Reagan for the presidential nomination, famously called it “voodoo economic policy.” And while Reaganolatry is now obligatory in the G.O.P., the truth is that he was right.
So what does it say about the state of the party that Mr. Bush’s son — often portrayed as the moderate, reasonable member of the family — has chosen to make himself a high priest of voodoo economics? Nothing good.
By: Paul Krugman, Op-Ed Columnist, The New York Times, June 19, 2015
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