“Presidents And The Economy”: Serious Analyses Of The Reagan-Era Business Cycle Place Very Little Weight On Reagan
Suddenly, or so it seems, the U.S. economy is looking better. Things have been looking up for a while, but at this point the signs of improvement — job gains, rapidly growing G.D.P., rising public confidence — are unmistakable.
The improving economy is surely one factor in President Obama’s rising approval rating. And there’s a palpable sense of panic among Republicans, despite their victory in the midterms. They expected to run in 2016 against a record of failure; what do they do if the economy is looking pretty good?
Well, that’s their problem. What I want to ask instead is whether any of this makes sense. How much influence does the occupant of the White House have on the economy, anyway? The standard answer among economists, at least when they aren’t being political hacks, is: not much. But is this time different?
To understand why economists usually downplay the economic role of presidents, let’s revisit a much-mythologized episode in U.S. economic history: the recession and recovery of the 1980s.
On the right, of course, the 1980s are remembered as an age of miracles wrought by the blessed Reagan, who cut taxes, conjured up the magic of the marketplace and led the nation to job gains never matched before or since. In reality, the 16 million jobs America added during the Reagan years were only slightly more than the 14 million added over the previous eight years. And a later president — Bill something-or-other — presided over the creation of 22 million jobs. But who’s counting?
In any case, however, serious analyses of the Reagan-era business cycle place very little weight on Reagan, and emphasize instead the role of the Federal Reserve, which sets monetary policy and is largely independent of the political process. At the beginning of the 1980s, the Fed, under the leadership of Paul Volcker, was determined to bring inflation down, even at a heavy price; it tightened policy, sending interest rates sky high, with mortgage rates going above 18 percent. What followed was a severe recession that drove unemployment to double digits but also broke the wage-price spiral.
Then the Fed decided that America had suffered enough. It loosened the reins, sending interest rates plummeting and housing starts soaring. And the economy bounced back. Reagan got the political credit for “morning in America,” but Mr. Volcker was actually responsible for both the slump and the boom.
The point is that normally the Fed, not the White House, rules the economy. Should we apply the same rule to the Obama years?
Not quite.
For one thing, the Fed has had a hard time gaining traction in the wake of the 2008 financial crisis, because the aftermath of a huge housing and mortgage bubble has left private spending relatively unresponsive to interest rates. This time around, monetary policy really needed help from a temporary increase in government spending, which meant that the president could have made a big difference. And he did, for a while; politically, the Obama stimulus may have been a failure, but an overwhelming majority of economists believe that it helped mitigate the slump.
Since then, however, scorched-earth Republican opposition has more than reversed that initial effort. In fact, federal spending adjusted for inflation and population growth is lower now than it was when Mr. Obama took office; at the same point in the Reagan years, it was up more than 20 percent. So much, then, for fiscal policy.
There is, however, another sense in which Mr. Obama has arguably made a big difference. The Fed has had a hard time getting traction, but it has at least made an effort to boost the economy — and it has done so despite ferocious attacks from conservatives, who have accused it again and again of “debasing the dollar” and setting the stage for runaway inflation. Without Mr. Obama to shield its independence, the Fed might well have been bullied into raising interest rates, which would have been disastrous. So the president has indirectly aided the economy by helping to fend off the hard-money mob.
Last but not least, even if you think Mr. Obama deserves little or no credit for good economic news, the fact is his opponents have spent years claiming that his bad attitude — he has been known to suggest, now and then, that some bankers have behaved badly — is somehow responsible for the economy’s weakness. Now that he’s presiding over unexpected economic strength, they can’t just turn around and assert his irrelevance.
So is the president responsible for the accelerating recovery? No. Can we nonetheless say that we’re doing better than we would be if the other party held the White House? Yes. Do those who were blaming Mr. Obama for all our economic ills now look like knaves and fools? Yes, they do. And that’s because they are.
By: Paul Krugman, Op-Ed Columnist, The New York Times, January 4, 2015
“Robbing-Peter-To-Pay-Paul”: Congress Unites To Screw The Hungry
Five years into our so-called recovery, hunger in America remains stuck at a depressingly high level. The number of families who struggle to put food on the table has barely inched downward, even though employment is up. And while a majority of those struggling families are already receiving food stamps, one of the biggest ways we assist families in need, it’s just not enough, making hunger in America a very real and serious concern.
You would think a generous, wealthy country like the United States would have no problem bolstering an initiative designed to help the working poor in such dire times. Surely, you might think, there is bipartisan support for one of the most successful anti-poverty programs in the country. But in fact there has been bipartisan support for decreasing both the amount of food stamp money families receive and the number of families who receive them.
In any given month, roughly 46 to 47 million people receive food stamps. It’s highly likely that even more families are eligible to receive them, but don’t seek the help because they don’t believe they qualify, are reluctant to go through the hassle of applying, or are subtly or overtly discouraged from doing so by the caseworker they meet.
Food stamps help reduce hunger, but they don’t eliminate it. Estimates released by the United States Department of Agriculture last week show that 17.5 million families struggle to put food on the table, and 62 percent of them were already receiving food stamps. About 6.8 million of those families have so little money for food they skip meals or eat less than they should. Those numbers are about the same they were in the previous year.
The costs of the Supplemental Nutrition Assistance Program, as food stamps are officially known, went up to about $78 billion a year during the recession, mostly because more people were using them. The increase in use tracks pretty well with the rise in unemployment and poverty during the downturn. More people lost jobs or income, and so more people needed help feeding their children.
In response to the rising need, Congress bumped up the amount of money families got on their benefit cards when they passed the stimulus act in 2009. The reasons were multifold: more money would help struggling families buy more food, but it also meant they spent more at their grocery stores, keeping their local economies pumping. Each dollar spent by the government in food stamps generates about $1.70 in economic activity.
Then, in a rare show of bipartisanship, Democrats and Republicans teamed up to gut the program. As David Dayen reported in The American Prospect, the Democrats were the first to raid this piggy bank when they decided to use food-stamp funds to help pay for a state aid bill in 2010. The stimulus food-stamp boost was supposed to last until about 2016, but the changes the Democrats made meant the extra funding would end earlier, in 2014.
The food stamp program then lost $2.2 billion to help pay for a $4.5 billion increase in the school lunch bill in 2010. Blanche Lincoln, the former Democratic senator from Arkansas who was then chair of the Senate agriculture committee, designed this Robbing-Peter-to-pay-Paul move. It drew opposition from anti-hunger groups but the bill passed anyway, partly because it was a centerpiece of Michelle Obama’s newly launched Let’s Move campaign to fight childhood obesity.
After Democrats laid that foundation, the Republicans came in and began attacking the program. First, they let the stimulus boost expire, which that meant an average family of three receiving benefits lost $29 per month. The cuts went into effect November 2013, right before the holidays.
Next, the House Republicans in charge attacked the base funding itself. Food stamps are the biggest and most expensive component of the farm bill—an arcane piece of legislation that sets farm policy. Because of the 70 percent increase in food stamp spending since the last farm bill had passed, in 2008, House Republicans refused to pass this one when it first went up for a vote last year. It was the first time in history a farm bill failed, and it later passed without the food-stamp component. After the House finally did address nutrition spending and work with the Senate, the program emerged in February with $8.6 billion cut over the next 10 years, so it’s no wonder families are still going hungry.
To be fair, Democrats fought these final cuts to the program: House Republicans originally wanted to cut $40 billion and the Democrats brought that number down. Indeed, a few Democrats—like Jim McGovern of Massachusetts in the House and Kirsten Gillibrand of New York in the Senate—want to rescind cuts and provide even more food stamp funding. But even if they succeed, that money might be too tempting for their fellow party members to pass up the next time they want to spend cash on something else.
By: Monica Potts, The Daily Beast, September 8, 2014
“Absurd Revisionist History”: Ted Cruz Is A Chip Off A Crazy Old Block
Former U.S. Rep. Ron Paul’s recent foray into 9/11 trutherism has revived questions about how his fringe politics could affect his son’s presidential ambitions. But Rand Paul isn’t the only White House aspirant with a political anchor in the family.
During an August 21 meeting of the Western Williamson Republican Club, Pastor Rafael Cruz — father of Senator Ted Cruz (R-TX) — attempted to explain that black Americans “need to be educated” about the real history of the civil rights movement, and that “the average black” doesn’t understand the minimum wage.
Cruz ran into trouble recounting a recent conversation that he had with a black pastor.
“I said, as a matter of fact, ‘Did you know that civil rights legislation was passed by Republicans? It was passed by a Republican Senate under the threat of a filibuster by the Democrats,’” Cruz told the group, as reported by BuzzFeed. “‘Oh, I didn’t know that.’ And then I said, ‘Did you know that every member of the Ku Klux Klan were Democrats from the South?’ ‘Oh I didn’t know that.’ You know, they need to be educated.”
“Jason Riley said in an interview, Did you know before we had minimum-wage laws black unemployment and white unemployment were the same?” he added, referring to the conservative Wall Street Journal editorial board member. “If we increase the minimum wage, black unemployment will skyrocket. See, he understands it, but the average black does not.”
Cruz’s assertions are riddled with factual inaccuracies. For starters, casting conservatives as the real heroes of the civil rights movement requires an absurd revisionist history (nevermind the fact that Republicans didn’t actually control the Senate in 1964).
Cruz is similarly off base on the effects of increasing the minimum wage. Both professional economists and recent history strongly dispute the notion that guaranteeing workers $10.10 per hour will cause unemployment to “skyrocket.” And, contrary to Cruz’s warning, “the average black” would actually disproportionately benefit from such an increase.
Additionally, Pastor Cruz’s riffing on the intelligence of “the average black” probably won’t help Republicans if they choose to revive their disastrously failed outreach to minorities before the 2016 presidential election. And that could be a problem for Senator Cruz.
Ted Cruz has made no apologies for his close personal and professional relationship with his father, who has been described as a “power broker” within the senator’s political organization. He has even used a Senate aide to book his father’s paid speeches, like the one given to the Western Williamson Republican Club. That means that, if Senator Cruz does pursue an oft-rumored presidential bid, he will have to answer for his father’s radical rhetoric. After all, not many serious presidential candidates have close advisors who believe that the California drought is the result of a United Nations plot to confiscate private property, or that the president is a secret Muslim who will force the elderly to undergo “suicide counseling,” or that evolution is a communist lie, among many other outrageous conspiracy theories. Cruz would have a difficult enough time convincing the electorate that he is mainstream enough to serve as president; his father’s regular outbursts will only make it harder.
Pastor Cruz believes that President Obama was “brainwashed for 18 years” by listening to the sermons of the Reverend Jeremiah Wright. What does that mean for Ted Cruz, who has been listening to his father for a lifetime?
By: Henry Decker, The National Memo, September 3, 2014
“The Power Of The Franchise”: Voting Still Matters When It Comes To Political Clout
More than a half-century after brave protesters marched and bled and died to demand the right to vote for black citizens, the ballot box remains a potent weapon for civic and political change — a radical undertaking that can shake up social systems and correct inequities and injustices. If there is any good news in the untimely death of Michael Brown, it’s that the black residents of Ferguson, Missouri, have been reminded of the power of the franchise.
As protests have ebbed and activists have sought solutions to police brutality, they’ve started to register Ferguson’s underrepresented black citizens to vote. That won’t solve every problem, nor will it produce instant results, but it’s certainly one obvious avenue toward social change.
It took tragedy and weeks of unrest — the unarmed Brown, a black teenager, was killed by a white police officer on August 9 — to awaken a sense of urgency. Even as the two elections of President Obama proved, once again, the persuasiveness of the ballot, many Americans, especially those in historically oppressed ethnic groups, failed to appreciate its power in state and local affairs.
As the demographics of Ferguson have changed over the last 10 to 20 years, its newer residents have not exercised their political clout. The city was about 80 percent white in 1980, but its white population was down to less than 33 percent by 2010, according to the U.S. Census. You wouldn’t know that from looking at its local leaders.
The city council of six has just one black member; the school board comprises six whites and one Latino. Of the 53 sworn police officers on the force, just three are black. That helps explain a law enforcement agency that shows disrespect and hostility toward its black citizens.
There is a danger, of course, in exaggerating the power of politicians to change the habits formed from centuries of racial injustice or to correct systemic inequities that remain stubbornly entrenched. Obama, indeed, is a case in point. He has attracted a noisy, if tiny, group of black detractors who regularly denounce him for failing to appreciably roll back the racism that has haunted black America for generations.
He has been criticized for failing to adopt a “black agenda” that would employ black Americans and close the gap between white and black earning power. He has been excoriated for occasionally reminding black audiences that hard work and responsible conduct engender success, even as racism remains a cultural force. He has even been castigated for failing to speak out more forcefully against police misconduct in Ferguson.
It’s understandable that there’s a degree of frustration and disappointment that Obama’s election hasn’t done more to mitigate historic forces. After his election in 2008, it seemed that barriers to black success would fall rapidly. Instead, there remains a significant gap in most measures of economic well-being, starting with the unemployment rate. While about 6.6 percent of whites are currently unemployed, about 12.6 percent of blacks are jobless.
That gap hasn’t changed in 50 years, and educational attainment doesn’t alter it appreciably. While the unemployment rate is lower for black college grads than for blacks with high school diplomas, there is still more joblessness among blacks with college degrees than among whites with similar educations.
There’s not much Obama, or any president, can do to change that. Still, elections matter because politicians can encourage progress in any number of ways, large and small. The Affordable Care Act — or Obamacare — is just one example of that. While its provisions apply to all Americans, it affects blacks disproportionately because they are less likely to be able to afford policies without it.
If the vote didn’t matter, Republicans would not have worked so hard over the last decade to block the franchise. They’ve pushed through voter ID laws, cut back early voting and purged voter rolls — all in an effort to block a few voters of color, a cohort that tends to vote for Democrats. That’s testimony to the enduring power of the vote, a power that Ferguson’s black citizens should put to good use.
By: Cynthia Tucker, The National Memo, August 30, 2014
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