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“Varieties Of Voodoo”: Undermining The Credibility Of The Progressive Economic Agenda

America’s two big political parties are very different from each other, and one difference involves the willingness to indulge economic fantasies.

Republicans routinely engage in deep voodoo, making outlandish claims about the positive effects of tax cuts for the rich. Democrats tend to be cautious and careful about promising too much, as illustrated most recently by the way Obamacare, which conservatives insisted would be a budget-buster, actually ended up being significantly cheaper than projected.

But is all that about to change?

On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers. The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”

That’s harsh. But it’s harsh for a reason.

The claims the economists are talking about come from Mr. Friedman’s analysis of the Sanders economic program. The good news is that this isn’t the campaign’s official assessment; the bad news is that the Friedman analysis has been highly praised by campaign officials.

And the analysis is really something. The Republican candidates have been widely and rightly mocked for their escalating claims that they can achieve incredible economic growth, starting with Jeb Bush’s promise to double growth to 4 percent and heading up from there. But Mr. Friedman outdoes the G.O.P. by claiming that the Sanders plan would produce 5.3 percent growth a year over the next decade.

Even more telling, I’d argue, is Mr. Friedman’s jobs projection, which has the employed share of American adults soaring all the way back to what it was in 2000. That may sound possible — until you remember that by 2026 more than a quarter of U.S. adults over 20 will be 65 and older, compared with 17 percent in 2000.

Sorry, but there’s just no way to justify this stuff. For wonks like me, it is, frankly, horrifying.

Still, these are numbers on a program that Mr. Sanders, even if he made it to the White House, would have little chance of enacting. So do they matter?

Unfortunately, the answer is yes, for several reasons.

One is that, as the economists warn, fuzzy math from the left would make it impossible to effectively criticize conservative voodoo.

Beyond that, this controversy is an indication of a campaign, and perhaps a candidate, not ready for prime time. These claims for the Sanders program aren’t just implausible, they’re embarrassing to anyone remotely familiar with economic history (which says that raising long-run growth is very hard) and changing demography. They should have set alarm bells ringing, but obviously didn’t.

Mr. Sanders is calling for a large expansion of the U.S. social safety net, which is something I would like to see, too. But the problem with such a move is that it would probably create many losers as well as winners — a substantial number of Americans, mainly in the upper middle class, who would end up paying more in additional taxes than they would gain in enhanced benefits.

By endorsing outlandish economic claims, the Sanders campaign is basically signaling that it doesn’t believe its program can be sold on the merits, that it has to invoke a growth miracle to minimize the downsides of its vision. It is, in effect, confirming its critics’ worst suspicions.

What happens now? In the past, the Sanders campaign has responded to critiques by impugning the motives of the critics. But the authors of the critical letter that came out on Wednesday aren’t just important economists, they’re important figures in the progressive movement.

For example, Alan Krueger is one of the founders of modern research on minimum wages, which shows that moderate increases in the minimum don’t cause major job loss. Christina Romer was a strong advocate for stimulus during her time in the White House, and a major figure in the pushback against austerity in the years that followed.

The point is that if you dismiss the likes of Mr. Krueger or Ms. Romer as Hillary shills or compromised members of the “establishment,” you’re excommunicating most of the policy experts who should be your allies.

So Mr. Sanders really needs to crack down on his campaign’s instinct to lash out. More than that, he needs to disassociate himself from voodoo of the left — not just because of the political risks, but because getting real is or ought to be a core progressive value.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, February 19, 2016

February 22, 2016 Posted by | Bernie Sanders, Economic Policy, Gerald Friedman, Progressives | , , , , , , , , , | 1 Comment

“Trump Is Right On Economics”: Jeb Relying On Magic Of Tax Cuts To Double The Growth Rate Is Pure Supply-Side Voodoo

So Jeb Bush is finally going after Donald Trump. Over the past couple of weeks the man who was supposed to be the front-runner has made a series of attacks on the man who is. Strange to say, however, Mr. Bush hasn’t focused on what’s truly vicious and absurd — viciously absurd? — about Mr. Trump’s platform, his implicit racism and his insistence that he would somehow round up 11 million undocumented immigrants and remove them from our soil.

Instead, Mr. Bush has chosen to attack Mr. Trump as a false conservative, a proposition that is supposedly demonstrated by his deviations from current Republican economic orthodoxy: his willingness to raise taxes on the rich, his positive words about universal health care. And that tells you a lot about the dire state of the G.O.P. For the issues the Bush campaign is using to attack its unexpected nemesis are precisely the issues on which Mr. Trump happens to be right, and the Republican establishment has been proved utterly wrong.

To see what I mean, consider what was at stake in the last presidential election, and how things turned out after Mitt Romney lost.

During the campaign, Mr. Romney accused President Obama of favoring redistribution of income from the rich to the poor, and the truth is that Mr. Obama’s re-election did mean a significant move in that direction. Taxes on the top 1 percent went up substantially in 2013, both because some of the Bush tax cuts were allowed to expire and because new taxes associated with Obamacare kicked in. And Obamacare itself, which provides a lot of aid to lower-income families, went into full effect at the beginning of 2014.

Conservatives were very clear about what would happen as a result. Raising taxes on “job creators,” they insisted, would destroy incentives. And they were absolutely certain that the Affordable Care Act would be a “job killer.”

So what actually happened? As of last month, the U.S. unemployment rate, which was 7.8 percent when Mr. Obama took office, had fallen to 5.1 percent. For the record, Mr. Romney promised during the campaign that he would get unemployment down to 6 percent by the end of 2016. Also for the record, the current unemployment rate is lower than it ever got under Ronald Reagan. And the main reason unemployment has fallen so much is job growth in the private sector, which has added more than seven million workers since the end of 2012.

I’m not saying that everything is great in the U.S. economy, because it isn’t. There’s good reason to believe that we’re still a substantial distance from full employment, and while the number of jobs has grown a lot, wages haven’t. But the economy has nonetheless done far better than should have been possible if conservative orthodoxy had any truth to it. And now Mr. Trump is being accused of heresy for not accepting that failed orthodoxy?

So am I saying that Mr. Trump is better and more serious than he’s given credit for being? Not at all — he is exactly the ignorant blowhard he seems to be. It’s when it comes to his rivals that appearances can be deceiving. Some of them may come across as reasonable and thoughtful, but in reality they are anything but.

Mr. Bush, in particular, may pose as a reasonable, thoughtful type — credulous reporters even describe him as a policy wonk — but his actual economic platform, which relies on the magic of tax cuts to deliver a doubling of America’s growth rate, is pure supply-side voodoo.

And here’s what’s interesting: all indications are that Mr. Bush’s attacks on Mr. Trump are falling flat, because the Republican base doesn’t actually share the Republican establishment’s economic delusions.

The thing is, we didn’t really know that until Mr. Trump came along. The influence of big-money donors meant that nobody could make a serious play for the G.O.P. nomination without pledging allegiance to supply-side doctrine, and this allowed the establishment to imagine that ordinary voters shared its antipopulist creed. Indeed, Mr. Bush’s hapless attempt at a takedown suggests that his political team still doesn’t get it, and thinks that pointing out The Donald’s heresies will be enough to doom his campaign.

But Mr. Trump, who is self-financing, didn’t need to genuflect to the big money, and it turns out that the base doesn’t mind his heresies. This is a real revelation, which may have a lasting impact on our politics.

Again, I’m not making a case for Mr. Trump. There are lots of other politicians out there who also refuse to buy into right-wing economic nonsense, but who do so without proposing to scour the countryside in search of immigrants to deport, or to rip up our international economic agreements and start a trade war. The point, however, is that none of these reasonable politicians is seeking the Republican presidential nomination.

 

By; Paul Krugman, Op-Ed Columnist, The New York Times, September 7, 2015

September 9, 2015 Posted by | Donald Trump, Jeb Bush, Supply Side Economics | , , , , , , , , | 1 Comment

“Obama’s Transformational Presidency”: He Should Be In The “All-Time-All-World Politics Hall Of Fame”

Is it safe to say that Barack Obama’s presidency will be remembered as the most consequential since Ronald Reagan’s — a presidency that “changed the trajectory of America” and “put us on a fundamentally different path”?

That was the audacious goal Obama set for himself during his 2008 campaign. Now is a useful time to assess his progress because the sixth year of any president’s tenure tends to be seen as a low point. Familiarity breeds impatience and frustration — among commentators, at least, whose narrow focus on which party is perceived as “winning” the day or the week misses the bigger picture.

In both the domestic and foreign spheres, Obama has had transformational impact. And there is more to come.

Reagan’s great achievement at home was to shift the political spectrum to the right. People tend to forget how radical his ideas once seemed. Tax cuts and massive deregulation were somehow going to produce more revenue? Wealth would inevitably trickle down and benefit the middle class and even the poor? It was not a Democrat but a fellow Republican, George H.W. Bush, who mocked the whole concept as “voodoo economics.”

That’s what I’d still call Reagan’s program, but he altered the political debate to such an extent that what once were fringe ideas came to be seen as centrist. By the time Obama took office, the combination of Reaganite policies — taken to extremes the Gipper might never have contemplated — and globalization had produced a nation where the rich were becoming obscenely rich and everyone else was struggling to tread water.

Obama’s impact has been to bring the words “fairness” and “equality” back into the political lexicon.

His biggest legislative accomplishment, the Affordable Care Act, is a landmark because it establishes the principle that health care should be considered a right, not a privilege. Democrats such as Harry Truman — and Republicans such as Richard Nixon — sought for decades to move the nation toward universal care. The fact that Obama succeeded where others failed is, in itself, a huge achievement.

Perhaps as important, however, is the fact that while Republicans still claim they want to repeal Obamacare, the debate within the party centers on how best to expand health insurance coverage. Returning to the way things were before the ACA is not an option.

Health care is part of a larger suite of issues on which Obama has swung the pendulum back to the left. He made the case, for example, that more regulation of the financial sector was needed. Republicans were forced to give way. The president has been hammering away in speeches about the need for an increase in the minimum wage. Republicans haven’t caved on this yet, but in the end they almost surely will because of widespread public support for it.

Whether Democrats lose the Senate or not, Obama will have a tough time getting significant legislation passed in his final two years. Please don’t tell me he simply needs to be a better politician, like Bill Clinton. Obama ran rings around both Clintons in 2008. A black man with the middle name Hussein who gets elected president twice should be in the all-time-all-world Politics Hall of Fame.

But he can still have transformational impact. Working through the Environmental Protection Agency, Obama can take major steps to limit carbon emissions. I don’t know whether he’ll go as far as I believe he should, but whatever he does will be, by definition, a big deal.

In foreign policy, Reagan applied pressure to the weak points of the Soviet empire and helped break it apart. Obama has taken on an equally big and important task: redefining the U.S. role in a vastly changed world.

Obama is not the first president to endorse multilateralism, but he may be the first to mean it. He agreed to use force in Libya only after France and Britain nominally took the lead. He has kept the NATO allies together in cautiously dealing with the Ukraine crisis. He has refused to be drawn into Syria because he is unsure whether intervention would make the situation better or worse.

The president realizes that even the most powerful nation on earth cannot mediate every dispute, take sides in all wars, alleviate all suffering. He acknowledges our limitations and more narrowly defines our national interest. The public approves, even if some foreign policy sages are apoplectic.

Obama can be reserved and introspective. Usually, however, I find him energized, confident, determined — and fully aware that he is shifting the ground.

 

By: Eugene Robinson, Opinion Writer, The Washington Post, May 8, 2014

May 12, 2014 Posted by | Politics, President Obama | , , , , , , , , | 1 Comment

Getting to Crazy: The Culmination Of A GOP Process

There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief — of the black-humor variety — in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy.

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.

Why, yes, it has. But this isn’t something that just happened, it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye.

And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.

Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

And even the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.

Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.

Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.

Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.

But there has been no such price. Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, then received an award for fiscal responsibility.

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem.

By: Paul Krugman, Op-Ed Writer, The New York Times, July 14, 2011

July 16, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Corporations, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, Elections, Freedom, GOP, Government, Government Shut Down, Health Care, Ideologues, Ideology, Journalists, Media, Middle Class, Politics, President Obama, Press, Pundits, Republicans, Right Wing, Taxes, Voters | , , , , , , , , , , , , , | Leave a comment

Bush Tax Cuts Turn 10: Wall Street Celebrates, Americans Suffer

Break out the bubbly, because there will be celebrations today on  Wall Street and in corporate boardrooms and mansions all across America. Why?  Because today is the 10th anniversary of the big Bush tax breaks for  bankers and billionaires and the businesses that bankroll their big-budget  campaigns.

Today is an opportunity to ponder these questions: If the Bush  tax cuts are so great, why has the economy been so bad since they became law 10  years ago? And how about this brain  teaser: If the GOP theology of cutting taxes for the rich brings in more  revenue, why is Democratic President Bill Clinton the only president in the  last generation to leave a surplus behind for the next president?

In 1980, President George H.W. Bush called it voodoo economics.  Bush 41 conveniently changed his position when he became Ronald Reagan’s  running mate that year. But the first President Bush was right the first time.  The idea that tax revenues will go up when you cut taxes has cast an evil spell  over the U.S. economy going all the way back to Ronald Reagan. In 1981, the new  GOP math became 1 + 1 = 3. With this kind of fuzzy math, it’s no wonder that  President Reagan left behind a massive budget deficit.

George W. Bush may have had George H.W. Bush for a father, but Ronald  Reagan was his role model. The latest incarnation of voodoo economics was the  creation of the second President Bush. The tax cuts for bankers and  billionaires that became law in 2001 quickly turned the Clinton surplus into  the Bush budget deficit as big as Donald Trump’s ego. Voodoo is what  Republicans do so well.

But Bush 43 did not stop there in handing out goodies to Wall  Street. In 2008, the president asked his Treasury Secretary, Henry Paulson, the  former CEO of Goldman Sachs, to bail out Goldman Sachs and other Wall Street  investment firms to the tune of three quarters of a trillion dollars. Of  course, President Bush never even considered an attempt to rescue the millions  of working Americans who first lost their jobs and then their homes because of malfeasance  on Wall Street.

Last month, the Center for Budget Priorities released a study  that demonstrated that the two biggest reasons for the current budget deficit  were the Bush tax cuts and the wars in Afghanistan and Iraq. So what do the  Republicans do? Do they vote to cut  Pentagon spending or end  dole welfare for wealthy Americans? Of course  they don’t. They gut Medicare. Genius!

Yesterday, Frank Patitucci, CEO and Chairman of NuCompass  Mobility Service, called on Republican Speaker John Boehner to increase taxes on  Americans making more than $1 million a year. Patitucci explained his position  by saying businesses need a strong middle class to prosper.

But I don’t want to be a party pooper or rain on Wall Street’s  parade, so party hardy, guys. Don’t scrimp on the Dom Perignon and the caviar.  Santa Claus comes only once a year. Let’s worry about the GOP cuts in healthcare for seniors and nutrition programs for women and their infant children another day.

By: Brad Bannon, U. S. News and World Report, June 7, 2011

June 7, 2011 Posted by | Banks, Budget, Businesses, Conservatives, Consumers, Corporations, Debt Crisis, Deficits, Economic Recovery, Economy, Financial Institutions, GOP, Government, Health Care, Ideologues, Ideology, Jobs, Medicare, Middle Class, Politics, Republicans, Right Wing, Seniors, Taxes, Wall Street, Wealthy, Women | , , , , , , , , , , , , , | Leave a comment

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