Relevant and even prescient commentary on news, politics and the economy.

Red vs. Blue

Given my proclivity for Red and Blue numbers (see “Topics,” left), I’m not sure how I missed this until now. On 1/30, the NYT ran an Op/Ed by Gore’s former speechwriter Daniel Pink on th subject:

You might expect that in the 2000 presidential election, Republicans, the party of low taxes and limited government, would have carried the Giver states — while Democrats, the party of wild spending and wooly bureaucracy, would have appealed to the Taker states. But it was the reverse. George W. Bush was the candidate of the Taker states. Al Gore was the candidate of the Giver states.


78 percent of Mr. Bush’s electoral votes came from Taker states.

76 percent of Mr. Gore’s electoral votes came from Giver states.

Of the 33 Taker states, Mr. Bush carried 25.

Of the 16 Giver states, Mr. Gore carried 12.


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Prospects for Consumption Growth

In the comments, General Glut asks the salient question in the wake of today’s unemployment report: “How long until these poor jobs numbers (and the even poorer wage and salary numbers) start eating into US consumption levels?”

Good question! This is especially important when you consider that consumption spending (spending by households and individuals) makes up close to 70% of all spending in the economy. Whatever economic growth we’ve seen over the past 2 years has been all the result of increasing consumer spending.

Up to now consumption has remained strong even while wage income has barely grown thanks to three factors. 1) To some degree, households have been spending some of their assets such as houses (e.g. through taking cash out when refinancing); 2) There have been some temporary windfalls such as the tax rebates of 2001 and 2003; and, most importantly, 3) Households have increased consumption faster than their income has grown, simply by devoting a smaller and smaller fraction of their (stagnant) income to savings, and more of it to consumption.

All three trends seem destined to end soon. The last GDP figures may have warned of the beginning of the end of the recovery, in fact. But there are specific reasons why the three exceptional factors listed above are not likely to continue boosting consumption. 1) The refinancing boom is beginning to peter out, since mortgage rates have stopped falling for some time (so most people who were going to refinance at these rates already have), and house values may be nearing their peak. 2) There will be one more tax boost with refund checks that are a couple of hundred bucks larger for most families than usual in April and May, but after that no more tax boosts for the foreseeable future. At this point, our fiscal policy ammunition has been pretty much completely used up. 3) Savings rates are about as low as they can go. That means that there’s precious little room for households to further increase their consumption.

So, the job reports – not just number of jobs, but also how well they pay – matter a LOT to the future of this economic recovery over the coming year. A few more mediocre reports like this and it looks a sure bet that economic growth in 2004 will be slower than 2003, not faster.


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Bush Approval Drops Below 50

The AP just released its poll results this morning. It’s the second major poll this week (the other was Gallup) that shows Bush’s approval rating sinking below 50% for the first time. Do chickens really come home to roost, even for the Republican machine?

For your edification and amusement, here’s a nice picture of the trend in the AP’s poll results over the past 12 months.


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Sluggish Job Creation

The new unemployment report is out. The estimate is that 112,000 jobs were created in January. That’s more job creation than we’ve seen in a couple of years, but still below expectations. The unemployment rate fell to 5.6%, thanks to a continuation of the surprisingly low labor force participation rate. All in all, this report suggests that, while there’s some hope of improvement on the horizon, the sluggish job market continues…


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Meet the Press

In a sign of desparation, optimism, or perhaps possession of very incriminating photos of Tim Russert doing things that Rick Santorum can only dream of, President Bush will be on Meet the Press this Sunday.

Most expect Russert to lob softballs at the president, but even so, it’s not Bush’s best forum. Russert once had a reputation as a very tough interviewer, though liberals question that now, with a fair amount of justification. In any event, Brad DeLong has some great ideas for questions Tim could ask, if he wants to be tough.

Note: “Meet the Press” is regularly seen from 9-10 a.m. ET, except in Washington, D.C. and New York City where the broadcast is seen from 10:30-11:30 a.m. ET. Set your TiVos and VCRS.


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I put part of this year’s Roth IRA money(*) into Costco. In part, it was because they have industry leading productivity and revenue per-square foot. In larger part, it’s because they pay their workers more and because they offer benefits (CEO Sinegal said back in the early 1990s, “We pay $1 more an hour than Sam’s or Price … We start our people at $8 an hour and boost them in three years to $14 an hour. It works for us. If you pay good wages, you get better productivity.”) Now I find that there’s yet another reason to support Costco:

Costco Wholesale Corp. Chairman Jeffrey Brotman and CEO James Sinegal gave $95,000 each in December to a political fund that aims to defeat President Bush in the November election, records filed with the Internal Revenue Service show.

Via Pandagon.


(*) Speaking of Roth’s, it’s that time of year where you should really, really, scrape up some money for either your Roth or traditional IRA. As a rule of thumb, if you have $3,000 available, then you probably make enough so that the Roth is better for you (with a Roth, you get no tax savings now, but the disbursements are tax free). If you don’t have $3,000 lying around, then you should probably put as much as you can into a traditional IRA (the contribution will come off your AGI, increasing your refund). If you’re confused about what stocks to buy, broad-based Exchange-Traded Funds (ETFs) (like the ones described here; you may have seen commercials for “Spiders” (SPDR) and “Cubes” (QQQ), both of which are ETFs) are a pretty good idea. Even if you don’t have much money, most online brokers have low or no minimum balances for a no fee IRA account.

Here’s a proposal I’d like to see analyzed: means-tested matches on a sliding scale to Roth and Traditional IRA contributions, with EITC recipients getting some amount match-free. Of course, that would take some money, which the federal government is about 1 trillion dollars short on in the current and upcoming fiscal years.

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Dick and Tony: Conflict of Interest

Dwight Meredith explains it:

So while a case about whether or not Dick Cheney must turn over documents that some think will show undue influence by energy companies, the defendant and one of the judges take a hunting trip together hosted by the head of an energy company. Wait, it gets worse.


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Those Wacky Liberals at The Economist (and they’re anonymous!)

On Bush’s budget: “George Bush presented Congress with a $2.4 trillion budget for the next. Think of it as a campaign brochure, complete with glossy pictures of the president bringing relief to the elderly, restoring the environment and exhorting the young.”

The Economist writers also appear more skilled at crafting sentences than their peers at the NYT (though they spell “defence” in that funny, European, way): “For the armed forces and homeland defence come big proposed increases in spending, up by 7% and 10% respectively.” (The NYT said that the homeland would be 10% more secure, rather than correctly stating that we’d be spending 10% more on homeland security.)

There’s also more substantive content in the Economist piece:

If this [cutting the deficit in half over the next five years] all looks too good to be true, it is. For once, the administration has not fiddled the books by relying on unrealistically high growth rates in the coming years; but it has relied on other fibs. For a start, the budget does not factor in the future costs of keeping soldiers in Iraq and Afghanistan: even Mr Bush’s own budget director says costs could be as much as $50 billion for Iraq alone in 2005. Then the usual implausible savings are found from “waste, fraud and abuse”. Third, all the president’s cuts are to fall on the one-fifth of the total budget that counts as domestic discretionary spending—hardly likely to happen in an election year.

Mr Bush’s most culpable failing lies in his refusal to think beyond the 2009 horizon. Take, first, the tax cuts of 2001 and 2003, which Mr Bush wants to make permanent at a ten-year cost, when other new proposals for tax-free savings schemes are added in, of $1.25 trillion. The cuts may well have provided a welcome economic stimulus at a time when confidence was knocked by recession and terrorist attack. But after 2009, these cuts will equal three-quarters of the total deficit, even by the administration’s own numbers. [more …]

Get it? If Bush excludes war costs, and makes unrealistic assumptions, and defines the time window just right, then maybe, just maybe, the deficit will be cut in half. Of course, cutting it in half will still mean a deficit over 1/4 billion dollars, or a bit more thant 2.2% of GDP — which is about the size of Clinton’s last surplus, but of course, in the opposite direction. Under the most optimistic of scenarios, the current budget proposes to run deficits the size of Clinton’s surpluses.


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Georgia Decides Not to Mandate Ignorance

College biology teachers in Georgia (or anywhere that admits students from Georgia) can breath a sigh of relief that they won’t have to start out teaching at the 8th grade level:

Georgia’s school superintendent Thursday dropped plans to remove the word “evolution” from the state’s high school science curriculum.

“I will recommend to the teacher teams that the word ‘evolution’ be put back in the curriculum,” Kathy Cox said in a statement.

Cox said she originally wanted to replace “evolution” with the phrase “biological changes over time” to avoid controversy.


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Why Can’t We Have a Better Press Corps?

USA Today has a column by Roy Blunt (R-MO) titled, “Bush Pushes Fiscal Discipline.” Not surprisingly, the argument is rather typical and not particularly interesting or convincing.

The odd part comes at the end, where the USA Today makes this note:

Rep. Roy Blunt, R-Mo., is the deputy majority leader of the U.S. House of Representatives. The Office of Management and Budget declined an offer to write the Opposing (sic) view.

Ok, USA Today editors, let’s visit the OMB web page, where this graphic is featured prominently at the top:

Now that’s fairness and balance! The President’s Budget Office — the office that freakin’ wrote the budget — declined an offer to oppose the view that “Bush pushes fiscal discipline.” As long as all sides of the issue had a chance to weigh in on the subject.


P.S. What would Atrios do? Probably post this URL: USA Today Feedback. Or this one: USA Today Letter to the Editor.

P.P.S. I stole the title to this post from Brad DeLong.

UPDATE/CORRECTION: Commenter Steve offers a plausible explanation. Online, all you see is Blunt’s column, followed by the “opposing view” statement. But apparently there’s also a USA Today editorial saying that the budget is irresponsible. USA Today offered to let OMB write the opposing view to USA Today’s editorial, OMB declined, and so USA Today got Blunt to do it. That explains why “Opposing” is capitalized above. Though if this is the case, the article being opposed really should be linked or somehow identified.

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