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

Obama’s First Fifteen Months, Composite Edition

Brad DeLong has two posts, one from Ezra “I’m a liberal who is safe for the Washington Post” Klein and one from Mike “I actually looked at the data” Konczal.

Brad deals with Ezra’s folly:

I think a B+ is too high a grade–largely because one big task of 2009 was to set up the situation so that you could still make policy in 2010 and 2011 if it turned out that you needed to.

And that’s without mentioning that the Administration violated the first law of Presidencies; the one George Effing W. Bush knew well: give your base something early, so they know you didn’t just come to them for their votes. Bush gave his “faith-based initiatives.” Obama—who campaigned on card check, principal reduction, and his father being Jor-El—only went for big-ticket items.

Mike goes in detail over the ground I discussed here: the idiocy that is the 2010 State of the Union Address, delivered 27 January 2010. With contemporaneous detail. Go Read the Whole Thing.

It’s not just bad economics, it’s bad politics. Which brings me back to Matt’s lazy first graphic, which means I’m going to beat the dead horse again. Below the fold.

I called it “lazy” because it is; it’s raw data, and you don’t just look at raw data in isolation, at least if you’re sane. You don’t do it if you’re an economist, and you don’t do it if you’re a politician.

As an economist, you don’t just look at unemployment; you look at unemployment in relation to other things—causes, effects. GDP gaps, demographics, transitions from one sector to another, you name it. It’s nice to see data, and flows, but they have to mean something.

Political analysts—if they’re any good—don’t look at data in isolation either, especially when they have Austan Goolsbee, Alan Kreuger, Christina Romer, and even Lawrence H. Summers working with them. Any one of those four—let alone all of them, often in the same room, if not always the same discussion—could tell David Axelrod that the U.S. needs to create between 110,000 and 150,000 jobs a month just to tread water on unemployment. Maybe they ballpark it at 125,000. So instead of Matt’s original graphic, David Axelrod would have seen something like this one:

And if he’s still talking about how his boss will have nothing to worry about in two years, well, I’m certain that Goolsbee, Krueger, Romer, or Summers—all of whom were still at the White House during that time—would have set him straight.

And there would have been another policy, a change of course. Or a really bad Unforced Error.

Tags: , , , Comments (3) | |

It’s not the tax and spending cuts, it’s the destroyed trust that has doomed our economy

By Daniel Becker
In the comments to my post “A reminder from Obama’s February 2009 speech”, there is the following:
“I guess it relates to the fake Obama they had made up in their heads,…” 
This sums up the early comments to the post suggesting that those who trusted Obama have only themselves to blame.
I addressed that concept in Obama, is he or isn’t he real…?  In that post I presented transcripts of Obama’s speeches and responses to questions and then argued:
“Are those talking like Glen Greenwald correct in that people should not be surprised with Obama’s appointments? Maybe, but then based on the above Obama words, that would mean we (you and I) just plain have to approach our relationship with governing as suspect until proven otherwise. Unfortunately, that means we will always be a day late and a dollar short having never known at the time of the decision if we made the correct one because you can not go by what is said.”
I recommend people go and not only read the posting, but the comments. (History is always fun to review.)
I concluded that posting with:
“Do you know what happens to a person when they can never get a straight, no hidden agenda answer from one they count on? They go nuts.”


 

This all speaks to the issue of growing our economy, because to promote distrust in a developed economy where 77% of our capital is intangible (via 2005 World Bank study) is to be destroying the prime driver of our growth. I wrote about the issue of were our true wealth comes from a few times. For this posting I am drawing on Attention Republicans/Blue Dog Democrates: Tax cuts as stimulus work against your goal.
February 5, 2009.
From the World Bank study:
“An economy with a very efficient judicial system, clear and enforceable property rights, and an effective and uncorrupt government will produce higher total wealth.”
I concluded:
“The republicans/blue dogs, and those helping them by lending their “professionalism”, think they are only effecting a political strategy. In truth, they are destroying the very basis for the wealth they desire. Their entire campaign for decades to discredit, to instill mistrust in the primary institution we have, the US (We the People) government, has been the primary cause to our economic decline. To increase the level of distrust is to decrease the available “intangible capital” which is 77% of our wealth generating power. “
Which brings us to what we just experienced with the debt ceiling issue. It’s not just the resulting budget changes, it’s the overall cognitive change being made in the people regarding trust of our ability to access a candidate and make the choice that will produce the desired results. Clinton, as for the Dems made the first blow to our trust with “triangulation”. I can and have on my own gone back and read speeches and answers to questions by Clinton during his first run and it shows the same as I note regarding Obama in “is he or isn’t he real”. Obama is (knowingly or not) bringing our trust close to death. 
Even the debt ceiling event is only the latest in a string of recent events that all drive an additional spike into the coffin of “trust”.
Last night on Racheal Maddow’s show, Chris Hayes, noted that we are now in a phase of governance where “created” crisis is the vehicle for results. Yes, Shock Doctrine governance level II.. It was presented from the perspective that the conservative mind set is the one employing such a tactic.

In my opinion, what he missed, and what makes this a unique form to this nation’s version of Naomie Klein’s Shock Doctrine is that there are enough economically conservative minded people in the opposing party (democratic party in this case) that the ruse can be played out with a more believable presentation than if just one side is playing along. Yes, both side play it differently, but would that not be expected based on the supposed “base party” paradigms? At no time during any of these “crisis” did the primary players on the democratic side resist the crisis by calling it out. Instead, they used it to get what the conservative faction of the party (a smaller faction since the last election) wants. These “wants” being very much inline with the republican non Norquist/Tea Party faction’s wants. Commonly referenced as Wall Street. In the end, no one to blame…It was the crisis.
This pattern has held true through out Obama’s current term.  In the latest example, the proposed budget from the house progressive caucus, the largest of the democratic party caucuses never was mentioned by the president. Recall the single payer health insurance issue?
The issue for this posting is not the “wants”. It is not about the resulting policy from the latest ruse played on We the People. The prime issue, the issue always suggested, implied, bandied about, but never out and out confronted: Public Trust.
This latest Obama/conservative policy process has brought us closer than ever to the demise of our economy and thus our democracy not primarily by the furthering of the financial disequilibrium, but by the perpetuation and enlarging of the perimeters of social order that will now be distrusted. I think we have approached, if not completely included the full boundaries of American culture in that which is to be distrusted with the completion of this debt crisis event. 
Sadly, I do not think Obama and those referred to as the “adults in the room” know what they have done. Instead. as I stated above, they believe they are just “effecting a political strategy”. 
There are 2 versions of distrust. First is the distrust nurtured by those who have made it a political tool of their strategy for political dominance, power and fortune. It is the “…most dangerous words in the English language: I am from the government and I am here to help you”. These people do not know that in essence their distrust is part of the ruse. The other distrust is those who see the ruse, have acted via those they trusted only to find they can no longer be trusted. I don’t believe one is worse than the other, but I do know having both means the solution will be slower in materializing. In both cases those in power can not be trusted and those who know it, presently have no one in power to represent their solutions.  It serves to make the what is the solution clear, it does not server to make it any easier or quicker in coming.
I do not believe this mode of operation is forever simply because we are not naturally selfish, self serving for survival sake creatures. We are not naturally so shallow in our collective thinking. It is only in our isolated, individual thought that we can and will be shallow. Of course this assumes that the concepts and application of virtual reality throughout our daily lives does not mutate us way from our natural self.  A big assumption considering “reality” is in the phrase “virtual reality” and the character dynamic is trust.

Tags: , , , , , , Comments (8) | |

A reminder from Obama’s February 2009 speech

By: Daniel Becker

In answer to the generic question regarding President Obama’s actions regarding the debt ceiling, I am re-posting this from 2/25/09.  In comments of the original I stated that cutting the deficit by 1/2 seemed to “optimistic” for me.
***************************

Ok, here are my basic issues with the substance of President Obama’s speech. First, may I remind everyone
that as of 11/08 I declared my divorce successful. Has it become my mission accomplish moment?

I heard this:

“And we will expand our commitment to charter schools. but as a father when I say that responsibility for our children’s education must begin at home.”

And thought: 2 tier education system/vouchers, no thank you. Education begins at home when home means one parent has the time to spend at home oppose to both working.

I heard this:

“And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.”

And thought: Are you freak’n kidding me! In this time of financial collapse we’re still going to talk about turning an insurance for the masses against the follies of finance into some form to include finance? The entire reason we want to create jobs is because we have suddenly realized that the vast, vast majority do not earn their money from money. Tax free? Has he not heard of 401K, IRA and all it’s versions, HSA, higher education accounts? Italy?

I heard this:

“Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office.”

And thought: Yeah, how’d that work for the last administration who made such a declaration? Did he have to say “in half”? Has his advisors not taught him about the blip during the FDR recovery? Only one way I can think of doing this: Raise taxes where the money is and whack the defense budget in half and I mean take a swipe at all moneys related to security. Are we really $1 trillion dollars worth of paranoid?

Tags: , , , , , , Comments (19) | |

Once more: I WANT MORE SPENDING!

by: Daniel Becker
Ok some more information to bolster my position that my flower shop being down this year another 4.5% compared to last year (at least the decline is leveling off) is not the results of government debt or too much taxation or banks not lending or unions… nope, my shop is off because of one thing: Lack of income in the hands of the many and nothing to date has been done to change that.
As noted here and here, monetary policy is not going to cut it. (Please pray for the Greeks.)
Or I should say, not cutting it for anyone who earns a penny because someone else had an extra penny to spend beyond their non-discretionary expenditures. That is, they are at the point of autonomous consumption, but not at the point of offsetting income earned from their cognitive or physical labor with that earned from money. That means we’re talking about the bottom 90% of the income earning population. (The top 10% own 82% of the stock.)


Two nice charts from the NY Fed bank

The first shows just how much of a dive spending has taken. Considering we’re a “consumption economy”, I don’t think this bodes well for us. The second shows how lacking in recovery such spending is compared to prior recession.
I don’t know about you, but I don’t care how much money we pump into the economy at the top, if it doesn’t get in the hands the bottom 90% of the income earners, there will be no recovery. It does not matter if the Fed’s are pumping it in or the Government is doing it via tax reductions because both methods are not putting the majority of the money in the hands of the many. The Fed article notes that this discretionary spending is “services”. It is 30% of all personal consumption expenditures (PCE). Non-discretionary is 34% of PCE, that leaves 36% somewhere in the middle? They state PCE is 70% of all output. So, 30% of 70% is 21% of all output? Using $14.7trillion means about 3.09 trillion has taken a 7% hit of $216 billion! ( I readily accept any math corrections in comments)
The author states:  
Because consumption accounts for about 70 percent of output, this in turn raises some concern about the future strength of the recovery.
That’s an understatement! He hedges some more: Also, households may remain wary about their employment and income prospects, suggesting that they may have lowered their future income expectations.
Really? “May” is the word one wants to use here? 
A Mr. Roche is more direct:
The real weakness in this recovery is rooted in the fact that consumer balance sheets are so mangled that they’re spending primarily on non-discretionary items and saving the rest of their incomes to pay down debts. This is important to understand because policy must be geared in such a way that it does not further hinder the household balance sheet. And therein lies the problem with a policy such as QE2. Anything that can potentially cause cost push inflation will only further weaken the household sector and detract from any possible recovery. In the case of QE2 I think we saw the increased speculation contribute directly to rising commodity prices which ultimately squeezed consumers further and led to the current soft spot in the economy.
BINGO!
Let’s not stop there. From Mr. Weisenthal Under “Scariest Job’s Chart Ever” we get this one on the duration of unemployment.

 
Which brings me to my posting from 4/2008: The longest Recession Ever
I noted in this post that it took 20 months from the Bush 2 recession for the peak of what I call Person Weeks Unemployed (a multiple of the number of people out and the number of weeks out). I also noted that Reagan with back to back recessions did not see the peak until 30 months past the first recession. Almost 3 full years! He also double the quotient.
I ended with: 
Thus, the peak of a recession is in the eye of the beholder. If you’re a person earning money from labor, a recession these days can last a very long time. This data would suggest that what we are seeing in the Spencer post is not a decreased risk but a lull before the storm. One other thing. It appears the Republicans fail again. As a group they have the longest turn-around to seeing a reduction in lost labor.
There you have it.  You want to fix the economy?  Don’t follow the conservative ideology.  The Republicans win in delaying recoveries. Yet, here we are with a “Democratic” president using the very language, words, framing of the group that is proven to not know how to create jobs and thus get money in the hands of the many in the shortest amount of time. Some say the Republicans are doing it this time with intention. I doubt that, though it is a meme that would make them seem to be the ultimate chess players.
Yes, I WANT MORE SPENDING!

Tags: , , , , Comments (35) | |

Prepping for the State of the Union address

By: Daniel J. Becker

With the state of the Union coming up and the current national attention having been drawn toward the question of the nation’s personality via reality mimicking Hollywood (God, that slap in the face hurt bad, assuming you felt it) I want to try to get us ready for the presentation by reminding people that drama can not be the end all and be all as motivation. We truly need to acknowledge the vastness between policy including policy statements and implementation and the living experience post policy.

Last year I posted my state of the union opinion based on real world small business experience.  Well, I can tell you, it’s not any better. I’ll get to that in the next post. Let’s just say, I got to experience the down side of the “stimulus” first hand. No, I’m not against stimulus, just poorly implemented stimulus.

In the mean time. There has been much discussion regarding the degree of leftyness of President Obama in the last 2 years. I asked in ’08: Obama, Is he or isn’t he….real?  In that post I drew on some statements President Obama made pre-election regarding policy positions. You should go read the comments. It’s kind of a “how wrong/correct were we” experience.

I want to focus on just one statement by President Obama from that post keeping in mind the concept of the “state of the union” address:

I will invest $150 billion over the next decade in renewable sources of energy to create five million new, green jobs – jobs that pay well and can’t be outsourced; jobs building solar panels and wind turbines and fuel- efficient cars;…

Great policy idea. Stimulus, jobs, hits the climate change thing, gives purpose and a direction for say our education system. Kind of lefty on the leftyness scale. However, there has always been rumblings that I’ve read and thought regarding greening our economy and jiving that with globalization and outsourcing. Well, we got our answer. It’s not jiving. Or should I say, it’s jiving just fine considering our current economic industrial policy?

Solar Panels Jobs Go to China

BEIJING — Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.

Even though Evergreen opened its Devens plant, with all new equipment, only in 2008, it began talks with Chinese companies in early 2009. In September 2010, the company opened its factory in Wuhan, China, and will now rely on that operation

Let the excuses begin. In the end, the reality of the state of the union is that it’s not good in all aspects of it’s health. As I asked in “Is he or isn’t he…real”

If the change we wanted was not to be bull shitted anymore, and the one I’m listening to is talking “change” using lingo, presenting policy plans of what I want, was I wrong to think they were talking no more bull shit?
Which brings us back to reality mimicking Hollywood. It is not just the issue of violent rhetoric. No, no, noooooooooooo.

Do you know what happens to a person when they can never get a straight, a no hidden agenda answer from the one(s) they count on? They go nuts.

Tags: , Comments (45) | |

Let the tax cuts go and you actually stick it to the top for real.

By: Daniel Becker (DOLB)

On Countdown (12/9/10), Keith had on Thomas Buffenbarger, president of the International Machinist Union. It was a chance for an “I told you so moment”in that Mr. Buffenbarger noted while campaigning for Secretary Clinton that President Obama would not be a fighter. Go watch the episode.

I made my position on of Obama clear after the 60 Minutes interview. Mr. Buffenbarger’s comments only reinforces my position as to understanding President Obama as does Obama’s latest “negotiation”. Surprisingly, only 4 comments were made. Too bad, the nation would have been more prepared for this latest act in “Obama the Negotiator. Not!”

But, that is not what got me regarding Mr. Buffenbarger’s interview. No. It was that he confirmed something I have been thinking since Obama stated his compromise policy after this current midterm elections.

…when Bush put the tax cut’s in place, very few of the members I’m privileged to represent noticed any difference in their pay check. And so, if the tax cuts were to go away, and we go back to the tax rates of then, our members would see very little change in their tax rates again.

Exactly. Has not the argument been that the cuts did little for the middle class? Then what is the problem with letting them go? I know for me it meant very little difference. Though, I realize having “meaning” is different for all so, here is a very nice chart I saved from 2005 looking at the tax cuts and what they meant for the various income groups.
First, let me say that when I initially viewed this chart years ago, I thought: How appropriate. Those who most likely think the republican party was watching out for them via tax cuts because they were in that top part of the food chain, were actually getting screwed too. Yeah, the one who you believes loves you is taking you for a ride. Those in the $100K to $300K range of income by 2015 were projected to pay a higher percentage of the share of national income taxes than they had before the cuts. And, even those above the $300k to the $1.5m range were getting much less of a break than their income relatives above them. Poetic justice? Just goes to show, that even those with significant incomes have no real conception of how small theirs is compared to the incomes of the upper echelons of this nation. But hey, you keep believing you’re just like them. It’s what they want.

More to the point of this post. Look at the “Average yearly tax savings” line for those from the lowest to the $383K level. I realize everyone’s situation is unique, but really, the range of the cost of the loss of the tax savings is virtually zero to 2.5% if your at $160K or 1% for those at $383k. As a share of supporting this nation, you/we have been screwed. I ask you all. The bottom 99%. Wouldn’t you like to really stick it to the economic royalty in this nation? Is 1% to 2.5% to much to give to finally get reality into the income tax?

You there in the 95 to 99% category. Your 2001 share of income was 15%.   Your projected share of the taxes in 2015 is 18.5% A ratio of 0.81. For your senior income family members the ratio in 2015 is 0.74. Still feeling loved?

Look at it this way. Based on this 2005 chart. The bottom 99% paid 75.3% of all income taxes before the tax cuts. Our projected share for 2015, the very tax cuts Obama et al have just negotiated to keep is 77.1%.

Who loves you now, baby?

Mr. Buffenbarger ended noting that his members understand that paying taxes is a privilege and is an act of support of our country. It is paying our way. So what do you say. Let’s show those at the very top just how unpatriotic they are. Let the tax cuts go and stand proud because honest American justice has prevailed.   You just screwed the biggest screwer of them all…The American Economic Royalty.

That is what the real Tea Party was about.

Tags: , , Comments (42) | |

The Class war summed up in quotes

By Daniel Becker

I just want to lay out the debate going on in our economy right now. There are 4 debaters. President Obama/Geithner et al, President Obama 2008, the rich (or capitalist, those who make their money from money) and the rest of us.

From President Obama’s 60 Minute interview:

PRESIDENT OBAMA:…And it turns out that actually the people who are most likely to use that money and spend that money are actually people of more modest means, and if what we’re concerned about is how we can grow the economy, there are more efficient ways to recirculate dollars out there and get people to spend.

PRESIDENT OBAMA:…But probably the biggest uncertainty right now for a lotta companies is there gonna be enough demand out there for the products, and we’ve gotta make sure that we’re workin’ with them to try to improve that.

KROFT: You’ve got a situation right now that banks have not significantly loosened up credit in spite of all the money that they’ve received, in spite of the fact that they’re quite profitable right now. And you’ve got manufacturing companies that haven’t replaced many of the jobs or hired back the people that they’ve cut. How do you get the banks to loan money, and how do you get businesses to hire people back?

PRESIDENT OBAMA: Well, it starts with businesses wanting to hire people back because they see customers out there. And so everything that we can do to expand consumer confidence, everything that we can do to get businesses to invest in plants and equipment through the tax code, through accelerated depreciation, through keeping taxes on middle class families where they are, as opposed to having them spike up — all that can make a difference. The more companies are doing well, the more likely they are to go to banks and say, “We need to borrow.”

The two Obama’s are struggling to have it both ways and thus the lack of action on issues such as easing unionization while going to South Korea for a trade deal ala NAFTA.

However, the other 2 parties in this debate have been very clear for years now. I present “Other People’s Money” 1991

The Capitalist represented by Lawrence Garfield:

“Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares? Care about them? Why? They didn’t care about you. They sucked you dry. You have no responsibility to them. For the last ten years this company bled your money. Did this community ever say, “We know times are tough. We’ll lower taxes, reduce water and sewer.” Check it out: You’re paying twice what you did ten years ago. And our devoted employees, who have taken no increases for the past three years, are still making twice what they made ten years ago; and our stock – one-sixth what it was ten years ago. Who cares? I’ll tell you. Me. I’m not your best friend. I’m your only friend. I don’t make anything? I’m making you money. And lest we forget, that’s the only reason any of you became stockholders in the first place. You want to make money! You don’t care if they manufacture wire and cable, fried chicken, or grow tangerines! You want to make money! I’m the only friend you’ve got. I’m making you money. Take the money. Invest it somewhere else. Maybe, maybe you’ll get lucky and it’ll be used productively. And if it is, you’ll create new jobs and provide a service for the economy and, God forbid, even make a few bucks for yourselves. And if anybody asks, tell ’em ya gave at the plant. And by the way, it pleases me that I am called “Larry the Liquidator.” You know why, fellow stockholders? Because at my funeral, you’ll leave with a smile on your face and a few bucks in your pocket. Now that’s a funeral worth having!

The rest of us represented by Andrew Jorgenson:

“…The entrepreneur of post-industrial America, playing God with other people’s money. The robber barons of old at least left something tangible in their wake- a coal mine, a railroad, banks. This man leaves nothing. He creates nothing. He builds nothing. He runs nothing. And in his wake lies nothing but a blizzard of paper to cover the pain. Oh, if he said, “I know how to run your business better than you,” that would be something worth talking about. But he’s not saying that. He’s saying, “I’m gonna kill you because at this particular moment in time, you’re worth more dead than alive.” Well, maybe that’s true, but it is also true that one day this industry will turn. One day when the yen is weaker, the dollar is stronger, or when we finally begin to rebuild our roads, our bridges, the infrastructure of our country, demand will skyrocket….God save us if we vote to take his paltry few dollars and run. God save this country if that is truly the wave of the future. We will then have become a nation that makes nothing but hamburgers, creates nothing but lawyers, and sells nothing but tax shelters. And if we are at that point in this country, where we kill something because at the moment it’s worth more dead than alive, well, take a look around. Look at your neighbor. Look at your neighbor. You won’t kill him, will you? No. It’s called murder, and it’s illegal. Well, this, too, is murder, on a mass scale. Only on Wall Street, they call it maximizing shareholder value, and they call it legal. And they substitute dollar bills where a conscience should be. Damn it! A business is worth more than the price of its stock. It’s the place where we earn our living, where we meet our friends, dream our dreams. It is, in every sense, the very fabric that binds our society together. So let us now, at this meeting, say to every Garfield in the land, here, we build things, we don’t destroy them. Here, we care about more than the price of our stock. Here, we care about people. Thank you.”

Unfortunately, the President appears to be debating parallel to the real debate.  Capitalist vs the rest of us.  Time to get engaged sir

Tags: , , , , Comments (16) | |

Bernanke Interlude

Via David Wessel’s Twitter feed, the WSJ publishes a letter:

Ben Bernanke is a good person, a fine academic and a well-respected professor. But those traits have no bearing on whether he should be reconfirmed as Federal Reserve chairman….

Applying accountability principles, there’s no way Chairman Bernanke should be reconfirmed by the Senate, let alone reappointed by the Obama administration….He’s been at the helm from the very beginning of this Great Recession. That alone warrants a “no” vote on reconfirmation.

At this point, I feel obligated to note that if you’re going to declare this The Great Recession—i.e., if you are assuming the chance of having the third Depression is over*—then Bernanke deserves credit, not blame. (Even those of us who do not assume we’re out of the woods admit we aren’t quite sunk yet, though 17.3% unemployment is problematic at best.)

In addition, the Fed’s behavior over the past 15 months has put America on a very dangerous path. The Fed has increased the monetary base (high-powered or wholesale money) by the largest amount ever, from colonial times to the present, times 10. Without an exit strategy, inflation is a virtual certainty over the coming decade, while an effective exit strategy virtually assures a further weakening of the U.S. economy. [emphasis mine]

This is Gospel for the WSJ editorial page, and a logical confusion of the first order. Any “exit strategy” assumes that the conflict is primarily over, so any exit strategy would, by definition, not weaken—let alone “further weaken,” which suggests that the writer’s faith that “the Great Recession” is accurate is wavering—the economy. (We can, and will, discuss where All That Money Has Gone; suffice to say, it’s not exactly producing a Multiplier Effect.)

But the writer saves the best for last.

And lastly, on a more personal note, [Bernanke] doesn’t have the gravitas of a Paul Volcker, Alan Greenspan or William McChesney Martin. In this day and age of crisis management, gravitas is essential. Almost anyone would be better than Mr. Bernanke.

Well, at least Arthur Burns is conspicuously excluded. It’s nice to know that Arthur Laffer believes in gravitas, while his best-known disciple believes “deficits don’t matter.”

*Yes, I could 1873-77 as a Depression in the United States. Looking at the evidence, it would be difficult not to.

Tags: , , , , Comments (6) | |

Dustbin of History Looking Increasingly Attractive to the Obama Administration

by Tom Bozzo

Update: See Brad DeLong. The exercise may even have been carefully conceived to do little harm, or perhaps little good if you’re an anti-deficit crazy. But even if this is not as bad on the substance as it could be, the engagement of the administration in the production of Potemkin policy initiatives is not reassuring.

See also: Steve Kyle at Americablog.

————————–

Jackie Calmes’ story on the Obama administration’s apparently forthcoming appearance-of-fiscal-rectitude initiative leaves me solidly in agreement with Ian Welsh. Calmes:

President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday…

[I]t would exempt the Pentagon, foreign aid, the Veterans Administration and homeland security budgets, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget, Medicare, Medicaid and Social Security.

Entitlement spending may be the biggest part of the budget, but it hasn’t been fastest-growing. From 2001 to 2008, defense spending’s share of GDP increased from 3 percent to 4.3 percent, according to the CBO [note: PDF]. All discretionary spending increased by 1.5 percentage points of GDP over the same period, from 6.5 to 8 percent, so nondefense discretionary spending increased by only 0.2 percent of GDP. Entitlements collectively increased by 1.2 percentage points — from 10 to 11.2 percent of GDP — Medicare spending growth accounts for one percentage point of that. Military and other security-related expenditures dominate Bush-era spending growth, and the rate of increase for those expenditures has far outstripped that of entitlements or nondefense discretionary spending.

The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years is less than 5 percent of the $9 trillion to $10 trillion in additional debt the government is expected to accumulate over that time.

Cutting 1.3 percent of GDP in military spending, in contrast, would save roughly $185 billion (2008 dollars) a year; with interest, that could be around 20 percent of the projected fiscal gap.

The initiative holds political risks as well as potential benefits. Because Mr. Obama exempts military spending while leaving many popular domestic programs vulnerable, his move is certain to further anger liberals in his party, including senior Democrats in Congress, who are already upset by the possible collapse of health care legislation and the troop buildup in Afghanistan, among other things.

Gee, ya think? Even here to the left of slightly-left-of-center, not all Federal spending is equally beloved. But there’s plenty of needed economic transformation that can’t or won’t be accomplished solely by way of private spending, and can’t be funded adequately at FY 2010 levels. I am thinking particularly about bringing various of the U.S.’s mostly inadequate infrastructure networks up to (or back up to) first-world standards.

Here’s the kicker:

But one administration official said that limiting the much smaller discretionary domestic budget would have larger symbolic value: It includes spending covering lawmakers’ earmarks for parochial projects, and only when the public believes such perceived waste is being wrung out will they be willing to consider reductions in popular entitlement programs.

“By helping to create a new atmosphere of fiscal discipline, it can actually also feed into debates over other components of the budget,” the official said, briefing reporters on the condition of anonymity.

So the whole charade is seen as a method to soften the public up for Medicare and Social Security cuts. For sure, health care spending including Medicare can’t grow as projected simply as a matter of Stein’s Law. But a system of reasonably universal, reasonably affordable health care is not obviously going to involve lower Federal spending on health care entitlements. On the Social Security front, Yves Smith recently groaned over a report (via Jesse’s Café Américain) that the Obama administration was seeking to promote conversion of retirement accounts to annuities. The problem with such a proposal, though, is more that private annuities tend to suck (for insurance market failure type reasons) than that senior citizens have too much secure, inflation-protected retirement income. A logical, and maybe even efficient, solution that happens to be off-limits in most of polite society would be to add resources to Social Security to increase benefits. You may see these programs less charitably — you may also have elderly relatives who would be in less dire financial straits without them than I do. The bottom line is that entitlement spending cuts shouldn’t be ends in themselves to anyone left-of-center with half a brain.

In any event, I have had enough. Fire Larry Summers. Fire Tim Geithner. Give Peter Orszag time to spend with his children. End the one-sided pseudo-post-partisan Kumbaya bullshit. Do it now.

Tags: , Comments (57) | |

America’s governance mind: FUBAR

by divorced one like Bush
UPDATED: Jim Watt  Remember him?

If you did not see it, go watch this weeks Bill Moyers Journal.  Part 2 is here.

From the second part we get all we need to know about where we’re going regarding government for, of and by the people and how little regard there is at the top for the seriousness of such a declaration and its implementation in perpetuity.

BILL MOYERS: Let me show you something that Ben Bernanke said to the annual meeting of economists earlier this week, last Sunday, I think it was.

BEN BERNANKE: The best response to the housing bubble would have been regulatory, not monetary. Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach for constraining the housing bubble than a general increase in interest rates.

DAVID CORN: Whoops.

BILL MOYERS: Whoops what?

DAVID CORN: Well, now he’s saying what a lot of us said earlier? That we should have had better regulation, you know, rather than just fiddling with interest rates?…

BILL MOYERS: You have a great chart in your story in “Mother Jones” on that.

DAVID CORN: I mean, my favorite one that I wrote about, and I don’t know him personally. He could be a great guy. Never even met him. I tried to interview him, but he wouldn’t consent. Mark Patterson. He’s the chief of staff for Timothy Geithner, the Treasury Department Secretary. He was a lobbyist for Goldman Sachs. What did he do as a lobbyist for Goldman Sachs? He lobbied against a bill in the Senate to restrain it was a very modest bill, to restrain CEO compensation.

Basically, gave shareholders the right to say, “We think you’re paying them too much.” It wasn’t even mandatory. It wouldn’t even cut back pay. He you know, Goldman Sachs would have none of that. He lobbied against that bill. Who authored that bill? Barack Obama, when he was a Senator. So, the guy who fought Barack Obama on CEO pay, an issue that Barack Obama says he cares about. And I believe he does. Is now running the Treasury Department for Tim Geithner. I mean, this really doesn’t make a lot of sense to me.

Yeah. Makes no sense to me either. In fact, the only mind that can make sense of such dichotomy in purpose and intent is a schizophrenic mind.

UPDATE
In responding to a comment by Guest who I assume is Cantab (we forget to check our sign-in names, Oh well), I mentioned James Watt.

Jim Watt’s experiences during and after his term as Secretary of the Interior is the perfect book end to Mark Patterson mentioned above. Back when Jim boy was Secretary, he got his ass booted. Sure, he created some messes. He was after all, the prototype for what we have in our administrative offices of our government.

From Wiki:

For over two decades, Watt held the record for protecting the fewest species under the Endangered Species Act in United States history… According to the environmental groups, Watt decreased funding for environmental programs,[5] restructured the department to decrease federal regulatory power,[5] wished to eliminate the Land and Water Conservation Fund (which had been designed to increase the size of National Wildlife Refuges and other protected land),[5] eased regulations on oil[5] and mining[6][5] companies, and favored opening wilderness areas and shorelands for oil and gas leases.[5]…In 1983, Watt banned The Beach Boys from playing a Fourth of July concert on the National Mall in Washington, D.C., saying that rock concerts drew “an undesirable element”; the group had played each year on the Mall on the Fourth of July from 1976 to 1981.

But, unlike Bush’s Metal of Freedom winners, Watt’s got booted. Sure, it took this to do it:

A public controversy erupted after a speech by Watt on September 21, 1983, when he said about his staff: “I have a black, a woman, two Jews and a cripple. And we have talent.”[13] Within weeks of making this statement, Watt submitted his resignation letter.[13][14]

but at least it was done. Not now though. Such countervailing, diametric behavior is apparently immune to public desire.

Worse though, is the loss of memory when people acted up-front. Jim Watt’s never hide his ideology. Also is the loss of memory of what justice used to mean in America:

In 1995, Watt was indicted on 25 counts of felony perjury and obstruction of justice by a federal grand jury.[15] The indictments were due to false statements made to a grand jury investigating influence peddling at the Department of Housing and Urban Development, which he had lobbied in the mid to late 1980s. On January 2, 1996, as part of a plea bargain, Watt pleaded guilty to one misdemeanor count of withholding documents from a federal grand jury. On March 12, 1996 he was sentenced to five years’ probation and ordered to pay a $5,000 fine and perform 500 hours of community service.[16]

Now we call it “politicizing government”.

Tags: , , Comments (49) | |