Sure, these two guys were a little nutty to begin with, but now they’ve gone around the bend.
First up: Have you seen the latest drivel from Robert J. Samuelson? Seriously, even the Washington Post should be ashamed to publish this guy. Get this — Samuelson says that sequestration is John F. Kennedy’s fault!
Fifty years ago, President Kennedy made a decision that, with hindsight, ranks as the biggest mistake of domestic policy since World War II. In many ways, it led directly to today’s “sequester” debacle.
Good Grief! What’s he talking about? The Bay of Pigs? The Cuban missile crisis?
No silly, President Kennedy decided to stimulate the economy.
In early 1963, he proposed a $13.6 billion tax cut (today: about $320 billion) even though the economy was not in recession and the tax cut would enlarge the budget deficit. Kennedy adopted the theory that government could, by manipulating its budgets, increase economic growth, reach “full employment” (then a 4 percent unemployment rate) and reduce — or eliminate — recessions.
It was a disaster.
High inflation was the first shock. An initial boom (by 1969, unemployment was 3.5 percent) spawned a wage-price spiral. With government seeming to guarantee 4 percent unemployment, workers and businesses had little reason to restrain wages and prices. In 1960, inflation was 1 percent; by 1980, it was 13 percent. The economy became less stable. From 1969 to 1982, there were four recessions, as the Federal Reserve alternated between trying to push unemployment down and prevent inflation from going up. Only in the early 1980s did the Fed, under Paul Volcker and with Ronald Reagan’s support, crush inflationary psychology.
A disaster? Really? I was a kid in the 1960s. The economy was great in those days–until 1973, those were the best economic times I’ve experienced in my lifetime. Unemployment was low, wages were good, people like my parents were movin’ on up to the middle class. But don’t take it from me–let’s see what an actual economist has to say about this. Here’s Dean Baker at the Center for Economic Policy Research (CEPR):
Samuelson’s economic history is even more striking than the linking of Kennedy to the sequester. He notes the fiscal stimulus that was sparked by the Kennedy tax cuts (and the Vietnam War and Johnson’s Great Society programs) and the boom that resulted, and tells us that “it was a disaster.”
Before looking at Samuelson’s horror story here, it is worth noting what happened in the boom, which can be treated as going through 1973, in spite of the recession in 1969. Growth over the 10 years from 1963 to 1973 averaged 4.4 percent, by far the most rapid stretch in the post-World War II era.
The unemployment rate hovered near 4.0 percent for most of this period, as Samuelson complains. This led to large gains in real wages and sharp declines in poverty. The overall poverty rate fell from 19.5 percent in 1963 percent to 11.1 percent in 1973, an all-time low. For African Americans the poverty rate fell from 55.1 percent in 1959 (annual data is not available) to 31.4 percent in 1973. I suspect most folks wouldn’t mind a few more disasters like this one.
As far as the recession story, Samuelson might have told readers that we had the same number of recessions in the 13 years following 1969 as we did in the 12 years preceding 1961. I suppose those recessions were also due to the Kennedy tax cut.
There’s lots more at both links. But you have to read Samuelson’s column to believe it. He goes on to claim that because of JFK’s tax cut, we developed “the loss of budgetary discipline,” and we’re still suffering from that 50 years later. So how does he rationalize the deficit spending under Reagan and W. Bush? He doesn’t.
And over at The New York Times, Iraq War propagandist Bill Keller disagrees with Samuelson: he thinks sequestration is “Obama’s Fault.” And of course he’s still droning on about “entitlements.” Keller admits that both parties agreed on the sequestration cuts, but it’s still really Obama’s fault because he hasn’t completely destroyed the safety net yet. And here’s the best part: Obama refuses to enact Simpson Bowles.
In December 2010 the commission, led by Erskine Bowles and Alan Simpson, delivered its list of spending cuts and revenue increases, plus the entitlement reforms necessary to fortify Medicare and Social Security for the surge of baby-boom retirees.
The Simpson-Bowles agenda was imperfect, and had plenty to offend ideologues of the left and right, which meant that it was the very manifestation of what Obama likes to call “a balanced approach.”
Ummm…no, Bill, the Commission never issued a report. They couldn’t agree on a unified agenda, so Simpson and Bowles wrote up their own report which was never approved by the commission members.
Now here’s where Keller really goes off the rails:
If Obama had campaigned on some version of Simpson-Bowles rather than on poll-tested tax hikes alone, he could now claim a mandate from voters to do something big and bold. Most important, he would have some leverage with members of his own base who don’t want to touch Medicare even to save it. This was missed opportunity No. 1.
That’s really funny. If Obama had campaigned on Simpson-Bowles, Mitt Romney would be president now. Because if you campaign on really really unpopular issues, people have a tendency to like, not vote for you.
There’s much more at the link, but you get the idea.
Good Morning!! I have a few interesting reads for you today. There isn’t a lot to be happy about in the news these days, but I hope that some of my picks will bring a smile to your face.
Maybe this will do it: Clint Eastwood: ‘I don’t give a f*ck’ if gays marry. The superstar actor and director told GQ Magazine that he considers himself an Eisenhower Republican, and he doesn’t sound too happy with the people running the party these days.
“These people who are making a big deal out of gay marriage?” Eastwood opined. “I don’t give a fuck about who wants to get married to anybody else! Why not?! We’re making a big deal out of things we shouldn’t be making a deal out of.”
“They go on and on with all this bullshit about ‘sanctity’ — don’t give me that sanctity crap! Just give everybody the chance to have the life they want.”
“I was an Eisenhower Republican when I started out at 21, because he promised to get us out of the Korean War,” he told GQ. “And over the years, I realized there was a Republican philosophy that I liked. And then they lost it. And libertarians had more of it. Because what I really believe is, let’s spend a little more time leaving everybody alone.”
Go ahead, make my day, Clint.
This story is a few days old, but it made me smile: Zakaria destroys Rumsfeld’s Iraq war talking points. Zakaria interviewed Rumsfeld on September 11, and the old goat still tried to claim that al Qaeda was in Iraq before the U.S. invaded.
“There’s no question that al Qaeda and Zarqawi and people were in Iraq,” Rumsfeld argued. “They aggregated there.”
“If we hadn’t invaded, they wouldn’t have been there,” Zakaria pointed out.
“We don’t know that,” Rumsfeld insisted. “You don’t know that. I don’t know that.”
“But they went in to fight us. So since we weren’t there, why would they have gone into Iraq?” Zakaria countered.
“Why have they gone into Yemen and Somalia?” Rumsfeld asked. “Why do al Qaeda go anywhere? They go where it’s hospitable.”
“Right, and Iraq hadn’t been hospitable,” Zakaria said.
ROFLOL! Why is this joke of a man able to get a book contract? Why does anyone want to put him on TV? He’s a complete loon.
Speaking of deserving people getting their comeuppance, deadbeat dad and Tea Party Rep. Joe Walsh was “scolded” by a Chicago judge yesterday for failing to support his children.
A Chicago judge issued a preliminary ruling Wednesday against U.S. Rep. Joe Walsh (R-Ill.) in his child-support dispute with his ex-wife, ordering the Tea Party favorite to explain why he appears to be $100,000 behind in child-support payments.
Vega did issue a “rule to show cause” — which means Walsh has to tell the court why he shouldn’t be held in contempt for falling so far behind in child support over the past five years.
Laura Walsh argues her ex-husband owes more than $100,000, a number the congressman disputes. But Vega’s ruling means that the burden is now on the congressman to prove that he doesn’t owe the money, attorneys for both Walshes agree.
Laura Walsh has gone into court on numerous occasions since filing for divorce in 2002, seeking court orders to have her ex-husband meet his court-ordered child-support obligations.
What a slug that guy Walsh is!
I came across this fascinating piece by Sarah Jaffe at Alternet: Are Jobs on Their Way to Becoming Obsolete? And Is That a Good Thing? It’s a long read, but I highly recommend you take the time. Here’s just a sample:
Media theorist and author of Life, Inc.: How the World Became a Corporation and How to Take it Back Douglas Rushkoff ruffled some feathers this week when he dared, at CNN.com of all places, to ask that question. It seemed, perhaps, gloriously insensitive to the plight of unemployed workers, of union workers at the U.S. Postal Service, who are struggling like so many others to stay afloat in an uncertain economy while they’re demonized in the press as greedy for wanting a decent job.
He argues that perhaps we’re going about it backward when we call for jobs, that maybe it’s not a bad thing that technology is replacing workers, and points out that actually, we do produce enough food and “stuff” to support the country and even the world—that, in fact, we produce too much “stuff.”
He alternately harkens back to a past before jobs, when many people worked for themselves on a subsistence level, and forward to a future where we are all busy making games and books and communicating with one another from behind computer screens, with the hours we have to work dwindling.
Rushkoff’s ideas really resonated with me. I haven’t worked a full-time job since 1986, and although I don’t have a lot of money, I have never regretted my decision to quit my 9-5 job and find some meaning in my life by doing things that made me happy. I did find that meaning, first by working on my own problems and issues and then by helping and being a caregiver for my elderly ex-mother-in-law in return for a place to live.
Because my expenses were low, I was able to return to college and get a bachelor’s degree, then go on to graduate school and earn an MA and a PhD. During graduate school and after, I have worked as a teaching assistant and have taught a number of courses. But now that I’m finished with my education, I’ve been reluctant to search for a full-time teaching job.
Lately I’ve survived mostly on my Social Security and selling my huge accumulation of books on the internet with a few teaching jobs thrown in. I will also have another small source of retirement income from my days as a full-time office worker when I choose to take it. I’m enjoying the time I’ve had to follow politics closely and blog about it. I’ve never been all that ambitious. I went to school simply for the joy of learning. I do want to find ways to give back, but I don’t care that much about making piles of money. I might have to check out Rushkoff’s book.
At Truthout, I learned that liberal economist Dean Baker has also written a book, and you can even download it free! The book is called “The End of Loser Liberalism: Making Markets Progressive. From the Truthout article by Keane Bhatt, Dean Baker: Why Didn’t We Make These Guys Run Around Naked With Their Underpants Over Their Heads?
KB: Your book argues that financial crises don’t have to lead to “lost decades” of massive pain and suffering and, even more importantly, that the US never even experienced a true financial crisis.
DB: There’s a lot of real sloppy thinking here. The main promulgators of this view are Kenneth Rogoff and Carmen Reinhart and they say that they look back over 600 years of history and find that in almost all these cases, countries took over a decade to recover. It’s painful, because I’d like to think – and one would expect that they’d like to think – that we know more economics than we did 600 years ago. If we don’t – and we really haven’t learned anything – why do you guys get paid high salaries? I say that only partially facetiously. If we were to look back through time, a very high percentage – probably the majority – of newborn babies didn’t survive to age 5. You’d be an idiot to say that the past trend holds today – we have modern medicine, so we have a very good reason to expect that the overwhelming majority of children will survive to age 5. We have learned something in economics over six centuries, so it’s not some curse, they’re concrete problems.
Finance gets very mysterious and complicated. There are instruments that are hard for people to understand; they’re hard for me to understand. The basic story is not complicated: we need demand. As I say in the book, there’s very little about the financial crisis that explains where we are today. People who want to buy homes have no problem getting credit – you can’t go 0% down, but someone who, say, 15 years ago was able to get a home mortgage can expect to get a home mortgage today. In terms of businesses, the US, unlike Japan, has a very large capital market where firms can directly access capital through commercial paper and bond financing. The current rates are extraordinarily low in both nominal and real terms. So the idea that the banks being crippled would impede the economy doesn’t follow when hundreds of the largest firms can go straight to the market and get financing.
Let’s imagine that the big firms can get credit but the small ones can’t. That would create a situation in which the big firms are running wild, grabbing market share at the expense of smaller competitors crippled by lack of access to capital. This is not happening.
There’s a survey that the National Federation of Independent Business has done for a quarter century that asks businesses what are the biggest problems to expanding. And currently, almost no one mentions finance – either access or cost. So clearly the problem is not finance.
Read the whole interview if you can–it’s well worth it.
I’m going to end with a story that won’t necessarily make you smile, but it’s a story that puts the lie to the Bush/Cheney claims that torture helped make us safer. I think that’s a good thing. In fact, author and former FBI interrogator Ali H. Soufan argues that the opposite is true, and that in fact 9/11 could have been prevented with traditional interrogation methods. Watch his interview with Keith Olbermann:
So…what are you reading and blogging about today?
In what I hope is not some symbolic hype, Alan Krueger–an actual economist and a labor one at that–was nominated by President Obama today to head the Council of Economic Advisors. He will replace Austin Goolsbee.
As the Wall Street Journal noted, Krueger’s scholarship suggests he will “likely provide a voice inside the administration for more-aggressive government action to bring down unemployment and, particularly, to address long-term joblessness.”
If his name sounds familiar, it’s because Krueger’s academic work has frequently played a valuable role in the political discourse. When congressional Republicans blatantly lied about the costs of a cap-and-trade plan, it was Krueger who set the record straight. When conservatives said in 2009 that slashing the minimum wage would boost the economy, Krueger explained why the opposite is true.
The economist also brings relevant experience to the table.
I’m hoping this finally brings the correct policy priorities and prescriptions to the table. We’ve had nearly three years of confused messages and results and the economy is clearly the worse for it. There’s an article up at The Guardian by economist Dean Baker that pretty much sums up all of my economic posts for the past few years. Obama never seemed to understand that high unemployment is a problem and never instituted any kind of policy to target the problem directly. He says he gets it now, but I’d just like to remind every one that he said he got it after the election that delivered the House of Representatives to the Tea Party terrorists and still has shown no sign that he understands that people expect bold fiscal policy in the face of low economic growth. All we keep getting is tax breaks for rich people and opposites day fiscal policy.
President Obama has discovered how serious the recession is. That’s what he told an audience in Chicago last week. To be fair, he was referring to revised data from the commerce department showing that the falloff in GDP was larger than originally reported.
But ridicule is appropriate. He and we knew all along how many people were out of work. The employment numbers told us the size of the hole and the desperate need for government action.
This sort of ridiculous comment, and President Obama’s weak response to the recession over the first two and a half years of his presidency, explains the tidal wave of scepticism facing his widely hyped upcoming speech on jobs after the Labor Day weekend. The list of remedies leaked ahead of time does little to inspire hope.
At the top of the list of job-creating measures is extending the 2 percentage-point reduction in the social security payroll tax. This provides no boost to the economy, since it just keeps in place a tax cut that was already there, but if the cut is allowed to end at the start of 2012, it will be a drag on growth.
As it stands, the social security programme is being fully reimbursed for the lost tax revenue, but there is always the possibility that Republicans will use this as a basis for attacking the programme. Given President Obama’s willingness to support cuts to social security, it is understandable that this part of his jobs agenda doesn’t generate much enthusiasm.
Baker goes on to call for a new CCC and explains why trade agreements, tax cuts to business yet again that undermine social security, and all the rest of the “jobs” agenda touted by the President aren’t going to do much of anything. Economist Nancy Folbre has a great piece of analysis up at the NYT explaining why letting this high level of unemployment go on for a period of time has an increasingly negative impact on the entire economy because things multiply over time. However, a new study covered by Folber shows that the unemployed just don’t sit around and act like they are on vacation. They create value by doing unpaid work. The same folks that think that the unemployed just lie around are the same ones that push the meme that homemakers spend their days eating bon bons and watching soap operas.
The overall increase in non-market work implies that household consumption among the unemployed fell less than market income, but it’s hard to put a dollar value on the unpaid work. When people make a voluntary decision to substitute time for money, we can infer something about the relative value they place on it.
But most unemployment is involuntary, and some unpaid work probably represents an effort to stay busy more than a significant contribution to household living standards.
The authors emphasize the relatively large impact of unemployment on unpaid work, in part because this is a new finding, and in part because it counters the wrong impression that, as Professor Hurst put it, the Great Recession was a Great Vacation.
But it is also important to note that most of the unemployed can’t allocate more of the free time they gain to productive uses, even if they want to. They lack the capital, land, tools and skills needed to flexibly shift from wage employment to production for their own use. Even when they can make a partial shift, their productivity is likely to be lower in unpaid work than paid work.
That’s why involuntary unemployment represents such a waste of human capabilities and loss of productive output for the economy as a whole.
So, what can Alan Krueger bring to the White House if the President will listen to this economist? This is economist Mark Thoma’s take on the appointee.
His most well known research is on the minimum wage and immigration, The work is somewhat controversial in that the results show small negative effects from raising the minimum wage and from increasing immigration. In my view that is a sign of an economist who is willing to let the evidence do the talking, and that is a good trait to have in this job.
He has also worked in many other areas, including occupational licensing, the economics of terrorism, and more recently on job search in periods when unemployment is high, including how job search is affected by things such as unemployment insurance. But that is just a small taste of the large amount of research he has done.
Krueger’s been working at the Treasury so maybe that will give him access that many of the other Obama economic advisers seemed without. Time is running out for policy to help the unemployed in any meaningful way. I say this because as we get closer to the election, it will make the Republicans more surly and less likely to do anything to help a Democratic administration. They’ve already been rewarded for hostage-taking behavior. Then, there’s the policy lags. Things like infrastructure banks take a lot of time to set up. Ideas like patent reform are laughable as job creation tools. I have no idea why the Obama administration won’t embrace things that worked in the past, but that doesn’t appear to be their MO. They seemed to get their jobs mojo from reheating failed Republican canards and presenting them as the higher, middle ground. I continue to be discouraged.