Thursday Reads

Good Morning!!

Washington Crossing the Delaware, 1975

Peter Saul, Washington Crossing the Delaware, 1975

The mainstream media, led by The New York Times, is writing the Democrat’s obituary after Terry McAuliffe’s loss in the Virginia gubernatorial race, but I don’t feel like writing about that. I have no idea whether the loss will affect the 2022 midterms. I don’t really want to think about it, except that I hope the Democrats will finally do something about the filibuster. There has been some talk of changing Senate rules for voting rights legislation, after Republicans once again blocked debate on the Voting Rights Act.

The New York Times: Republicans Block a Second Voting Rights Bill in the Senate.

Senate Republicans on Wednesday blocked legislation to restore parts of the landmark Voting Rights Act weakened by Supreme Court rulings, making it the second major voting bill to be derailed by a G.O.P. filibuster in the past two weeks.

Despite receiving majority support, the John Lewis Voting Rights Advancement Act, named for the civil rights activist and congressman who died last year, fell nine votes short of the 60 required to advance over Republican opposition.

In the aftermath of the defeat, Senate Democrats said they would intensify internal discussions about altering filibuster rules or making other changes to allow them to move forward on voting rights legislation despite deep resistance by Republicans, who have now thwarted four efforts to take up such measures.

“Just because Republicans will not join us doesn’t mean Democrats will stop fighting,” said Senator Chuck Schumer, Democrat of New York and the majority leader, after the vote. “We will continue to fight for voting rights and find an alternative path forward.”

Yesterday the Federal Reserve announced plans to deal with inflation. I don’t know about you, but I’ve been affected by the rising food prices. Even though we’re getting the biggest Social Security increase in a very long time, it isn’t going to be enough. The New York Times: Fed Takes First Step Toward End of Pandemic Measures.

The Federal Reserve on Wednesday took its first step toward withdrawing support for the American economy, saying that it would begin to wind down a stimulus program that’s been in place since early in the pandemic as the economy heals and prices climb at an uncomfortably rapid pace.

Peter Saul’s Columbus Discovers America, 1992-1995, points the way to the painter’s mature work, distinguished by provocative subject matter and a cartoon-based style.

Peter Saul’s Columbus Discovers America, 1992-1995, points the way to the painter’s mature work, distinguished by provocative subject matter and a cartoon-based style.

Central bank policymakers struck a slightly more wary tone about inflation, which has jumped this year amid booming consumer demand for goods and supply snarls. While officials still expect quick cost increases to fade, how quickly that will happen is unclear.

Fed officials want to be prepared for any outcome at a time when the economy’s trajectory is marked by grave uncertainty. They are not sure when prices will begin to calm down, to what extent the labor market will recover the millions of jobs still missing after last year’s economic slump, or when they will begin to raise interest rates — which remain at rock-bottom to keep borrowing and spending cheap and easy.

So the central bank’s decision to dial back its other policy tool, large-scale bond purchases that keep money flowing through financial markets, was meant to give the Fed flexibility it might need to react to a shifting situation. Officials on Wednesday laid out a plan to slow their $120 billion in monthly Treasury bond and mortgage-backed security purchases by $15 billion a month starting in November. The purchases can lower long term interest rates and prod investors into investments that would spur growth.

Assuming that pace holds, the bond buying would stop altogether around the time of the central bank’s meeting next June — potentially putting the Fed in a position to lift interest rates by the middle of next year.

John Durham’s “investigation” into the origins of the FBI/DOJ investigation of Trump’s ties to Russia is beginning to look like a real witch hunt. The New York Times: Authorities Arrest Analyst Who Contributed to Steele Dossier.

Federal authorities on Thursday arrested an analyst who in 2016 gathered leads about possible links between Donald J. Trump and Russia for what turned out to be Democratic-funded opposition research, according to people familiar with the matter.

The arrest of the analyst, Igor Danchenko, is part of the special counsel inquiry led by John H. Durham, who was appointed by the Trump administration to scrutinize the Russia investigation for any wrongdoing, the people said.

Mr. Danchenko, was the primary researcher of the so-called Steele dossier, a compendium of rumors and unproven assertions suggesting that Mr. Trump and his 2016 campaign were compromised by and conspiring with Russian intelligence officials in Moscow’s covert operation to help him defeat Hillary Clinton.

The people familiar with the matter spoke on condition of anonymity because the indictment of Mr. Danchenko had yet to be unsealed. A spokesman for Mr. Durham did not respond to a request for comment.

Peter Saul, Quack-Quack, Trump, 2017

Peter Saul, Quack-Quack, Trump, 2017

So this information was leaked without any indication of what the basis of the arrest was. What laws did  Danchenko break? The last Durham arrest was hinky too.

The charges against Mr. Danchenko follow Mr. Durham’s indictment in September of a cybersecurity lawyer, Michael Sussmann, which accused him of lying to the F.B.I. about who he was working for when he brought concerns about possible Trump-Russia links to the bureau in September 2016.

Mr. Sussmann, who then also worked for Perkins Coie, was relaying concerns developed by data scientists about odd internet logs they said suggested the possibility of a covert communications channel between the Trump Organization and Alfa Bank, a Kremlin-linked financial institution. He has denied lying to the F.B.I. about who he was working for.

Today is the hearing about whether Trump has any right to claim executive privilege over documents related to the January 6 insurrection. CNN: High-stakes hearing Thursday in Trump effort to block release of presidential documents.

The power Donald Trump holds as a former president will be put to the test on Thursday, as a federal judge is set to hear arguments on whether Trump can keep secret records from his White House about his attempt to overturn the 2020 election.

Trump has asked the DC District Court to block the National Archives from giving more than 700 pages of documents to the House Select Committee investigating January 6. He’s claimed the House’s investigation is illegitimate, and that his role as a former President should give him control over reviewing and deciding upon access to the records.

The hearing may be the pivotal moment in a potentially historic legal fight about the authority of a former president, the House’s investigative power and the reach of executive privilege….

In the short term, the case also may have huge implications for the bipartisan House investigation, which is pushing for records and witnesses before the midterm elections take place next year. Without access to the documents, the House could be hampered significantly in its fact-finding.

In court, the House has cast its investigation as one of its most critical tasks in history. “In 2021, for the first time since the Civil War, the Nation did not experience a peaceful transfer of power,” lawyers for the House wrote over the weekend. “A peaceful transfer of power from one President to another is crucial to the continuation of our democratic government. It is difficult to imagine a more critical subject for Congressional investigation, and Mr. Trump’s arguments cannot overcome that pressing legislative need.

Hitler's Bunker, Peter Saul

Hitler’s Bunker, Peter Saul

This happened yesterday in the trial of the Charlottesville rally organizers. Buzzfeed News: A Renowned Holocaust Historian Testified That Charlottesville Rally Organizers’ Messages Were A “Call To Arms”

Neo-Nazis Christopher Cantwell and Matthew Heimbach on Wednesday seemed almost to forget for a moment that they were in a court of law and defendants in a civil case that could potentially bankrupt them and take down the white nationalist groups with which they’re associated.

“What’s your favorite Holocaust joke?” Cantwell, who is representing himself in court, asked Heimbach, who was called to the stand by the plaintiffs as a witness, during cross-examination….

The strategy behind Cantwell’s line of questioning wasn’t immediately clear, and attorneys for the plaintiffs interjected before any jokes were uttered. But Cantwell, who had previously gone on bizarre courtroom tangents, and Heimbach spent nearly an hour talking about their adoration for Nazi Germany, Adolf Hitler, the dictator’s book Mein Kampf, and their belief that the Holocaust was a hoax.

Hitler, Heimbach testified, “did nothing wrong” in murdering some 6 million Jews.

The exchange between the two neo-Nazis contrasted sharply with the testimony by Deborah Lipstadt, an acclaimed Holocaust scholar and professor of modern Jewish history at Emory University.


Saturday Reads: A Mixed Bag of Stupid, Crazy and Sad, with Some Awesome Thrown In

MezenzevDenis_Mad_hatter_tea_party

Good Morning!!

Did you hear about how Tennessee Republican Rep. Marsh Blackburn tried to argue against President Obama’s proposal to increase the minimum wage and then index it to inflation–and then ended up demonstrating why the increase is desperately needed? She claimed that we need to lower the minimum wage to help young kids get into the work force–the way it was back in the late 1960s or early 1970s when she got her first job in Mississippi and the minimum wage was $2.15.

Quoted at Think Progress:

BLACKBURN: What we’re hearing from moms and from school teachers is that there needs to be a lower entry level, so that you can get 16-, 17-, 18-year-olds into the process. Chuck, I remember my first job, when I was working in a retail store, down there, growing up in Laurel, Mississippi. I was making like $2.15 an hour. And I was taught how to responsibly handle those customer interactions. And I appreciated that opportunity.

Too bad Blackburn forgot (or didn’t know) that $2.15 was worth a hell of lot more in 1968 than it is in 2013.

Blackburn was born in 1952, so she likely took that retail job at some point between 1968 and 1970. And according to the Bureau of Labor Statistics’ inflation calculator, the $2.15 an hour Blackburn made then is worth somewhere between $12.72 and $14.18 an hour in today’s dollars, depending on which year she started.

At that time, the minimum wage was $1.60, equivalent to $10.56 in today’s terms. Today’s minimum wage is equivalent to just $1.10 an hour in 1968 dollars, meaning the teenage Blackburn managed to enter the workforce making almost double the wage she now says is keeping teenagers out of the workforce.

These poor math-challenged Republicans just can’t help themselves. They’re stuck on stupid.

Yesterday Dakinikat posted about Elizabeth Warren’s questioning of bank regulators during her first appearance at a Banking, Housing and Urban Affairs Committee hearing. Oh my, the big bankers are freaking out about it. From HuffPo:

Sen. Elizabeth Warren’s (D-Mass.) meeting with bank regulators Thursday left bankers reeling, after she questioned why regulators had not prosecuted a bank since the financial crisis.

At one point, Warren asked why the book value of big banks was lower, when most corporations trade above book value, saying there could be only two reasons for it.

“One would be because nobody believes that the banks’ books are honest,” she said. “Second, would be that nobody believes that the banks are really manageable. That is, if they are too complex either for their own institutions to manage them or for the regulators to manage them.”

That set off angry responses to Politico’s Morning Money. “While Senator Warren had every right to ask pointed questions at today’s Senate Banking Committee hearing, her claim that ‘nobody believes’ that bank books are honest is just plain wrong,” a “top executive” emailed the financial newsletter. “Perhaps someone ought to remind the Senator that the campaign is over and she should act accordingly if she wants to be taken seriously.”

So if she wants to be “taken seriously,” she should act like a doormat and let bankers walk all over her?

During the hearing, Warren asked why ordinary people often faced prosecution while banks do not.

“You know, I just want to note on this. There are district attorneys and U.S. attorneys who are out there every day squeezing ordinary citizens on sometimes very thin grounds. And taking them to trial in order to make an example, as they put it. I’m really concerned that too big to fail has become too big for trial,” she said. “That just seems wrong to me.”

Like the Aaron Swartz prosecution, for example?

According to an article in the Washington Post this morning, the proposed new assault weapons ban isn’t likely to be particularly effective: Latest try at new assault weapons ban would exempt more than 2,200 specific firearms

Congress’ latest crack at a new assault weapons ban would protect more than 2,200 specific firearms, including a semi-automatic rifle that is nearly identical to one of the guns used in the bloodiest shootout in FBI history.

One model of that firearm, the Ruger .223 caliber Mini-14, is on the proposed list to be banned, while a different model of the same gun is on a list of exempted firearms in legislation the Senate is considering. The gun that would be protected from the ban has fixed physical features and can’t be folded to be more compact. Yet the two firearms are equally deadly.

“What a joke,” said former FBI agent John Hanlon, who survived the 1986 shootout in Miami. He was shot in the head, hand, groin and hip with a Ruger Mini-14 that had a folding stock. Two FBI agents died and five others were wounded.

The bill propopsed by CA Sen. Diane Feinstein

…would ban 157 specific firearms designed for military and law enforcement use and exempt others made for hunting purposes. It also would ban ammunition magazines that hold more than 10 rounds.

Yet there are firearms that would be protected under Feinstein’s proposal that can take large capacity magazines like the ones used in mass shootings that enable a gunman to fire dozens of rounds of ammunition without reloading.

Feinstein said in a written response to questions from The Associated Press that the list of more than 2,200 exempted firearms was designed to “make crystal clear” that the bill would not affect hunting and sporting weapons.

Sigh…

A couple of days ago, Molly Ball of The Atlantic tried to figure out why 22 conservative Republicans voted against the Violence Against Women Act when do so has the effect of making Republicans “look bad.”

Surely Republicans, whatever you may think of them, are not actually in favor of violence against women. But if they’re going to absorb all this terrible publicity, they must have significant substantive objections to the legislation in question, right?

If you say so, Molly. I think they’re just plain mean and stupid.

The objections can be grouped in two broadly ideological areas — that the law is an unnecessary overreach by the federal government, and that it represents a “feminist” attack on family values. “The ideological foundations of the law are flawed and have led to an inability to help victims effectively,” Christina Villegas, a visiting fellow at the conservative Independent Women’s Forum and adjunct professor of political science at Cal State San Bernadino, told me.

VAWA, Villegas said, is premised on the theory that violence against women is a product of sexism and patriarchy — “men’s desire to keep women down” and the sexes’ unequal social status. But research shows that such violence has many sources, from substance abuse to marital conflict, according to Villegas. “VAWA provides so much funding [based on this model] that could be so much more effective if it focused on the proven causes of violence,” she said.

And so on, you can read the rest at the link. But what Ball’s straight-faced reporting of conservative objections to the bill really demonstrates is that their excuses are just cover for the simple truth that a lot of Republicans think that protecting them from rape, murder, and beatings by husbands and boyfriends violates men’s “rights.” As Amanda Marcotte wrote in her response to Ball’s piece, Republicans “have issues.”

WTF?!

WTF?!

Molly Ball of the Atlantic decided to delve into why it is that Republicans have caved into conservative pressure groups who oppose the Violence Against Women Act. The reasons that conservatives gave her were, she had to admit, shallow and idiotic and, if she delved in deeper (the claim that VAWA is making domestic violence worse is simply not true), straight up dishonest, but she didn’t make the obvious leap and realize that perhaps conservatives oppose VAWA because they are misogynist, and that all the excuses they give are attempts to deflect people from seeing the obvious.

But in case you are still struggling to accept that straight-up misogyny might be driving the fight against VAWA, consider this: Talking Points Memo discovered the conservative super-PAC and advocacy group [that] has been behind the push against VAWA. You don’t have to dig very deep to discover that their reasons are blunt force misogyny:

In a blog post, FreedomWorks criticized the cost of the legislation — $660 million — and pointed out that domestic violence is “already illegal in all 50 states.” It added: “Supporters of the VAWA portray women as helpless victims – this is the kind of attitude that is setting women back.”

Well what do you know? Freedom Works again. Marcotte continues:

In other words, the solution to domestic violence is to simply refuse to label a woman whose partner is beating her a “victim”. Got it. I’m curious if FreedomWorks is willing to expand this attitude towards other crimes. Mugged? Well, it’s disempowering and bad for you to call you a “victim”—god forbid!—so let’s just say you’re generous to people who wield guns and call it a day. FreedomWorks also claims that simply having laws on the books banning domestic violence is enough—as long as we formally say we’re against it, we don’t need to do anything silly like make sure the laws are enforced by directing resources to them. They also make the facetious claim that feminists are demanding that men be thrown in jail for merely yelling at women. It’s an amazing show of minimizing domestic violence, pretending that it’s just couples fighting, and seeking any way possible to make sure that abusive men aren’t held accountable.

And from the annals of rape culture, Alternet reports on “How police treat rape in America.”

In some of the most disturbing and sickening news of the day, New York state police have decided that a 15-year-old girl who was sexually assaulted by three boys was in fact not sexually assaulted because both she and the boys are mentally handicapped.

In May of last year, three boys attacked a 15-year-old mentally challenged student at Martin De Porres Academy, a school for students with special needs in Long Island. According to the police report, one of the boys repeatedly banged her head against the table while the other two forced her to give them oral sex and then tried to have forcible anal sex with her. In interviews with the police, the girl explained how she repeatedly said “no” and “stop” but that the boys continued to assault her. When she came home from school that day, her mother noticed that she had blood on her underwear.

But when the police learned that the alleged rapists were also mentally challenged, they withdrew the charges.

The department’s spokesperson told the New York Daily News , “It was more of a consensual situation with their mental capabilities.”

Of course, head-banging, blood and repeated pleas to “stop” are never consensual situations–regardless of the IQ level of the attackers. But, in this case, the police department is even further off target. As the family’s lawyer explained, the girl has an IQ of about 50 points, which puts her below the cognitive functioning level to consent to sex at all.

Here’s another outrageous child abuse story from the Smoking Gun: FBI: Man Slapped Crying Toddler On Delta Flight

After demanding that the mother of a crying toddler “shut that nigger baby up,” a male passenger allegedly slapped the 19-month-old across the face as a flight prepared to land in Atlanta last Friday evening, The Smoking Gun has learned.

The shocking February 8 incident aboard Delta Airlines Flight 721 resulted in Joe Rickey Hundley, 60, being charged with simple assault, according to a U.S. District Court affidavit. Hundley…is president of an aircraft parts manufacturer headquartered in Hayden, Idaho.

Can you believe that? I guess the FBI got involved because this may be a hate crime.

As detailed by FBI Agent Daron Cheney, Hundley was traveling to Atlanta from Minneapolis in seat 28A on the MD-90 twin-engine jet. He was seated next to Jessica Bennett, who shared seat 28B with her son Jonah.

Bennett, 33, told investigators that the “aircraft was in final descent” to Hartsfield-Jackson International Airport when her child “started to cry due to the altitude change.” Bennett added that she “was trying to get [her son] to stop crying, but he continued.”

At this point, Bennett recalled, Hundley used the racial epithet as he told her to shut the child up. He then allegedly “turned around and slapped” the toddler in the face “with an open hand, which caused the juvenile victim to scream even louder.” The slap, Bennett said, “caused a scratch below [the child’s] right eye.”

Thanks to Dakinikat for alerting me to this story.

And thanks to JJ for this one from The Guardian UK: Every meteorite fall [that we know about] on earth mapped. Please go check it out. The known incidents go all the way back to 2,300 BC!

Those are my recommendations for today. What’s on your reading and blogging list? I look forward to clicking on your links!


Tuesday Reads: Daniel Inouye, Richard Engel, and Fiscal Slope Trial Balloons and Lead Balloons

Sen. Dan Inouye reads with children

Sen. Dan Inouye reads with children

Good Morning!!

Senator Dan Inouye, who died yesterday at age 88 was a Japanese American who fought for the U.S. in World War II. From Time Magazine:

On Dec. 7, 1941, high school senior Daniel Inouye knew he and other Japanese-Americans would face trouble when he saw Japanese dive bombers, torpedo planes and fighters on their way to bomb Pearl Harbor and other Oahu military bases.

He and other Japanese-Americans had wanted desperately to be accepted, he said, and that meant going to war.

“I felt that there was a need for us to demonstrate that we’re just as good as anybody else,” Inouye, who eventually went on to serve 50 years as a U.S. Senate from Hawaii, once said. “The price was bloody and expensive, but I felt we succeeded.”

Inouye had wanted to become a surgeon, but he lost his right arm in a firefight during the war. He was elected to the House in 1959 after Hawaii became a state. Inouye became well known nationally as a member of the Senate Watergate Committee and later as chairman of the Congressional committee that investigated the Iran Contra scandal.

In one of the most memorable exchanges of the Watergate proceedings, an attorney for two of Nixon’s closest advisers, John Ehrlichman and Bob Haldeman, referred to Inouye as a “little Jap.”

The attorney, John J. Wilson, later apologized. Inouye accepted the apology, noting that the slur came after he had muttered “what a liar” into a microphone that he thought had been turned off following Ehrlichman’s testimony.

Inouye achieved celebrity status when he served as chairman of the congressional panel investigating the Iran-Contra affair in 1987. That committee held lengthy hearings into allegations that top Reagan administration officials had facilitated the sale of weapons to Iran, in violation of a congressional arms embargo, in hopes of winning the release of American hostages in Iran and to raise money to help support anti-communist fighters in Nicaragua….

The panel sharply criticized Reagan for what it considered laxity in handling his duties as president. “We were fair,” Inouye said. “Not because we wanted to be fair but because we had to be fair.”

NBC foreign correspondent Richard Engel and his production team have been released after five days in captivity in Syria. The Guardian reports:

The group disappeared shortly after crossing into north-west Syria from Turkey last Thursday (13 December). NBC had no contact with the kidnappers and asked for a news blackout about the incident, which was observed by mainstream news outlets.

There was no request for a ransom during the time Engel and his crew were missing.

After being abducted they were put into the back of a truck and blindfolded before being transported to an unknown location, believed to be near the small town of Ma’arrat Misrin.

Throughout their captivity they were blindfolded and bound, but otherwise not physically harmed, said the network.

Read more at the link.

According to Beltway Bob (AKA Ezra Klein), a deal between President Obama and Speaker Boehner is in the offing, and it isn’t a good deal for old ladies who are trying to survive on Social Security.

Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.

On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress.

Now how is that a win for Democrats? If we go over the cliff, Republicans are going to be blamed, and taxes will go up on everyone until Republicans give in to public outcry in early January. But Social Security, Medicare, and Medicaid cuts will inevitably be blamed on Democrats, who are supposed to fight for the social safety net. Then in 2014, Republicans will attack them for those cuts, and it will work–just as it did when Romney and Ryan falsely accused Obama of cutting Medicare benefits in the recent presidential campaign. Back to Beltway Bob:

The deal will lift the spending sequester, but it will be backed up by, yes, another sequester-like policy. I’m told that the details on this next sequester haven’t been worked out yet, but the governing theory is that it should be more reasonable than the current sequester. That is to say, if the two parties can’t agree on something better, then this should be a policy they’re willing to live with.

On stimulus, unemployment insurance will be extended, as will the refundable tax credits. Some amount of infrastructure spending is likely. Perversely, the payroll tax cut, one of the most stimulative policies in the fiscal cliff, will likely be allowed to lapse, which will deal a big blow to the economy.

Again, that doesn’t sound like a win for Obama at all. Let’s hope Beltway Bob is wrong again.

Dean Baker on the chained CPI: He argues that the chained CPI is not really applicable to seniors.

The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index (CPI-E) which reflects the consumption patterns of people over age 62. This index has shown a rate of inflation that averages 0.2-0.3 percentage points higher than the CPI-W.

The main reason for the higher rate of inflation is that the elderly devote a larger share of their income to health care, which has generally risen more rapidly in price than other items. It is also likely that the elderly are less able to substitute between goods, both due to the nature of the items they consume and their limited mobility, so the substitutions assumed in the chained CPI might be especially inappropriate for the elderly population.

Baker explains for the umpteenth time that it is wrong to use Social Security cuts to lower the deficit.

It is important to remember that under the law Social Security is supposed to be treated as a separate program that is financed by its own stream of designated revenue. This means that it cannot contribute to the budget deficit under the law, because it is only allowed to spend money from the Social Security trust fund.

This is not just a rhetorical point. There is no commitment to finance Social Security out of general revenue. The projections from the Social Security trustees show the program first facing a shortfall in 2033 after which point it will only be able to pay a bit more than 75 percent of scheduled benefits. While this date is still fairly far in the future, at some point it will likely be necessary to address a shortfall.

It is reasonable to expect that the changes needed to keep the program fully funded will involve some mix of revenue increases and benefit cuts. However if the chained CPI is adopted as part of a budget deal unconnected to any larger plan for Social Security then it effectively means that there will have been a substantial cut to Social Security benefits without any quid pro quo in terms of increased revenue. This hardly seems like a good negotiating move from the standpoint of those looking to preserve and strengthen the program.

There is much much more at the link. Digby has been writing about this issue for months, and she had another good post on it yesterday.

There has always been some fantasy, mostly held by people who are about to be fleeced by Wall Street sharpies, that this country should be run like a cash business. It cannot and should not be done that way. (Ask Mitt Romney about the role of debt in a modern economy.) The problem is that this focus on debt is making it impossible to do the things we need to do to spur economic growth in the short term, which would close the deficit, and apparently the only way anyone in Washington can see to get around that is to sell off the future security of American citizens as some sort of human sacrifice for no good reason. It simply is not necessary, as Krugman shows.

John Boehner came up with a new “offer” this week-end to raise the rates on those who make a million or more each year and also agreed to take the debt ceiling off the table for the next year. Krugman thinks this is a bad deal which Obama has no good reason to take — and I would agree with him if I didn’t still see a very dangerous possibility that the administration wants to pursue some unacceptable spending cuts in order to deliver on that “balanced approach.” A looming debt ceiling fight is a very good excuse for them to do that. If kicking the can down the road another year will stop them from cutting more spending, then I’m inclined to say take the deal.

Obviously, this whole thing is ridiculous. They should get rid of this idiotic debt ceiling vote altogether: after all once they appropriate the funds they’ve agreed to pay for them whether through taxation or borrowing. This yearly vote allows them to get credit for the goodies and then later refuse to pick up the tab. But unless they are willing to give it up completely, I’d be glad to at least see it be delayed until the White House stops talking about cutting vital programs.

And yes, the taxes should go up for all income over $250,000. They can afford it. But not if the price is changing to the Chained CPI which will take the food out of the mouths of 90 year old women and squeeze veterans and disabled people who can’t afford it. In other words, the devil is in the details. If Obama hangs tough as Krugman prescribes and wins on all these points without giving up the store (also known as “making tough choices ” his own base “won’t like”) then I say go for it. I’m just not sure I have much faith that’s the game plan. If it isn’t, then maybe he should take Boehner’s offer, repeal the sequester and put this to bed for the time being. There’s been more than enough cutting already to drag this economy down. Let’s see what happens if we stop the austerity insanity for a while.

Dr. Dakinikat would probably agree with that.

Meanwhile, most Americans disapprove of the the proposed cuts to safety net programs, so maybe this will turn out to be another trial balloon that goes over like a lead balloon.

Most Americans want President Obama and congressional Republicans to compromise on a budget agreement, though they, too, are unhappy about the options that would avert the “fiscal cliff,” according to a new Washington Post-ABC News poll.

The strong support for compromise belies widespread public opposition to big spending cuts that are likely to be part of any deal.

Most Americans oppose slashing spending on Medicaid and the military, as well as raising the age for Medicare eligibility and slowing the increase of Social Security benefits, all of which appear to be on the table in negotiations. Majorities call each of these items “unacceptable.”

Wow. I’m running out of space already? Suddenly, a week before Xmas there’s more happening in the news. We’ll have to discuss other items in in the comments. So what’s on your reading list today?


Misery Index hits Reagan Years High

One of the measurements of economic well-being that got some play in the Carter/Reagan years was the Misery Index.  It basically measures the impact of price increases and unemployment on people. There’s some new information coming out of this index. It seems it’s as bad as it was in 1983.

John Williams, over at Shadow Stats, compiles economic data for inflation and unemployment the way it used to be calculated pre-1990. Based on that data, the CPI inflation rate is over 10%, and the unemployment rate is over 15% (see charts). The Misery Index is the sum of the current inflation rate and the unemployment rate.  If it were to be calculated using the older methods, the Index would now be over 25, a record high. It surpasses the old index high of 21.98, which occurred in June 1980, when Jimmy Carter was president. Most believe the height of the Index along with the Iranian hostage crisis is what caused Carter to lose his re-election bid.

We’ve changed a lot of the way we measure inflation and unemployment since then partially because we’ve tried to focus more narrowly on measures of both inflation and unemployment but also because the measures were consistently high during the 1970s and 1980s.  The inflation rate as stated by the CPI was frequently overstated because of its use of a base market basket that didn’t always reflect the introduction of new goods and services, the places people shop, and the switching or substitution behavior of people.  It had a fix budget apportionment that was used to weight prices and those weights were frequently stale.

The changes in the way the unemployment rate was measured had to do with the shift away from  reliance on the traditional 40 hour work week job by both businesses and job seekers.  The unemployment rate was changed so that you only had to work at least one hour a week at paid work to be excluded.   This is why economists look at a bunch of different statistics to get a handle on the job market.  People that don’t want to work part time but are stuck there are now considered underemployed and are tracked separately.  If you visit Shadow Government Statistics you can see comparisons of the old and the new way of doing things.

Some of the most salient points are that long-term, discouraged workers were taken out of the unemployment statistic in 1994.  SGS calls this being “defined out of existence”.  Again, the statistic is still being tracked so you have to go look for it at the BLS.  I will say that economics reporters have been doing a better job of providing more than just the unemployment rate in their analysis.  You  have to look at the underemployed and the discouraged worker to get a good idea of what’s going on.  We’ve talked about the changes in the make up of the labor force around here because it’s one of the reasons that you’re seeing the unemployment rate go up and down recently.  When discouraged workers re-enter the labor force, the new unemployment rate will go up because the number of people in the labor force–the denominator in the statistic–goes up.

I actually have less problems with the changes in the inflation right but then again, the problem is that people need to realize that the definitions of the measures have changed and narrowed so it is important to look at more than just one rate.  This does explain, however, why people whose budgets are being impacted by food and gas prices  aren’t seeing the pain in the new inflation rates.  We’ve talked about this before also.

So, what does this mean?  I think it’s significant that the Misery Index is basically at similar levels to the last time the country was expressing discontent with the economy because it gives us a historical perspective. Ronald Reagan probably would not have won a second term if the Federal Reserve didn’t start significantly loosing monetary policy during that same time which brought down the inflation included in the Misery Index.The first Reagan term was the last time the economy was this bad.  Changes in monetary policy were the real reason for the worst of the Carter Recession and much of the eventual Reagan Recovery although some of the Reagan Recovery was due to the incredible increase in government purchases which are typical Keynesian economic aggregate demand stimulation policies.   Paul Volcker and the Fed brought on a recession by increasing interest rates in an attempt to reign in inflation and inflation expectations.  They did so. It happened with some extreme economic pain and that was what the Misery Index was supposed to reflect at the time.  The drivers for the misery right now are different.  We have record loose monetary policy.  The incredible shock to the economy of the financial crisis is the root of our issues now.


A First: Fed Chair Presser

I’m watching Bernanke do a presser.  Wow.   (It’s a live blog … updates and explanations will be provided.)  I can’t believe the press sent political reporters to this.  What an amazing number of really rotten questions!!!

Some key points from the morning’s congressional testimony.

On Unemployment: We do see some grounds for optimism, including a decline to the unemployment rate, declines in the new unemployment insurance claims and improvements in firms’ reported hiring plans. But, even so, it could take quite a while for unemployment to come down to desired levels at current expected growth rates and, in particular, the FOMC projects unemployment still to be in the range of seven and-a-half to eight percent by the end of 2012. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.

On Inflation: “I want to go back over this whole line of interventions, including today quantitative easing. And there have been a series of criticisms that have been made and negative predictions, and my view is that none of them have come true. And I think it is important for us to — to note that. And — and I know you’ve talked about this. I know you mentioned in your statement some of the points. But we were told, for instance, that it was going to be very inflationary. And I know it is your view as of now, and I think supported by the facts, that inflation is not now a problem, and we do not see inflation, certainly not one caused by any of what’s been done going forward. We were told this was going to be extraordinarily expensive, that it was going to cost a lot of money. I believe the answer is that on many of these things the federal government has made a profit by the — by the intervention.”

On Crude Oil: “The relative price of oil, again, is primarily due to global supply and demand. I think it’s important to note that the United States is consuming less oil today, importing less oil and producing more oil than it did before the crisis. That all the increase in demand from outside the United States, particularly in the emerging markets. And so there’s limited amount of what the Fed can do about oil prices alone. Again though, we want to be very sure that it doesn’t feed into overall inflation. We will make sure that doesn’t happen.”

On the Dollar: If the dollar was no longer reserve currency there would – it would on the margin probably mean that we would have to pay highest interest rates to finance the federal debt, and that would be a negative obviously. On other other hand, we might not suffer some of the capital inflows that contributed to the boom and the bust in the recent crisis. But again, I know there was also a countervailing argument in the Journal this morning as well. And I – I just don’t see at this point that there is a major shift away from the dollar.

On the Consumer: We understand the visibility of gas prices and food prices and we want to be sure that people’s expectations aren’t adversely affected. I think it’s important to note that, according for example, to the Michigan survey of consumers, that long term inflation expectations have been basically flat. I mean, they haven’t moved, notwithstanding ups and downs in gas prices, for example.

On the U.S. Fiscal Situation: While I understand these are difficult decisions and we certainly can’t solve it all in the current fiscal year, I do think we need to look forward and I know the House Budget Committee and others will be setting up a 10 year proposal. It’s very important and would be very constructive for Congress to lay out a plan that would be credible that will help bring us to sustainability over the next few years. In particular, one rule of thumb is cutting enough that the ratio of the debt to GDP stops rising. Because currently it’s rising relatively quickly. If we could stabilize that, I think that would do a lot to increase confidence in our government and in our fiscal policies.

Obviously, Bernanke needs to drill baby drill to get rid of inflation … so simple!!!

or this:

ezrakleinEzra Klein
Bottom line: Congress is embracing austerity. The Fed is going to start tapping the brakes. Sucks to be you, unemployed people. #fedpresser

Background information on the Fed Presser from NYT and David Leonhardt.

On Wednesday at 2:15 p.m., Ben Bernanke will do something that previous Federal Reserve chairmen considered a terrible idea. He will hold a news conference.

Mr. Bernanke spent much of his academic career arguing that the Fed should be less opaque, and, as chairman, he has put his ideas into action. Now it’s time for those of us in the media to hold up our end of bargain. In the spirit of democratic accountability, we should ask hard questions — and we shouldn’t let him get away with the evasions and half-answers that members of Congress too often allow Fed chairmen during their appearances on Capitol Hill.

One question more than any than other is crying out for an answer: Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it?

Here’s Paul Krugman’s take on the presser:  Bernanke Wimps Out. He’s got the same questions I do about the inflation v. unemployment .  (See my comments in the thread below.)

So Bernanke did get asked why, given low inflation and high unemployment, the Fed isn’t doing more. And his answer was disheartening.

As far as I can tell, his analytical framework isn’t too different from mine. The inflation rate to worry about is some underlying, inertial rate rather than the headline rate; the Fed likes the core personal consumer expenditures deflator; and this rate has actually been running below target, indicating that inflation isn’t a concern …