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.
On Fox News Sunday, Chris Wallace worked very hard to get a straight answer out of Republican Paul Ryan on the tax plan he and Mitt Romney are proposing, but he failed. Paul Ryan is nothing but a flim-flam man–a sneaky little weasel who couldn’t tell the truth if you paid him a million dollars. Never in my life have I seen such bullshit artist! He truly is Eddie Haskell. Here’s the video (via Think Progress):
WALLACE: So how much would it cost?
RYAN: It’s revenue neutral…
WALLACE: No no, I’m just talking about cuts. We’ll get to the deductions, but the cut in tax rates.
RYAN: The cut in tax rates is lowering all Americans’ tax rates by 20 percent.
WALLACE: Right, how much does that cost?
RYAN: It’s revenue neutral.
WALLACE: But I have to point out, you haven’t given me the math.
Ryan: No, but you…well, I don’t have the time. It would take me too long to go through all of the math. But let me say it this way: you can lower tax rates by 20 percent across the board by closing loopholes and still have preferences for the middle class. For things like charitable deductions, for home purchases, for health care. So what we’re saying is, people are going to get lower tax rates.
In the midst of refusing to give any specifics on what loopholes he would close and/or programs he would cut, Ryan brags that he’s been on the Ways and Means Committee for twelve years. So? Are we supposed to take that as proof that he’s not full of shit? And as a bonus, the throws out his favorite word “baseline” again. I guess we’re supposed to be impressed about how wonky he is? Give me a break! Just look at those Power Point slides he’s been using in his stump speech. They could have been created by a high school sophomore.
This guy has been in the House for twelve years and he has nothing but surface knowledge about the legislative process. But he knows exactly what he wants to cut–Medicare, Medicaid, and Social Security, plus even cent that goes into infrastructure or protecting the environment. What else is there now that he’s claiming the middle class will still have charitable deductions, mortgage deductions, and health care deductions?
Honestly, Mitt Romney is one of the most shameless liars I’ve ever seen in my more than fifty years of following politics; but I really think Ryan is worse. I can visualize him in the Old West, selling youth tonics and elixirs out of the back of his wagon to credulous homesteaders, then hightailing it out of town before the sheriff catches up with him.
Please use this as an open thread.
Dylan Ratigan goes nuts over government corruption
David Goodfriend (on Dylan Ratigan Show) explains why cutting taxes doesn’t create jobs
Bernie Sanders schools Obot Al Sharpton on the debt deal, plus Keith Ellison
Heard any good rants lately?
I’m not one to look back to the past. I definitely am not one to obsess on the past. It’s possible that my Buddhist training keeps me rooted in the pragmatic present. It’s likely that it had something to do with my bout with inoperable and deadly cancer. It took me at least five years to think beyond about one month. I completely lost my ability to project ahead during that time. While I have regained my foresight and I have an appreciation for hindsight, I’m still not one to rehash what coulda, shoulda, woulda been. However, Ruth Marcus shoved my thoughts back to the year of wishful thinking.
It was about 3 years ago when I started to realize who the only credible Democratic candidate was for the post-Dubya years. I came to that after listening to about three primary debates and reading a lot of background material. I was tempted by the lot of them but I always found it odd that the first one I discounted as more vice presidential material than presidential material given his appalling performance in the first primary debate wound up with the top job. The world keeps spinning on. We now have so many crazies in the Republican party that it’s a wonder they all don’t walk through the statehouse with a set of visible knuckles dragging the floor. The economy isn’t creating enough jobs to sustain us and we have people advocating the same kinds of policy that caused the great depression now. One of the worst ones wants to repeat the 20’s era Fed’s mistakes and is in charge of the House oversight committee on the Fed. Then, we have irresponsible tax cuts while running two wars. And THAT’s just a few of the economic policies ruling topsy turvy land these days.
So, again, my chagrin and thoughts were peaked by this Ruth Marcus Op Ed piece. So, I had to look back to read now and look forward.
For a man who won office talking about change we can believe in, Barack Obama can be a strangely passive president. There are a startling number of occasions in which the president has been missing in action – unwilling, reluctant or late to weigh in on the issue of the moment. He is, too often, more reactive than inspirational, more cautious than forceful.
Each of these instances can be explained on its own terms, as matters of legislative strategy, geopolitical calculation or political prudence.
He didn’t want to get mired in legislative details during the health-care debate for fear of repeating the Clinton administration’s prescriptive, take-ours-or-leave-it approach. He doesn’t want to go first on proposing entitlement reform because history teaches that this is not the best route to a deal. He didn’t want to say anything too tough about Libya for fear of endangering Americans trapped there. He didn’t want to weigh in on the labor battle in Wisconsin because, well, it’s a swing state.
Yet the dots connect to form an unsettling portrait of a “Where’s Waldo?” presidency: You frequently have to squint to find the White House amid the larger landscape.
This tough assessment from someone who generally shares the president’s ideological perspective may be hard to square with the conservative portrait of Obama as the rapacious perpetrator of a big-government agenda.
Then, read on, the rationalizations are still there but we finally get back to the punchline: “Where’s Obama? No matter how hard you look, sometimes he’s impossible to find.” I’d just like to say that any one with an impressive career of voting present so many times, who was known to hide out in bathrooms during the tough votes, spent his entire senate career campaigning and not voting, and only introduced minor legislation into the Chicago legislature after it was carefully crafted by others already had shown his brand of leadership. How a standing record that was way out of its way in proving “he who hesitates is lost” got translated into national ‘hope and change’ by so many people will be something I will ask myself whenever books come out with themes similar to Marcus’ WAPO musings. Past performance is usually an indicator of future performance. Next time, check your data. That is all. Back to the present for me.
As the details of Obamanomics finally roll out to the public, it is increasingly obvious that what we are seeing is some kind of Reaganomics lite. I mentioned this in a post on January 5th trying to answer Paul Krugman’s concerns on how ‘bold and swift’ the Obama plan will be. Today, Krugman answered strongly not bold enough in the Obama Gap.
But Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.”
Today’s Market Watch outlines the abysmal labor market.
Total hours worked in the economy fell 1.1%, with the average workweek falling to the shortest ever, signaling an annualized decline of 6% in gross domestic product in the fourth quarter, wrote John Silvia, chief economist for Wachovia. Hours worked have declined “at an eye-watering” 7.7% annual pace in the quarter, Shepherdson said.
An alternative measure of unemployment that includes workers too discouraged to look for a job rose to 13.5% from 12.6% in November; it’s the highest in the 13 years since those data have been kept.
These are serious numbers that followed the even MORE serious numbers in manufacturing reported earlier in the week. Rather than repeat what I said earlier, I’d like to show some that I’m not alone out there in the liberal wilderness. Yes, I said LIBERAL wilderness. The Black Agenda Report which has never been in the Obama corner and endorsed Cynthia McKinney outlines Obama’s hostility to both Universal Health Care and what is traditionally the Democratic Party’s approach to the economy.
In a similar vein, “Obamanomics” at best falls short of the bold progressive initiatives and challenges to financial and corporate power required to spark equitable domestic development. As adjusted in response to the banking crisis and deepening recession, moreover, Obama’s economic program could well amount to “something akin to a national austerity program….” Instead of forward movement on jobs, education, retirement, and health care, Jack Rasmus finds, “what me may well get is ‘Let’s all tighten our belts to get through this crisis.”
Turning away from the op-ed pieces, let’s examine this front page headline from the NY Times: Senate Allies Fault Obama on Stimulus.
WASHINGTON — President-elect Barack Obama’s economic recovery plan ran into crossfire from his own party in Congress on Thursday, suggesting that quick passage of spending programs and tax cuts could require more time and negotiation than Democrats once hoped.
Senate Democrats complained that major components of his plan were not bold enough and urged more focus on creating jobs and rebuilding the nation’s energy infrastructure rather than cutting taxes.
So here we have more evidence that many are beginning to see that the Obama plan is not bold and will not be swift. Back on MarketWatch, we once again have the winds of cold, harsh reality hitting the face of any one connected to the U.S. Economy.
WASHINGTON (MarketWatch) — The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, chairman of RGE Monitor. Roubini was one of the first economists to predict the recession and the credit crunch stemming from the housing bubble. For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010, he said. Consumer prices will fall about 2% in 2009. Housing prices will probably overshoot, dropping 44% from the peak through mid-2010. “The U.S. economy cannot avoid a severe contraction that has already started and the policy response will have only a limited and delayed effect that will be felt more in 2010 than 2009,”
As we get more and more evidence that Obama’s actions never reach anywhere near the level of his rhetoric, will the koolaide start wearing off even before the President Elect gets to give his first State of the Union Address? I’m waiting to see if it comes any where near even one of FDR’s minor fireside chats.
Meanwhile, Senator Harkin from Iowa, the state where, oddly enough, I attended Herbert Hoover Elementary School had this to say in the Times article today.
“There is only one thing we have got to do in the stimulus, and that is how can we create jobs,” said Senator Tom Harkin, Democrat of Iowa, as he left the meeting. “I am a little concerned by the way that Mr. Summers and others are going at this in that, to me, it still looks like a little more of this trickle-down, if we just put it in at the top, it’s going to trickle down. A number of people in there said, ‘Look, we have got to have programs that actually create jobs and put people to work.’ ”
Okay, did Senator Harkin just call Obamanomics more trickle down economics, voodoo economics, Reaganomics? Can I get a witness? Again, it’s very hard to argue for business tax credits when most businesses are just looking for customers. If you don’t put the money into the hands of customers, a few tax credits here and there aren’t going to accomplish anything. There has to be income first.
Anyway, is it too early for me to buy an ‘I told You So’ bumper sticker for my poor worn-down mustang yet?
NOTE: For those of you into really snarky satire, there’s a post at today’s Daily Beast about Obama’s package being inadequate. Also, other blogs are discussing this same topic. Jane at FDL and even HuffPo have put up threads. The link to FDL is on the right side. I think you can manage to find the other on your own.
I’d like to focus on some potential policies that could see us through this difficult economy. It should be apparent that we’re in for a period of time where uncertainty will cause a lot of stress in the financial markets. The uncertainty has bled into the ‘real’ economy where we’re seeing increasingly higher levels of unemployment and distress in industries outside the banking world. If you haven’t noticed, the Fed has been actively working on this for some time. It’s major tools indirectly impact the real economy by influencing the credit markets and the availability of loans. It’s pretty straight forward actually, in a normal economy, low interest rates would cause banks to lend to more businesses and households and this would stimulate the economy out of a recession. The problem right now is that losses from loans are creating such problems for bank profitability, banks are holding the money. We have extremely low interest rates right now. This is a situation that we saw in Japan during the 1990s. It took a decade for the Japanese economy to snap out of it. The Fed’s rate to banks is 1% right now. It is cheap for them, and now many other financial institutions to borrow from the Fed. There is still some constipation, if you will, in the banking system. What is worse, some of the money sent to these banks that has gone to healthy banks is going into buying other banks. None of this will help stimulate the economy. So how do we avoid Japan’s stagnant decade?
If you know me, you know I do not favor bailing out the automobile industry. We have a system to help corporations rearrange their obligations and make themselves more able to carry on in the future. It is called bankruptcy. We’ve watched the airline industry go into the bankruptcy process and come out as healthier companies. Usually, all contracts between debtors and the companies are either renegotiated or foregiven. The stockholders lose their stake. The Unions will have to scale back on their contracts. This will all happen in a very structured manner and all will have to sacrifice for the companies to survive. I’m afraid that if we do not force them into this circumstance that we will find that we lend them money, only to have them pay creditors at the same losing level with the same bad managers. The folks we could spend the money on would be the folks that do lose their jobs. We can provide them with extended unemployment insurance and with job retraining. We’ve seen the Treasury’s deal with bank result in outcomes we did not want: no credit going to main street, bonuses and dividends still in tact, and buy-outs. We do not need to repeat this mistake.
Do we need another stimulus package or do we need tax cuts? If so, who should be the focus? Short term tax stimulus is probably in order. However, if we spend all of this money, we will grow the deficit. Growing the deficit is not a bad thing during recessions, however, we already are running a huge deficit and it’s getting bigger because of two wars and the Bush tax cuts. If we continually push 10 year bonds out to the market, there will be a point where the big money (mostly soveign wealth funds) will begin to balk. Rates could go up which means that we could spend a huge amount of money just servicing the debt. Any stimulus should be short-lived and should focus on the middle and working class. Tax increases, even on the wealthy and on corporations, should be avoided for several years. The adminstration will have to scale back on its offerings of new benefits and programs. I don’t think we’ll see work on the health care system right now because other things will take priority.
There are two areas where new spending should be encouraged. These are energy independence and infrastructure rebuilding. This does not mean building new bridges to nowhere, but fixing our aging infrastructure. This expenditures will create future economic growth and can provide jobs during the recession. Grants to states for specific purposes can be used so that states with the biggest problems can get the highest priority. There are challenges to this, however. The biggest problem with major programs like this is getting them to move out of congress and committees. This can take so much time that the projects may never have an impact. Since the Democrats have strong majorities in both houses, they should be able to usher through these types of programs. These need to be expedited. The one big thing I worry about here is that they will not focus on what is best, but will focus on enriching groups that supported election winners. Projects providing jobs that focus on building our future potential would be a lot better use of funds than just giving folks extended unemployment benefits. Hillary Clinton’s green jobs program and McCain’s cap and trade system to reduce green house gases are both good programs. Jobs could include retrofitting existing houses to be more energy efficient. The focus needs to be on the underlying capital that leads to future growth so that even if some of them are slow to develop, there will be economic development.
The focus during the rest of this year and into the next will undoubtedly be dealing with the ongoing slow-down in the economy. We will soon see if we will get real change or just a bigger deficit with spending that accomplishes little. I’m worried about the quality of the spending, because as I said, most of our debt is financed by the international community. There are many other places to park their wealth. If they pull it, U.S. citizens will not be able to come up with the difference without getting use to much higher taxes.