DOWNLOADS: (202)

PLAYS: (1169)

Embed

About the only people on the planet who say the 2009 Recovery Act (ARRA) failed are Republicans. This is a necessary posture for them, given that not one of them voted for it. They have too much ideology vested in its failure to admit success, which is why they attack projects like Solyndra and green energy in particular. It's why the Republican governors in Republican states reject high-speed rail and other infrastructure projects. It isn't that it wouldn't be great for their states. It's simply that the funds came into being via the Democrat in the Oval Office and thin majority of Democrats in Congress, and so they just cannot, will not, bring themselves to be a party to possible success.

Their lack of patriotism is unsurprising, but still astounding in its cynicism. But was the stimulus package and overall success? Though there is a wide range of studies and opinions, the consensus among economists appears to be yes, it did.

Continue reading »

This campaign strategy doesn't make any sense at all to me. I don't know what good appealing to the middle will do when so many Democratic voters are disgusted enough not to vote at all. We're in the middle of economic devastation unknown in our lifetime, and we'd like to see our president show more concern about that than his own reelection:

Obama's jobs agenda, which he plans to tout on his Midwestern tour, calls for $30 billion to rebuild roads, bridges and ports; improvements to the patent system to spur innovation; trade deals with a trio of countries to boost exports; a $40-billion extension of unemployment insurance benefits; and renewal of the current one-year reduction of the payroll tax at a cost of up $120 billion.

A range of economists and Democratic critics call those ideas inadequate.

Asked about Obama's support for free-trade deals with South Korea, Colombia and Panama, Dean Baker, co-director of the Center for Economic and Policy Research, a center-left think tank, said, "I would think they would be embarrassed to mention it."

"These are small countries, and we already have a lot of trade with them," he added.

Obama's policies "are just not big enough to make much of a difference," said Robert Reich, who was Labor secretary under President Clinton.

Alternative ideas have been floating up from Democratic think tanks, elected officials and strategists: Peter R. Orszag, Obama's former budget director, advocates tripling the size of the payroll tax break — essentially wiping out the payroll tax entirely — and keeping the rate low as long as unemployment remains high.

This is one of the stupider ideas I've seen. In addition to robbing Social Security by cutting those taxes, people aren't going to spend that money on anything more than the increased price of food and gas. There won't be any left over to stimulate the economy in any meaningful way.

Continue reading »

While Joseph Stiglitz wasn't happy with what he said was the inadequate size of the economic stimulus package, he still is a strong advocate for the Keynesian tactic and like most rational economists, contends that the economy would be much worse without it. Now he's calling for another round:

NEW YORK — Nobel Prize-winning economist Joseph Stiglitz called for another round of federal stimulus dollars to spur the economy. He spoke Sept. 30 to the Society of American Business Editors and Writers (SABEW) at its Fall Workshop.

“We will see in the next two years the real cost of there not being a second round of stimulus,” he said. “We will see the economy slow down at a very high economic cost.”

The Columbia University professor also said that the “new normal” as far as the unemployment rate is concerned may not be the 4 to 5 percent that existed before the financial crisis in 2008, but more like 7 to 8 percent.

Unemployment is about 9.5 to 9.6 percent officially, he said, but many people who are working part-time involuntarily or who have stopped looking but want work are not counted in the official rate.

Congress passed the first stimulus on Feb. 11, 2009, approving a $787 billion bill, the American Recovery and Reinvestment Act.

He said one reason that stimulus has not had more effect is that state and local governments have cut spending, undoing about one-half of the impact of the money that the feds have injected.

He said the stimulus also could have had more effect if more money had been put into making up for the shortfalls of state budgets, stopping layoffs; if less had been put into tax cuts that wary consumers just ended up saving; and if safeguards to prevent waste had not slowed the money from being spent.

Still, he said, “The stimulus absolutely worked.” Without it, unemployment could have peaked at more than 12 percent.

Oy. This White House is just so timid, so careful, so freakin' measured about everything that what should be serious policy making turns into an extended game of "Mother May I?":

With just two months until the November elections, the White House is seriously weighing a package of business tax breaks - potentially worth hundreds of billions of dollars - to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.

Among the options under consideration are a temporary payroll-tax holiday and a permanent extension of the now-expired research-and-development tax credit, which rewards companies that conduct research into new technologies within the United States.

[...] White House officials cautioned that no tax cuts have been settled on and that a more limited measure could emerge. Policy staffers are debating a range of options. For example, a payroll-tax holiday - a top priority of many business groups - could be applied only to new hires or extended to current employees. It could be limited to small businesses or extended to larger firms.

[...] Permanently extending the research credit would cost roughly $100 billion over the next decade, tax analysts said. And depending on its form and duration, a payroll-tax holiday could cost more than $300 billion. While costing significantly less than last year's stimulus package, both ideas would be far more dramatic than anything the White House has so far acknowledged considering.

More spending on infrastructure, particularly transportation projects, is also under discussion. But it would be easier for a package composed purely of tax cuts to "avoid the stain of a 'bailout' or 'stimulus' label," said one official familiar with the talks, speaking on the condition of anonymity because the deliberations were private.

Yeah, God forbid the administration actually back something that will directly stimulate the economy, (you know, like creating jobs or paying unemployment benefits to the people who have run out) rather than playing cautious politics. That strategy's worked so well, don't you think? Gee, do you think it might even be why we're looking at a Republican tsunami?

And what will the Republicans do if they win? Why, they'll go back to ignoring the deficit and immediately pass a heaping mess o' tax cuts to put Obama on the spot. What are the odds he has the spine to veto them?

DOWNLOADS: (878)

PLAYS: (1162)

Embed

Memo to Justices Scalia, Alito, Roberts, Thomas and Kennedy: Your Citizens United chickens are coming home to roost in 22 major markets, starting tomorrow.

Los Angeles Times:

A conservative advocacy group Monday will kick off a huge ad campaign in 11 states and two dozen of the most competitive congressional races, slamming "wasteful federal spending."

The $4.1-million ad buy from the Americans for Prosperity Foundation does not mention individual candidates in the November election. The script attacks Washington policies, describing the economic stimulus program as a failure and declaring that "wasteful spending must stop."

Well, of course it doesn't mention individual candidates. That would mean they'd have to report independent expenditures to the FEC, but since it's an issues campaign that simply happens to dovetail with the teabaggers' lament, they can hide behind the curtain and never let the public know whose message this really is.

Americans for Prosperity. Such a misleading name. Rich Americans for Prosperity might be more apt. Americans for Prosperity is, of course, the Koch mouthpiece that funded last summer's town hall protests, the Sarah Palin bus tour, partners with every teabag operation out there, and lays astroturf in every town with a sidewalk.

And lest we forget, AFPs Tim Phillips got his start with Century Strategies, Ralph Reed's lobbying firm and close ally of Jack Abramoff. Rachel Maddow peeled that onion last year during health care reform.

So they're going to saturate key markets with claims of pork and waste in the stimulus bill, eh? Here's a suggestion for the DCCC and other groups getting ready to put ads up: Start with this list of Republicans who denounced the stimulus bill with righteous outrage while skulking back with their hands out for a second bite at the apple. Rapid-fire it at the viewer with a few key names. That ought to be an appropriate beginning.

I hope the Billionaire Boys' Club at Americans for Prosperity spends lots of money on their ads and stimulates the economy even more while their agenda goes down in flames.

So we'll never really know why she left, because you'd think that Larry Summers would indeed be the one taking the fall (what with him being the person who didn't even present her stimulus proposal to Obama):

Christina Romer, chairwoman of Pres. Obama's Council of Economic Advisers, has decided to resign, according to a source familiar with her plans.

Romer, an economics professor at the University of California (Berkeley) before taking the key admin post, did not respond to repeated calls to her office.

"She has been frustrated," a source with insight into the WH economics team said. "She doesn't feel that she has a direct line to the president. She would be giving different advice than Larry Summers [director of the National Economic Council], who does have a direct line to the president."

"She is ostensibly the chief economic adviser, but she doesn't seem to be playing that role," the source said. The WH has been pounded for its faulty forecast that unemployment would not top 8% after its economic stimulus proposal passed.

Instead, the jobless rate is 9.5%, after exceeding 10% last year. It was "a horribly inaccurate forecast," said Bert Ely, a banking consultant. "You have to wonder why Summers isn't the one that should be taking the fall. But Larry is a pretty good bureaucratic infighter."

This version, of course, is contradicted on several points by the Wall Street Journal story:

"I never anticipated the amount of the contact I'd have with the president," she added. "If anyone had told me that I'd meet the president of the free world every day, I never would have believed it."

Among her challenges was explaining why her prediction that the Obama-backed fiscal stimulus would keep the unemployment rate below 8% proved overly optimistic. The unemployment rate is now at 9.5%.

"I certainly hoped it would be lower," she said. "The world deteriorated between November 2008 when I started" and the initial estimates were made "and when we took office January 21. Do I wake up every morning and wish it were 8% instead of 9.5%? You bet."

In internal White House circles, Ms. Romer occasionally clashed with Lawrence Summers, the Obama adviser and former Harvard University president and Treasury secretary. But on Thursday, she said, "If anyone had told me that I'd come to view Larry Summers as one of my dearest friends, I never would have believed it. But I do."

I thought this part was pretty interesting:

One thing she says she hadn't realized previously: "The degree to which you often only get one shot at something like the Recovery Act."

"An economist's natural instant is to do things in stages. You take one action, see what it does and see if you need more," she explained. But with the Bush administration Troubled Asset Relief Program to shore up the banks or the Obama fiscal stimulus, that proved wrong. "I didn't realize the degree to which you have only one shot."

Despite the fact that Paul Krugman, Jamie Galbraith and Joe Stiglitz were trying to get the word out? Either she's not too swift, or she's taking the fall for Summers.

Krugman on how the G20 economic conference has been taken over by the deficit hawks, and predicts we're headed for a "lost decade," like the one that paralyzed Japan:

It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.

But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts. A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.

But what about Greece and all that? Look, right now sovereign debt problems are taking place in countries with a very specific problem: they’re part of the euro zone, AND they’re badly overvalued thanks to huge capital inflows in the good years; as a result they’re facing years of grinding deflation. Counties not in that situation are not facing any pressure from the markets for immediate cuts; as of this morning, 10-year bonds were yielding 3.51 in Britain, 3.21 in the US, 1.27 in Japan.

Yet the conventional wisdom now is that these countries must nonetheless cut — not because the markets are currently demanding it, not because it will make any noticeable difference to their long-run fiscal prospects, but because we think that the markets might demand it (even though they shouldn’t) sometime in the future.
Utter folly posing as wisdom. Incredible.

This is one of the main issues we'll be discussing at the America's Future Now conference in D.C. this week. It still astounds me that some progressives are simply ignoring the very real economic and political arguments in favor of increasing economic stimulus, not slashing it:

With voter anger about the federal deficit intensifying in this election year, Democrats in Congress are edging away from one of their long-held articles of faith — government spending on social programs such as education and relief for the jobless.

The painful tradeoff comes to center stage this week, when the Senate tries again to pass an extension of unemployment benefits — this time a $54-billion measure that marks an abrupt retreat from a $200-billion bill that Democratic leaders had proposed before the Memorial Day recess.

The stripped-down bill is just one sign of how budget anxieties are beginning to impinge on Democrats' legislative ambitions and traditional commitments.

A White House-backed proposal to spend $23 billion to save as many as 300,000 teachers' jobs has been stymied by deficit concerns. Similarly, the House, usually a bastion of liberalism, bowed to fiscal conservatives and dropped health insurance subsidies for the unemployed.

"There is a very changed climate," House Speaker Nancy Pelosi (D-San Francisco) recently told reporters, referring to anti-deficit pressures she faces within her own party.

Though polls for years have shown high levels of public concern about the deficit, rarely has it outstripped most other issues. A Wall Street Journal/NBC News poll in mid-May found a notable increase in recent months in those who believe cutting the deficit and spending should be the government's highest priority.

Gee. You don't suppose having the media keep up a constant drumbeat of anti-deficit propaganda would have anything to do with that, do you?

According to the poll, 20% of those surveyed wanted the deficit and government spending to be the top priority, an issue second to the 35% concerned about job creation and economic growth. (In a January poll, 13% cited the deficit and government spending.)

"There's no question that people are almost as concerned about the deficit and government spending as about jobs," said Mark Mellman, a pollster who works closely with congressional Democrats. "It is not just about the actual dollars — it is a metaphor for wasted money and lack of discipline and long-term economic decline."

That's because Congress - and the administration - did such a piss-poor job explaining the difference between stimulus spending and the bank bailout.

Even Friday's report that private-sector job growth had slowed to a crawl in May is not expected to offset the Democrats' new reluctance to add to the deficit for unemployment benefits.

And you know what the really stupid thing is? The Democrats will try to act like Republicans by cutting the deficit, and it won't win them any additional votes. It never does. The kind of people who like Republican policies vote for Republicans.

I try to walk that line between being supportive of Obama - and being blind to his very real failings. I don't like a lot of his policy decisions - and neither does Paul Krugman. Today, Krugman writes that the administration's problems aren't the fault of "trying to do too much," but rather bad policy decisions on Obama's part:

The stimulus was too small; policy toward the banks wasn’t tough enough; and Mr. Obama didn’t do what Ronald Reagan, who also faced a poor economy early in his administration, did — namely, shelter himself from criticism with a narrative that placed the blame on previous administrations.

About the stimulus: it has surely helped. Without it, unemployment would be much higher than it is. But the administration’s program clearly wasn’t big enough to produce job gains in 2009.

Why was the stimulus underpowered? A number of economists (myself included) called for a stimulus substantially bigger than the one the administration ended up proposing. According to The New Yorker’s Ryan Lizza, however, in December 2008 Mr. Obama’s top economic and political advisers concluded that a bigger stimulus was neither economically necessary nor politically feasible.

Their political judgment may or may not have been correct; their economic judgment obviously wasn’t. Whatever led to this misjudgment, however, it wasn’t failure to focus on the issue: in late 2008 and early 2009 the Obama team was focused on little else. The administration wasn’t distracted; it was just wrong.

The same can be said about policy toward the banks. Some economists defend the administration’s decision not to take a harder line on banks, arguing that the banks are earning their way back to financial health. But the light-touch approach to the financial industry further entrenched the power of the very institutions that caused the crisis, even as it failed to revive lending: bailed-out banks have been reducing, not increasing, their loan balances. And it has had disastrous political consequences: the administration has placed itself on the wrong side of popular rage over bailouts and bonuses.

Now this is exactly what we've been worried about: that Wall Street would successfully push Obama for an early end to economic stimulus (which also includes extended unemployment benefits, by the way), just as bankers and Republicans did with FDR in 1937 - tipping the country right back into recession. (Krugman's been sounding the alarm for a while.)

I predict Bernanke will withdraw anything that makes it look like they don't have faith in a spring recovery, hoping to use it as a placebo effect.

And as to the millions of us still looking for work, and whose unemployment checks are about to run out? Morgan Stanley responds that there's "never an easy time to do it." I hope Mr. Roach has a big yard, since we're all going to be camping in it:

Jan. 5 (Bloomberg) -- Morgan Stanley Asia Ltd. Chairman Stephen Roach said U.S. policy makers should start to exit emergency stimulus measures now if the economic recovery is as strong as they say it is.

“There is never an easy time to do it,” Roach said on Bloomberg Television today. “The longer they wait, the greater the chance they sow the seeds for the next bubble. So I’m in favor of an early exit strategy.”

The Federal Reserve on Dec. 16 pledged to keep interest rates “exceptionally low” for an “extended period” even as officials said financial markets were healthy enough to allow most emergency lending programs to expire at the end of this month. Chairman Ben S. Bernanke and his fellow policy makers cut the benchmark rate almost to zero in December 2008.

“We’ve seen the most extraordinary monetary stimulus on the record in the 15, 16 months post-Lehman Brothers,” Roach said. “We’ll have to see the most extraordinary withdrawal of stimulus on record” and “if this recovery is as strong as Bernanke and markets think it is, the time to exit is now.”

Data since the Nov. 3-4 Fed meeting showed that “economic activity has continued to pick up and that the deterioration in the labor market is abating,” the Open Market Committee said in a Dec. 16 statement. “Financial market conditions have become more supportive of economic growth,” while the economy is “likely to remain weak for a time,” policy makers said.