Quote of the Day

“The wrong turn we’ve taken in economic policy — our obsession with debt and ‘entitlements,’ when we should have been focused on jobs and opportunity– was of course, driven in part by the power of wealthy vested interest.  but it wasn’t just raw power.  The fiscal scolds also benefited from a sort of ideological monopoly:  for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.

“Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008.  This is going to change the discourse — and, eventually, I believe, actual policy.”

Paul Krugman, “Obama Gets Real,” NYT

It’s been so frustrating to me that during and since the Great Recession, we’ve sacrificed growth by focusing too much on each year’s deficit and the national debt.  Of course, deficits were going to spike when unemployment was so high and we were paying out so much more for unemployment benefits, food stamps, Medicaid, etc. and taking in so much less in revenues.  But we behaved as if that was not just a temporary circumstance, but our long-term destiny, and thus prolonged and deepened that temporary state, weakening us as a country and cruelly crushing a whole lot of families unnecessarily.  Keynes is (still) right, Paul Ryan is wrong, and Ayn Rand was a novelist, not an economist.  It’s time for the Prez and the Dems to lead us out of this economic wilderness.

Why 2012 Is Not 1980

Some in the GOP are comparing President Obama to Jimmy Carter in 1980 and predicting that Mitt will win just as Reagan did.

But I believe there’s a fatal flaw in that thinking.

Carter won in 1976 because it was the first presidential election since Nixon had resigned in disgrace, and voters wanted to tell the GOP what they thought of Watergate.  They also viewed Gerald Ford as somewhat illegitimate because he had been appointed vice president, not elected.   To add insult to that injury, Ford, this guy nobody had voted for, took it upon himself to pardon Nixon.

When the economy blew up under Carter, with the prime rate at 20% and gas lines stretching to the horizon, voters recognized that Ronald Reagan had nothing to do with Watergate or Nixon or Ford.  By voting for him, they weren’t in any way condoning or returning to the way things had been under the last Republican Administration.

That’s why voting for Mitt now is different from voting for Reagan in 1980.  While the economy is not exactly going gangbusters under Obama, Mitt would take us back to the Bush policies, to the complete lack of interest in regulating Wall Street, that led to the Great Recession. He would support the kind of drastic austerity that would pull us right back into recession.

We may not like where we are, but we hate where we’ve been, and we’ll be damned if we’re going back there.  Forward!

 

 

The Real Big News Out of Silicon Valley

To me, the most important story out of Silicon Valley on Friday was not Facebook’s IPO, but Hewlitt Packard’s plan to cut about 30,000 jobs.  That’s one of the biggest mass layoffs since the start of the Great Recession.

The Myth of “Expansionary Austerity”

My favorite voice in the wilderness these days is Nobel-prize-winning economist Paul Krugman and his derision of “expansionary austerity,”* which he defines as “the notion that instead of increasing government spending to fight recessions, you should slash spending instead — and that this would lead to faster economic growth.”

He says that Britain, Spain, and Italy are doing worse today than during the Great Depression by the measure of changes in their GDP since the Great Recession began.

“[S]urpasing the track record of the 1930s shouldn’t be a tough challenge.  Haven’t we learned a lot about economic management over the last 80 years?  Yes, we have — but in Britain and elsewhere, the policy elite decided to throw that hard-won knowledge out the window, and rely on ideologically convenient wishful thinking instead.”

Krugman says that because President Obama has refused to “do a Cameron” (in the sense of emulating Prime Minister David Cameron’s austerity in Britain), things aren’t as bad here as they could be.  But he notes that while federal spending hasn’t been slashed, local and state spending has, and that has hurt our overall economy.  Krugman laments, “Without those spending cuts, we might already have been on the road to self-sustaining growth….”

Krugman concludes:

“The infuriating thing about this tragedy is that it was completely unnecessary.  Half a century ago, any economist…could have told you that austerity in the face of depression was a very bad idea.  But policy makers, pundits and, I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know.  And millions of workers are paying the price for their willful amnesia.”

 

* “The Austerity Debacle,” by Paul Krugman, NYT

Keep This Guy Out of the White House!

David Brooks has a column in the NYT today praising Mitt “I’m Also Unemployed” Romney and his advisers.  Brooks specifically mentions chief economic adviser R. Glenn Hubbard as part of “the gold standard of adviser teams.”

Really?  Hubbard was Bush 43’s Chairman of the Council of Economic Advisers, a man who pushed the Bush tax cuts, not just the pre-9/11 ones, but the 2003 cuts, despite our having to pay for two wars.  Hubbard was a huge fan of deregulation and derivatives.  In other words, Hubbard is high on the list of those who deserve blame for the economic collapse.

I don’t want him anywhere near the White House again.  Mr. Brooks, all that glitters is not gold.