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.

Europe Sees the Light, as U. S. Opts for Darkness

The misguided GOP focus on deficits and austerity in the U. S. is messing up the whole world’s economy.  From the NYT*:

“The Europeans lately have slightly eased their austerity policies, after four years of deep spending cuts and rising taxes that many economists blame for keeping the Continent in recession long after America’s ended.

“And the Obama administration, after years of pressing Europe to adopt American-style stimulus measures, is now presiding — if reluctantly — over European -style austerity that is measurably slowing its recovery. …

“The new reality in the Unites States reduces the president’s already limited leverage in his fiscal debate with Europeans…even as Europe’s woes continue to act as a drag on its trading partners, including the United States.”

I would force every Republican member of Congress to write “Keynes was right” on the blackboard 1,000 times.

*  “Lines Blur in U.S.-Europe Debate on Austerity,” Jackie Calmes

This Is What a Recovery Looks Like

When housing collapses, it doesn’t really matter whether Democrats or Republicans are in charge, the economy is going to be awful until that powerful sector recovers.  I believe Keynesian measures hasten that day, but hard times are inevitable.

Housing is finally coming back — rather than being a drag on the economy, a drain on GDP,  it’s now beginning to perform its engine function.  It thinks it can, it thinks it can…

That’s why we see Home Depot announce that they are adding 10,000 jobs for the spring season.

As housing goes, so goes the nation.

Besides literal green shoots this spring, I expect many more figurative ones.

The Best Article in a Decade

Wherever you live on the political spectrum, you absolutely must, must read Bruce Bartlett’s truly amazing article, “Revenge of the Reality-Based Community,” in The American Conservative.

He talks about the censorship that the right, especially Rupert Murdoch, has tried to impose on him and about how this former supply-sider has come to agree with Paul Krugman on how to deal with the Great Recession.

A little background if you don’t know Bartlett.  He worked for Congressman Jack Kemp, for Heritage, in the second-term Reagan White House, at Treasury under Bush 41, for Cato, and wrote for all the top-line conservative publications.

Some excepts:

“My book, Impostor:  How George W. Bush Bankrupted America and Betrayed the Reagan Legacy, was published in February 2006.  I had been summarily fired by the think tank I worked for back in October 2005.  Although the book was then only in manuscript, my boss falsely claimed that it was already costing the organization contributions.  He never detailed, nor has anyone, any factual or analytical error in the book.

“Among the interesting reactions to my book is that I was banned from Fox News.  My publicist was told that orders had come down from on high that it was to receive no publicity whatsoever, not even attacks.  Whoever gave that order was smart; attacks from the right would have sold books.  Being ignored was poison for sales.

“I later learned that the order to ignore me extended throughout Rupert Murdoch’s empire.  For example, I stopped being quoted in the Wall Street Journal.  Awhile back a reported who left the Journal confirmed to me that the paper had given her orders not to mention me.  Other dissident conservatives, such as David Frum and Andrew Sullivan, have told me that they are banned from Fox as well.  More epistemic closure.

“Annoyingly, however, I found myself joined at the hip to Paul Krugman, whose analysis [of the economic meltdown] was identical to my own.  I had previously viewed Krugman as an intellectual enemy and attacked him rather colorfully in an old column that he still remembers.

“For the record, no one has been more correct in his analysis and prescriptions for the economy’s problems than Paul Krugman.  The blind hatred for him on the right simply pushed me further away from my old allies and comrades.

“The final line for me to cross in complete alienation from the right was my recognition that Obama is not a leftist.  In fact, he’s barely a liberal — and only because the political spectrum has moved so far to the right that moderate Republicans from the past are now considered hardcore leftists by right-wing standards today.  Viewed in historical context, I see Obama as actually being on the center-right.

“At this point, I lost every last friend I had on the right.  Some have been known to pass me in silence at the supermarket or even to cross the street when they see me coming.  People who were as close to me as brothers and sisters have disowned me.

“So here we are, post-election 2012.  All the stupidity and closed-mindedness that right-wingers have displayed over the last 10 years has come back to haunt them.

“The economy continues to conform to textbook Keynesianism.  We still need more aggregate demand, and the Republican idea that tax cuts for the rich will save us becomes more ridiculous by the day.

“At least a few conservatives now recognize that Republicans suffer for epistemic closure.  They were genuinely shocked at Romney’s loss because they ignored every poll not produced by a right-wing pollster such as Rasmussen or approved by right-wing pundits such as the perpetually wrong Dick Morris.  Living in the Fox News cocoon, most Republicans had no clue that they were losing or that their ideas were both stupid and politically unpopular.

“I’ve paid a heavy price, both personal and financial, for my evolution from comfortably within the Republican Party and conservative movement to a less than comfortable position somewhere on the center-left.  Honest to God, I am not a liberal or a Democrat.  But these days, they are the only people who will listen to me.  When Republicans and conservatives once again start asking my opinion, I will know they are on the road to recovery.”  Emphasis added.

I haven’t had Bartlett’s distinguished career, but his story, especially over the past four years, is my story ideologically and philosophically.

 

It’s About the Big Bang, Not Big Bird

The GOP tells us that this is a watershed election.  I agree, but not for the reasons they say.  This isn’t about whether or not we’re going to switch to vouchers for Medicare or what the Medicaid budget is going to be.  This is about whether we’re going to continue down the Republican path to the Dark Ages.

To their shame, the GOP has let extremists take over their party at the state and national level.   The question on November 6 is whether we’re going to let the crazies take over our country.

I grew up believing that some things were settled in our society — that evolution was established science, that Keynesianism was established economics.  But now the GOP presents laughable, long-discredited science and economics as the truth.

With 435 congressional districts, we’re going to get people like Todd “Legitimate Rape” Akin.  But fringe people like him should not be elevated to the Senate.  And they definitely shouldn’t become Vice President, but Paul Ryan and Todd Akin are Tweedledee and Tweedledum on social issues.  Ryan is a little more careful about what he says in public, but their views and votes are the same.

We are outraged about the Taliban shooting of 14-year-old Malala Yousafzai in Pakistan because she defended the right of girls to go to school.  We rightly think the Taliban are sick barbarians.  But if Ryan and Akin had their way, we’d have 14-year-old rape and incest victims dying from illegal abortions.  That is every bit as sick and barbaric.

I voted for Bush 43 in 2004 and McCain in 2008 because I was afraid of the radical Muslims.   I’m still a registered Republican, but I’m voting for Obama because I’m afraid of the radical Christians.  I want to defeat the Christian Taliban here at home.

 

They Are All Randians Now

The chattering classes all along the political spectrum have been saying that the GOP is in an identity crisis, that they know they want to run from Bush 43, but haven’t yet figured out exactly what they’re running to.

The chattering classes are wrong — the GOP has definitively chosen a new identity:  they may give lip service to Ronald Reagan, but they’re really kissing the behind of another dead person — Ayn Rand.  They are all Randians now.

Nixon famously said we are all Keynesians now, and that was true.  The Dems had a leftist take on Keynes, and the GOP had a rightist take on him, but everybody believed that when the economy was bad, as during a garden-variety recession let alone a Great Recession, the government should spend to make up for the lack of private sector demand.  The difference was that when things were good and humming along, the Dems wanted more government spending than the GOP did.  It was a difference of degree, not of fundamental ideology.

Ayn Rand is a different ideology.  This is not the GOP of Nixon, Ford, Reagan, either Bush, or McCain.

Republicans, Independents, and the teeny, tiny sliver of Dems who are voting for Mitt need to think long and hard about this — are they really Randians?  Is this what they believe?  It’s not just that this isn’t your father’s GOP, this isn’t even the GOP of 2008.  Reagan famously said that he didn’t leave the Democratic party, it left him.  Well, now the Republican party has left him as well.   Everyone who is voting for Mitt should stop and reflect if the party has left them as well.

Mitt himself isn’t really a Randian, he’s an empty vessel, but he picked Paul Ryan because Mitt recognizes that Rand has filled the vacuum Bush left, and Ryan is her deaf, dumb, blind disciple — Paul “Tommy” Ryan.

The “Other” threatening our country isn’t a fictional Kenyan Muslim Socialist, it’s a Russian atheist who wrote fiction.

The Weapon of “Weaponized Keynesianism”

From “Obstruct and Exploit,” Paul Krugman, NYT:

“Anyway, do Republicans really believe that government spending is bad for the economy?  No.

“Right now, Mitt Romney has an advertising blitz under way in which he attacks Mr. Obama for possible cuts in defense spending — cuts, by the way, that were mandated by an agreement forced on the president by House Republicans [that would be you, Paul Ryan] last year.  And why is Mr. Romney denouncing these cuts?  Because, he says, they would cost jobs!

“This is classic ‘weaponized Keynesianism’ — the claim that government spending can’t create jobs unless the money goes to defense contractors, in which case it’s the lifeblood of the economy.  And no, it doesn’t make any sense.”

Quote of the Evening

“The stimulus was not, as conservatives have convinced many of their fellow Americans, big government on steroids; it was Keynesian economics on birth control. It did not restore the 8 million jobs lost to the crash of 2008 or provide the 200,000 jobs a month needed for new entrants into the labor market, but it did prevent a second Great Depression.”

Drew Westen, “If Obama loses the election, here’s why,” WaPo

So Where Are the High Interest Rates?

From “Money For Nothing,” Paul Krugman, NYT:

“For years, allegedly serious people have been issuing dire warnings about the consequences of large budget deficits — deficits that are overwhelmingly the result of our ongoing economic crisis.

“But a funny thing happened on the way to the predicted fiscal crisis:  instead of soaring, U. S. borrowing costs have fallen to their lowest level in the nation’s history.  And it’s not just America.  At this point, every advanced country that borrows in its own currency is able to borrow very cheaply.

“The failure of deficits to produce the predicted rise in  interest rates is telling us something important about the nature of our economic troubles (and the wisdom, or lack thereof, of the self-appointed guardians of our fiscal virtue).
“Oh, and pay no attention to the warnings any day now we’ll turn into Greece, Greece I tell you.  Countries like Greece, and for that matter Spain, are suffering from their ill-advised decision to give up their own currencies for the euro, which has left them vulnerable in a way that America just isn’t.

“So what is going on?  The main answer is that this is what happens when you have a ‘deleveraging shock,’ in which everyone is trying to pay down debt at the same time.

“But it’s simply crazy to be laying off schoolteachers and canceling infrastructure projects at a time when investors are offering zero- or negative-interest financing.

“You don’t even have to make a Keynesian argument about jobs to see that.  All you have to do is note that when money is cheap, that’s a good time to invest.

“That said, you should be a Keynesian, too.  The experience of the past few years — above all, the spectacular failure of austerity policies in Europe — has been dramatic demonstration of Keynes’s basic point:  slashing spending in a depressed economy depresses that economy further.”

GOP Hates Obama, Not Keynes

I grew up hearing about the deprivations of the Great Depression from my parents and grandparents.  But I took comfort in the fact that because governments now understood Keynesian economics, I didn’t have to worry about a repeat of that experience.

That’s why I’ve watched in perplexity and frustration as the Republicans have trashed Keynesian theories as the way to get us back on track after the Great Meltdown.

But I finally get it — it’s not that they reject John Maynard Keynes, it’s that they reject Barack Hussein Obama.  It pure politics, not economics.

Mitt admitted as much when he recently said that you can’t do big budget cuts in the near future without throwing the economy back into recession.

If Mitt wins, suddenly we’ll all be Keynesians again.