Repackaging the Bush agenda, just with austerity, is not the path to prosperity.
Romney economic adviser Glenn Hubbard apparently has a very short memory.
In a Wall Street Journalop-ed making the case for Romney's economic agenda, Hubbard presents a strikingly ahistorical account of the past few years -- not to mention sprinkling in one big questionable assumption. Let's take a tour of some of the lowlights.
"We are currently in the most anemic economic recovery in the memory of most Americans."
Does the memory of most Americans go back a decade? If it does, then they can remember a more anemic recovery -- at least when it comes to jobs. The post-2001 recovery had the slowest job growth of any postwar recovery. It also had the slowest private sector growth of any postwar recovery. It's puzzling that Hubbard doesn't remember this, considering that he was the chair of President George W. Bush's Council of Economic Advisors from 2001 to 2003.
Now, the economy did grow faster then than it has now. But that's because the government grew as much as it did then; it's shrinking now. Really. So why does this weak recovery feel weaker than that weak recovery? Well, the tech bubble recession was much milder than the housing bubble recession -- in other words, we're in a deeper hole this time around. All else equal, we would expect a better recovery from a worse recession, but all else is not equal. As Harvard professor Kenneth Rogoff has shown with over 800 years of data, recoveries from financial crises are long, slow slogs. It's doubtful that recycling Bush-era policies will get us out of this ditch faster. It didn't ten years ago.
"[U]ncertainty over policy--particularly over tax and regulatory policy--slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone."
Well, that certainly sounds bad. When did all of this uncertainty peak? Let's look at the paper. August of 2011. Hmmm. What happened in August of 2011? Oh, that's right. The debt ceiling debacle. Why don't we let the authors speak for themselves. Here's why they said uncertainty was so elevated in 2011:
A series of later developments and policy fights - including the debt- ceiling dispute between Republicans and Democrats in the summer of 2011, and ongoing banking and sovereign debt crises in the Eurozone area - kept economic policy uncertainty at very high levels throughout 2011.
In other words, a debt crisis the Republicans manufactured and a debt crisis the Europeans manufactured drove uncertainty in 2011. Granted, tax uncertainty has been bad -- but so has monetary policy uncertainty. And have you noticed what we haven't talked about yet? The authors conclude that healthcare and financial regulation uncertainty were "much less pronounced" than all of the above questions.
And according to the Congressional Budget Office, the large deficits codified in the president's budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law. [...]
The governor's plan would reduce federal spending as a share of GDP to 20%--its pre-crisis average--by 2016. This would dramatically reduce policy uncertainty over the need for future tax increases, thus increasing business and consumer confidence. [...]
The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate--the highest in the world--to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.
Hubbard says that 1) Medium-run deficits are bad for medium-run growth, 2) Romney will cut public spending, which will increase private spending, and 3) Romney will lower tax rates and eliminate tax loopholes while keeping tax revenues the same. Individually, these might make sense. Together, they're the economic equivalent of saying two plus two equals five.
Let's unpack this fiscal mess. Romney wants to cut taxes, but he also wants to cut medium-run deficits too. That's a problem. His answer: He won't cut taxes, but tax rates -- while cutting spending too. But this creates new problems. For one, it means his tax plan will raise taxes on the bottom 95 percent, while cutting them for the top 5 percent. For another, it leaves Romney stuck embracing spending cuts that will hurt the economy.
Expansionary austerity is a myth, at least in the short-term. That was the conclusion the IMF reached in a 2011 paper that examined 173 cases of fiscal retrenchment over the past 30 years. On average, cutting the deficit by 1 percent of GDP led to a 0.5 percentage point increase in unemployment -- with private spending falling in tandem with public spending. Austerity can work over the longer-term, as long as interest rates or the currency falls to offset the fall in government spending. But interest rates are already at zero, and Republicans aren't too keen about quantitative easing or that whole "dollar depreciation" thing. That leaves the Romney camp with one final reason why cutting government spending would lead to more spending overall: Ricardian equivalence. It's the idea that the private sector spends less when the public sector borrows more, because households know that eventually the government will have to raise taxes to pay for that borrowing. The empirical evidence on this is mixed -- after all, few households 1) know enough about the deficit to predict what will happen to their taxes, or 2) have enough disposable income or access to borrowing to smooth their lifetime spending. That's not to say that there isn't something to it, but that it's a flimsy hope for the catch-up growth we need.
I don't mean to pick on Glenn Hubbard. He has plenty of good ideas about how to get the economy moving again -- like mass refinancing for mortgages owned by Fannie and Freddie. But repackaging the Bush agenda, just updated with austerity, is not the path to prosperity.
The transcript of the president’s conversation with The New York Times throws his shortcomings into greater relief than ever before.
“Now Donald Trump has finally done it” is a sentence many people have said or written, but which has never yet proven true. As Trump gained momentum during the campaign season, errors that on their own would have stopped or badly damaged previous candidates bounced right off.
These ranged from mocking John McCain as a loser (because “I like people who weren’t captured”), to being stumped by the term “nuclear triad” (the weapons of mass destruction that he as U.S. president now controls), to “when you’re a star ... you can grab ‘em by the pussy” (my onetime employer Jimmy Carter had to spend days in the 1976 campaign explaining away his admission to Playboy that he had sometimes felt “lust in the heart”), to being labelled by an in-party opponent a “pathological liar,” “utterly amoral,” and “a narcissist at a level I don't think this country's ever seen” (the words of his now-supporter Ted Cruz). I kept my list of 152 such moments in the Time Capsule series as the campaign went on.
Many point to unromantic 20-somethings and women’s entry into the workforce, but an overlooked factor is the trouble young men have in finding steady, well-paid jobs.
TOKYO—Japan’s population is shrinking. For the first time since the government started keeping track more than a century ago, there were fewer than 1 million births last year, as the country’s population fell by more than 300,000 people. The blame has long been put on Japan’s young people, who are accused of not having enough sex, and on women, who, the narrative goes, put their careers before thoughts of getting married and having a family.
But there’s another, simpler explanation for the country’s low birth rate, one that has implications for the U.S.: Japan’s birth rate may be falling because there are fewer good opportunities for young people, and especially men, in the country’s economy. In a country where men are still widely expected to be breadwinners and support families, a lack of good jobs may be creating a class of men who don’t marry and have children because they—and their potential partners—know they can’t afford to.
“Look, Sessions gets the job. Right after he gets the job, he recuses himself,” Trump said. “So Jeff Sessions takes the job, gets into the job, recuses himself. I then have—which, frankly, I think is very unfair to the president. How do you take a job and then recuse yourself? If he would have recused himself before the job, I would have said, ‘Thanks, Jeff, but I can’t, you know, I’m not going to take you.’ It’s extremely unfair, and that’s a mild word, to the president.”
The Linkin Park singer, dead at 41, may have been the purest voice of angst on the radio this millennium.
Chester Bennington started as a rock star by saying that he was finished. “I cannot take this anymore / saying everything I’ve said before” went the opening lines to Linkin Park’s first smash, “One Step Closer,” which is among the many, many songs that take on an awful resonance after the news that Bennington has died, in what’s being investigated as suicide, at age 41.
Linkin Park became one of the most popular and most divisive bands of the new millennium because of their genre blending and pop polish, but to listen to that debut single is to remember that they were also differentiated by a core of raw, convincing pain. It almost entirely came from Bennington. He was arguably the purest font of angst—and inarguably one of the most powerful male voices—in mainstream music since 2000.
When it comes to health care and entitlements, the party’s policies don't always align with its coalition’s beliefs.
The Senate Republican health-care bill has been repeatedly crushed in a slow-motion collision between the party’s historic ideology and the interests of its modern electoral coalition. Yet congressional Republicans appear determined to plow right through the wreckage.
Even as the Senate’s latest effort to repeal the Affordable Care Act collapsed on Tuesday, the House Republican leadership released a 10-year federal-budget blueprint that points them toward a similar confrontation, between their dominant small-government dogma and the economic needs of their increasingly blue-collar and older white base.
John F. Kennedy famously said that failure is an orphan. But the failure, at least for now, of the GOP drive against the ACA has many parents. One was a distracted and ineffectual President Trump. Even higher on the list sits Senate Majority Leader Mitch McConnell, who displayed a blinding hubris that will forever cloud his previous reputation for legislative wizardry. Operating with unprecedented secrecy and insularity, McConnell degraded Senate tradition by refusing to hold any public hearings or committee votes on the legislation. His closed-door process provoked not only unified opposition from Democrats, but also every major medical stakeholder. He sought to pressure dissenting senators with unrealistic vote deadlines—then retreated as they repeatedly called his bluff.
A new study explores why the latter are far more likely to opt for an elite college where they'd struggle than a so-so one where they'd excel.
There’s a saying in China that it’s better to be the head of a chicken than the tail of a phoenix. The premise of the aphorism—it’s better to be over-qualified than under-qualified relative to one’s surroundings—is so widely accepted that similar versions of it exist across cultures. In Japan, they tend to say that it’s better to be the head of a sardine than the tail of a whale. Americans and Brits often declare that it’s better to be a big frog (or fish) in a small pond than a little frog in a big pond.
Extensive research supports these axioms, particularly in the realm of education. Longitudinal studies have consistently shown that high-performing students at less-selective schools feel more competent, have higher GPAs, and have more ambitious career aspirations than low-performing students at more-selective schools.
It seems to be business as usual for top federal law-enforcement officials one day after receiving harsh criticism from the president.
President Trump’s extraordinary broadside this week against Attorney General Jeff Sessions and Special Counsel Robert Mueller raised eyebrows across the nation’s capital. But it’s unclear whether it will affect how either man performs his day-to-day job.
The president expressed frustration with both men, as well as withother top federal law-enforcement officials, in an interview with The New York Times on Wednesday. Trump reserved his greatest ire for Sessions’s decision to step aside from the Russia investigation in March following controversy over his interactions with that country’s ambassador. “Sessions should have never recused himself, and if he was going to recuse himself, he should have told me before he took the job and I would have picked somebody else,” he said.
John McCain is being urged to persevere based on strength of character, a quintessentially American approach to thinking about health.
Eighty-year-old Senator John McCain has been diagnosed with glioblastoma, according to doctors at the Mayo Clinic in Arizona. The cancer that is being described in news reports as it is in medical texts, as an “aggressive brain tumor.”
The weight of that diagnosis hasn’t registered in all quarters. For the average man his age, the tumor means the odds of surviving five years are in the single digits. There are outliers, but a bet on many years of life for McCain is vanishing. Still, the message from past and present American leaders has been that McCain is no average man. He is a fighter.
Here are just a few. Bill Clinton: “As he’s shown his entire life, don’t bet against John McCain.” Barack Obama: “John McCain is an American hero, and one of the bravest fighters I've ever known. Cancer doesn’t know what it's up against. Give it hell, John.” Joe Biden: “He is strong, and he will beat this.” Sarah Palin: “John McCain is one tough fighter.” Gabrielle Giffords: “You’re tough! You can beat this. Fight, fight, fight!” Mike Pence: “Cancer picked on the wrong guy. John McCain is a fighter, and he’ll win this fight too.” Elizabeth Warren: “John’s in fighting shape, and we're rooting for him.” John Dingell: “My friend John McCain is a dogged ole S.O.B. Sharp as hell and tougher than a $2 steak.”
When photography was new, it was often used to preserve corpses via their images. An Object Lesson.
Photography owes much of its early flourishing to death. Not in images depicting the aftermath of violent crimes or industrial accidents. Instead, through quiet pictures used to comfort grieving friends and relatives. These postmortem photographs, as they are known, were popular from the mid-19th through the early-20th centuries—common enough to grace mantelpieces. Many can be viewed anew at online resources like the Thanatos Archive.
Historians estimate that during the 1840s, the medium’s first decade, as cholera swept through Britain and America, photographers recorded deaths and marriages by a ratio of three to one. Budding practitioners had barely learned to handle the bulky machinery and explosive chemicals before they were asked to take likenesses of the dead: to bend lifeless limbs into natural poses and mask tell-tale signs of sickness, racing against rigor mortis.
Most of the country understands that when it comes to government, you pay for what you get.
When I was a young kid growing up in Montreal, our annual family trips to my grandparents’ Florida condo in the 1970s and ‘80s offered glimpses of a better life. Not just Bubbie and Zadie’s miniature, sun-bronzed world of Del Boca Vista, but the whole sprawling infrastructural colossus of Cold War America itself, with its famed interstate highway system and suburban sprawl. Many Canadians then saw themselves as America’s poor cousins, and our inferiority complex asserted itself the moment we got off the plane.
Decades later, the United States presents visitors from the north with a different impression. There hasn’t been a new major airport constructed in the United States since 1995. And the existing stock of terminals is badly in need of upgrades. Much of the surrounding road and rail infrastructure is in even worse shape (the trip from LaGuardia Airport to midtown Manhattan being particularly appalling). Washington, D.C.’s semi-functional subway system feels like a World’s Fair exhibit that someone forgot to close down. Detroit’s 90-year-old Ambassador Bridge—which carries close to $200 billion worth of goods across the Canada-U.S. border annually—has been operating beyond its engineering capacity for years. In 2015, the Canadian government announced it would be paying virtually the entire bill for a new bridge (including, amazingly, the U.S. customs plaza on the Detroit side), after Michigan’s government pled poverty. “We are unable to build bridges, we're unable to build airports, our inner city school kids are not graduating,” is how JPMorgan Chase CEO Jamie Dimon summarized the state of things during an earnings conference call last week. “It’s almost embarrassing being an American citizen.”