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.
When cities compete to attract big employers, the country as a whole suffers.
Since Amazon announced last year that it is going to build a second corporate campus, cities—238 of them in North America, in three countries—quickly started courting the company. They scrambled to propose the most generous package of financial incentives they could muster, in hopes of luring the online-retailing and cloud-computing giant.
On Thursday, Amazon announced that it had whittled its list down to 20 finalist cities spanning the country, from Los Angeles to Austin to Boston and Miami. What does the future hold for the lucky winner? In Amazon’s request for proposals, it dangled the promise of hiring up to 50,000 full-time employees (at an average salary of more than $100,000 a year) over the next 10 or 15 years, and spending $5 billion in the process of executing the project.
Their peaceful premises and intricate rule systems are changing the way Americans play—and helping shape an industry in the process.
In a development that would have been hard to imagine a generation ago, when video games were poised to take over living rooms, board games are thriving. Overall, the latest available data shows that U.S. sales grew by 28 percent between the spring of 2016 and the spring of 2017. Revenues are expected to rise at a similar rate into the early 2020s—largely, says one analyst, because the target audience “has changed from children to adults,” particularly younger ones.
Much of this success is traceable to the rise of games that, well, get those adults acting somewhat more like children. Clever, low-overhead card games such as Cards Against Humanity, Secret Hitler, and Exploding Kittens (“A card game for people who are into kittens and explosions”) have sold exceptionally well. Games like these have proliferated on Kickstarter, where anyone with a great idea and a contact at an industrial printing company can circumvent the usual toy-and-retail gatekeepers who green-light new concepts. (The largest project category on Kickstarter is “Games,” and board games make up about three-quarters of those projects.)
The Senate struck a deal to reopen the government on Monday morning—but without any help from President Trump.
If ever there were a time for a dealmaker in Washington, this weekend was it. Friday, as a shutdown loomed, it seemed as though Republicans and Democrats would be able to reach some accommodation to fund the government, but in the wake of that failure, the mood turned bitter over the weekend.
With leaders in Congress at an impasse, the most logical person to step in and broker an arrangement was the president of the United States. That’s usually the case, but it’s especially true now, with a president whose name, thanks to his first book, is practically synonymous with deals. And yet, Donald Trump remained strangely absent. Oh, sure, the president was tweeting, but he offered mostly uncharacteristically bland restatements of the White House line that it was all Democrats’ fault. After meeting with Democratic leader Chuck Schumer on Friday, Trump stayed largely on the sidelines.
The federal government will likely reopen by Tuesday after Senate Democrats accepted an offer from Majority Leader Mitch McConnell to end their filibuster of a stopgap spending bill.
Updated on January 22 at 1:21 p.m. ET
Senate Democrats have given in.
A three-day shutdown of the federal government is about to end after Senate Democrats dropped their filibuster of a stopgap spending bill and accepted an offer from the Republican leadership to debate an immigration proposal by early February.
“The Republican leader and I have come to an arrangement: We will vote today to reopen the government,” Senate Minority Leader Charles Schumer said early Monday afternoon.
An overwhelming majority of the Senate voted, 81-18, early Monday afternoon to advance legislation to fund the government for the next three weeks, through February 8. A final vote is expected shortly, and House Republican leaders have indicated they’ll swiftly pass the measure and send it to President Trump for his signature.
When truth itself feels uncertain, how can a democracy be sustained?
“In God We Trust,” goes the motto of the United States. In God, and apparently little else.
Only a third of Americans now trust their government “to do what is right”—a decline of 14 percentage points from last year, according to a new report by the communications marketing firm Edelman. Forty-two percent trust the media, relative to 47 percent a year ago. Trust in business and non-governmental organizations, while somewhat higher than trust in government and the media, decreased by 10 and nine percentage points, respectively. Edelman, which for 18 years has been asking people around the world about their level of trust in various institutions, has never before recorded such steep drops in trust in the United States.
After a rocky start in theaters, the Hugh Jackman–starring circus musical has become a massive word-of-mouth hit.
The hottest box-office story in Hollywood right now isn’t Star Wars: The Last Jedi, which made more than $600 million in the U.S. and became the sixth biggest hit in movie history. It isn’t the surprising success of Jumanji: Welcome to the Jungle, an unambiguous smash that has cemented the star power of Dwayne Johnson and Kevin Hart. No, the most interesting film in last weekend’s returns was The Greatest Showman—the family-friendly original musical about P.T. Barnum starring Hugh Jackman that has now made $113 million in five weekends. It was a risky proposition of a movie that got mediocre reviews and initially generated little excitement from audiences. Now, it’s one of the largestword-of-mouth hits in Hollywood history. So what happened?
The U.S. vice president promised peace in the country’s newly recognized capital, but his itinerary showed that a deal is far beyond reach.
JERUSALEM—Mike Pence was greeted in Israel’s center of government on Monday in the way of a dear friend. Prime Minister Benjamin Netanyahu beamed as he stood with the American vice president in his offices. “I have had the privilege over the years of standing here with hundreds of leaders and welcomed them, all of them, to Israel’s capital, Jerusalem,” he said. “This is the first time that I stand here where both leaders can say those three words: ‘Israel’s capital, Jerusalem.’”
“It is my great honor, on behalf of the president of the United States, to be in Israel’s capital, Jerusalem,” Pence replied, similarly emphasizing the word capital. “But also, I look forward to speaking with you in detail about the opportunity for peace.” When President Trump recognized Jerusalem as Israel’s capital and vowed to relocate the American embassy from Tel Aviv in December, he “did so convinced ... that we would create an opportunity to move on in good-faith negotiations between Israel and the Palestinian Authority,” Pence said.
When the government shuts down, the politicians pipe up.
No sooner had a midnight deadline passed without congressional action on a must-pass spending bill than lawmakers launched their time-honored competition over who gets the blame for their collective failure. The Senate floor became a staging ground for dueling speeches early Saturday morning, and lawmakers of both parties—as well as the White House and political-activist groups—flooded the inboxes of reporters with prewritten statements castigating one side or the other.
Led by President Trump, Republicans accused Senate Democrats of holding hostage the entire government and health insurance for millions of children over their demands for an immigration bill. “This is the behavior of obstructionist losers, not legislators,” the White House said in a statement issued moments before the clock struck midnight. In a series of Saturday-morning tweets, Trump said Democrats had given him “a nice present” for the first anniversary of his inauguration. The White House vowed that no immigration talks would occur while the government is closed, and administration officials sought to minimize public anger by allowing agencies to use leftover funds and by keeping national parks and public lands partially accessible during the shutdown—in effect, by not shutting down the government as fully as the Obama administration did in 2013.
Advocates are tracking new developments in neonatal research and technology—and transforming one of America's most contentious debates.
The first time Ashley McGuire had a baby, she and her husband had to wait 20 weeks to learn its sex. By her third, they found out at 10 weeks with a blood test. Technology has defined her pregnancies, she told me, from the apps that track weekly development to the ultrasounds that show the growing child. “My generation has grown up under an entirely different world of science and technology than the Roe generation,” she said. “We’re in a culture that is science-obsessed.”
Activists like McGuire believe it makes perfect sense to be pro-science and pro-life. While she opposes abortion on moral grounds, she believes studies of fetal development, improved medical techniques, and other advances anchor the movement’s arguments in scientific fact. “The pro-life message has been, for the last 40-something years, that the fetus … is a life, and it is a human life worthy of all the rights the rest of us have,” she said. “That’s been more of an abstract concept until the last decade or so.” But, she added, “when you’re seeing a baby sucking its thumb at 18 weeks, smiling, clapping,” it becomes “harder to square the idea that that 20-week-old, that unborn baby or fetus, is discardable.”
Nearly a century of mistrust of America and an obsession with defeating the Kurds sparked its operation in Afrin.
In the 19th century, Britain, France, and Russia occupied or fostered the independence of Greece, Serbia, Romania, Montenegro, Bulgaria, Tunisia, and Egypt—each one part of the Ottoman Empire. In 1920, the victors of World War I forced the Ottomans to sign the Treaty of Sèvres, which detached what would become Lebanon, Syria, Jordan, and Israel from the House of Osman. The agreement also granted the French a zone of influence in the southeastern portion of Anatolia, adjacent to its Mandate for Lebanon and Syria, while the Italians were ceded an area that included southern and central parts of Anatolian territory, including Antalya and Konya. The Greeks established a protectorate in Smyrna, now known as Izmir.