Brad DeLong1, an economist at the University of California-Berkeley that I’ve followed since the Golden Age of Blogging, was interviewed by Vox:
“Barack Obama rolls into office with Mitt Romney’s health care policy, with John McCain’s climate policy, with Bill Clinton’s tax policy, and George H.W. Bush’s foreign policy,” DeLong notes. “And did George H.W. Bush, did Mitt Romney, did John McCain say a single good word about anything Barack Obama ever did over the course of eight solid years? No, they fucking did not.”
The result, he argues, is the nature of the Democratic Party needs to shift. Rather than being a center-left coalition dominated by market-friendly ideas designed to attract conservative support, the energy of the coalition should come from the left and its broad, sweeping ideas. Market-friendly neoliberals, rather than pushing their own ideology, should work to improve ideas on the left. This, he believes, is the most effective and sustainable basis for Democratic politics and policy for the foreseeable future.
Interesting take. As a member of that part of the political spectrum far to the left of Clinton2 I’d like if we finally got a chance to enact some liberal policies. There hasn’t been a left-wing president in my lifetime. Obama – center left; Bill Clinton – center-right; Jimmy Carter – center left; and even Lyndon Johnson was not really a lefty, despite originally being a disciple of FDR. Meanwhile, the GOP keeps creeping right, right, right until they are basically knuckle-draggers like Trump and his crew.
protectionism in general should reduce efficiency, and hence the economy’s potential output. But that’s not at all the same as saying that it causes recessions.
But didn’t the Smoot-Hawley tariff cause the Great Depression? No. There’s no evidence at all that it did. Yes, trade fell a lot between 1929 and 1933, but that was almost entirely a consequence of the Depression, not a cause. (Trade actually fell faster during the early stages of the 2008 Great Recession than it did after 1929.) And while trade barriers were higher in the 1930s than before, this was partly a response to the Depression, partly a consequence of deflation, which made specific tariffs (i.e., tariffs that are stated in dollars per unit, not as a percentage of value) loom larger.
…and on the Lord Little Hands Dotardo’s tariff threats in general:
So what will happen when the Trump tariffs come?
There will be retaliation, big time. When it comes to trade, America is not that much of a superpower — China is also a huge player, and the European Union is bigger still. They will respond in kind, targeting vulnerable U.S. sectors like aircraft and agriculture.
And retaliation isn’t the whole story; there’s also emulation. Once America decides that the rules don’t apply, world trade will become a free-for-all.
Will this cause a global recession? Probably not — those risks are, I think, exaggerated. No, protectionism didn’t cause the Great Depression.
What the coming trade war will do, however, is cause a lot of disruption. Today’s world economy is built around “value chains” that spread across borders: your car or your smartphone contain components manufactured in many countries, then assembled or modified in many more. A trade war would force a drastic shortening of those chains, and quite a few U.S. manufacturing operations would end up being big losers, just as happened when global trade surged in the past.
An old joke tells of a motorist who runs over a pedestrian, then tries to fix the damage by backing up — and runs over the victim a second time. Well, the effects of the Trumpist trade war on U.S. workers will be a lot like that.
Hmmm, so maybe I shouldn’t lay awake worrying about the upcoming conflagration? That Trump is not trying to sabotage the world economy so that totalitarian governments will rise around the world? I suppose we’ll see for ourselves, if Trump even follows through with his trade threats.
One Chromosome Too Many
Trump has threatened to withdraw NAFTA pact since the 2016 campaign, saying the 24-year-old deal allowed manufacturers to relocate to Mexico and take advantage of cheaper labor. Even a number of Democrats have said NAFTA should be reworked, but Canada and Mexico have resisted Trump’s strong-arm tactics.
And a number of GOP lawmakers are apoplectic about what would happen if Trump withdrew from NAFTA, warning it could devastate the U.S. agriculture industry.
Tying NAFTA to the steel and aluminum tariffs shows that Trump is trying to use his new trade gambit as leverage, though it’s unclear if it will work.
Trump on Thursday surprised much of Washington — and his own staff — by announcing that he would impose a 25 percent tariff on steel and a 10 percent tariff on aluminum. A formal announcement is expected this week or next. Commerce Secretary Wilbur Ross and top trade adviser Peter Navarro are both supportive of the tariffs, but even they were hard pressed to explain how the new restrictions would work.
This does make me a bit nervous about the economic near-future of the US. We can hope that Trump chickens out again, letting one of his lackeys claim that Trump never meant to impose tariffs, but I’m not sanguine this Trump-train won’t keep steaming until we reach 1930s-era economics. After all, the rise of totalitarian governments soon followed in those times, perhaps Trump1 has a plan for emulation.
President Donald Trump declared Friday that “trade wars are good, and easy to win.”
But European Union officials are already planning retaliatory actions, targeting products from politically sensitive Republican-run states, including the imposition of tariffs on Harley-Davidsons made in Speaker Paul Ryan’s home state of Wisconsin; duties on bourbon made in Senate Majority Leader Mitch McConnell’s home state of Kentucky; and duties on orange juice from Florida, a critical swing state.
“We will put tariffs on Harley-Davidson, on bourbon and on blue jeans — Levis,” European Commission President Jean-Claude Juncker told German television. Commissioners from the EU’s 28 member countries plan to discuss the countermeasures on Wednesday.
Across the globe, Trump’s plan to impose a 25 percent duty on steel and a 10 percent duty on aluminum imports would alienate dozens of countries in Europe, North America and Asia, many of them longtime allies and trading partners, who could turn the tables by targeting key U.S. sectors such as agriculture and aircraft, based in states that elected him and fellow Republicans.
We can also take heart that perhaps the long-term effect of Trump nuking the world economy will drive historically GOP friendly corporations away from the Republican Party, sectors like agribusiness, automotive, manufacturing and the like.
Also amused at these targeted tariffs, that’s fairly clever, make the states that vote in these Republican monsters pay an economic price for their negligence and enabling behavior.
Willis Hawley and Reed Smoot have haunted Congress since the 1930s when they were the architects of the Smoot-Hawley tariff bill, among the most decried pieces of legislation in US history and a bill blamed by some for not only for triggering the Great Depression but also contributing to the start of the second world war.
Pilloried even in their own time, their bloodied names have been brought out like Jacob Marley’s ghost every time America has taken a protectionist turn on trade policy. And America has certainly taken a protectionist turn.
Hawley, an Oregon congressman and a professor of history and economics, became a stock figure in the textbooks of his successors thanks to his partnership with the lean, patrician figure of Senator Reed Smoot, a Mormon apostle known as the “sugar senator” for his protectionist stance towards Utah’s sugar beet industry.
Before he was shackled to Hawley for eternity Smoot was more famous for his Mormonism and his abhorrence of bawdy books, a disgust that inspired the immortal headline “Smoot Smites Smut” after he attacked the importation of Lady’s Chatterley’s Lover, Robert Burns’ more risqué poems and similar texts as “worse than opium … I would rather have a child of mine use opium than read these books.”
But it was imports of another kind that secured Smoot and Hawley’s place in infamy.
The US economy was doing well in the 1920s as the consumer society was being born to the sound of jazz. The Tariff Act began life largely as a politically motivated response to appease the agricultural lobby that had fallen behind as American workers, and money, consolidated in the cities.
Hawley started the bill but with Smoot behind him it metastasized as lobby groups shoehorned their products into the bill, eventually proposing higher tariffs on more than 20,000 imported goods.
Siren voices warned of dire consequences. Henry Ford reportedly told Hoover the bill was “an economic stupidity”.
Critics of the tariffs were being aided and abetted by “internationalists” willing to “betray American interests”, said Smoot. Reports claiming the bill would harm the US economy were decried as fake news. Republican Frank Crowther, dismissed press criticism as “demagoguery and untruth, scandalous untruth”.
In October 1929 as the Senate debated the tariff bill the stock market crashed. When the bill finally made it to Hoover’s desk in June 1930 it had morphed from his original “limited” plan to the “highest rates ever known”, according to a New York Times editorial.
The extent to which Smoot and Hawley were to blame for the coming Great Depression is still a matter of debate. “Ask a thousand economists and you will get a thousand and five answers,” said Charles Geisst, professor of economics at Manhattan College and author of Wall Street: A History.
What is apparent is that the bill sparked international outrage and a backlash. Canada and Europe reacted with a wave of protectionist tariffs that deepened a global depression that presaged the rise of Hitler and the second world war. A myriad other factors contributed to the Depression, and to the second world war, but inarguably one consequence of Smoot-Hawley in the US was that never again would a sitting US president be so avowedly anti-trade. Until today.
Don’t hold your breath, Dr. Krugman. Once a cliché becomes as lodged in the public consciousness as this one about the French being a bunch of wine-slurping slackers, the cliché has a life of its own, facts be damned.
But in truth the French deserve an apology from a lot of American politicians and commentators. If you think that France is a nation where everyone is either lazy or unemployed, compared with hard-working America, you’re not just repeating a caricature, you’re repeating a caricature that’s many years out of date. The French do take more vacations than we do; but in their prime working years, they’re a lot more likely to be employed than we are:
Whenever I mention this fact, I get mail from people insisting that I must be wrong and demanding a correction. Even well-informed commentators seem to be underinformed on this point; for example, Justin Fox, while not wrong in what he says here, doesn’t seem aware that lower French overall labor force participation is entirely the result of early retirement and lower employment among the young — which in turn partly reflects students not having to work in college.
Of course, French employment success isn’t what is supposed to happen in a generous welfare state
If people consistently make logically incoherent, ignorant arguments, the duty of a commentator is to say just that — not to mislead readers by pretending that they’re actually serious and making sense. You shouldn’t make gratuitous insults — I have never, to my knowledge, declared that someone’s mother was a hamster and his father smelt of elderberries. But stupid/ignorant is as stupid/ignorant does, and influence changes nothing. Where I’ve been getting pushback lately is in my pronouncements that the whole Republican field is talking nonsense on economic policy. That’s a terrible thing to say, I’m told. But what if it’s true? And of course it is.
It is almost amusing how much crazy economic policy was initiated by the expense account of Dick Cheney and Donald Rumsfeld. Without the Laffer Curve, there would be no Supply Side Economic Voodoo theory, and perhaps our country wouldn’t be on a downward spiral. Also, the Laffer Curve, as originally formulated, never claimed to know what the magical tax rate was, and in fact, could be interpreted as arguing that tax rates should increase!
The Laffer Curve came about as the result of a lunch conversation in 1974 among conservative economist Arthur Laffer, Dick Cheney, and Donald Rumsfeld. The curve in question is the relationship between tax revenues and tax rates—at zero percent, no tax revenue will be collected because no income is taxed, while at 100 percent, no revenue will be collected because there is no incentive to work if all income is confiscated. Somewhere in the middle is a sweet spot: the perfect rate of taxation at which revenue is maximized, and where any tax increases past that point will actually result in a decrease in revenue.
The Laffer Curve has been consistently used as justification for the supply-side belief that tax cuts will pay for themselves through the increased economic activity that they will create. This belief is no longer simply a theory, but is now official federal policy: the 114th Congress changed the rules for how budget bills are evaluated from static scoring to what is called “dynamic scoring,” which will mask the actual cost of tax cuts by simply assuming that they will increase economic output.
Really though, it seems as if the GOP is better for business executives instead of businesses. The executives make more, by outsourcing jobs, enjoying reduced tax rates and increased tax loopholes for things like private jets and so on. More take-home pay, in other words, and less investing in the business itself. For non-executives, the GOP is not your party, nor are you even invited, except during election season.
Kansas Gov. Sam Brownback brought on Arthur Laffer as an advisor to steer his radical experiment of cutting taxes to the bone under the assumption that the cuts would simply pay for themselves through economic expansion. The results, however, have been absolutely horrific: job growth on the Missouri side of the Kansas City metropolitan area is occurring at four times the rate on the Kansas side. Education is being vastly underfunded. And perhaps most tellingly, the state collected far less money in taxes than it expected in December, even after downgrading expectations. In other words, Laffer was wrong in every single way possible.
In Wisconsin, meanwhile, Republican Gov. Scott Walker has followed a path nearly has extreme as that of Brownback, but is being forced to scale his ambitions back because the theory just isn’t working:
Earlier this year, just before enacting the half-billion-dollar tax cut, Walker said it was just the beginning — that he wanted to eliminate income taxes. Now, a representative of Walker, asked about the elimination plan said the governor “has only said that he would explore other areas of tax reform.” The state has a projected $2.2 billion deficit for the next biennium, 2015 to 2017. There’s also a transportation funding problem.
Now, not even his top allies in the House think new cuts aren’t possible.
The situation is so bad in Wisconsin that to try to balance the budget in anticipation of a possible 2016 presidential campaign, Walker is rumored to be considering selling off public assets as a stopgap measure just to make the numbers look good. The contrast with states like California, which raised taxes to help balance its budget and cover a shortfall in education, couldn’t be clearer: California’s revenue is surging, while tax-cutting states are figuring out how to mitigate the damage.
Will this example stop the next GOP executive branch from claiming that cutting tax rates will help grow economies? Probably not. In fact, I wouldn’t be surprised if newly elected Illinois Governor Bruce Rauner tries his best to lower tax rates on his own wealth during the next four years. If Rauner was such a good business man, perhaps he’d let facts and history convince him that perhaps the marginal tax rates are too low…
To maximize real economic growth in the United States, the top marginal income tax rate should be about 65%, give or take about ten percent. Preposterous, right? Well, it turns out that’s what the data tells us, or would, if we had the ears to listen.
This post will be a bit more complicated than my usual “let’s graph some data” approach, but not by much, and I think the added complexity will be worth it. So here’s what I’m going to do – I’m going to use a statistical tool called “regression analysis” to find the relationship between the growth in real GDP and the top marginal tax rate. If you’re familiar with regressions you can skip ahead a few paragraphs.
Regression analysis (or “running regressions”) is a fairly straightforward and simple technique that is used on a daily basis by economists who work with data, not to mention people in many other professions from financiers to biologists. Because it is so simple and straightforward, a popular form of regression analysis (“ordinary least squares” or “OLS”) regression is even built into popular spreadsheets like Excel.
Oh, Kansas, you so crazy – you elected this clown twice!
Kansas Gov. Sam Brownback (R) is calling all hands on deck to fix his state’s huge self-imposed budget crisis, which nearly cost him re-election this year, and the staunch conservative is now receiving an assist from an unlikely source: Obamacare.
The state’s well-documented budget troubles came after Brownback’s dramatic reductions in taxes since taking office in 2011. With its revenue drying up and cash reserves depleted, Kansas is staring at a $280 million hole in its $6.4 billion FY 2015 budget, which ends in June.
Brownback offered his proposal for closing that hole last week, a mixture of spending cuts and transferring funds from other parts of the budget to fill it. And second biggest of those transfers is $55 million in revenue from a Medicaid drug rebate program that was bolstered under the Affordable Care Act.
The short version then is this: Obamacare is helping Kansas address its fiscal crisis — even if Brownback’s administration seems loath to admit it.
No worries, Kansas will turn into Somalia soon enough, Governor Brownback has 4 more years of wrecking the state’s economy to prove Republican talking points about economics are faith-based. As long as you don’t live in Kansas, or near Kansas, or have any dealings with Kansas, or live in the same country as Kansas, you should be ok…
Two years ago Kansas embarked on a remarkable fiscal experiment: It sharply slashed income taxes without any clear idea of what would replace the lost revenue. Sam Brownback, the governor, proposed the legislation — in percentage terms, the largest tax cut in one year any state has ever enacted — in close consultation with the economist Arthur Laffer. And Mr. Brownback predicted that the cuts would jump-start an economic boom — “Look out, Texas,” he proclaimed.
But Kansas isn’t booming — in fact, its economy is lagging both neighboring states and America as a whole. Meanwhile, the state’s budget has plunged deep into deficit, provoking a Moody’s downgrade of its debt.
There’s an important lesson here — but it’s not what you think. Yes, the Kansas debacle shows that tax cuts don’t have magical powers, but we already knew that. The real lesson from Kansas is the enduring power of bad ideas, as long as those ideas serve the interests of the right people.
Why, after all, should anyone believe at this late date in supply-side economics, which claims that tax cuts boost the economy so much that they largely if not entirely pay for themselves? The doctrine crashed and burned two decades ago, when just about everyone on the right — after claiming, speciously, that the economy’s performance under Ronald Reagan validated their doctrine — went on to predict that Bill Clinton’s tax hike on the wealthy would cause a recession if not an outright depression. What actually happened was a spectacular economic expansion.
and as long as the morons in Washington don’t follow Brownback’s lead:
Remember, as far as Brownback is concerned, he has a popular mandate from the Kansas electorate. He ruined the state’s finances, won a second term, and sees no need to change course. So, predictably, he’s keeping the tax breaks that didn’t work and slashing public investments even deeper, since this is entirely consistent with the agenda endorsed by voters.
Shortly after the election, Brownback’s budget director said the administration “has no intention of revisiting the state’s tax policy.” Of course not. Why would failure need to be revisited?
Postscript: Two years ago, incoming Senate Majority Leader Mitch McConnell (R-Ky.) said of Brownback’s radical economic experiment, “This is exactly the sort of thing we want to do here, in Washington.” Something to keep in mind.
Some additional reading June 10th from 19:41 to 19:41:
Yes! 50 Scientifically Proven Ways to Be Persuasive « alex.moskalyuk – Number 7 sounds like Apple’s iPhone 3GS and 3G pricing model:
“A more expensive product makes the old version look like a value buy. An example here is a Williams-Sonoma bread maker. After an introduction of a newer, better, and pricier version, the sales of the old unit actually increased, as couples viewed the new item as “top of the line”, but old product was all of a sudden reasonably-priced, even though a bunch of features were missing”
The Wall Street Journal attempts to smear Democratic governance by using the example of Illinois:
A favorite conceit of Democrats is that the U.S. budget and economy would be A-okay if congressional Republicans weren’t able to obstruct President Obama’s agenda. One counter-argument would be the state of Illinois, where one-party Democratic rule has led to a fiscal crisis that’s culminating in political paralysis.
…except California is also governed by the Democratic Party, and they seem to be doing ok:
After years of grueling battles over state budget deficits and spending cuts, California has a new challenge on its hands: too much money. An unexpected surplus is fueling an argument over how the state should respond to its turn of good fortune.
If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.
As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
Also, it should be noted that there were already 7.8 million Americans age 65 or older in 1935 (cf. Table 2), so there was a large and growing population of people who could receive Social Security. Indeed, the actuarial estimates used by the Committee on Economic Security (CES) in designing the Social Security program projected that there would be 8.3 million Americans age 65 or older by 1940 (when monthly benefits started). So Social Security was not designed in such a way that few people would collect the benefits.
As veteran critics of the post-crash financial industry well know, one thing that has allowed big banks to maintain their rosy outlook is a rule change from the Federal Accounting Standards Board that allows these entities — still flush with toxic assets — to avoid having to mark their assets “to market.” Instead, banks are allowed to essentially treat these assets as “marked to fantasy,” a hoped-for future value that is unlikely to ever be realized. The banks have fought, and beaten back, any attempt to return to a “mark to market” regime, and it’s easy to see why: Reality comes with a cost. Should they ever have to realize the true value of the assets on their balance sheets, their false façade will fall, and it will be revealed that they are more structurally insolvent than they prefer to let on.
The truth of the matter is that Bob Woodward has been a Republican partisan for many, many years, and only fools or the misinformed thought otherwise. Someone long ago called him a Stenographer To Power, and that epithet has stuck in my mind whenever I hear Woodward talk, or get tricked into reading some blather he’s written. Remember when Woodward said: “They trashed the place, and it wasn’t their place.”
A few articles I’ve read about Bob Woodward this week:
“Woodward at war,” was the headline Politico’s Mike Allen and Jim VandeHei attached to their February 27 article playing up Washington Post reporter Bob Woodward’s claim that a senior White House official had threatened him over email regarding Woodward’s reporting on the origins of the budget sequestration. The Politico report on Woodward’s “major-league brushback” caught fire in the press and prompted allegations of White House intimidation. However, the email chain — which Politico published the following morning — shows that the claims of threats and intimidation by the White House are, at best, wildly overblown, and that Politico helped hype a bogus allegation by Woodward absent the full context.
The original February 27 Politico piece featured a short clip of Allen and VandeHei’s “hourlong interview” with Woodward “around the Georgetown dining room table where so many generations of Washington’s powerful have spilled their secrets.” In that clip, Woodward reads from an email he received from a top White House official, later revealed to be economic advisor Gene Sperling. As Woodward puts it, Sperling did “something that I think it is important for people to understand. He says, you know, ‘I think you will regret staking out that claim,'” referring to Woodward’s assertion that the president was “moving the goal posts” in negotiations to avert sequestration.
During the Clinton years, “liberal” Woodward often took direct aim at the Democratic president, as well as Vice President Al Gore, labeling him ‘Solicitor-in-Chief,’ a move which conservatives cheered. Years later, when news broke that newly elected president Barack Obama had selected Hillary Clinton to be his Secretary of State, Woodward lamented that “She never goes away, she and her husband.”
At the same time Woodward was being granted extraordinary access to the Bush White House and to Bush himself in order to write his war-themed books, Woodward helped delay the Plame whodunit. He did it by failing, for two years, to reveal that a senior Bush administration official had told him that former ambassador Joe Wilson’s wife, Plame, worked at the CIA.
Worse, prior to his shocking revelation, Woodward had made the media rounds minimizing the scandal as “laughable,” “an accident,” “nothing to it” and denigrating Fitzgerald as “disgraceful” and “junkyard dog,” never once noting mentioning he’d been on the receiving end of a leak about Plame.
This doesn’t even scratch the surface. But read the rest if you have the inclination.
Thank You For Voting
and a wee bit of sequester history from Ezra Klein
I don’t agree with my colleague Bob Woodward, who says the Obama administration is “moving the goalposts” when they insist on a sequester replacement that includes revenues. I remember talking to both members of the Obama administration and the Republican leadership in 2011, and everyone was perfectly clear that Democrats were going to pursue tax increases in any sequester replacement, and Republicans were going to oppose tax increases in any sequester replacement. What no one knew was who would win.
The sequester was a punt. The point was to give both sides a face-saving way to raise the debt ceiling even though the tax issue was stopping them from agreeing to a deficit deal. The hope was that sometime between the day the sequester was signed into law (Aug. 2, 2011) and the day it was set to go into effect (Jan. 1, 2013), something would…change. There were two candidates to drive that change.
The first and least likely was the supercommittee. If they came to a deal that both sides accepted, they could replace the sequester. They failed.
The second was the 2012 election. If Republicans won, then that would pretty much settle it: No tax increases. If President Obama won, then that, too, would pretty much settle it: The American people would’ve voted for the guy who wants to cut the deficit by increasing taxes. The American people voted for the guy who wants to cut the deficit by increasing taxes. In fact, they went even further than that. They also voted for a Senate that would cut the deficit by increasing taxes. And then they voted for a House that would cut the deficit by increasing taxes, though due to the quirks of congressional districts, they didn’t get one.
Alex Parene gets to the meat of the Woodward-Gate: Woodward seems to think that if the President does something, it isn’t illegal. Quite a change from 1972, no?
Speaking of kinds of madness, Woodward’s actual position here is insane. As Dave Weigel points out, “some budget document” is a law, passed by Congress and signed by the president. Woodward is saying, why won’t the president just ignore the law, because he is the commander in chief, and laws should not apply to him. That is a really interesting perspective, from a man who is famous for his reporting on the extralegal activities of a guy who is considered a very bad president!
Also, that George W. Bush analogy is amazing. It would have been a good thing for him to invade and occupy Iraq without congressional approval? Say what you will about George W. Bush, at least he was really, really devoted to invading Iraq. (And yes the Reagan line, lol.)
There is nothing less important about “the sequester” than the question of whose idea it originally was. So, naturally, that is the question that much of the political press is obsessed with, to the exclusion of almost everything else. Republicans have been making the slightly incoherent argument that a) the sequester, which is a bad thing, is entirely Obama’s fault, b) Obama is exaggerating how bad the sequester will be, and c) the sequester, which is Obama’s fault, is preferable to not having the sequester. Woodward has lately been fixated on Obama’s responsibility for the idea of the sequester, but at this point, the important question is who will be responsible if it actually happens. On that question, Woodward, and others, have taken the position that it will be Obama’s fault because he has failed to “show leadership.” But laws come from Congress. The president signs or vetoes them. Republicans in the House are unwilling and unable to repeal the law Congress passed creating the sequester. All Obama can do is ask them to pass such a law, and to make the case to the public that they should pass such a law. And Obama has been doing those things, a lot.
Woodward’s second point — “moving the goalposts” — has been torn to shreds like a hunk of meat tossed into the lion cage. Brian Beutler points out that the law didn’t call for spending cuts to be put into place, it called for “deficit reduction.” David Corn adds that Boehner himself conceded the possibility, however remote, that sequestration could be replaced with some mix of higher revenue and lower spending. Dave Weigel points out that Woodward’s own book says the same thing. There’s nothing left at all to the point Woodward is trying to argue here.
To understand where Woodward is coming from, you need to recall his book on the 2011 debt ceiling negotiations. That book was notable because it concluded that Obama was responsible for blowing up the big deal to reduce the deficit by spooking John Boehner and mishandling the negotiations. Woodward’s interpretive line here runs in contrast to every other account of the episode, which shows Obama was always ready to offer highly generous terms to Boehner, but Boehner simply concluded his party’s base, represented by Eric Cantor, would not accept higher revenue in any form.
What Woodward is saying here is that the failure to strike a deal is Obama’s fault by definition. There is no set of imaginable facts that would cause Woodward to conclude that Congress bears responsibility for an agreement. It’s a truly bizarre way of thinking, but also a common one, combining elements of BipartisanThink and the Cult of the Presidency. Fellow venerable reporter Ron Fournier has been insisting that Obama ought to somehow mind-control Republicans into accepting higher revenue. “His aides and allies will ask, ‘Exactly what can he do to get the GOP to deal?,’” writes Fournier, “That is a question best put to the president, a skilled and well-meaning leader elected to answer the toughest questions.”
Hypnosis! Jedi mind tricks! Whatever! Fournier’s job is to demand that Obama do something that flies in the face of everything we know about the ideological makeup of the Republican Party and the nature of free will, not to explain how it could happen. David Gregory, among others, heartily endorses Fournier’s argument.
Woodward’s strange way of understanding this issue survives because it is something that he and certain people need to believe, for professional and ideological reasons.
To reconcile Woodward’s journalistic reputation with the weird pettiness of his current role, one has to grasp the distinction between his abilities as a reporter and his abilities as an analyst. Woodward was, and remains, an elite gatherer of facts. But anybody who has seen him commit acts of political commentary on television has witnessed a painful spectacle. As an analyst, Woodward is a particular kind of awful — a Georgetown Wise Man reliably and almost invariably mouthing the conventional wisdom of the Washington Establishment.
His more recent books often compile interesting facts, but how Woodward chooses to package those facts has come to represent a barometric measure of a figure’s standing within the establishment. His 1994 account of Bill Clinton’s major budget bill, which in retrospect was a major success, told a story of chaos and indecision. He wrote a fulsome love letter to Alan Greenspan, “Maestro,” at the peak of the Fed chairman’s almost comic prestige. In 2003, when George W. Bush was still a decisive and indispensable war leader, Woodward wrote a heroic treatment of the Iraq War. After Bush’s reputation had collapsed, Woodward packaged essentially the same facts into a devastating indictment.
Woodward’s book on the 2011 debt negotiations was notable for arguing that Obama scotched a potential deficit deal. The central argument has since been debunked by no less a figure than Eric Cantor, who admitted to Ryan Lizza that he killed the deal.
The real rap on Woodward isn’t that he makes things up. It’s that he takes what powerful people tell him at face value; that his accounts are shaped by who coöperates with him and who doesn’t; and that they lack context, critical awareness, and, ultimately, historic meaning. In a 1996 essay for the New York Review of Books, Joan Didion wrote that “measurable cerebral activity is virtually absent” from Woodward’s post-Watergate books, which are notable mainly for “a scrupulous passivity, an agreement to cover the story not as it is occurring but as it is presented, which is to say as it is manufactured.”
Woodward’s 2000 book on Alan Greenspan, “Maestro,” which was clearly based on extensive access to the Fed chairman, is a good example of what Didion was talking about. As an inside account of what Greenspan said and did and thought, it was a useful primer, and, as with all of Woodward’s books, it included some arresting, if largely irrelevant, narrative details, such as one in which the great man, disturbed by his wife, Andrea Mitchell’s, desire for a canine companion, asks one of his colleagues, the chairman of the Philadelphia Fed, “Well, how do you tell your wife you don’t want a dog?” But as a guide to the impact of Greenspan’s policies, or the real significance of his rise to a godlike status, “Maestro” wasn’t much help at all. Less than a year after it was published, the stock-market bubble that Greenspan had helped to inflate burst, and the country was plunged into a recession.
So in other words, Obama said in November 2011 exactly what he said for the next year, and exactly what he is saying today! Those goal posts are now looking more and more stationary, aren’t they? The notion that the supercommittee was the only place where revenues could be discussed is so wrong that it really makes me wonder how intelligent Bob Woodward is. It was understood in November 2011 that Congress still had 13 months to come up with something until the January 2013 deadline. And Obama has wanted revenues that entire time. Sheesh.
Investigative journalist Bob Woodward announced Thursday that he’s received credible information from an anonymous source confirming that Woodward hasn’t been a relevant force in American journalism in 40 years. “Though I cannot divulge his name, I can tell you that he’s an extremely reliable, high-level government source, and thus far everything he’s told me about how I’m no longer a salient or even particularly respected journalistic figure completely checks out,” Woodward told reporters, describing a late-night parking garage rendezvous in which the Washington Post editor was purportedly told to “follow the writing.” “My source assured me that once I read my careless reporting on the Iraq war, my exaggerated interviews, and my exploitative and inaccurate account of the recent sequestration situation, it would be abundantly clear that my influence in the field has substantially waned since Watergate. And he’s right. It’s all true.” Woodward then accidentally revealed that his source’s name was White House Communications Director Daniel Pfeiffer, which prompted the journalist to murmur, “Goddamnit, Bob, you’ve really lost it,” under his breath.
what do you say to those folks who don’t have the comfort of a pension? That don’t have a good job that they can get employed at all the way through the age of 70, say? How do you deal with that?”
“I always say to people,” Alan Simpson told NBC’s Chuck Todd, “before you, you know begin to drool at the mouth, and go crazy and scratch our eyeballs out, read the damn report. It was 67 pages, we put it in December 1, 2010 and people said, “What are you doing to the vulnerable?” And I said, read it. We don’t do anything to people on SSI, we don’t do anything with food stamp, we don’t do anything with people on — on unemployment. Get — get your — use your bean, instead of listening to crap all day long from the right, and the left.”
Simpson’s answer, meanwhile, was no answer at all. It was just schtick. It does nothing to, say, rebut the Center on Budget and Policy Priorities, which took a close look at the changes Simpson-Bowles made to Social Security and concluded that the proposal “would generate nearly two-thirds of its Social Security savings over 75 years — and four-fifths of its savings in the 75th year — from benefit cuts,” and that “while these benefit cuts would be largest for workers with above-average earnings, they would affect the vast majority of retired and disabled workers.”
Fifteen years after he retired from the U.S. Senate, Simpson has become a key figure in American politics by picking the right issue, the right enemies, and the right language to describe them. He is like America’s cranky grandpa. A bit unfiltered, sure, but loved for saying what everyone else was already thinking. And it works because most of the people Simpson talks to — particularly the ones in the media — really do think like Alan Simpson.
For reasons I’ve never quite understood, the rules of reportorial neutrality don’t apply when it comes to the deficit. On this one issue, reporters are permitted to openly cheer a particular set of highly controversial policy solutions. At Tuesday’s Playbook breakfast, for instance, Mike Allen, as a straightforward and fair a reporter as you’ll find, asked Simpson and Bowles whether they believed Obama would do “the right thing” on entitlements — with “the right thing” clearly meaning “cut entitlements.”
As I’ve written on previous occasions, the Bernie Madoff phenomenon helped me understand a lot about the persistence of bad economics. Madoff flourished through “affinity fraud”; his investors thought he was their kind of guy, so they didn’t look hard at how he was allegedly making money. And I realized that a similar phenomenon explains the enduring popularity of goldbugs and fiscal doomsayers — including, say, the Wall Street Journal editorial page — despite years of being wrong about everything; their devotees, who consist in large part of cranky old white men, see kindred spirits and can’t see past that to the consistently terrible analysis.
Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more. He is also a reliably terrible forecaster, having predicted an imminent fiscal crisis — within two years — um, two years ago. Yet he remains not only respectable among the Beltway crowd; as Ezra says, he’s lionized in a way that looks from the outside like a clear violation of journalistic norms…
So what is it that makes Simpson the figure he is? Clearly, it’s an affinity thing: never mind his obvious lack of knowledge, his ludicrous track record, reporters trust and idolize Simpson because he’s their kind of guy.
And think about what it says about them that their kind of guy is this cantankerous, potty-mouthed individual, who evidently feels not a bit of empathy for those less fortunate.
and for good measure, William Greider wrote these words in 2010, which are still relevant…
Retired Wyoming Senator Alan Simpson, who inherited a soft-cushion career in politics from his father, is a garrulous old crank who at 79 seems desperate for attention. Simpson likes to pop off provocatively. He cannot resist mocking lesser mortals like Social Security recipients with meanspirited ridicule. Simpson is an always quotable darling of Washington reporters, who mistake his nastiness for straight talk, who are too lazy to check out his ugly distortions.
Senator Trash Mouth keeps messing up the plan, however, by provoking outrage with his tasteless zingers. Most recently, Simpson compared Social Security—the federal government’s most beloved program—to “a milk cow with 310 million tits.”
On the same page the Times reported Simpson’s latest gaffe, political reporter Matt Bai contributed a far more outrageous falsehood of his own. In condescending style, he dismissed opponents to Social Security cuts (dimwits like me) as stuck-in-the-past liberals, trying to defend big government against harsh reality. Bai celebrated the courage of Representative Earl Blumenauer of Oregon, a Democrat who evidently embraces the same view. Bai did not mention the people and public opinion overwhelmingly opposed to benefit cuts (check the polls if you doubt this). Someone should ask Congressman Blumenauer’s constituents how they feel about his brave stance.
Bai’s great falsification was to insinuate that the Social Security’s trust fund is bogus—that the massive surpluses collected from working people to pay for their future retirements are meaningless. Social Security, he acknowledged, has amassed a pile of Treasury bonds—IOUs from the government—but he says as a practical matter that money can’t be paid back because taxes would have to be raised or more funds borrowed elsewhere. “This is sort of like saying that you’re rich because your friend has promised to give you 10 million bucks just as soon as he wins the lottery,” Bai explains.
His comparison is a clever but consequential lie, consistent with the elite propaganda. Bai makes it sound like the government is going to give this money to retirees. In fact, it’s the other way around. Social Security collected this money from workers as their involuntary savings, better known as FICA deductions. Then the federal government borrowed the money from us and spent it on other things. Congress raised the FICA deductions twenty-five years ago on all working people to pay for the baby boom generation’s copming retirements. The Social Security trust fund has since built up massive surpluses–$2.5 trillion now and growing to $4.2 trillion in 2023—and set it aside for the future. But starting with Ronald Reagan, the federal government ran massive deficits on its own budgets and borrowed the savings from Social Security to pay for wars and military buildups, regressive tax cuts for the wealthy and corporations, among other things.
This vast wealth belongs to the working people who paid it—not to the federal government or Congress. Naturally, many politicians would like to get out of paying it back, but that constitutes a massive bait-and-switch swindle of working people. Bai and many other reporters of the mainstream media have been assured by their sources it is impossible to pay back that money, but that is a political choice, not a fiscal requirement. It would make working people pay for Republican gravy that went to someone else.
Funny isn’t it that facts never get factored into the discussion. Or rarely. Even though austerity as an option to solve economic duress has not worked, now, or ever, those proponents never give in, and adjust their mantra to factor in new facts. Instead, they just increase their voice’s volume.
Paul Krugman notes:
Ralph Waldo Emerson understood this. The original version of his famous quote — I had forgotten this — reads:
A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
I don’t know about the divines bit, but the little statesmen thing is completely accurate. Suppose George Osborne were to admit that austerity isn’t working. What, then, would be left of his claim to be qualified to do, well, anything? He has to stick it out until something turns up,no matter how many lives it destroys.
Suppose that some pundit who has spent his whole career calling for bipartisanship, a compromise between the extremes of left and right, were to admit the plain fact that Obama is very much a centrist, who is in particular proposing deficit reduction through exactly the kind of mix of tax hikes and spending cuts “centrist” pundits demand — and that the GOP, by contrast, is an extremist organization whose extremism is almost solely responsible for the bitterness of the partisan divide. A pundit making that admission would in effect be saying that everything he has said and done for the past several years was not just useless but harmful, actively misleading readers about the state of the debate. He just can’t do it.
The point is that a large part of the reason we’re locked into such a mess is careerism. And yes, that’s quite vile, if you think about it: politicians and pundits alike letting the world burn — probably unconsciously, but still — because their personal position would be hurt if they admitted to past mistakes.
So there is real if modest improvement over the past year. Also, the September numbers looks not like an aberration but like a return to trend from what looks like noise in the data over the previous couple of months.
This story is, by the way, broadly consistent with the payroll data, from a different survey, which also suggest employment growing somewhat faster than population.
So contra Romney, this is a real recovery. Modest, but real. Unless, of course, you believe that there’s a conspiracy of socialist statisticians …