Unaccountable (OR What a fine mess)

March 6, 2009

I don’t have time for a long post, and I keep delaying some posts that I mean to write so much that they don’t seem relevant by the time I get around to them…  but, here’s a quickie.

Talking Points Memo details the sort of mess we can get into (and did) when we rely on an unaccountable agency to rescue the financial sector from itself:

To avoid booking a loss on the Fed’s balance sheet, because the Fed had some legal problems if either of these Maiden Lanes lost money, and because of a reporting requirement that Dodd had put into TARP which actually required the Fed to report to the Congress and the public about the cost to taxpayers from ML I, the Fed did some creative accounting.

As they say, read the whole thing. It’s bad enough when companies go bankrupt after their “creative accounting” comes to light, it seems particularly treacherous if the US Federal Reserve does the same. Which reminds of a point Robert Reich made a while back:

The Fed is not directly accountable to American voters, or even to Congress or the President.

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Recovery (OR Where do we spend money next?)

February 21, 2009

One concern that’s beginning to filter through the blogosphere seems be an uncertainty about what will bring our economy out of its current slump. Where will investment go? What will drive consumer consumption? What will spur growth?

Matt Yglesias thinks:

American households won’t have that much capacity to consume additional stuff. Americans will need to start making more products and services that people in East Asia and Germany and the oil-exporting countries want to buy. My understanding is that the main export goods we specialize in are airplanes, defense systems, and pop culture.

Which sounds a little tongue-in-cheeky…  Paul Krugman has similar concerns:

To be sure, the Obama administration is taking action to help the economy, but it’s trying to mitigate the slump, not end it. The stimulus bill, on the administration’s own estimates, will limit the rise in unemployment but fall far short of restoring full employment. The housing plan announced this week looks good in the sense that it will help many homeowners, but it won’t spur a new housing boom.

What, then, will actually end the slump?

Krugman also points out that Japan crawled out of their lost decade by increasing exports, but the whole world can’t increase exports.

It seems to me that the answer will be found in things we are not yet doing, namely clean energy. If we impose some type of carbon pricing mechanism, and lead the world in doing the same, we will simultaneously create a profitable sector of our economy where American ingenuity and entrprenuership can flourish and create a significant revenue stream for our (and other) governments which can be used, in our case, to continue the internal investment (in infrastructure, schools, education, trasportation, etc). Both sides of this should create jobs and, partnered with something like the Employee Free Choice Act, help grow incomes to a point where we can become good little consumers again (only with a little more restraint, this time).

Of course, getting something like this through the increasingly obstructionist Republican party doesn’t seem all that likely, but one can hope.


*Snip* OR (This isn’t what I voted for)

February 8, 2009

As I’m sure you’ve heard, a group of “moderate” Senators took it upon themselves to trim almost $100 billion out of a stimulus bill that was already potentially too small.

Matt gives a good rundown of the potential rational for cutting from the stimulus:

  • One is that you might want to maintain that the macroeconomic situation isn’t actually so dire that we need such a quantity of stimulus. Obviously, if that’s the case then you want to reduce the overall amount of stimulus.
  • A second is that a proposal might be actually harmful. Offering to pay a $1,500 no-questions-asked bounty to anyone who brings another person’s severed finger into their local post office could stimulate the economy, but the cure would be worse than the disease.
  • A third is that you might think a given proposal isn’t as good an idea as some other proposal, so you’re offering a swap. To my mind, spending money on new highway construction is a worse idea than spending money on fixing up existing highways. And spending money on transit is better than spending money on highways. And spending money on operating costs is a better idea than spending money on new transit construction. So within that set of hierarchies, if I were a Senator I would be seeking to shift funds from worse ideas to better ones within the realm of the politically possible.

And Paul Krugman gives a quick analysis of the repercussions:

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

And, I heard on the radio (and confirmed here) that Colorado’s two new Senators, Udall and Bennet, were amoung the group of “moderates” who helped gut the bill.

I really can’t express how frustrated I’m getting with this whole process. I’m regularly reminded why I never used to pay much attention to politics, and why, I imagine, a majority of American’s don’t pay attention to politics. We, are Atrios often says, ruled by some stupid, stupid people…

Read the rest of this entry »


Rules (OR Hoops to jump through)

February 8, 2009

Via Ezra comes a pretty decent explanation of why 60 votes are needed in the Senate to pass the stimulus bill. In essence, due to Pay-as-you-go rules, a 3/5 majority is required to consider a bill to take on more debt…   at least, I think that’s what it says…

This, obviously, renders the “why don’t the Democrats make the Republicans actually filibuster” question entirely moot.

It doesn’t, however, seem to mean there aren’t other, equivalent measures that could be taken.

It seems to me that Majority Leader Reid could have the Senate waive the rule (via 3/5 majority) because, until recently, even Republicans were acknowledging that something needed to be done, and that something was going to require an increase in debt.

If the Republicans stand against that, it would make it very clear that they aren’t interested in borrowing money to revitalize the economy. It would change the debate from nitpicking points of a large spending bill to one about the value of stimulus (and associated debt).

It seems likely that 2-3 Republicans would see fit to vote in agreement of borrowing money for a stimulus bill. After that’s done, the Republicans could be forced to actually filibuster bill. At the same time, all the arguments about whether it’s appropriate to borrow money for such a purpose could be answered with a “we already voted on that matter: you lost” type of response… It would then up to Republicans to get in line with the borrowing, or filibuster.

So, this rule changes things slightly, but it still feels like the Democrats are being much too timid about forcing Republicans into politically untenable positions.


Just do it! (OR Make ’em blather)

February 4, 2009

Via just about every blog I read comes news that the Senate doesn’t have the votes to pass the stimulus bill. Ezra interprets this to mean that they can’t overcome a filibuster, which seems like a reasonable assumption.

The real question here is why 58 Democrats can’t pass the president’s top priority. We’re learning that the minority still controls the Senate. So long as Republicans fundamentally don’t want a bill to pass, they can make virtually limitless demands.

Ok, I’m getting more than a little irritated here…  I believe I’ve already expressed my concern that President Obama approaches conflict in a much too conciliatory manner. His oft expressed desire to acheive effective bipartisan governance sounds great, and probably plays well in largely Republican portions of the country. Unfortunately, as evidenced by the significant deficit in representation in the House of Representatives, most of the country is not largely Republican.

Amazingly, it seems that he has drastically underestimated the obstinance and irrationality of Republican Senators and Representatives. There have been numerous posts floating around about how President Obama and his administration have been virtually invisible while the Republicans in congress have co-opted this well-intentioned and vitally necessary bill into the epitome of wasteful government spending (revitalize the National Mall? What a waste!).

Regrettably, the Democratic leadership in congress is following the Administration’s lead. Where are the powerful and well known progressives (Speaker Pelosi… paging Speaker Pelosi) to make the case for spending as stimulus?

And now, the noises that there aren’t enough votes to pass this bill. I can understand why there aren’t enough votes to break a filibuster, since the Republicans are their typically unified selves in opposition, but why in the hell is Majority Leader Reid not threatening to make the Republicans actually filibuster? The habit of the Senate has become to not bring bills to a vote if there are not enough votes for cloture, essentially allowing a silent filibuster. Logistically, I can see some sense here…  why waste the time? 41 Senators could maintain a filibuster indefinitely. But in this case?

President Obama has been talking about the need for urgent action since well before his inauguration, and every day the economy is noticably worse. Jobs are being cut, states are cutting funding for vital programs, and on and on…

Don’t the optics of Democrats united behind a stimulus bill (any stimulus bill really, but a good one would be even better), ready to enact the one thing that might stop the freefall, while Republicans visibily and vociferously obstruct the same look really good for Democrats? If the Democrats hit the media circuit hard, repeating over and over, that this bill is ready for passage (since they just need 51 votes for that) if the Republican would stop preventing this vital legislation while the Republicans can be seen on C-SPAN at all hours quoting recipes, wouldn’t Americans get fed up pretty quickly?

Where the hell are the Democrats here? Are they waiting for leadership from the Whitehouse? If so, why is President Obama being so timid? Why isn’t he on the TV in primetime making his case for the passage of this bill? I didn’t pay much attention to him, but was President Bush always on the tube when he had an agenda to push? Where’s the President? Where’s Speaker Pelosi? Where’s Majority Leader Reid’s spine?

This is getting ridiculous.

UPDATE: I just found an email from David Plouffe in my inbox… He links to some videos of President Obama discussing the stimulus, and then says:

You can help make sure the American people have all the facts so they can support this crucial effort to boost our struggling economy.

The President is leading. Help is on the way.

Lend your voice by sharing this video with everyone you know.

I understand that this grassroots thing worked in the campaign, but it was paired with, you know, a candidate in front of cameras at all hours of the day. On it’s own, it’s a little weak. Leading is not telling your supporters what they want to hear, and writing it an email certainly doesn’t make it so. He doesn’t appear to be doing his part to “make sure the American people have all the facts.”

C’mon, President Obama, you can do better.


Struture (OR Bigger Problems)

February 2, 2009

Robert Reich has a very important post about what’s really at stake in our economy as President Obama try to guide us through this recession.

Some nuggets:

Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists.

[…]

But structuralists see it very differently. The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier — in the late 1970s, when median U.S. incomes began to stall.

[…]

What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent.

[…]

It’s not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation’s income.

Read, as they say, the whole thing.


Stim, Stim, Stim … (OR What and why)

February 2, 2009

I imagine you all have heard about this stimulus bill thingy that’s been bouncing around Capitol Hill for the last couple weeks.

There has been a great deal of talking, but not a whole lot being said.

For example, where is the White House explaining why direct government spending is an appropriate course of action? Everyone seems to agree that a stimulus bill is appropriate, or at least, everyone is talking as though a stimulus is appropriate.

The Republicans have brought their one trick pony, tax cuts, and are touting it as the answer to all our ills. Despite the fact that evidence shows that tax cuts are highly ineffectual as a stimulus, the Democrats have willingly accepted them into the bill rather than highlighting the inadequacy of the sole Republican solution.

Ironically, Republicans are objecting to some of the spending because it might go on longer than a couple years while suggesting that their proposed tax cuts be permanent.

Anyway, this all amounts to politics as usual, it seems. Still, I wanted to highlight some important things.

First, to answer the “why we must spend” question is Paul Krugman:

But looking forward, the Taylor rule says that the Fed should cut rates a lot from here — in fact, to negative 6%. That’s not surprising: we’re clearly opening up a huge output gap, inflation is turning into deflation.

[…]

This is why we need a huge fiscal stimulus, unconventional monetary policy, and anything else you can think of to fight this slump. Quite literally, the usual rules no longer apply.

When faced with a nearly unprecedented situation, the idea that the same solution as last year (which didn’t work) or 6 years ago (which also didn’t work) is adequate is borderline farcical, and to allow the Republicans to claim it isn’t in the name of bipartisanship is equally so.

Next, this obsession with the duration of some of the stimulus programs seems more than a little misplaced. Matt Yglesias is kind enough to provide this graph, which I believe came from the White House:

Both Yglesias and Krugman (and just about anyone looking at this, I expect) wonder “why not try for more?” I don’t have that answer, but I’m sure that the obstruction we’ve seen on the Hill has something to do with it. The other question I have is, in looking at this graph, why in the world are we concerned about whether a stimulative measure extends into 2011? The economy is predicted to be headed in the right direction, but certainly not fully recovered. Why is it such a terrible thing to have stimulus funding run into the middle of 2011? Assuming all the standard caveats about spending the money as a stimulative investment, rather than just spending for the sake of spending, is a few extra month of government spending really worth getting all worked up over?

Along these same lines, take some time to watch this Rachel Maddow clip and the requisite skewering of a dissenting Republican Congressman.