Tag Archives: Derek Thompson

The Path, The Road, The Depression Not Taken

Sewell Chan at NYT:

Like a mantra, officials from both the Bush and Obama administrations have trumpeted how the government’s sweeping interventions to prop up the economy since 2008 helped avert a second Depression.

Now, two leading economists wielding complex quantitative models say that assertion can be empirically proved.

In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program, the nation’s gross domestic product would be about 6.5 percent lower this year.

In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.

The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody’s Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years.

Calculated Risk:

I’ll post a link tomorrow (if it is available). David Leonhardt adds:

As Mr. Blinder and Mr. Zandi note, their estimates of the fiscal stimulus are similar to the estimates of othersincluding the Congressional Budget Office.

Although Zandi completely missed the housing bubble, I’ve been using his estimates of the impact of policy (and estimates from Goldman Sachs), and I think they have been very useful in forecasting.

Brad DeLong:

It is very nice to see that they are attempting this. The hard part of it, of course, is figuring out what would have happened to the flow-of-funds through financial markets in the absence of TARP, of quantitative easing, and of other extraordinary financial policy interventions. That they were, collectively, about twice as big as the ARRA smells right to me, but the only pieces of information I have to support that are even shakier than back-of-the-envelope calculations.

Derek Thompson at The Atlantic:

When I go to conferences with conservative economists, I often hear the line: “Now that we know the stimulus isn’t working…” I want to respond, what do you mean by “working”? The first few hundred billion dollars went primarily to three things: tax cuts, Medicaid funding, and state rescue. The tax cuts were pocketed as families paid down their debt, and the state funding mostly salved budget wounds that would have bled out in a worse recession. It wasn’t a stimulus. It was a stopgap.

Today, economists Alan Blinder and Mark Zandi release a new analysis of the recession that reaches a similar conclusion. Yes, the economy stinks today. And yes, it would have been a lot worse without the stimulus, or TARP, the stress tests, and the Fed actions. The stimulus didn’t fail. It just didn’t succeed enough. When I read that over, it sounds like shady justification. But there’s a difference between something that doesn’t work, and something that works, but is insufficient. To cop Blinder’s analogy, the Recovery Act was a baseball team that scored a healthy 7 runs, and lost 20-7.

Stephen Spruiell at The Corner:

Blinder and Zandi still give the stimulus credit for saving (or creating?) around two million jobs, but I suspect this has more to do with the assumptions built into their models than with any empirical evidence to that effect. The Times is good enough to acknowledge this as well:

Told about the findings, another leading economist was unconvinced.

“I’m very surprised that they find these big impacts,” said John B. Taylor, a Stanford professor and a senior fellow at the Hoover Institution. “It doesn’t correspond at all to my empirical work.”

Mr. Taylor said the Fed had successfully stabilized the commercial paper and money markets, but he argued that its purchases of $1.25 trillion in mortgage-backed securities have not been effective. And he said the Obama administration’s stimulus program has had “very little impact and not much to show for it except a legacy of higher debt.”

The disagreement underscored the extent to which econometric estimates are heavily reliant on underlying assumptions and models, but Mr. Blinder and Mr. Zandi said they hoped their analysis would withstand scrutiny by other scholars.

The bottom line is that it’s still pretty early in the game to be evaluating what effects the bailouts, the Fed interventions, and the stimulus actually had — particularly when, with regard to the stimulus, that involves simply re-running Keynesian models that predicted what the stimulus would do. I have some more thoughts on the great stimulus debate on the home page today.

Ryan Avent at Free Exchange at The Economist:

It should go without saying that the paper will be challenged; empirical work on such a matter is fraught with difficulties and heavily dependent on assumptions. And of course, economists haven’t managed to settle similar debates over policy choices made in the 1930s. But Mr Blinder and Mr Zandi point out that their estimates are in line with a number of other empirical efforts, including work by the Congressional Budget Office. The damage done by uncontrolled bank failures in the early 1930s provides a hint of what might have occurred if governments had allowed cascading failures among large financial institutions, and the national growth statistics give some sense of how much worse the output trajectory might have been absent stimulus. The big problem, for supporters of stimulus, is that the public doesn’t observe the 8 million jobs that would have been lost, according to the paper’s authors, without stimulus. But voters are very much aware of the 15 million workers who currently lack work. And they’re not happy about it.

Steve Benen:

Zandi, by the way, was an advisor on economic policy to the McCain/Palin presidential campaign.

The two looked at the totality of the federal response — TARP, stimulus, auto industry rescue, intervention from the Federal Reserve — and concluded that the collected efforts prevented an economic catastrophe.

“When all is said and done, the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly as much as most had feared and not nearly as much as if policy makers had not acted at all,” they write.

The economists didn’t measure what would have happened if policymakers had followed the right’s recommendations — no TARP, no auto industry rescue, and a five-year spending freeze — but the word “cataclysmic” comes to mind.

Indeed, the Zandi/Blinder paper concluded, “[I]t is clear that laissez faire was not an option; policymakers had to act. Not responding would have left both the economy and the government’s fiscal situation in far graver condition. We conclude that [Federal Reserve Chairman] Ben Bernanke was probably right when he said that “We came very close in October [2008] to Depression 2.0.”

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Filed under Economics, The Crisis

They Won’t Let The Sun Go Down On Them

Alexander Bolton at The Hill:

Democrats are considering a plan to delay tax hikes on the wealthy for two years because the economic recovery is slow and they fear getting crushed in November’s election.

It could mean a big reprieve for families earning $250,000 and above annually.

President George W. Bush’s tax cuts will expire at the end of the year unless Congress acts to delay their sunset.

Some Democrats are now arguing forcefully that a delay is a win-win plan that would help the federal budget without hurting the economy.

Wealthy families would not have an incentive to cut back on spending and budget writers could assume an inflow of tax funds in future years, making five- and 10-year budget projections look less scary.

Rep. John Yarmuth (D-Ky.), a member of the Ways and Means Committee, which has jurisdiction over taxes, said some of his Democratic colleagues have discussed the idea out of fear of impeding the nation’s economic recovery.

“I’ve heard some sentiment about raising the rate but not making it effective until 2012,” he said.

Derek Thompson at The Atlantic:

Sen. Kent Conrad (D., N.D.) said in an interview Wednesday that Congress shouldn’t allow taxes on the wealthy to rise until the economy is on a sounder footing. Sen. Ben Nelson (D., Neb.) said through a spokesman that he also supported extending all the expiring tax cuts for now, adding that he wanted to offset the impact on federal deficits as much as possible.

Brian Beutler at Talking Points Memo:

Has Kent Conrad done an about face and become a supporter of the Republican plan to endlessly extend tax cuts for the rich? Far from it.

“The Republicans’ proposal to me is a formula for the decline of the United States,” Conrad said last night in response to a question from TPMDC.

Conrad is among the only Senators whose hawkish rhetoric on deficits closely matches his voting record, and he surprised many — even senior members of his own party — when he was quoted widely supporting a continuation of the Bush tax cuts, including for high income earners.

“The general rule of thumb would be you’d not want to do tax changes, tax increases … until the recovery is on more solid ground,” he told reporters outside the Senate chamber yesterday afternoon.

And indeed, he reiterated that position at length when TPMDC caught up with him last night. But he also made it clear that he’s in no way supportive of the GOP position on taxes.

“In the short term, most economists would say raising taxes or cutting spending during an economic downturn is counterproductive,” Conrad said. “Now if you break it down, the high income would be the least problematic in terms of…a change in the tax rates, because they’re the least likely to spend the money. Middle income, far more important. And with [unemployment insurance], that’s actually the most important thing, because that money’s all going to get spent.”

In other words, a deficit-financed tax cut for the wealthy (as the GOP currently proposes) is the least stimulative of the options Conrad listed and ,though he’d like to preserve all of the current tax rates temporarily, tax cuts for the rich ought to be the first to go.

“[M]ost economists are saying that for the next 18 months or two years, we’re going to have continued economic weakness,” Conrad said. However, “the analysis has been done by CBO and others show that deficit-financed tax cuts actually hurt long term growth.

“I was answering what would be my reaction to the circumstance we face,” Conrad explained. “My reaction would be don’t cut spending, don’t raise taxes and that would mean on anyone. But this is the time to prepare to pivot, to put together a plan that does bring deficits and debt down over the more extended period of time.”

Jennifer Rubin at Commentary:

Nevertheless, these two plus Sen. Evan Bayh are “a departure from what appeared to be an emerging unified Democratic stance.” Maybe not so unified after all.

Remember Rep. Joe Sestak bemoaning the plight of small businesses the other day? Hmm, maybe he could join the reality-based Democrats. After all, those small businesses are the ones that will be hit if the top rate rises to 39.6%. (”Republicans and many business groups favor extending all the breaks, contending that increasing tax rates will hit small businesses hard.”) But I haven’t heard any of that from him. And really, is a guy who voted with Nancy Pelosi 97.8 percent of the time the lawmaker who is going to break with liberal orthodoxy? Not likely.

Blue Texan at Firedoglake:

Yeah, God forbid we restore the already historically low Clinton-era levels. The ’90s economy really sucked.

Jonathan Chait at TNR:

This isn’t the worst idea in the world, if they do sunset the tax cuts in 2012. There are a couple problems, though. First, it’s not a cost-effective way to stimulate the economy. The Bush tax cuts were not designed to encourage consumption. They were designed to incentivize the rich to work harder and more productively, out of the theory that Clinton-era tax rates had dampened the entrepreneurial spirit and the desire to invest. (Obviously, right? Nobody was trying to get rich in the 1990s.) Alternatively, this theory was a handy excuse to enact a policy designed to make rich people richer. In either case, nobody was claiming that it was a way to increase consumer spending. Indeed, one prevailing right-wing justification from the era was that upper-bracket tax cuts were needed because the rich save more money than the poor and middle class. (That was true, though if you want to promote saving, deficit reduction was far more efficient.)

John Cole:

We enacted these tax cuts, there was no job creation, debt exploded, and only the wealthiest of the wealthy profited. So tell me, Mr. Fiscal Conservative Kent Conrad, why should we not let the tax cuts for the rich expire?

And if it is not evident to you by now, the best way to get our finances back in order is to systematically ignore anyone who calls himself a fiscal conservative. If I could find a bank run by dirty hippies I would put my money there, because I just don’t trust these people in pinstripes anymore.

UPDATE: David Stockman at NYT

Barry Ritholtz at Big Picture

Bruce Bartlett

Sam Stein at Huffington Post

UPDATE #2: Derek Thompson at The Atlantic

Ezra Klein

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Filed under Economics, Legislation Pending

It’s Getting Hot In Here, So Turn Off All Your AC

Stan Cox in WaPo:

Washington didn’t grind to a sweaty halt last week under triple-digit temperatures. People didn’t even slow down. Instead, the three-day, 100-plus-degree, record-shattering heat wave prompted Washingtonians to crank up their favorite humidity-reducing, electricity-bill-busting, fluorocarbon-filled appliance: the air conditioner.

This isn’t smart. In a country that’s among the world’s highest greenhouse-gas emitters, air conditioning is one of the worst power-guzzlers. The energy required to air-condition American homes and retail spaces has doubled since the early 1990s. Turning buildings into refrigerators burns fossil fuels, which emits greenhouse gases, which raises global temperatures, which creates a need for — you guessed it — more air-conditioning.

A.C.’s obvious public-health benefits during severe heat waves do not justify its lavish use in everyday life for months on end. Less than half a century ago, America thrived with only the spottiest use of air conditioning. It could again. While central air will always be needed in facilities such as hospitals, archives and cooling centers for those who are vulnerable to heat, what would an otherwise A.C.-free Washington look like?

At work

In a world without air conditioning, a warmer, more flexible, more relaxed workplace helps make summer a time to slow down again. Three-digit temperatures prompt siestas. Code-orange days mean offices are closed. Shorter summer business hours and month-long closings — common in pre-air-conditioned America — return.

Business suits are out, for both sexes. And with the right to open a window, office employees no longer have to carry sweaters or space heaters to work in the summer. After a long absence, ceiling fans, window fans and desk fans (and, for that matter, paperweights) take back the American office.

Best of all, Washington’s biggest business — government — is transformed. In 1978, 50 years after air conditioning was installed in Congress, New York Times columnist Russell Baker noted that, pre-A.C., Congress was forced to adjourn to avoid Washington’s torturous summers, and “the nation enjoyed a respite from the promulgation of more laws, the depredations of lobbyists, the hatching of new schemes for Federal expansion and, of course, the cost of maintaining a government running at full blast.”

Derek Thompson at The Atlantic:

… but a productive workday and a good night’s sleep is way too important for me to long for the halcyon, hot days of yesteryear.

Kathy Kattenburg at Moderate Voice:

Full disclosure: I worship air conditioning. Although I didn’t grow up with it, it would be very difficult for me to live without it now. And that is one part (among many others) of why Cox’s argument, in my view, is so foolish.

First, let me be clear about what I am NOT saying, or suggesting. I am not saying, or suggesting, that global warming is not a problem. It’s a problem. In fact, it’s an existential problem — more so even than global terrorism, because worldwide climate change contributes to conditions that exacerbate terrorism. By contrast, terrorism does not contribute to conditions that exacerbate global warming.

I am also not saying, or suggesting, that Cox is wrong to indict air conditioning’s electricity-hogging, fluorocarbon-producing nature as a prime contributor to global warming. Anything that uses massive amounts of electricity and/or puts more carbon into the atmosphere has to be taken seriously as one ingredient in global climate change. However, that does not mean that the industrialized world can simply give up air conditioning, or cut back on its use to the extent that would be needed to make a significant difference.

Reality sometimes does bite, and the reality is that even though most people over the age of 50 did not grow up with air conditioning, and yet somehow survived despite that; and even though before the use of air conditioning became widespread and common in everyday life, people found ways to stay cool (or cooler) that actually and demonstrably were effective, over the past 40 years, at least, Americans have gotten used to NOT having to suffer in the heat, and you can’t just wish that away. Also, and perhaps even more pointed as a counterargument, air conditioning has fueled (literally, I suppose) an entire way of life, in every possible sense — economically and socially and in many other ways. The widespread use of air conditioning, and the growing affordability of residential air conditioning and its use in offices and other workplaces, made possible such socioeconomic phenomena as “the Sunbelt” — a term that connotes a vast region of the United States that attracts jobs, industry, tourism, and retirees. I don’t have confirming statistics at my fingertips, but I’m nevertheless reasonably confident, that air conditioning has saved lives and helped to increase longevity in general. The U.S. economy as it exists today would not be possible without air conditioning.

Now, when I say this, I do NOT intend to imply that changes in the way the U.S. economy operates are not needed — I mean, God and TMV’s readers know that! I am not saying it might not be a good idea to reduce our dependence on air conditioning, or that Cox’s substantive arguments do not have merit.

The salient, central point, for me, is that it’s simply not realistic to expect that the kind of massive shifts in demographics, in lifestyles, in economic patterns, that have occurred as the result in large part of air conditioning could just be reversed, because Stan Cox says that we’ve gotten too used to air conditioning. It took half a human lifetime for these shifts to develop — they did not do so overnight. If we as a people want to change that, it cannot be done by fiat, and it certainly cannot be done by exhortatory op-ed pieces.

Iain Murray at The Corner:

Many of the so-called solutions the green movement proposes consist of turning back the clock and relying on technology we left behind decades, even centuries ago: They want us to use windmills and railroads, use more land for crops (and thereby less for forests), and burn plants to make energy. Now, there has come along a fellow who thinks air conditioning is a bane rather than a boon and hankers for the offices of the 1940s

[…]

I suggest Congress and government agencies lead by example and adopt this rule of no air conditioning immediately. In fact, I’m sure it must be somewhere in Speaker Pelosi’s Greening the Capitol initiative. Questions should be asked on the floor as to why they’re running the AC this week.

Conn Carroll at Heritage:

Doesn’t the AC-free enviro-dream world sound wonderful? Daily summertime siestas, shorter business hours, even some days completely off! But as with all enviro-leftist schemes, the heavy costs of their low energy utopian dream are being ignored. Slower workdays means less productivity. Shorter hours and closed offices mean lost profits for employers.

This is just the latest way the left wants to control our lives under the banner of global warming. They also want to control what we eat, how we travel, and where we live. Even how we go to the bathroom.

Ann Althouse:

AND: Here are some more things I want to see from you to prove that you really believe in global warming.

1. Your weight should be at the low end of normal, indicating that you are not overconsuming the products of agriculture.

2. You should not engage in vigorous physical exercise, as this will increase your caloric requirements. You may do simple weight-lifting or calisthenics to keep in shape. Check how many calories per hour are burned and choose a form of exercise that burns as few calories as possible.

3. Free time should be spent sitting or lying still without using electricity. Don’t run the television or music playing device. Reading, done by sunlight is the best way to pass free time. After dark, why not have a pleasant conversation with friends or family? Word games or board games should replace sports or video games.

4. Get up at sunrise. Don’t waste the natural light. Try never to turn on the electric lights in your house or workplace. Put compact fluorescent bulbs in all your light fixtures. The glow is so ugly that it will reduce the temptation to turn them on.

5. Restrict your use of transportation. Do not assume that walking or biking is less productive of carbon emissions than using a highly efficient small car. Do not go anywhere you don’t have to go. When there is no food in the house to make dinner, instead of hopping in the car to go to the grocery store or a restaurant, take it as a cue to fast. As noted above, your weight should be at the low end of normal, and opportunities to reach or stay there should be greeted with a happy spirit.

6. If you have free time, such as a vacation from work, spend it in your home town. Read library books, redo old jigsaw puzzles, meditate, tell stories to your children — the list of activities is endless. Just thinking up more items to put on that list is an activity that could be on the list. Really embrace this new way of life. A deep satisfaction and mental peace can be achieved knowing that you are saving the earth.

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Filed under Environment

You Can’t Reinvent The Wheel, But You Can Reinvent The Scribe, Part II

Lee Bollinger at WSJ:

The idea of public funding for the press stirs deep unease in American culture. To many it seems inconsistent with our strong commitment, embodied in the First Amendment, to having a free press capable of speaking truth to power and to all of us. This press is a kind of public trust, a fourth branch of government. Can it be trusted when the state helps pay for it?

American journalism is not just the product of the free market, but of a hybrid system of private enterprise and public support. By the middle of the last century, daily newspapers were becoming natural monopolies in cities and communities across the country. Publishers and editors drew on the revenue to develop highly specialized expertise that enhanced coverage of economics, law, architecture, medicine, science and technology, foreign affairs and many other fields.

Meanwhile, the broadcast news industry was deliberately designed to have private owners operating within an elaborate system of public regulation, including requirements that stations cover public issues and expand the range of voices that could be heard. The Supreme Court unanimously upheld this system in the 1969 Red Lion decision as constitutional, even though it would have been entirely possible to limit government involvement simply to auctioning off the airwaves and letting the market dictate the news. In the 1960s, our network of public broadcasting was launched with direct public grants and a mission to produce high quality journalism free of government propaganda or censorship.

The institutions of the press we have inherited are the result of a mixed system of public and private cooperation. Trusting the market alone to provide all the news coverage we need would mean venturing into the unknown—a risky proposition with a vital public institution hanging in the balance.

Ironically, we already depend to some extent on publicly funded foreign news media for much of our international news—especially through broadcasts of the BBC and BBC World Service on PBS and NPR. Such news comes to us courtesy of British citizens who pay a TV license fee to support the BBC and taxes to support the World Service. The reliable public funding structure, as well as a set of professional norms that protect editorial freedom, has yielded a highly respected and globally powerful journalistic institution.

There are examples of other institutions in the U.S. where state support does not translate into official control. The most compelling are our public universities and our federal programs for dispensing billions of dollars annually for research. Those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.

Yet—through a carefully designed system with peer review of grant-making, a strong culture of independence, and the protections afforded by the First Amendment—there have been strikingly few instances of government abuse. Indeed, the most problematic funding issues in academic research come from alliances with the corporate sector. This reinforces the point that all media systems, whether advertiser-based or governmental, come with potential editorial risks.

To take a very current example, we trust our great newspapers to collect millions of dollars in advertising from BP while reporting without fear or favor on the company’s environmental record only because of a professional culture that insulates revenue from news judgment.

Derek Thompson at The Atlantic:

Is it time for another bailout? Should the government save the news? Lee Bollinger argues yes, for at least two reasons.

First, we depend on publicly funded news, already. The BBC, PBS and NPR all receive federal funding. The artery from federal coffers isn’t always large or direct — NPR applies for competitive grants and gets about 2 percent of its funding from the federally supported organizations like the Corporation for Public Broadcasting and the National Endowment for the Arts — but it’s undeniably public funding. And yet, the BBC, PBS and NPR are consistently among the most trusted sources of news.

Second, as Bollinger points out, there are other publicly funded institutions we commonly accept as independent from federal control. “The most compelling are our public universities and our federal programs for dispensing billions of dollars annually for research,” he write. “Those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.”

Bollinger’s broader point — serious news struggles to pay for itself — isn’t special to the recession. Newspapers rarely made bank on the kind of undercover investigative stories about City Hall, or Kabul. The money came from somewhere else. Somewhere else used to mean classifieds and lucrative leisure sections. But as James Fallows wrote in his cover story on Google and the news, “the Internet has been one giant system for stripping away such cross-subsidies.”

So there are a few ways to recoup the missing subsidy. For some companies, that will mean seeking rich benefactors (obvious example: Carlos Slim). For others, it will mean relying on foundations. For others, it might mean relying — partially, even indirectly — on government-funding. All of these additional sources of income theoretically compromise news-gathering, because the news is beholden to outside sources who might themselves become newsworthy. But some combination of outside support will probably become increasingly necessary as journalism continues to undergo wrenching change and unspectacular revenue growth. It doesn’t have to be a terrifying future. In fact, we’ve been living with it for decades.

Mark Tapscott at The Washington Examiner:

Bollinger thus makes common cause with the intentionally misnamed Free Press coalition led by the neo-Marxist McChesney, an Illinois university professor of communications who, presumably with a straight face, claims “aggressive, unqualified political dissent is alive and well” in the thug state formerly known as Venezuela.

Several of the Free Press coalition’s flawed assumptions are prominent in Bollinger’s argument, including the notion that America never had a pure free market in news. We can’t do that because “trusting the market alone to provide all the news coverage we need would mean venturing into the unknown – a risky proposition with a vital public institution hanging in the balance.”

Never mind that the Internet with no federal subsidies to preferred media outlets today provides more independent news gatherers and analyzers – they’re called “bloggers” – than ever worked in all the newsrooms combined in the old media’s glory days.

Or that the Internet is driving news delivery technology in new directions at warp speed, thus promising more independent checks on politicians and bureaucrats than Publius could ever have dreamed.

In place of this present and future reality, Bollinger wants to preserve and extend the “hybrid system of private enterprise and public support” he claims has always existed in America. So subsidized postal delivery of publications in Ben Franklin’s day is no different from federal bureaucrats collecting billions of tax dollars to hand out to favored media organizations, as advocated now by Free Press?

Not to worry, though, because we have the comforting example of heavily subsidized colleges and universities where, according to Bollinger, “those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.”

Somehow I doubt Bollinger would understand that those of us fighting to preserve freedom of the press are anything but comforted by his example, publicly assisted schools being among the least free-thinking institutions in America, owing to their pervasive speech codes and other forms of censorship.

See, for example, this New York Sun story in 2007 on how Columbia, just one week after proclaiming itself a bastion of free speech for hosting a speech by Iran’s Mahmoud Ahmadinejad, insisted on exercising pre-publication censorship reviews of documentary filming shot on its grounds.

But then maybe we shouldn’t be surprised that Columbia University’s president sees no difference between a government-subsidized university system that perpetuates a suffocating academic orthodoxy and government-subsidized news media like that praised by an apologist for Hugo Chavez’s suppression of the Venezuelan media.

After all, his final argument is a warning that other countries are doing it, countries like still-communist China, with its state-run Xinhua News and Central China Television. Clearly, independent journalism is doomed if it must depend for its defense upon “friends” like Bollinger.

Roger Pilon at Cato:

The argument, in essence, is this. The communications revolution has decimated media budgets. Indeed, “the proliferation of communications outlets has fractured the base of advertising and readers,” leading to shrunken newsrooms, especially in foreign bureaus. Thus the FCC and FTC are now studying the idea of enhanced public funding for journalism. Not to worry, Bollinger assures us, since “we already have a hybrid system of private enterprise and public support” – to wit, public regulation of the broadcast news industry and the Corporation for Public Broadcasting. And the most compelling example of state support not translating into official control, he continues, can be found in our public and private research universities, which receive billions of government dollars annually with no apparent problem.

Really? Try getting your hands on some of those funds, or an appointment in one of those departments, if you have reservations about global warming. Or do we need any better example than the case of Elena Kagan, now before us. When the good dean took her principled stand against admitting military recruiters to the Harvard Law School, the larger university community reminded her of the government funds that were thus put in jeopardy, and she adjusted her position accordingly.

But here comes the kicker: Like those who imagine that there’d be no art without the National Endowment for the Arts, Bollinger tells us that “trusting the market alone to provide all the news coverage we need would mean venturing into the unknown—a risky proposition with a vital public institution hanging in the balance.” Was there no news before the invention of NPR, all things considered? And back on the academic analogy, he adds, “Indeed, the most problematic funding issues in academic research come from alliances with the corporate sector. This reinforces the point that all media systems, whether advertiser-based or governmental, come with potential editorial risks.” True, but government is categorically different than private businesses, of which there is no shortage. Yet those who fail to notice that difference, or discount it, are forever drawn to government because it is, as we say, so easy to get in bed with.

Stephen Spruiell at The Corner:

Bollinger anticipates that the public’s chief concern with his plan will be that a press that gets its paychecks from the government cannot effectively perform its function as democracy’s watchdog. That is not my concern. My concern is that journalists on the public payroll will become even more fervently dedicated to the idea of higher taxes and more spending. If you thought the press had a big-government bias before, wait until it is officially run by quasi-government employees.

Bollinger’s example of how a government-funded enterprise can carry on without its ties to the government compromising its mission is academia. I’d say that illustrates my concern perfectly. I do not think it is any coincidence that the academy has drifted further leftward as its reliance on public funding has grown.

Bollinger’s conception of “watchdog” is too narrow: I am sure the press would continue to try to expose corruption on the part of public officials, as it does now. But I am also sure that many journalists would, consciously or subconsciously, fall victim to the already common tendency to look a little more carefully for corruption on the part of those public officials who oppose missions for thegovernment that fall beyond the protection of basic liberties and the defense of the nation’s strategic interests — missions such as, say, subsidizing newspaper writers and TV reporters.

Jennifer Rubin at Commentary:

What if viewers and readers, um, don’t think they need what Big Government News is serving up? And how do we know what we “need”? Ah, Bollinger and his fellow Ivy Leaguers will tell us. Such is the state of liberal thinking and the mind of an Ivy League president. Yeah, I’m thinking the same thing: people spend money to send their kids to these places?

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Filed under Mainstream

How Low Will He Go? How Low Will He Go?

Dan Balz and Jon Cohen at WaPo:

Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy.

Regard for Obama is still higher than it is for members of Congress, but the gap has narrowed. About seven in 10 registered voters say they lack confidence in Democratic lawmakers and a similar proportion say so of Republican lawmakers.

Overall, more than a third of voters polled — 36 percent — say they have no confidence or only some confidence in the president, congressional Democrats and congressional Republicans. Among independents, this disillusionment is higher still. About two-thirds of all voters say they are dissatisfied with or angry about the way the federal government is working.

CBS News:

Economists have declared the economic recession over largely over, but most Americans don’t share their optimism, and they are increasingly blaming President Obama for their money woes.

Mr. Obama’s approval rating on the economy has tumbled five percentage points from last month, according to a new CBS News poll, with just 40 percent of those polled expressing full confidence in his actions.

More than half of those questioned (54 percent) said they disapproved of Mr. Obama’s handling of the economy. Last month, 45 percent approved. The drop in approval has been seen mostly among independents, just 35 percent of whom now say they approve.

Jennifer Rubin at Commentary:

In short, Obama has lost the confidence of the voters on the issues that matter most. (”Just 43 percent of all Americans now say they approve of the job Obama is doing on the economy, while 54 percent disapprove.”) They will take it out on those with a “D” next to their names in November.

DiA at The Economist:

Things look bad for the Democrats, but I’m not sure I agree with Jennifer Rubin’s oversimplified assessment that the poll “has nothing but bad, very bad, news for Obama.” Buried deep in the Post‘s report is the surprising news that Mr Obama’s overall job-approval rating stands at 50%. Granted, “those who strongly disapprove now significantly outnumber those who strongly approve”, according to the paper. But with the unemployment rate at 9.5%, I’d expect much worse. Mr Obama’s rating puts him in a similar position to Bill Clinton in 1994, and ahead of where Ronald Reagan was in 1982, when he too struggled with a severe recession. Mr Clinton’s Democrats lost both the House and the Senate, and Mr Reagan’s Republicans lost a bunch of seats in the House, but both went on to easily win re-election two years later. So, bad news for the president’s party, but not all bad for the president himself. The worse news for Mr Obama is that voters seem to be prioritising deficit reduction over further stimulus spending, which will make it hard for the president to do anything about that sticky unemployment rate.

John McCormack at The Weekly Standard:

One bright spot for President Obama in an otherwise dreary Washington Post/ABC News poll:

On the issues tested in the poll, Obama’s worst ratings come on his handling of the federal budget deficit, where 56 percent disapprove and 40 percent approve. He scores somewhat better on health-care reform (45 percent approve) and regulation of the financial industry (44 percent). His best marks come on his duties as commander in chief, with 55 percent approving.

Voters also disapproved of Obama’s job performance on the one other issue tested by the Post: 54 percent disapprove and 43 percent approve of how he’s handling the economy.

So Obama’s head was above water on just one of the five issues tested by the Post: his performance as commander in chief. Yet his overall approval rating is at 50 percent, which suggests that perhaps the president’s determination to prosecute the war in Afghanistan is propping up his overall job performance rating.

Jonathan Chait at TNR:

At the same time, the poll also shows that the public clearly favors the Democrats over the Republicans. The Post story about the poll leads with the fact that only 43% of the public has confidence in President Obama to make the right decisions for the country’s future. That’s low. But only 26% have confidence in Republicans in Congress to make the right decisions, which is far lower than Obama, and even lower than Congressional Democrats, in whom 32% have confidence. That’s not an anomaly. Asked which party will do a better job of handling the economy, 42% say the Democrats and 34% say the GOP.

So, in sum, there’s a crucial swing vote bloc that prefers the policies of the Democrats over the Republicans but plans to vote for the Republicans anyway.

Why would anybody do that? Delving into the psychology of voters is tricky. But clearly, it vindicates the sense that voters hold the governing party responsible for the state of the country, which mainly means the state of the economy. Voters in the middle are not going to compare the policies of the two parties. They’re just going to vote yay or nay on how things appear to be going. That makes more sense when you consider things from the perspective of voters who don’t follow politics very closely.

Tom Maguire:

A new WaPo/ABC News poll shows Obama is still taking on water as he continues his Titantic fail.  Two bright spots for Dems – although Dems are moving down, Republicans are not really moving up.  And the poll didn’t ask about immigration, thereby sparing Obama more mortification:

Confidence in Obama reaches new low, Washington Post-ABC News poll finds

By Dan Balz and Jon Cohen
Washington Post Staff Writer
Tuesday, July 13, 2010; A01

Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy.

As a aside, I am sort of missing the fawning coverage of Obama’s oh-so-sweet date night in Manhattan with Michelle.  I wonder if we will be seeing any more date nights like that before the election

Derek Thompson at The Atlantic:

Finally, this analysis requires a big asterisk. Democrats are almost certainly doomed to fall by the dozens in the House this November. It’s not the candidates, it’s the conditions: plus-nine percent unemployment; slow business investment; continuing weakness in the housing sector. (As the graphs below demonstrate, income growth is a particularly accurate indicator of losses.)

History will debate and determine whether the Obama/Bernanke regime wisely handled the recession. In the nearer term, the voters will make that judgment themselves, and there isn’t much evidence from July 2010 to suggest that the recovery, or the Democrats’ fortunes, are ready to pick up any time soon.

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You Feel Hot And Itchy, Cut Taxes… Your Foot Run Over By A Lawnmower, Cut Taxes… Your Daughter’s Marrying Pol Pot, Cut Taxes

Sam Stein at Huffington Post:

Top Senate Republican Jon Kyl (R-Ariz.) insisted on Sunday that Congress should extend the Bush tax cuts for the wealthiest Americans regardless of their impact on the deficit, even as he and other Republicans are blocking unemployment insurance extensions over deficit concerns.

“[Y]ou should never raise taxes in order to cut taxes,” said the Arizona Senator during an appearance on Fox News Sunday. “Surely Congress has the authority, and it would be right to — if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that’s what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.”

Ezra Klein:

What’s remarkable about Kyl’s position here is that it appears to be philosophical. “You should never have to offset cost of a deliberate decision to reduce tax rates on Americans,” he said. Never! This is much crazier than anything you hear from Democrats. Imagine if some Democrat — and a member of the Senate Democratic leadership, no less — said that as a matter of principle, spending should never be offset. He’d be laughed out of the room.

Back in the real world, tax cuts and spending increases have the exact same affect on the budget deficit. This sort of comment is how you tell people who care about the deficit apart from people who are interested in exploiting fears of the deficit to shrink the size of government. It’s also the sort of comment that makes clear that the deficit commission’s work is doomed, even if they do go with three-quarters spending cuts. Democrats won’t accept an unbalanced product and Republicans won’t accept a balanced product.

Daniel Foster at The Corner, responding to Klein:

First of all, I’m not sure where the “gotcha” moment is. The most natura way to interpret Kyl’s statement is that a tax cut paid for by a tax increase is no tax cut at all. It’s a tax redistribution. Second of all, I’m sure if you asked Senator Kyl, he’d tell you thattax cuts should be offset — by spending cuts. That also seems a fairly natural inference to draw here.

On the point I’ve bolded, that Kyl’s position is “philosophical.” You’re damned right it is. So is Klein’s.

Klein says, “Back in the real world, tax cuts and spending increases have the exact same affect on the budget deficit.” Of course, and to a big-government technocrat, they have the same moral status.

Not so for conservatives. To put it plainly, conservatives tend to think you need a better reason to raise taxes, to grow government, and to infringe liberty than you do to cut taxes, shrink government, and increase liberty. Klein may think disagree with that, but it is not an incoherent position — or for that matter, a position without a rich and noble tradition.

UPDATE: Actually, these comments suggest Kyl is openly advocating some “starve the beast” unfunded tax cuts. The point about the contradictory nature of a tax cut “offset” by tax increases elsewhere holds. And I still bet Kyl’s preferred route would be to offsettax cuts with spending cuts. But it seems, failing that, he’s okay adding to the deficit. Maybe Senator Kyl should read some Kevin Williamson.

Steve Benen:

To my mind, Kyl’s remarks were every bit as ridiculous as House Minority Leader John Boehner (R-Ohio) comparing the financial crisis to “an ant,” or Rep. Joe Barton (R-Texas) apologizing to BP. Kyl’s entire defense was sheer nonsense.

Bush’s tax cuts, which failed miserably in their stated goal of producing robust economic growth, also failed to keep the balanced budget Clinton left gift-wrapped on Bush’s desk. Kyl insists we should keep the failed policy in place, which in and of itself is a reminder of how truly bizarre the Republican approach to the economy really is.

But for all the talk about how desperate Republicans are to lower the deficit, when asked how the GOP would pay for $678 billion in tax cuts, Kyl said what he actually believed: he wouldn’t pay for them at all. Spending requires budget offsets, tax cuts don’t. Indeed, in Kyl’s confused mind, one should “never” even try to pay for tax cuts.

It’s quite a message to Americans: Republicans believe $30 billion for unemployment benefits don’t even deserve a vote because the money would be added to the deficit, but Republicans also believe that adding the cost of $678 billion in tax cuts for the wealthy to the deficit is just fine.

The lesson couldn’t be any more obvious: the GOP’s economic agenda is a pathetic charade. Kyl and his cohorts failed with Bush’s tax cuts, failed to prevent massive deficits, and failed when given a chance to set things right. That one of the Senate’s most powerful Republicans wants to go right back to the policies that didn’t work, and put the tab on future generations, is, as Jay Bookman put it, “both very telling and very worrisome.”

David Dayen at Firedoglake:

The ultimate example of this deficit fraudulence comes with the cuts to the military budget that the Pentagon and the political establishment have talked a good game about of late. Conservatives nod their head, rhetorically, but in the end, they work as hard as possible to maintain outdated weapons systems.

The White House has jumped on Kyl’s comments about tax cuts never needing to be paid for, at least. But you could spend the rest of your life pointing out this misinformation and never catch up to it all.

Derek Thompson at The Atlantic:

The statement “You should never raise taxes in order to cut taxes,” is masterful in its internal logic. Raising taxes to cut taxes … how paradoxical, and absurd!

But tax cuts don’t pay for themselves. Renewing the entire 2001/03 tax cut will add more than $3 trillion to our debt/ Obama’s plan would shave off about $700 billion. So if you’re a true deficit hawk suggesting alternatives, you’ve got a few choices. You can start looking for $700 billion in offsets from spending cuts, tax increases, or tax expenditure cuts. Or you can implicitly acknowledge that you were never really serious about that deficit thing anyway. But Republicans’ intellectual slavishness to tax cuts as the Alpha and Omega of public policy is just exhausting and sad at this point.

Doug Mataconis:

Leaving aside Gibbs’ rich v. poor rhetoric, the real mistake here is the same one that Republicans made during the Bush years when they cut taxes without cutting spending and, in the process, added to the budget two wars and a trillion dollar Medicare prescription drug benefit program.  The consequences were inevitable; in the course of eight years, Bush and the GOP added to the national debt the same amount that had accumulated during the previous 212 years of the Republic. Now, we’re caught in a debt cycle that will have unforesable consequences in the future.

I happen to agree with Kyl that the Bush tax cuts should be extended. Raising taxes in the middle of an anemic economic recovery that seems as if it could turn into another recession at any money strikes me as a monumentally stupid idea. At the same time, though, it seems to me that Republicans would sound much more credible on issues like this if they came out and identified spending cuts that could be made to offset the tax revenue that would be lost. Otherwise, they’re just making the same mistakes all over again.

UPDATE: Paul Krugman

More Benen

Brad DeLong

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This Young Man In The New York Times Article Needs But One Word… Plastics

Chart via Catherine Rampell at NYT

Louis Uchitelle at NYT:

For young adults, the prospects in the workplace, even for the college-educated, have rarely been so bleak. Apart from the 14 percent who are unemployed and seeking work, as Scott Nicholson is, 23 percent are not even seeking a job, according to data from the Bureau of Labor Statistics. The total, 37 percent, is the highest in more than three decades and a rate reminiscent of the 1930s.

The college-educated among these young adults are better off. But nearly 17 percent are either unemployed or not seeking work, a record level (although some are in graduate school). The unemployment rate for college-educated young adults, 5.5 percent, is nearly double what it was on the eve of the Great Recession, in 2007, and the highest level — by almost two percentage points — since the bureau started to keep records in 1994 for those with at least four years of college.

Yet surveys show that the majority of the nation’s millennials remain confident, as Scott Nicholson is, that they will have satisfactory careers. They have a lot going for them.

“They are better educated than previous generations and they were raised by baby boomers who lavished a lot of attention on their children,” said Andrew Kohut, the Pew Research Center’s director. That helps to explain their persistent optimism, even as they struggle to succeed.

Abe Greenwald at Commentary:

The New York Times is running a story about the “millennial” generation in America and its inability to find employment. The article is supposed to convey the challenges for young Americans due to bad economic times but will probably exacerbate the hopelessness of older Americans, who won’t recognize this strange, new definition of ambition:

Mr. Nicholson, 24, a graduate of Colgate University, winner of a dean’s award for academic excellence, spent his mornings searching corporate Web sites for suitable job openings. When he found one, he mailed off a résumé and cover letter — four or five a week, week after week.

Over the last five months, only one job materialized. After several interviews, the Hanover Insurance Group in nearby Worcester offered to hire him as an associate claims adjuster, at $40,000 a year. But even before the formal offer, Mr. Nicholson had decided not to take the job.

Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.

“The conversation I’m going to have with my parents now that I’ve turned down this job is more of a concern to me than turning down the job,” he said.

A 24-year-old man is more fearful of a parental lecture than unemployment. If that doesn’t capture the dreary state of able-bodied America, nothing does. Meanwhile, this same person, living off of mom and dad, is so certain of his worth on the job market, he won’t consider pocketing an expense-free annual $40,000 because it requires dead-end work.

Daniel Indiviglio at The Atlantic:

Wait. You mean he found a job with the national underemployment rate at 16.5%, with no professional work experience, that paid $40,000 per year, and didn’t take it because it wasn’t exactly what he wanted? There must be some confusion here about the American Dream. The idea that every 24-year old lands their dream job straight out of college isn’t the American Dream: it’s a fantasy.

Anyone who grew up throughout the 20th Century could attest that the American dream isn’t about always getting precisely what you want. It’s about taking what life hands you, working extremely hard, and having the ability to live a relatively satisfying life. Millions immigrated to the U.S. over the years seeking an opportunity to succeed, not to be provided precisely the opportunity they wanted.

Look back at those Americans of past generations who lived the American Dream. Did the coal miner who had a brutal job but decent wages that allowed him to provide for his family live the American Dream? How about the worker who drove railroad spikes into the ground under the hot sun all day? What about the factory employee who sat on a monotonous assembly line for hours on end? They all attained the American dream, because they had an opportunity to work, raise a family, earn enough money to live relatively well, and find some joy in life. They may have preferred to be a professional golfer, a famous novelist, or high-powered corporate executive making millions of dollars per year. But not everyone has such luck, but in America they can live relatively fruitful, pleasant lives nonetheless.

Certainly, millennials will have a different job path than their parents and grandparents. It will likely take them longer to gain their footing in the labor market. But that hardly means they’re hopeless, it just means they will have to work a little harder to end up in a job they like and attain a higher income. They won’t be able to walk into any manufacturing jobs and succeed like their predecessors, but they will have opportunities in technology, the service economy, and other U.S. industries that will endure.

The American Dream that so many other nations envy isn’t to live a perfect life. It’s to have the opportunity to succeed if you work hard. You don’t get that in some places, but you do in the U.S. The millenials won’t lose out on that, but they may have to work a little harder to attain it.

Catherine Rampell at NYT:

The chart above, adapted from a recent Bureau of Labor Statistics report, shows the difference in weekly pay between people with a given education level today and their counterparts from a generation ago.

As you can see, most men today earn less than equally educated men in 1979, with the exception of the most highly educated.  The opposite is true for women: Most women today earn more than their equally educated counterparts from 1979, with the exception of the least educated.

There are a few forces behind these trends. One is that generally speaking, it’s harder to make it in today’s job market than it was a few decades ago if you don’t have at least a high school degree, since the expectations for what educational credentials workers should possess have risen. This is in part because the economy is less dependent on lower-skilled, manual-labor-intensive industries like manufacturing, and more reliant on industries that require formally credentialed education and training, like health care. Thus, in general, the earnings potential for the most educated has risen, and that for the least educated has fallen.

Another consideration is that the gap between men’s and women’s pay has narrowed over the years. One effect of this is that women’s wages, at most levels of education, have grown.

Felix Salmon on the chart:

But in fact what we’re seeing here understates how bad things have been for most men over the past generation. If you go to the source, this chart only shows data for people working full time. And, at least when it comes to men, that’s much less common now than it was in 1979.

The labor force participation rate for men 20 years and older was 79.8% in 1979; today, it’s just 74.4%. And I don’t think that most of that drop can be explained in terms of a larger number of students: the rate was as high as 77% as recently as August 2000, and then dropped to a low of 73.9% in December 2009.

You can be sure that most of the drop in labor force participation is coming from the less well educated Americans. Which means that if you’re a man with less than a high school diploma, your real wages have fallen by 28% over the past 30 years if you’re lucky enough to have a job at all. At the same time, the number of such men without a job has been growing steadily. It’s a depressing set of data, and there’s no sign of it turning around in the foreseeable future.

Matthew Yglesias:

What I would also add to that is the observation that college educated men typically marry college educated women, creating very high earning households. Working class people tend to marry each other, and also have much higher rates of divorce, meaning that on the household level the inegalitarian impacts are magnified.

James Joyner:

In 1979, most married women stayed at home with the kids or simply tended house; that almost immediately changed.   And, while being a high-school dropout wasn’t exactly a road to riches even then, there were still entry level jobs that would take you and allow you to work yourself up if you were good enough.  Why, “self-service” was still a necessary descriptors for gas stations that didn’t have attendants to pump it for you.   The personal computer was a novelty item and the Internet as we know it was nearly 15 years into the future.

Good thing that our levels of education have changed to keep up with the trend:

Americans are more educated than ever before, with a greater percentage graduating from high school and college than a decade ago, U.S. Census data released Tuesday show. Eighty percent of Americans are graduates of high school or higher, compared with 75.2% in 1990, the 2000 figures show. That change came about in part because of a decline in the rate of students dropping out before ninth grade: 7.5% in 2000, compared with 10.4% in 1990.

That report, based on the 2000 Census, came out in 2002.  It’s almost surely even more stark now, at least for native-born Americans.

That’s not to say that these trends are sustainable.  We can’t keep increasing our level of meaningful education.   Everyone isn’t college material or capable of doing intellectual work.   But the nature of modernity is that more skills are necessary to do median level jobs.

Derek Thompson at The Atlantic:

The upshot is that even as the cost of college comes under scrutiny, the evidence continues to suggests that four expensive years is the price our generation has to pay if we expect to earn more than our parents.

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