Two leading rating firms have cautioned the U.S. on its credit rating, expressing concern over a deteriorating fiscal situation that they say needs correction.
The warnings issued Thursday echoed prior statements by the companies, however, and financial markets largely ignored them. Treasury yields, which move in the opposite direction as prices, were lower in late-morning trade and the cost of insuring U.S. debt against the risk of default, already below that of Germany, the euro-zone benchmark, barely budged.
“My traders are shrugging it off as stuff we’ve heard before,” said Tom Di Galoma, head of interest-rate trading at Guggenheim Partners in New York.
Moody’s Investors Service said in a report that the U.S. will need to reverse an upward trajectory in the debt ratios to support its triple-A rating.
“We have become increasingly clear about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the U.S., the likelihood of a negative outlook over the next two years will increase,” said Sarah Carlson, senior analyst at Moody’
I am pretty sure these folks will lower the U.S. debt rating the day after bond and currency markets go nuts in, as the econ guys say, “a non-linear event.” That’s right, a Black Swan, baby. Instead of a gradual repricing of U.S. debt, there’s a sudden and seemingly unpredictable break. Of course, a lack of action by Washington makes such a happening completely predictable. One interesting bit is the remark by Sirou on the jobless nature of the recovery. Not only is high unemployment costly, but it is a sign of a lack of vigor in the economy. Slow growth will only make it that much harder to escape the debt trap.
This makes the imperative to seriously cut spending all the more urgent. We cannot run deficits that amount to a third of our budget any longer, and we can’t afford to tax our way up to the spending level at which we currently operate. We have to start cutting large amounts from pretty much all phases of federal government, and especially need structural reforms in entitlements to genuinely reduce spending rather than just slow the rate of increases. And that has to happen now.
Even a drop from AAA to AA would mean hundreds of billions of dollars a year in additional interest expenses, which is one budget expense that we cannot cut.
As of Tuesday, the National Debt is $14,019,559,567,587.86. We are long past the time when we should have been dealing with this.
The Senate on Tuesday morning defeated a proposal from Sen. Tom Coburn (R-Okla.) to ban congressional earmarks.
In a 39-56 vote, members defeated a temporary ban on the appropriations procedure. The moratorium was offered as an amendment to a food-safety bill that is scheduled for a final vote Tuesday morning.
Senate Republicans have already passed a voluntary ban on earmarks in their caucus, but several GOP senators have objected to it. Democrats have so far declined to ban earmarks from their members.
Tuesday’s vote 56-39 vote on the moratorium contrasts with one last March in the Senate defeating a similar ban by a larger margin: 68-29.
Since November’s elections, the Senate Republican Conference has embraced a two-year moratorium beginning in the next Congress. Tuesday’s amendment, offered by Tom Coburn of Oklahoma, ups the ante by including this budget year and is very much in line with the thinking of incoming House Speaker John Boehner. (See: GOP backs earmarks ban in vote)
Coburn had hoped to get to 40 and was hurt by the defections of eight Republicans, many prominent in the Appropriations Committee. But the House GOP leadership has been unyielding thus far, and with the Democratic defections, hopes to put pressure on Majority Leader Harry Reid (D-Nev.) to accept a temporary ban.
In a recent private meeting, Boehner warned Reid, a long time veteran of the Appropriations process, that he would not accept any earmarks in the 2011 spending bills, according to several sources familiar with that discussion.
Seven Democrats backed the proposal: Sens. Evan Bayh (Ind.), Michael Bennett (Colo.), Russ Feingold (Wis.), Claire McCaskill (Mo.), Bill Nelson (Fla.), Mark Udall (Colo.), and Mark Warner (Va.). All are either freshman members, retiring/defeated members, or up for reelection in 2012.
Eight Republicans, primarily members of the Appropriations Committee, went on the record against the ban: Sens. Bob Bennett (Utah), Thad Cochran (Miss.), Susan Collins (Maine), James Inhofe (Okla.), Lisa Murkowski (Alaska), Richard Lugar (Ind.), Richard Shelby (Ala.), George Voinovich (Ohio).
As Cochran and other have made clear, everyone on that list — apart from Bennett (defeated in primary) and Voinovich (retiring) — should expect a primary challenge in their next election. Only Lugar is up in 2012, though he has been especially defiant in the face of criticism from the right, earning him a place in the heart of the The New York Times.
Even without a formal ban, pork-lovers are going to have a difficult time keeping the practice alive in the 112th Congress, with House and Senate Republicans voting to do away with earmarks on their own. Expect the GOP to continue its efforts to isolate Harry Reid and Senate Democrats on the issue.
If you can’t trust these feckless Republicans on a little thing like earmarks, you can’t trust them on a big, hard thing like balancing the budget. I hope the Tea Party guys are planning to primary these clowns
Harvard research shows that states that experience an increase in earmark spending suffer from decreases in corporate capital expenditures and employment. Earmarking also robs money from local government transportation priorities to pay for Senator’s vanity projects. And there is a strong correlation between high numbers of earmarks high total spending by Congress.
The earmark ban, like the freeze on pay for federal workers, is largely symbolic, but let’s be honest: symbols matter, and the voters are looking for signs that their lawmakers “get it.” With the few exceptions noted above, it seems that Democratic senators by and large don’t understand what’s afoot in the country. They remain oblivious at their own peril.
I hope congressional Republicans recognize the stakes for this 112th Congress. Even though there is little hope of major policy breakthroughs, they are exceedingly high. It’s not just a matter of setting the 2012 election up nicely. The reputation of the Grand Old Party is on the line here. The Republican party has long been known as the party of fiscal responsibility. You vote for them not because you want to them to save the world — that’s what the liberal Democrats are for — but because they’re the serious fellows who insist on a balanced budget. Yet over the last couple of years the Republican Party in Congress has totally obliterated this image. And now they lose 20 percent of the Senate caucus over what is little more than a symbolic gesture on spending? That does not fill one with confidence.
This morning the full Senate voted down a proposed rule that would have barred earmarks for the next two years. Part of the reason? Earmarks are transparent.
Here’s Senator Dick Durbin (D-Ill.), quoted in a Hill article:
There is full disclosure in my office of every single request for an appropriation. We then ask those who have made the requests to have a full disclaimer of their involvement in the appropriation, so it’s there for the public record. This kind of transparency is virtually unprecedented.
Senator Durbin doesn’t know transparency. Take a look at Senator Durbin’s earmark disclosures. Yes, you can read through them, one by one. But can you make a list of recipients? Can you add up the totals? Can you search for common words in the brief explanations for each earmark? Can you make a map showing where recipients of Senator Durbin’s requests are?
No, no, no, and no.
That’s because Senator Durbin puts his request disclosure out as scanned PDFs. Someone on his staff takes a letter and puts it on a scanner, making a PDF document of the image. Then the staffer posts that image on the senator’s web site. It’s totally useless if you want to use the data for anything. Notably, Senator Durbin doesn’t even include the addresses of his earmark recipients.
There are two schools of thought about the Reagan tax cuts. The conventional conservative view: They spurred investment, entrepreneurship, and real economic growth, helping to resuscitate the post-Carter economy, and, by doing so, they paid for themselves. The conventional liberal view: They were an ill-considered product of starve-the-beast ideology and produced crippling deficits, inaugurating a new era of fiscal irresponsibility only briefly transcended during the golden years of the Clinton presidency.
Here’s a different take: They never happened.
Properly understood, there were no Reagan tax cuts. In 1980 federal spending was $590 billion and in 1989 it was $1.14 trillion; you don’t get Reagan tax cuts without Tip O’Neill spending cuts. Looked at from the proper perspective, we haven’t really had any tax cuts to speak of — we’ve had tax deferrals. Reagan and his congressional allies had an excuse in the considerable person of Speaker O’Neill. But George W. Bush and the concurrent Republican majorities in both houses of Congress didn’t manage to cut spending, either. Part of that was circumstances — 9/11, Afghanistan, Iraq, the subprime meltdown — but part of it was the fact that a poorly applied supply-side analysis has infantilized Republicans when it comes to the budget. They love to cut taxes but cannot bring themselves to cut spending: It’s eat dessert first and leave the spinach on the table.
There is some evidence that this is both bad politics and bad policy. Many conservatives were disheartened by the Republican spending excesses of 2001–06, and abandoned the GOP in the elections of 2006 and 2008. And you may have noticed that our parks and public spaces are from time to time filled with rowdy tea-party demonstrators hollering for Washington to drop anchor post-haste on the USS Appropriations, which is nonetheless steaming on at a nauseating clip. Spending cuts are always popular in theory and detested in practice, but the deficit is now truly terrifying, and, fortunately for Republicans, it is owned by Barack Obama and Nancy Pelosi. Our gross national debt is about 80 percent of GDP today and will be nearly 100 percent by 2012. If the government applied any sort of reasonable accounting standard to its future liabilities — if it were taking the same write-downs on Social Security and Medicare that the Fortune 500 are taking on Obamacare — then our real liabilities would far exceed GDP. It’s ugly, and the numbers suggest that we aren’t going to grow our way out of it: Despite all those pro-growth tax cuts, our deficits continue to grow faster than our economy. That’s been especially true during the Great Recession, but even during periods of strong economic growth, there has been nothing to indicate that our economy is going to grow so fast that it will surmount our deficits and debt without serious spending restraint. This should be a shrieking klaxon of alarm for conservatives still falling for happy talk about pro-growth tax cuts and strategic Laffer Curve optimizing.
Some people are more sensible about that Laffer Curve talk. Laffer, for instance. Arthur Laffer, whose famous (and possibly apocryphal) back-of-the-napkin diagram launched supply-side tax policy, readily concedes that the growth effects of tax cuts are oversold in the political debate. “Does every tax cut pay for itself? No. I think Irving Kristol wrote that, once — and then did a pretty good job of arguing for it. But if some guy running for Congress in Clayton County, Texas, says all tax cuts pay for themselves, what do we want to do? Go after him with a shotgun? Sure, they’re going to cite me, and there’s very little I can do about it. But there’s the same amount of ignorance on the other side, ignoring the economic feedback effects of tax cuts.”
What’s great about Williamson’s article is that he masterfully walks the difficult line of coming out against supply-side economics but not against tax cuts. The argument is the following: Not every tax cut pays for itself. If they don’t and you don’t cut spending, you end up with a bigger deficit. If they do pay for themselves and you don’t cut spending, it’s likely that the increased revenue will be used for even more spending and the government will grow. So, basically, the theory called “starve the beast” doesn’t actually shrink the size of government.
Full disclosure: I used to believe in the starve-the-beast theory. I used to think that every tax cut paid for itself. I don’t anymore. More importantly, I don’t believe that tax cuts without spending cuts will reduce the size of government.
Does it mean I think we shouldn’t cut taxes if we don’t cut spending at the same time? I don’t know; I am conflicted about that. I love the growth that comes from cutting taxes. I want more of it. Yet I know it’s not enough. Debt matters, too, and spending needs to be cut dramatically, because tax cuts do not starve the beast — the government keeps on spending and growing, no matter who is in power. What I really want is a smaller government. (Actually, what I really want is small government.) Tax cuts alone can’t do. The question is, are they making things worse?
But I think we should be careful not to throw the baby out with the bathwater here. Understood as reductions in marginal income tax rates, the Reagan tax cuts did happen. They did save taxpayers more than $2.5 trillion. They did moderate the upward trajectory of taxes as a percentage of the economy.
The first Reagan tax cut lowered marginal income tax rates by 25 percent across the board. The top marginal income tax rate was eventually reduced from 70 percent all the way down to 28 percent. Income taxes were finally indexed to inflation, eliminating bracket creep. The number of tax brackets was reduced from 14 to just two. Millions of low- to moderate-income Americans were dropped from the tax rolls entirely.
Many of those policies have been eroded — the top tax rate is higher today; there are more tax brackets, as the near-flat tax created by the Tax Reform Act of 1986 didn’t last very long — but none of them have been completely repealed. In addition to the political reasons, this is because there were salutary economic effects. There is a strong case to be made that tax cuts played a role alongside tight money in the policy mix that finally whipped stagflation. And while tax increases to cope with the rising deficit began as early as 1982, Reagan was a net tax cutter and these lower rates were compatible with historic revenue growth over the fullness of time.
This doesn’t change any of Williamson’s main points: We are not as far out on the Laffer Curve as we were before Reagan (though if spending isn’t controlled, we will be again); tax cuts are unsustainable without spending cuts; the Republican Party — with the encouragement of too many conservatives — has increasingly embarked upon a path of high-borrowing “don’t-tax-and-spend.” But Reagan’s tax success was a success. It was simply a success endangered by his failures on spending.
This is an extremely important issue for the future of conservative governance. Eventually, the right will be back in power — whether in Congress, the White House, or both. When that day arrives, conservatives will inherit a fiscal situation that will be dire at best, catastrophic at worst. They can respond responsibly, by eschewing the dream of Reaganesque tax cuts and taking the political risks necessary to actually restrain federal spending. Or they can be irresponsible, and tell themselves fairy tales about just growing our way out the current fiscal hole. The choice is theirs, but it’s the obligation of conservative wonks and intellectuals to give them a shove in the right direction — and good for Williamson (and NR) for doing so.
Interestingly, the European Central Bank just released a new study showing that there are substantial Laffer Curve affects and that lower tax rates generate large amounts of revenue feedback. In a few cases (Sweden and Denmark), the researchers even conclude that some lower tax rates would be in that rare category of self-financing tax cuts. But the key point from this ultra-establishment institution is that changes in tax rates do lead to changes in taxable income. This means it is an empirical question to determine the revenue impact. Here’s a key excerpt from the study’s conclusion:
We show that there exist robust steady state Laffer curves for labor taxes as well as capital taxes. …EU-14 countries are much closer to the slippery slopes than the US. More precisely, we find that the US can increase tax revenues by 30% by raising labor taxes but only 6% by raising capital income taxes, while the same numbers for EU-14 are 8% and 1% respectively. …We find that for the US model 32% of a labor tax cut and 51% of a capital tax cut are self-financing in the steady state. In the EU-14 economy 54% of a labor tax cut and 79% of a capital tax cut are self-financing. We therefore conclude that there rarely is a free lunch due to tax cuts. However, a substantial fraction of the lunch will be paid for by the efficiency gains in the economy due to tax cuts.
Contrary to over-enthusiastic Republicans and deliberately-dour Democrats, the Laffer Curve/supply-side economics debate is not a binary choice between self-financing tax cuts and zero-impact tax cuts. Yes, there are examples of each, but the real debate should focus on which types of tax reforms generate the most bang for the buck. In the 1980s, the GOP seems to have the right grasp of this issue, focusing on lowering tax rates and reducing the discriminatory tax bias against saving and investment. This approach generated meaningful results. As Nobel laureate Robert Lucas wrote, “The supply side economists, if that is the right term for those whose research we have been discussing, have delivered the largest genuinely free lunch that I have seen in 25 years of this business, and I believe we would be a better society if we followed their advice.”
But identifying and advocating pro-growth tax reforms, as Williamson notes, is just part of the battle. The real test of fiscal responsibility if controlling the size of government. Republicans miserably failed at this essential task during the Bush year. If they want to do the right thing for the nation, and if they want to avert a Greek-style fiscal collapse, they should devote most of their energies to reducing the burden of government spending.
Obviously there are benefits to cutting taxes when those taxes have reached truly burdensome levels, but unless spending is also curtailed, this is hardly an act of fiscal conservatism. Nor does starve the beast work in a system in which the primary goal of all lawmakers is reelection. Williamson points out that it’s easy to sell tax cuts but nearly impossible to sell reductions in spending. He suggest conservatives “develop a rhetoric in which “spending” and “taxes” are synonyms, so a federal budget with $1 trillion in new spending means $1 trillion in new taxes — levies on Americans today or on our children tomorrow, with interest.”
In the meantime, serious politicians in both parties need to stop passing the buck. At some point we’re going to need to come up with new revenues from higher taxes or new taxes like the VAT. We’re also going to need to cut spending – and not just around the edges. Entitlement spending and defense spending are not only cash cows but sacred cows, and until we have legislators brave enough (or stupid enough) to go after those, we’re going to keep barreling headlong toward fiscal insolvency. Some combination of spending cuts and tax increases is in our future. The question is only a matter of when.
I am made only slightly more optimistic by the fact that this is an article in the National Review, a place not well known for its questioning of GOP orthodoxy.
Obviously, I don’t share the conservative movement’s goals. The trouble with the right’s embrace of magical thinking is that it makes even negotiation over the size of government impossible. In a rational world, Democrats and Republicans should be able to define their desired level of taxes and spending and meet somewhere in the middle. But this negotiation is impossible as long as Republicans continue to be so detached from fiscal reality that they can’t even advance their own interests.
Anti-tax absolutists still have a firm firm grip upon the Republican Party and the conservative movement. They have spent a good thirty years drumming magical thinking on taxes into the skull of every dittohead, Young Republican, Fox News watcher, or admirer of Ronald Reagan or George W. Bush. It will take a long, long time before the party is ready again to enter have a discussion of fiscal policy that merely engages with reality. But Williamson’s article is a pretty remarkable first step.
U.S. military teams and intelligence agencies are deeply involved in secret joint operations with Yemeni troops who in the past six weeks have killed scores of people, among them six of 15 top leaders of a regional al-Qaeda affiliate, according to senior administration officials.
The operations, approved by President Obama and begun six weeks ago, involve several dozen troops from the U.S. military’s clandestine Joint Special Operations Command (JSOC), whose main mission is tracking and killing suspected terrorists. The American advisers do not take part in raids in Yemen, but help plan missions, develop tactics and provide weapons and munitions. Highly sensitive intelligence is being shared with the Yemeni forces, including electronic and video surveillance, as well as three-dimensional terrain maps and detailed analysis of the al-Qaeda network.
As part of the operations, Obama approved a Dec. 24 strike against a compound where a U.S. citizen, Anwar al-Aulaqi, was thought to be meeting with other regional al-Qaeda leaders. Although he was not the focus of the strike and was not killed, he has since been added to a shortlist of U.S. citizens specifically targeted for killing or capture by the JSOC, military officials said. The officials, like others interviewed for this article, spoke on the condition of anonymity because of the sensitivity of the operations.
But buried in Priest’s article is her revelation that American citizens are now being placed on a secret “hit list” of people whom the President has personally authorized to be killed:
After the Sept. 11 attacks, Bush gave the CIA, and later the military, authority to kill U.S. citizens abroad if strong evidence existed that an American was involved in organizing or carrying out terrorist actions against the United States or U.S. interests, military and intelligence officials said. . . .
The Obama administration has adopted the same stance. If a U.S. citizen joins al-Qaeda, “it doesn’t really change anything from the standpoint of whether we can target them,” a senior administration official said. “They are then part of the enemy.”
Both the CIA and the JSOC maintain lists of individuals, called “High Value Targets” and “High Value Individuals,” whom they seek to kill or capture. The JSOC list includes three Americans, including [New Mexico-born Islamic cleric Anwar] Aulaqi, whose name was added late last year. As of several months ago, the CIA list included three U.S. citizens, and an intelligence official said that Aulaqi’s name has now been added.
Indeed, Aulaqi was clearly one of the prime targets of the late-December missile strikes in Yemen, as anonymous officials excitedly announced — falsely, as it turns out — that he was killed in one of those strikes.
Just think about this for a minute. Barack Obama, like George Bush before him, has claimed the authority to order American citizens murdered based solely on the unverified, uncharged, unchecked claim that they are associated with Terrorism and pose “a continuing and imminent threat to U.S. persons and interests.” They’re entitled to no charges, no trial, no ability to contest the accusations. Amazingly, the Bush administration’s policy of merely imprisoning foreign nationals (along with a couple of American citizens) without charges — based solely on the President’s claim that they were Terrorists — produced intense controversy for years. That, one will recall, was a grave assault on the Constitution. Shouldn’t Obama’s policy of ordering American citizens assassinated without any due process or checks of any kind — not imprisoned, but killed — produce at least as much controversy?
Obviously, if U.S. forces are fighting on an actual battlefield, then they (like everyone else) have the right to kill combatants actively fighting against them, including American citizens. That’s just the essence of war. That’s why it’s permissible to kill a combatant engaged on a real battlefield in a war zone but not, say, torture them once they’re captured and helplessly detained. But combat is not what we’re talking about here. The people on this “hit list” are likely to be killed while at home, sleeping in their bed, driving in a car with friends or family, or engaged in a whole array of other activities. More critically still, the Obama administration — like the Bush administration before it — defines the “battlefield” asthe entire world. So the President claims the power to order U.S. citizens killed anywhere in the world, while engaged even in the most benign activities carried out far away from any actual battlefield, based solely on his say-so and with no judicial oversight or other checks. That’s quite a power for an American President to claim for himself.
Drawing the line is difficult, indeed. Most obviously, if said accused terrorist were located within the borders of the United States, it would be clearly illegal to simply assassinate him. (Provoking him into defending himself by kicking in his door late at night, thus necessitating killing him, would of course be permissible.) But that would be true, I should think, of Osama bin Laden himself, much less an American citizen.
On the other hand, we blow up suspected terrorists — or, even Taliban leaders — in commando raids and drone attacks in places like Pakistan without thinking about it. Indeed, according to an official quoted in Priest’s report, “There have been more such strikes in the first year of Obama’s administration than in the last three years under President George W. Bush.” No one seems to be complaining about the president’s authority to do this. (Many question whether it’s a sound strategy, of course, but that’s a different issue entirely.)
Would it make any difference if the accused terrorist had American citizenship? I’m not so sure.
Obviously, this is an awesome power and one that could easily be abused. But it’s not at all clear where the line should be drawn.
This Dana Priest article is interesting for the way it fleshes out the way the US is working in Yemen (primarily), Pakistan, and Somalia. But note this line, which she kind of buries in there.
As part of the operations, Obama approved a Dec. 24 strike against a compound where a U.S. citizen, Anwar al-Aulaqi, was thought to be meeting with other regional al-Qaeda leaders. Although he was not the focus of the strike and was not killed, he has since been added to a shortlist of U.S. citizens specifically targeted for killing or capture by the JSOC, military officials said. [my emphasis]
That is, somewhere there’s a list of Americans who, the President has determined, can be killed with no due process.
[…]
Of course, they said Jose Padilla had close ties to al Qaeda, but those turned out to be more tenuous than originally claimed. Likewise the case against John Walker Lindh. And there are any number of “aspirational” terrorists whom officials have claimed had joined al Qaeda.
But I guess the tenuousness of those ties don’t really matter, when the President can dial up the assassination of an American citizen.
Here are the top 25 newspapers in the country ranked by daily (Monday-Friday) circulation for the six months ending September 2009 from the Audit Bureau of Circulations. The percent change compares the same six-month period ending September 2008.
Go here for more on this list by E&P Senior Editor Jennifer Saba, and here for a list of the top 25 papers on Sunday. For a list of the top 10 gainers this time around, go here.
THE WALL STREET JOURNAL — 2,024,269 — 0.61%
USA TODAY — 1,900,116 — (-17.15%)
THE NEW YORK TIMES — 927,851 — (-7.28%)
LOS ANGELES TIMES — 657,467 — (-11.05%)
THE WASHINGTON POST — 582,844 — (-6.40%)
DAILY NEWS (NEW YORK) — 544,167 — (-13.98%)
NEW YORK POST — 508,042 — (-18.77%)
CHICAGO TRIBUNE — 465,892 — (-9.72%)
HOUSTON CHRONICLE — 384,419 — (-14.24%)
THE PHILADELPHIA INQUIRER — 361,480 — N/A
NEWSDAY — 357,124 — (-5.40%)
THE DENVER POST — 340,949 — N/A
THE ARIZONA REPUBLIC — 316,874 — (-12.30%)
STAR TRIBUNE, MINNEAPOLIS — 304,543 — (-5.53%)
CHICAGO SUN-TIMES — 275,641 — (-11.98%)
The PLAIN DEALER, CLEVELAND — 271,180 — (-11.24%)
DETROIT FREE PRESS (e) — 269,729 — (-9.56%)
THE BOSTON GLOBE — 264,105 — (-18.48%)
THE DALLAS MORNING NEWS — 263,810 — (-22.16%)
THE SEATTLE TIMES — 263,588 — N/A
SAN FRANCISCO CHRONICLE — 251,782 — (-25.82%)
THE OREGONIAN — 249,163 — (-12.06%)
THE STAR-LEDGER, NEWARK — 246,006 — (-22.22%)
SAN DIEGO UNION-TRIBUNE — 242,705 — (-10.05%)
ST. PETERSBURG (FLA.) TIMES — 240,147 — (-10.70%)
The Boston Globe’s circulation is down 18 percent in one year; the San Francisco Chronicle’s is down 26 percent. The WSJ is actually stable. But these slides and the readerships they now represent are hard to ignore. They are not signs of an industry as we have known it in trouble. They are signs of it ending.
I think we’re witnessing the end of the newspaper business, full stop, not the end of the newspaper business as we know it. The economics just aren’t there. At some point, industries enter a death spiral: too few consumers raises their average costs, meaning they eventually have to pass price increases onto their customers. That drives more customers away. Rinse and repeat . . .
For twenty years, newspapers have been trying to slow the process with increasingly desperate cost cutting, but almost all are at the end of that rope; they can’t cut their newsroom or production staff any further and still put out a newspaper. There just aren’t enough customers who are willing to pay for their product what it costs to produce it.
The numbers seem to confirm something I’ve thought for a while: we’re eventually going to end up with a few national papers, a la Britain, rather than local dailies. The Wall Street Journal, the Washington Post, and the New York Times (sorry, conservatives!) are weathering the downturn better than most, and it’s not surprising: business, politics, and national upper-middlebrow culture. But in 25 years, will any of them still be printing their product on the pulped up remains of dead trees? It doesn’t seem all that likely.
That the four grievously biased papers identified in the three previous paragraphs are among the serially worst performers especially supports the notion that while the Internet and technology in general have clearly been factors in the print industry’s decline, bias in its various forms — leftist slants, annoying PC language, and the suppression of stories that don’t fit the conventional “wisdom” template — have also contributed to the accelerating decay in many instances. Simply put, they don’t get it, and they’re paying dearly for it.
It’s over. The advertiser-funded model of daily newspapers is now circling the drain.
Today’s Audit Bureau numbers also disprove one of the theories that newspaper ideologues have floated in recent years: that the larger “regional” papers – like the Timeses of NY and LA and the Post of DC – would emerge to gobble up the readers of other dying dailies in geographic proximity to become healthy regional giants. The data clearly demonstrates that that ain’t happening at all.
When the topic comes up, this final generation of daily newspaper editors and reporters typically takes its hands off its eyes and ears just long enough to blurt out a rant about how “bloggers” can never replace newspapers. But before one can engage them with, say, real facts (those mere props in the US daily newspaper mythology) about other news sources that are growing and thriving today (like this online newspaper you’re reading right now, much more diverse in our models than blogs only), and the different methods we use to investigate and report the news, these Cro-magnons typically go back to the monkey-see monkey-do pose as if in tantrum to express that they’re not listening.
In their increasingly public ruminations about why this is “happening to them” there is zero self-reflection about the biggest factor behind their demise: That they have lost credibility with their former public. Asking “why” just isn’t done in polite company. The big dirty secret that they must deny at all costs is that they did this to themselves by abandoning the interests of the majority of the public in favor of targeting only those readers with expendable cash that advertisers want to reach.
Which is why it is particularly poetic that, for example, the Miami Herald, which had transparently become what I’ve long called “Oligarch’s Daily” in its efforts to pander to the wretched refuse of the oligarch diaspora in Southern Florida, saw its circulation fall over the last year by 23 percent to just 162,260: it now reaches only three percent of its 5.4 million metropolitan area population. Those numbers simply are not sustainable to keep fielding a gaggle of professional simulators like Frances Robles to pretend to be “journalists” in order to disinform the US public about events in Latin America. The pink slip begins its inexorable journey into hers and others’ hands. It truly is only a matter of time.
There are days when this online newspaper exceeds the daily readership of most of those US dailies, and we’re not even close in sheer numbers to those like Markos Moulitsas and Andrew Sullivan who out-gun all of them every single day in circulation.
The number proved unexpected dire for the newspaper business, and – prospectively more frightening – could turn out to be a systemic, rather than simply cyclical, change. With more news readers getting their data from digital sources, chances are high that newspapers simply never recapture the lost audience for their products. And while newspaper, obviously, have made the push into online models, they don’t get to capture any lost revenue on a dollar-for-dollar basis.
Around The Sphere 
Congress, Can You Hear Me? Can You Feel Me Near You?
J. Taylor Rushing at The Hill:
David Rogers at Politico:
Kevin D. Williamson at The Corner:
Conn Carroll at Heritage:
Jennifer Rubin at Commentary:
Jay Cost at The Weekly Standard:
Jim Harper at Cato:
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