Responses to the Boston Marathon Bombing

A friend of mine posted this on Facebook; a criticism of Barney Frank for his response on TV to the Marathon Bombing in which he made the point that a well functioning government is crucial in dealing with tragedies like this.

In this terrible situation, let's be very grateful that we had a well-funded, functioning government. It is very fashionable in America, and has been for some time to criticize government, belittle public employees, talk about their pensions, talk about what people think ... of [their] health care. Here we saw government in two ways perform very well. ... I never was as a member of Congress one of the cheerleaders for less government, lower taxes. No tax cut would have helped us deal with this or will help us recover. This is very expensive.

The responses of conservative commenters were a torrent of nasty put-downs of Frank for politicizing the bombing. But when I clicked over to the video I was struck by the way Frank made his point- he didn't call out specific people, or the Republican party.  He didn't blame anyone for anything- he made what I think is an interesting and important point, that when we talk about how government spending is "out of control" we should think about things like government-funded first responders, who may often be sitting around twiddling thumbs on our dime, but are there when we need them, like on April 15.  Hey, he was nothing like this stuff on twitter.  Or this:

If you’re looking for an example of a politician cloaking his cowardice in principle, look no further than Rep. Steve King (R-IA).
On Tuesday, less than 24 hours after the Boston Marathon bombing that left three dead and more than 150 injured, King gave an interview to National Review Online where he used the attack to justify his opposition to immigration reform.
From the interview:

Representative Steve King of Iowa, a prominent House conservative, says Congress should be cautious about rushing immigration reform, especially after Monday’s bombing in Boston, where three people were killed.
“Some of the speculation that has come out is that yes, it was a foreign national and, speculating here, that it was potentially a person on a student visa,” King says. “If that’s the case, then we need to take a look at the big picture.”
On immigration, King says national security should be the focus now, and any talk about a path to legalization should be put on hold. “We need to be ever vigilant,” he says. “We need to go far deeper into our border crossings. . . .We need to take a look at the visa-waiver program and wonder what we’re doing. If we can’t background check people that are coming from Saudi Arabia, how do we think we are going to background check the 11 to 20 million people that are here from who knows where.”

I guess in a world with the internet and billions of people who feel really strongly about stuff, it will be easy to troll for outrageous comments on every side of an issue related to a terrible event like the Boston bombing.  In the twitter link above the Tea Party blames President Obama for the bombing, pointing out that President Bush kept us safe (I guess 9/11 doesn't count for them).

For the record, I don't think Boston demonstrates much of a lesson that benefits anyone's side in the political wars (if it had been an assault weapons attack, that might have been a different story).

All my condolences to the families of the victims.

Hello Again, Sorry for the Hiatus

Well, I've been a little busy lately, but that doesn't mean I haven't been thinking about the latest political budget disputes.  I mysteriously can't sleep tonight, so here are my thoughts:

Most striking to me lately is the framing of President Obama's latest budget proposal, in which he puts in writing his offer last year to John Boehner, to cut benefits to Social Security and Medicare, in return for tax increases.  It's the "grand bargain" all the centrist pundits are keen on, and in fact it's not anything new- it seems that the administration has been continually frustrated by the mainstream media's framing of the budget issues, blaming both sides for the budget impasse while the administration proposes compromise after compromise and is rebuffed. 

This has been building as centrist pundits like David Brooks kept criticizing Obama for not reaching out to the GOP, while pushing him to propose exactly what he was already proposing.  Of course the real reason that no Grand Bargain is possible is that Republicans are totally unwilling to consider revenue increases under any circumstances, and thus have nothing to offer in any compromise that's better than the status quo to Democrats and liberals.  The right wing press is completely hysterical about the budget deficit, insisting that our out-of-control debt will destroy Ameerica, but they won't endorse raising taxes one nickel in order to combat it- which makes one wonder how serious a problem it really is in their minds.

But there's something else happening that doesn't seem to be getting noticed through all the carping: the budget deficit is actually going down already.  With the tax increases of 2013, the Sequester, the economic recovery, and previous budget cuts forced by Republicans, the deficit is down 47% in four years.  And that's while the US is among the lowest-taxing countries in the first world.

 

 



That's 2010, and this year's tax increases would change things a little, but not much. 

Now a sane Republican party would be bragging about how their tight-fisted spending has brought the deficit down even while taxes remain really low.  They have every right to brag about it!  Spending is certainly much lower because of the influence of the Tea Party.  But it seems like the Republican party is now temperamentally unable to celebrate victory if they have to share it with Obama or Democrats.  In some ways this is the biggest obstacle of all to productive lawmaking in a divided country- if Obama agrees to it, it's by definition a bad deal for them.

The Causes of Economic Crisis

This week's story is Cyprus- another European periphery country in economic crisis, requiring a bailout from the ECB or someone.  Natually this caused my right wingnut email correspondent to fire off a missive about Cyprus's fiscal profligacy and the Doom that awaits the US if we don't solve our deficit problem.



But why did Cyprus's banking industry implode?  Should we blame it on liberal government spending?

No.

OK, I admit it, I knew nothing about Cyprus.  Now I know next-to-nothing about Cyprus.  But I'm reading up online a little.  And the story isn't complicated- it's nearly the same as the Irish story and the Iceland story, with a few twists.  Banking sectors become incredibly large, investing lots of leveraged money poorly (in this case, I guess they invested in Greek government bonds- OOPS!).  In Cyprus, they had lots of money to invest because they were a banking haven where wealthy Russians could go to avoid taxes. (In Ireland and Iceland, the banks attracted investors from Germany and UK especially).  In all three places, the banks were about to go bust, and so the government had to step in, but the numbers were too massive for such small countries to fund the bailouts, so they were screwed.

But where does government incompetence and overspending come in?  Sorry, wingnuts, it doesn't.  Yes, yes, that story plays in Greece, and it plays to a lesser extent in Italy, but not here.  Not in Spain and Ireland, which were running budget surpluses before 2008.

 

When you're a hammer, everything looks like a nail.  For people who have decided that government deficits will be the death of us all, every problem can be explained by deficits if the shoehorn is flexible enough.  But when a country goes in the tank because the banking industry fails, where does the blame actually lie?  With the banking industry!  And with the governments' failure to adequately regulate the industry.  That's the real message.

 

I guess my critics will say I'm just a regulation-guy hammer, so regulation is the answer to everything.  But at least my argument follows a logical progression from problem back to cause.

 

And there's another reason that Cyprus is totally screwed: they don't print their own money, so they can't devalue, they can't increase the money supply, they can't cause inflation to rise.  The European monetary system is controlled by Germany, and is run for the benefit of the German economy and nobody else. 

Macro Economics is Complicated!

Scattergraph- showing the correlation between austerity and
GDP growth- from Krugman's blog

Although my readers who don't share my political philosophy may find this hard to believe, I actually think a lot about how to analyze the economy in a way that's objective and which filters out my confirmation bias.  In one sense this is a futile exercise for anyone who is passionate about politics and has a strong point of view- I'm drawn to arguments that bolster my pre-existing opinions, which is a natural human modus operandi.  But I'm trying.

So one way I try to hold myself intellectually accountable is to make predictions about the future and then see if events bear them out.  I want to try to be ready to change my views if events prove me wrong.

But this game is getting really hard these days, because so much is going on.  We can hang the whole economy on President Obama, and judge "liberal" policies based on how the economy responds to his leadership.  But now we have the Sequester- a clear win for the conservative fiscal hawks.  So I've predicted some economic slowdown because of the Sequester- but from what baseline?  If the economy keeps limping along but not crashing (which is my prediction), do we blame Obama and his liberal policies, or do we blame spending cuts of 2013?  For that matter, do we blame the tax increases that kicked in during January?

 

Now if the economy goes into recession and the bottom really falls out, conservatives will of course blame the president, and liberals will of course blame the austerity policies of the Republicans.  Here I think liberals have a better case- if conservatives are going to crow that they won the latest round of the Budget Wars, which they did, then they really need to own the results.

 

But to be fair, that means that if the economy takes off and has a surprisingly strong period of growth, conservatives get to own that too.  I'll want to crow about Obama's deft handling of things, but that won't really be fair, given that I just said he "lost" the 2013 Budget Battle.

 

So barring some new twist in these wars, I guess I'm saying this: we're testing out austerity budgeting now, in 2013.  Not the severe austerity of the UK or Spain, but relative austerity compared to the policies of 2009-2012.  Keynesian economics says that should mean slowed growth; conservatives say we'll have "expansionary austerity".  Let's see who's right!

You've Gotta Be Kidding Me...

I got this from Kevin Drum today.  A Democratic Senator is mad at the Republicans for continuing to filibuster even after the deal reached early in the year.  Jeff Merkley of Oregon says:

“Senate Republicans have demonstrated that they have absolutely no intention of ending their assault on the ability of the U.S. Senate to function,” Merkley told TPM, saying he had hoped the bipartisan rules change would ease gridlock. “Many of my colleagues are absolutely beside themselves with frustration, and that frustration is rapidly turning to fury.”
 

Now I guess Merkley is one of the Good Guys, who wanted filibuster reform to mean something.  But that any Democratic senator would be surprised that Republicans have continued to filibuster all business, including court nominees, just makes me want to scream.

As I've said before, Republicans are going to immediately change the filibuster rule as soon as they're in control of the Senate.  They're not going to put up with Democrats gumming up their agenda just because it's tradition.  And those oldtimer Democratic senators will howl in fury again; but they'll really have only themselves to blame.  They're just criminally naive.

Obama is a Very Bad Nerd

At President Obama's press conference last week, he said the following:

Now I am outraged that I voted twice for a president who doesn't know the difference between Star Wars and Star Trek.  As everyone knows, the Jedi do a "mind trick"

whereas the "Mind Meld" is done only by Vulcans

I'm just disgusted.

UPDATE: Of course I'm not exactly the first to pick up on this http://www.theatlanticwire.com/entertainment/2013/03/obama-jedi-mind-meld/62672/

The Sequester is Implemented- Small Government Conservatives Rejoice

As predicted, no deal has been reached on the Sequester, and it will now go into effect.  This means that discretionary spending, including the military, will be cut very heavily- there will be furloughs, layoffs, contracts cancelled, and government bureaucracies unable to operate at full capacity.

But one way to look at this is a big win for fiscal conservatives, particularly for those who sneer at Keynesian economics and see the path to prosperity paved only with balanced budgets.  Liberal economists universally note that this will be bad for the economy as a whole in the short term, as it is fundamentally anti-stimulative.

So we have the beginnings of a natural experiment here.  If Freshwater Economists are right, then the recovery should continue apace and even accelerate now that government spending is down so much.  And if Saltwater Economists are right, then this will drag down growth.  Of course there are so many factors in economies, and we'll probably end up somewhere in the middle, but maybe not.  Certainly a big boom in the next year with the Sequester in place would have to make fools of the Keynesians. 

Another point here is who gets the credit/blame for the economy now.  I know the Republicans will continue to try to pin continued slow growth solely on Barack Obama, but fiscally they've just gotten what they want- austerity policies including no tax hikes.  The fact that half those cuts were to the military, which most Republicans don't like, is immaterial in terms of economic growth.  If the US is successfully invaded by a foreign country due to our weakened military, we can blame liberals.  But if unemployment ticks north of its current position in the next year, we need to acknowledge that it's because of conservative fiscal policies.