Economy

Spare the Stimulus, Spoil the Recovery

Flickr/Richard Lemarchand
Flickr/Richard Lemarchand W e are now halfway into our own lost decade. Five years ago this month, the economy started to collapse in the largest downturn since the Great Depression. Though the recession has officially been over since 2009, we’ve had a slow and uneven recovery. Unemployment, which dropped from 8.3 percent in January to 7.7 percent in November, remains far too high. But 2013 could be a turning point for the economy. The housing market, which has held the recovery in check since the crash, started to show signs of life this past year. The Federal Reserve recently stepped up its monetary policy, pledging to continue its efforts to stimulate the economy until unemployment falls to 6.5 percent. No less important, the public rebuked the politics of extreme austerity in November, handing President Obama a second term. Government actors played an important role in keeping the economy going in 2012, and will need to do the same to sustain the recovery into the new year...

Don't Count Boehner Out Just Yet

AP Photo/J. Scott Applewhite
AP Photo/John Duricka Representative John Boehner holds up a copy of the Constitution on Capitol Hill in Washington Thursday, May 7, 1992, as Senator Don Nickles looks on. T he side of John Boehner we understand most is the one that offers a distant sense of comfort—the one who'll pander to the conservative movement during these fiscal-cliff talks but understands a compromise must come through at the end. This is the John Boehner we dub the "dealmaker," the leader who must "stand up” to the Tea Party—and Majority Leader Eric Cantor, the rival who would do him in. His “dealmaker” persona stems from the assumption he isn’t a true believer or an aggressively ideological Republican, which is correct. But it's his other side, the deeply ambitious one, that clouds our ability to predict where the fiscal saga ends. This is the Boehner who clawed his way to the House Speakership for over 20 years, a position that his conference may force him out of if he "surrenders" to President Obama in...

Prostitution for the Price of a Happy Meal

Why food-stamp bans are perpetuating risky behaviors among America’s most vulnerable

AP Photo/Charles Rex Arbogast, file
Carla walked into my office with despair in her eyes. I was surprised. Carla has been doing well in her four months out of prison; she got off drugs, regained custody of her kids, and even enrolled in a local community college. Without much prodding she admitted to me that she had retuned to prostitution: “I am putting myself at risk for HIV to get my kids a f---ing happy meal.” Despite looking high and low for a job, Carla explained, she was still unemployed. Most entry-level jobs felt out of reach with her drug record, but what’s worse, even the state wasn’t willing to throw her a temporary life preserver. You see, Carla is from one of the 32 states in the country that ban anyone convicted of a drug felony from collecting food stamps. With the release of the Global Burden of Disease Study last week, it bears looking at how we are perpetuating burdens among the most vulnerable Americans with our outdated laws. If she’d committed rape or murder, Carla could have gotten assistance to...

It’s a Mad, Mad Michigan

Right-to-work legislation was only the beginning. State Republicans have an entire docket full of legislation set to limit rights.

(AP Photo/The Detroit News, Elizabeth Conley)
Sure, lame-duck legislatures are bound to be a bit mad. But the session that just closed in Michigan was one for the ages. Aflush with the flurry of bills sent to the desk of Governor Rick Snyder—not so much speaking to his opinion on their quality—a politics-loving friend of mine in Detroit exclaimed, “It’s like Christmas in … well, in December.” The swift passage of right-to-work in Michigan picked up national and international headlines last week. But that overhaul of labor law is only one piece of the expansive legislative plan for the state that now awaits Snyder’s go-ahead. The lame-duck session was the final and powerful display of influence by GOP and Tea Party lawmakers that had a total and triumphant win in the 2010 election. Even as Michigan’s reputation as a “swing state” is diminishing—it’s voted Democratic for president since 1992, and both its U.S. senators are Democrats—local politics remain fractious. Not only does the GOP dominate both chambers in the state...

Obama's Unwise, Unnecessary Concessions

AP Photo/ Evan Vucci
AP Photo/ Evan Vucci President Barack Obama talks about the fiscal-cliff negotiations during a news conference yesterday. W hy is the president back to making premature and unnecessary concessions to Republicans? Two central issues in the 2012 presidential election were whether the Bush tax cuts should be ended for people earning over $250,000, and whether Social Security and Medicare should be protected from future budget cuts. The president said yes to both. Republicans said no. Obama won. But apparently Obama is now offering to continue to Bush tax cuts for people earning between $250,000 and $400,000, and to cut Social Security by reducing annual cost-of-living adjustments. These concessions aren’t necessary. If the nation goes over the so-called “fiscal cliff” and tax rates return to what they were under Bill Clinton, Democrats can then introduce a tax cut for everyone earning under $250,000 and make it retroactive to the start of the year. They can combine it with a spending...

The Social Security Conversation We Should Be Having

401K / Flickr
Matthew Yglesias makes an excellent point about an essential tension between Social Security and the demands of “The Market,” in a post called “Why the Powers that Be Hate Social Security”: You’ve got this big scheme to levy taxes on working people who are participating in The Economy and transfer money to people who’ve dropped out of The Economy. They take that money and use it to pay the electricity bill and buy a cookie for their grandkids. If they didn’t get that money, they’d probably have to work longer and spend more years being part of The Economy. And they’d have to spend their working years being thriftier, and amassing more savings that (via the magic of the financial system) finance private sector investments in The Economy. So not only would lower taxes on The Economy spur more growth, but the mere fact of not sending your grandma those checks is good for The Economy. The Economy thrives on incentives (if you work, we’ll give you money) and desperation (if you want money...

Chairman Summers? Let’s Hope Not

AP Photo/Shizuo Kambayashi
AP Photo/Shizuo Kambayashi Former U.S. Treasury Secretary Lawrence Summers addresses a press conference after attending the Group of Seven finance ministers in Fukuoka, Japan in July 2000. He’s back. Larry Summers is running hard to succeed Ben Bernanke as chairman of the Federal Reserve when Bernanke’s term expires in early 2014. This is not a great idea, for three main reasons. The first is Summers’ famous temperament. The problem is not just that he’s less than sensitive to women. It’s that he’s a bully in general, cocksure of himself, using others as foils and prevailing by controlling the agenda. Through several turns in a career marked by falling upwards, Summers’ chief patron and sponsor, Robert Rubin, keeps assuring people that “Larry has changed.” And Larry keeps not changing. It was the bullying more than the disrespect towards women that finally got him fired as president of Harvard. Justice Oliver Wendell Holmes, Jr. famously said of Franklin Roosevelt, “a second-rate...

Social Security: Will Obama Cave?

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Barack Obama looks toward reporters shouting questions at him regarding the fiscal cliff as he walks to the White House after attending a holiday party for the National Security Council. O nce again, President Obama seems to be on the verge of folding a winning hand. Widely leaked reports indicate that the president and House Speaker John Boehner are making a fiscal deal that includes hiking tax rates back to the pre-Bush levels with a threshold of $400,000 rather than the original $250,000, and cutting present Social Security benefits. Obama, the reports say, will now settle for as little as $1.2 trillion in tax increases on the rich rather than the $1.6 trillion that he had originally sought. The difference, in effect, will come out of the pockets of workers, retirees, the young, and the poor. Especially foolish is the cut in Social Security benefits, disguised as a change in the cost-of-living adjustment formula. Before getting to the arcane...

Drinking the Deficit-Reduction Kool-Aid

It was the centerpiece of the president’s re-election campaign. Every time Republicans complained about trillion-dollar deficits, he and other Democrats would talk jobs. That’s what Americans care about—jobs with good wages. And that’s part of why Obama and the Democrats were victorious on Election Day. It seems forever ago, but it’s worth recalling that President Obama won re-election by more than 4 million votes, a million more than George W. Bush when he was re-elected—and an Electoral College majority of 332 to Romney’s 206, again larger than Bush’s electoral majority over Kerry in 2004 (286 to 251). The Democratic caucus in the Senate now has 55 members (up from 53), and Republicans have eight fewer seats in the House than before. So why, exactly, is Washington back to obsessing about budget deficits? Why is almost all the news coming out of our nation’s capital about whether the Democrats or Republicans have the best plan to reduce the budget deficit? Why are we back to...

For Women Executives, Still Lonely at the Top

(Flickr / Sheraton Hotels and Resorts)
On Monday, the research team at Catalyst released their 2012 Census of women board directors . They found women held just 16.6 percent of board seats in corporate America. As Bryce Covert notes , this is the seventh consecutive year without significant growth in the percentage of women on corporate boards. What can be done? We can look at Norway for one path forward. In 2002 only 7.1 percent of boards consisted of woman. Though up from 3 percent in 1993, progress was slow. This is in a country with significant gender equality, where over 80 percent of women work outside the home. In order to jumpstart gender equality in the boardroom, the Norwegian government decided to use the law to speed things up. In 2002 a trade minister proposed a law requiring 40 percent of company board members to be women by 2005, and in 2003 the Norwegian Government passed it. Compliance with this law was encouraged but voluntary, with no penalties in place. Few companies, only around 20 percent, were...

Full Employment is the Best Deficit Reduction Plan

Google
Despite the fact that Democrats have already agreed to large spending cuts, the Republican position continues to be that further reductions are needed, despite the fact that spending on social programs has already been cut to the bone. The problem, of course, is that there just isn’t much money left in social programs, absent major, unpopular cuts to programs like Social Security and Medicare. Those aside, the most ripe area for savings is the Pentagon, and Republicans have no interest in reducing military spending—indeed, Mitt Romney spent the past year campaigning on more military spending, regardless of actual needs. If deficit reduction is a priority, then more revenue is needed. This chart illustrates the problem: The Bush tax cuts and the Great Recession precipitated a massive drop in the revenue collected by the federal government. Until we return to at least pre-recession levels, deficit reduction will be a difficult enterprise. Which gets to a broader point: The best plan for...

The Federal Reserve Gets Down to Business

(AP Photo/David Goldman)
At a press conference in April 2012, New York Times reporter Binyamin Appelbaum asked Federal Reserve Chairman Ben Bernanke to respond to criticism that he wasn’t doing enough to bring down unemployment. Bernanke responded: “[T]he question is: Does it make sense to actively seek a higher inflation rate in order to achieve a slightly increased pace of reduction in the unemployment rate? The view of the committee is that that would be very reckless. We have … spent 30 years building up credibility for low and stable inflation." Bernanke was putting a limit on how much he would do to get the economy growing faster and unemployment down. Accepting inflation above the target rate of 2 percent, either directly through active policy or implicitly by temporarily tolerating higher inflation without raising rates, wasn’t worth it. By this point a serious critique of Federal Reserve policy had been developed by those who thought the Federal Reserve should be doing more. This held that the...

The Italian Job

The prime minister’s announcement that he will leave Italy’s top spot early could throw Europe into chaos.

(AP Photo/Geert Vanden Wijngaert)
Mario Monti’s announcement last Saturday that he plans to resign his post as Italy’s prime minister earlier than was previously expected has thrown Italian politics, and the whole Eurozone, into renewed turmoil. Monti, a Yale-educated technocrat and former EU commissioner, took over in November of last year after market pressure forced Silvio Berlusconi to quit in order to prevent the ignominy of Rome having to apply for an international bailout. The plan was for him to serve the rest of the parliamentary term, until elections scheduled for no later than April 2013. But last week, Berlusconi’s PdL (People of Freedom) party, which had been backing the Monti government, pulled its support, just as its exceedingly controversial 76-year old billionaire leader declared that he would make one more run for the premiership (he has been elected three times already in the span of nearly two decades). This led directly to Monti’s announcement that he will go as soon the 2013 budget is passed,...

Stop Blaming Single Mothers

Taking male pundits—liberal and conservative—to task for pushing marriage before motherhood.

Flickr / 50s Family
What magic power do single mothers possess that make them the target for so much blame for social ills? What witchery are they engaged in that can turn even liberal men—even those who pride themselves on supporting feminist causes!—into reactionaries breathlessly opining that the poor only have themselves to blame for their sexually incontinent ways? Whatever it is, the latest victim is Nicholas Kristof, once champion of ending sex slavery and improving maternity care, but most recently hitting The New York Times to accuse rural single mothers of turning down perfectly nice offers of marriage and forcing their kids to be illiterate in order to get disability checks from the government. Kristof is but the latest in a long line of mostly male pundits, both liberal and conservative, to argue that the best way to patch up women’s economic concerns is for the little ladies to settle down with one of their no doubt many eligible suitors. Indeed, The New York Times this past month alone has...

Magnificent Trespasser

Albert Hirschman, an economist who became one of the greatest of the 20 th century’s moral philosophers, died Tuesday at age 97. Hirschman’s intellectual odyssey took him from the study of eastern European economies under Hitler to work as a development economist for the Federal Reserve Board, then in Latin America in the 1950s and 1960s, as an adviser to the Colombian Planning Ministry, and then to engagement with the enduring questions of economy and society from the 1970s until illness suspended his active life. Along the way he taught at Yale, Columbia, Harvard, and the Institute for Advanced Study. To the extent that Hirschman is widely known today, it is mainly though a small book with a puzzling title, Exit, Voice, and Loyalty , written in 1970. The book has a huge following among social scientists, mainly outside of Hirschman’s own profession of economics. His basic insight is elegant, simple, and original. Citizens and consumers have two basic ways of responding when they...

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