Tag Archives: Congress

It’s the Austerity and Lack of Trust

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The chart below shows government spending after our last four recessions (that’s total federal, state and local spending, corrected for inflation, with the numbers at the bottom representing yearly quarters after the recessions).

After three recessions, government spending went up. After the most recent recession, it’s gone down:

blog_austerity_state_local_federal_spending_0

It makes sense for families to cut spending if they run into economic difficulty, but it makes no sense for the government to do the same. In situations like we’re in now, the government has to counteract the natural tendency of families and businesses to cut back when economic times are hard. Common sense and economic theory tell us the government should spend more after a recession in order to help the economy recover, even if that means increasing government debt until things get better. Yet we’ve been following the opposite policy the past few years. The result has been a relatively weak recovery that has left too many Americans unemployed and underemployed.

Why have we acted so stupidly? The obvious answer is that there were Republicans in the White House after those earlier recessions. Now there’s a Democrat. That’s why Republicans in Congress supported government spending after the earlier recessions, but have vigorously opposed it this time. (After all, Republicans love certain kinds of government spending, despite what they claim.) Hypocrisy, foolishness, the desire to recapture the White House, combined with the failure of Democrats to make the case for more stimulus. It’s all those things and more. 

The chart is from “How Austerity Wrecked the American Economy” at Mother Jones. The author updates the story here.

Meanwhile, Paul Krugman sees a connection between the declining acceptance of evolution among Republicans and their rejection of stimulus spending: in order to be a good Republican these days, you have to deny climate change, evolution and modern economics.

Another economist who has repeatedly pointed out the stupidity of what we’ve been doing is Joseph Stiglitz. In a New York Times article called “In No One We Trust”, he explains how we’re losing trust in each other and our institutions as inequality increases. The article is especially interesting when he shows how a lack of trust and an excess of bad behavior got us into the economic mess we’re still trying to get out of:

Trust is becoming yet another casualty of our country’s staggering inequality: As the gap between Americans widens, the bonds that hold society together weaken. So, too, as more and more people lose faith in a system that seems inexorably stacked against them, and the 1 percent ascend to ever more distant heights, this vital element of our institutions and our way of life is eroding….

The banking industry is only one example of what amounts to a broad agenda, promoted by some politicians and theoreticians on the right, to undermine the role of trust in our economy. This movement promotes policies based on the view that trust should never be relied on as motivation, for any kind of behavior, in any context. Incentives, in this scheme, are all that matter.

Moe Should Have Watched “The Wire”

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David Simon, the creator of The Wire, spoke recently at a conference in Australia. The Guardian has an edited transcript of his talk here. Some selected paragraphs:

You know if you’ve read Capital or if you’ve got the Cliff Notes, you know that [Marx’s] imaginings of how classical Marxism – of how his logic would work when applied – kind of devolve into such nonsense as the withering away of the state and platitudes like that. But he was really sharp about what goes wrong when capital wins unequivocally, when it gets everything it asks for.

That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress.

From this moment forward unless we reverse course, the average human being is worth less on planet Earth. Unless we take stock of the fact that maybe socialism and the socialist impulse has to be addressed again; it has to be married as it was married in the 1930s, the 1940s and even into the 1950s, to the engine that is capitalism.

Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way. Capitalism is a remarkable engine again for producing wealth. It’s a great tool to have in your toolbox if you’re trying to build a society and have that society advance. You wouldn’t want to go forward at this point without it. But it’s not a blueprint for how to build the just society. There are other metrics besides that quarterly profit report.

And that’s what The Wire was about basically, it was about people who were worth less and who were no longer necessary, as maybe 10 or 15% of my country is no longer necessary to the operation of the economy. It was about them trying to solve, for lack of a better term, an existential crisis. In their irrelevance, their economic irrelevance, they were nonetheless still on the ground occupying this place called Baltimore and they were going to have to endure somehow.

Moe really should have watched The Wire.

In Case You’re Concerned About Health Insurance Cancelations

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It’s the media’s current ACA crisis. In other words, a lot of sound and fury, signifying very little.

The policies being canceled are those that don’t meet the ACA’s new minimum standards. All policy holders will be able to sign up for better policies. That’s the basic story. This short article in the New York Times explains what happened at a House committee hearing today:

Republicans were apparently furious that government would dare intrude on an insurance company’s freedom to offer a terrible product to desperate people.

http://takingnote.blogs.nytimes.com/2013/10/30/the-uproar-over-insurance-cancellation-letters/

It’s worth reading, if only for its humor value.

Meanwhile, You Don’t Want To Be Poor In America

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The Center on Budget and Policy Priorities, a Washington think tank, has issued a report relating to “welfare reform”, the law that Congress passed and President Clinton signed 17 years ago.

Federal funding for the Temporary Assistance to Needy Families program (what used to be called “Aid to Families with Dependent Children” or “welfare”), hasn’t increased since 1996, so inflation has eaten away at the program’s benefits:

Because TANF benefits have declined substantially in value, they do much less to help families escape deep poverty than they did in 1996.  With the exception of Maryland and Wyoming, a poor family relying solely on TANF to provide the basics for its children (such as during a period of joblessness, illness, or disability) in every state is further below the poverty line today than in 1996.

In fact, the inflation-adjusted value of benefits has decreased by more than 20% in 14 states and by more than 30% in 26 states.

Believe it or not, the monthly cash payment to an unemployed woman with two children in Mississippi is $170. Where I live, in one of the highest income states in the country, it’s $424 for a family of three, exactly what it was in 1996 (that’s a 32% decrease in real value).

Of course, there are other Federal programs for poor people, whether they have jobs or not, like the Supplemental Nutrition Assistance Program (SNAP or “food stamps”). But you can’t pay the rent or buy shoes with food stamps. Next week, by the way, people receiving food stamps will start getting less. A family of four, other things being equal, will receive $36 less per month.

The CPBP report (with charts):

http://www.cbpp.org/cms/index.cfm?fa=view&id=4034

The food stamp news:

http://www.nbcnews.com/business/food-stamp-benefits-going-down-holidays-8C11418632

To B Or Not To B

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That is a question. If Hamlet were with us today, would he ask himself: “To blog or not to blog?”

That’s what I asked myself this morning. Whether I should put this blog on hold.

But how can I save the world (one blog post at a time) or find out what I think if I don’t speak whereof I can?

Especially today, after a respected reader shared this letter to the editor:

When seniors started enrolling in the new Medicare system, hardly anyone touched a computer, there was no internet, or broadband connection. The system worked. Today, the same tools are available to us as were available then: applications, telephone, person-to-person help. The preferred method of access is the Internet, but the Internet is really just a way to get one into the system. The media is spending way too much time complaining about the method by which people sign up. They should be pointing out that millions of people who have not had access to health coverage will now have it. We need more stories about people with sick children who can now get coverage, not how much trouble people are having logging in to a web site. (BTW, just to see how it would work, I went to healthcare.gov and created an account. No problems. Maybe they kick in when you try to actually sign up for something.) 

I hate the media.

Me too, much of the time.

Now, in this autumn of our discontent, everyone with access to a media bullhorn should keep in mind that large information technology projects almost always have problems, especially when a “drop-dead date” is involved. The Republicans will “investigate”, silly people on TV and the radio will say stupid things (except in Afghanistan), columnists will draw the wrong conclusions, but the problems will be fixed, millions of people will benefit and, as someone said the other day, the ACA isn’t just a website.

We should also remember that most people sign up for things as the deadline approaches, and in this case the deadline (March 31, 2014) isn’t “drop-dead” at all – it’s a soft deadline that can be delayed a while, if necessary.

On the even brighter side, healthcare.gov is getting all kinds of free publicity! Let’s hope everyone spells the name right – although that’s not required these days (“did you mean healthcare.gov?”).

For the icing on the cake, take a look at how Republican politicians defended the problem-plagued rollout of the Medicare prescription drug benefit eight years ago, when one of their own was in the White House:

http://thinkprogress.org/health/2013/10/24/2828261/hearing-post/

“The empty vessel makes the greatest sound.” (Henry V, act 4, scene 4)