In 2010, two Harvard economists published an academic paper that spoke to the world’s biggest policy question: should we cut public spending to control the deficit or use the state to rekindle economic growth? Growth in a Time of Debt by Carmen Reinhart and Kenneth Rogoff has served as an important intellectual bulwark in support of austerity policies in the US and Europe. It has been cited by politicians ranging from Paul Ryan, the US congressman, to George Osborne, the UK chancellor. But we have shown that several critical findings advanced in this paper are wrong. So do we need to rethink austerity economics more broadly?
Their research is best known for its result that, across a broad range of countries and periods, economic growth declines dramatically when a country’s level of public debt exceeds 90 per cent of gross domestic product. In their work with a sample of 20 advanced economies in the postwar period, they report that average annual GDP growth ranges between about 3 per cent and 4 per cent when the ratio of public debt to GDP is below 90 per cent. But it collapses to -0.1 per cent when the ratio rises above a 90 per cent threshold.
In a new working paper, co-authored with Thomas Herndon, we found that these results were based on data errors and unsupportable statistical techniques.
We are not suggesting that governments should borrow and spend profligately. But judicious deficit spending remains the single most effective tool we have to fight against mass unemployment caused by severe recessions. Recent research by Prof Reinhart and Prof Rogoff, along with all related arguments by austerity proponents, does nothing to contradict this fundamental point.
This is big news because this is what many of the so-called VSP’s (very serious people) have been using for years to justify austerity policies. Another way to say this is that Keynes is still right. Here’s Paul Krugman’s take, The Excel Depression.
Ms. Reinhart and Mr. Rogoff had credibility thanks to a widely admired earlier book on the history of financial crises, and their timing was impeccable. The paper came out just after Greece went into crisis and played right into the desire of many officials to “pivot” from stimulus to austerity. As a result, the paper instantly became famous; it was, and is, surely the most influential economic analysis of recent years.
In fact, Reinhart-Rogoff quickly achieved almost sacred status among self-proclaimed guardians of fiscal responsibility; their tipping-point claim was treated not as a disputed hypothesis but as unquestioned fact. For example, a Washington Post editorial earlier this year warned against any relaxation on the deficit front, because we are “dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth.” Notice the phrasing: “economists,” not “some economists,” let alone “some economists, vigorously disputed by other economists with equally good credentials,” which was the reality.
For the truth is that Reinhart-Rogoff faced substantial criticism from the start, and the controversy grew over time. As soon as the paper was released, many economists pointed out that a negative correlation between debt and economic performance need not mean that high debt causes low growth. It could just as easily be the other way around, with poor economic performance leading to high debt. Indeed, that’s obviously the case for Japan, which went deep into debt only after its growth collapsed in the early 1990s.
Like other things in the recent past – ahem..Irag…ahem – this study fit well in to the VSP’s pre-determined outcome. So it became the de facto study to prove austerity works. Now that it’s been debunked let’s hope austerity policies will die with it.
Because we have a much, much bigger problem then debt and deficits – Jobs. The Jobless Trap.
But while debt fears were and are misguided, there’s a real danger we’ve ignored: the corrosive effect, social and economic, of persistent high unemployment. And even as the case for debt hysteria is collapsing, our worst fears about the damage from long-term unemployment are being confirmed.
So we are indeed creating a permanent class of jobless Americans.
And let’s be clear: this is a policy decision. The main reason our economic recovery has been so weak is that, spooked by fear-mongering over debt, we’ve been doing exactly what basic macroeconomics says you shouldn’t do — cutting government spending in the face of a depressed economy.
It’s hard to overstate how self-destructive this policy is. Indeed, the shadow of long-term unemployment means that austerity policies are counterproductive even in purely fiscal terms. Workers, after all, are taxpayers too; if our debt obsession exiles millions of Americans from productive employment, it will cut into future revenues and raise future deficits.
Our exaggerated fear of debt is, in short, creating a slow-motion catastrophe. It’s ruining many lives, and at the same time making us poorer and weaker in every way. And the longer we persist in this folly, the greater the damage will be.
Hey, just because virtually everyone who has been arguing the case for deficit reduction for years has been shown to be a crank, a charlatan or shockingly bad at arithmetic is no reason to question your beliefs. Of course austerity is sane! It just must be! Clearly the problem isn’t that austerity is the wrong prescription, it’s that now only bloggers will be making the case and they won’t dominate the debate like the long, long line of discredited analysts and economists who history has proven to be asses. It’s tough times for austerians.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
- American author Upton Sinclair
There has been a whole bunch of economic mis-information, related to the Great Recession, going around in the MSM for years now. Much of it has to do with anti-Keynesians out there that was exposed when Paul Krugman appeared on Joe Scarborough’s show this week.
If anyone wants to blame the greater severity of the donwturn on the stimulus they would have a hard story to tell. Most of the hit was before a dollar of the stimulus was spent. Employment in March of 2009 was 5.4 million before its year ago level.
Of course CBO was overly optimistic about the pace of the turnaround. It predicted that employment would rise by 1.7 million in 2010 even if we did nothing. Someone may have a story about how this increase would have happened had it not been for the stimulus (lower interest rates?), but it is difficult to envision what that story would look like.
The other point that this chart makes nicely is that the predicted gains from the stimulus were small relative to the size of the downturn. CBO predicted that the maximum benefit from the stimulus would be in 2010 when employment would be 2.4 million higher than without the stimulus. This needs to be repeated a few hundred thousand times the stimulus was only projected to create 2.4 million jobs.
That is not rewriting history or making it up as we go along. This is a projection from an independent agency made at the time the stimulus was passed. The economy ended up losing over 7 million jobs. At its peak impact, the stimulus was only projected to replace 2.4 million of these jobs. And after 2010 the stimulus’ impact quickly went to zero as the spending and tax cuts came to an end.
How can anyone be surprised that the stimulus did not bring the economy back to full employment? No one expected it to be large enough to reverse the impact of a slump of this magnitude.
President Obama and his team deserve lots of criticism for failing to recognize the severity of the downturn. They deserve even more blame for not acknowledging this fact, and that their stimulus was inadequate for the task at hand.
But their errors do not change the reality. The stimulus was not designed to create 7 million jobs. Why would Joe Scarborough or anyone else be surprised to see that it didn’t?
Why? See the quote at the top.
And finally another these pieces of misinformation, that government spending and the size of government has ballooned since President Obama took office. Government spending is at it’s lowest point since the 1950′s, Government outlays rising at slowest pace since 1950s.
f all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.
As would-be president Mitt Romney tells it: “I will lead us out of this debt and spending inferno.”
Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true.
Government spending under Obama, including his signature stimulus bill, is rising at a 1.4% annualized pace — slower than at any time in nearly 60 years.
But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.
Even hapless Herbert Hoover managed to increase spending more than Obama has.
By this measure, the era since the Great Recession began has been marked by unprecedented fiscal austerity.
How big a deal is this? Government consumption and investment is about $3 trillion; if it had grown as fast this time as it did in the Bush years, it would be 12 percent, or $360 billion, higher. Given a multiplier of more than one, which is what the IMF among others now thinks reasonable under current conditions, that ends up meaning GDP something like $450 billion higher, which is 3 percent — and an unemployment rate 1.5 points lower.
So fiscal austerity is the difference between where we are now and an unemployment rate not much above 6 percent. It’s a policy disaster.
What all of this shows is that our economic policy since the Great Recession has been all wrong. First a stimulus plan that was way too small, and then austerity and a focus on the deficit.
This could change with a new stimulus, rehiring teachers, and rebuilding our country’s infrastructure, as a start. But nothing will change until more Americans understand it doesn’t have to be like this. See the reality of our recent failed economic policies and demand their government focus on putting people back to work. Until then this depression will continue.
Paul Krugman’s been taking a lot of undeserved s&#t for years now. Mainly because he’s been right about the economy. This has come up again because he was on “Morning Joe” on Monday and they didn’t like what he had to say.
Paul Krugman went on Morning Joe and challenged the Grand Wisdom of the Austerians. Joe Scarborough went and had aconniption fit worthy of a medieval prelate being confronted with heliocentrism for the first time. In Scarborough’s world, to believe that the deficit is anything less than a sword of Damocles is to be insane and unworthy of polite society. And yet, Krugman’s understanding of the economy is widespread, basic Keynesianism that has been proven right time and time again.
How is it that Scarborough lives in such an ideological bubble that standard Keynesianism is so shocking?
Here at Hullabaloo we call it the Kool Kids Table, a pathway to power and social acceptance inaccessible to those who don’t hold the “right” views.
Do I believe that everyone in Joe Scarborough’s sphere of influence knows that Keynesianism is accurate and that Krugman is right, but chooses to say otherwise because it pads their bank account? Of course not. It takes a conspiracy theorist and an idiot to believe that. Washington is corrupt, but it’s not that corrupt.
No, most of these people believe what they say. I don’t doubt that Scarborough’s perplexed shock is genuine. Just like I believe that most of the conservative theologians who burned Giordano Bruno at the stake believed that our solar system was the only one of its kind. After all, anyone who believed otherwise wasn’t taken seriously and didn’t advance in the Church hierarchy. Everyone who was anyone knew better, and since Bruno refused to accept the conventional wisdom he had to be shunned and ultimately silenced. Bruno’s ideas were unserious and dangerous. The man had his head in the sand and couldn’t see what seemed obvious to everyone else.
Perhaps one day the Church of the Austerians will belatedly apologize to Keynes, Krugman, Stiglitz and all the other great economists whose names have been dragged through the mud. But not likely soon, and not during their lifetimes. In our own sordid lifetimes, Popes Simpson and Bowles will continue to bestow favors upon their cardinals, giving communion only to the Kool Kids who deserve it.
Krugman’s and the Keynesian argument is that most immediate issue we have is to put people back to work, not the deficit. Once the unemployment rate is back down to around 5% then it’s time to start working on the deficit. In other words were in a Depression – not a great one but one nonetheless – and if we don’t put people back to work will stay in it, or as today’s news shows, fall back into recession. (See this from a few years back from Robert Reich, My Father and Alan Greenspan).
The thing is Joe Scarborough and his friends at the Kool Kids Table can scoff at Krugman all they want. But that doesn’t change the fact that he is, and was, right.
Krugman was also on Washington Journal this morning, watch it then you’ll understand what’s going on.
Unemployment in Texas rose for the second consecutive month to 7.2 percent in July despite continued job growth, according to state jobless data released Friday.
Texas Workforce Commission figures show that the state added 17,800 nonfarm jobs in July. But that wasn’t enough to keep up with rising population, causing the jobless rate to tick up from 7 percent in June.
Austin’s unemployment rate stayed steady last month while the state rate went up slightly.
Austin’s unemployment rate was at 6.4 percent in both June and July.
“All in all it’s not a bad picture but we are at a bit of a loss to explain some of the job losses that occurred during July, especially at the same time where we saw an increase in the numbers of the civilian labor force – which, again, is attributable to population growth,” says Capital Area Workforce Solutions Executive Director Alan Miller. ”But some of the numbers just don’t quite make sense. And they’re going to require us to dig a little deeper and find out what was going on in July.”
Much of the reason for Texas’ jumble is similar to the reason it’s jumbled at the national level. The cutbacks in public sector workers because of austerity, State cut more than 6,000 employees.
A state auditors report just released shows that the state has eliminated about 6,145 jobs in the past year. Most of those cuts have come in state agencies, but colleges and universities also report that they have cut 336 faculty posts and 580 staff members.
The Legislature slashed state spending last year to deal with a multi-billion shortfall. The numbers of job lost don’t reflect public school teaching jobs, where nearly 11,000 positions were cut.
Texas is eligible for $31 million from the unspent earmark pot, Transportation Secretary Ray LaHood said today. The money can be spent by Texas and other states on any eligible highway, transit, passenger rail, or port project.
“We’re releasing these funds so Texas can get down to the business of moving transportation projects forward and putting our friends and neighbors back to work,” LaHood said.
If public sector jobs were at the same level they were now, as they were during the Bush years, the unemployment rate and economy would be in much better shape. And the same can be said for Texas, we wouldn’t be in this jumble if The Lege had not cut so many teachers from the payroll. As good as Texas’ economy is doing, if it was for the austerity measures put in by the regressives last year, the economy would be humming along.
The job numbers are out and they’re not good. We’re in a depression. That’s why Paul Krugman has written a book titled End This Depression Now! The basic premise of the book is that we’re in a depression, not as bad as the Great Depression, we know how to get out of it, and we’re not applying the known fix.
First the difference between a recession and a depression:
Joshua Holland: Let me ask you first about a somewhat provocative word in your title, the D-word. What makes this a depression rather than a so-called “Great Recession” that we’ve heard so much about?
Paul Krugman: A recession is when things are going down, when the economy is heading down. A depression is when the economy is down, and stays down for a long time. We have the Great Depression, which was more than a decade. There were two recessions in there and there were two periods that were recoveries in the sense that things were getting better, but not much better. The whole period was a period that was really terrible for America and for the world. We’re in a period like that right now. Not as bad as the Great Depression, but that’s not much to recommend it. It’s a sustained thing. We’re now in year five of very high unemployment with terrible prospects for young people. It’s a depression.
And next how to get out of a depression:
JH: I want to encourage people to read the book, but can you just give readers a sense of what you think is the most important thing policy makers should be thinking about doing right now?
PK: The moral of the book is: this doesn’t have to be happening. This is essentially a technical process; it’s a small thing. It’s like having a dead battery in a car, and while there may be a lot wrong with the car, you can get the car going remarkably easily, if you’re willing to accept that’s what the problem really is.
First and foremost, what we have is an economy that just doesn’t have enough spending. Consumers are hobbled by debt, corporations don’t want to spend if they don’t see consumer demand. Somebody has to step in and spend, and that somebody is the government. The government could – and by all means let’s talk about forward-looking, big projects — right away get a big boost in the economy just by reversing the big cutbacks that have taken place in state and local governments these past three years. Get the schoolteachers rehired and get the policemen and firefighters back on the beat. Fill those potholes that have been developing in New Jersey and I believe all over America. We’d then be most of the way back to a decent economy again.
A simpler way to say it is that when consumers can’t spend money (because they don’t have any), and business won’t (because of low, or no demand), then the government must. And if the government won’t spend money, because of politics, then we will languish in a depression until our government does.
The solution is out there and neither the Democrats or the Republicans appear willing to do what is needed to lower unemployment and fix our economy. Anyone worried about the debt should read this, My Father and Alan Greenspan.
When I was a small boy at the start of the 1950s, my father gave me my first economics lesson. “Bobby,” he said with obvious concern, “you and your children and your children’s children will be repaying the national debt created by Franklin D. Roosevelt.”
I didn’t know what a national debt was, but I remember being scared out of my wits.
Dad was wrong, of course. Even though the national debt then was a much higher percentage of the national economy than it is today, it shrank as the economy boomed. My children have never mentioned FDR’s debt. My granddaughter (almost 2) will never pay a penny of it.
Dad, now 96 and still in good health, recognizes how wrong he was then. He admits FDR’s deficit spending not only won World War II but it also got America out of the Great Depression.
The overriding theme of Krugman’s book is we’re in a depression, we were in one before, we know how to get out of one, and we’re not doing it. We have a demand problem that won’t be fixed until jobs return, and wages begin to rise. In times of trouble the government is supposed to act to help the people, it is not, and until it does the depression will continue. All that’s left is to wonder, what is it going to take for our elected representatives to figure this out?
Thousands of Texas public schoolchildren are in more crowded classes this year as districts claim financial hardship following state budget cuts.
The number of elementary school classrooms exceeding the state’s class size cap has more than doubled since last year.
“It’s a huge issue,” said Linda Bridges, president of the American Federation of Teachers chapter in Texas. “This is an issue that not only teachers care about, but parents care about.”
School districts are reporting to the Texas Education Agency that they have broken the cap in more than 6,000 classes this fall – up from 2,238 classes last year, according to the TEA and local officials.
State law limits classes in kindergarten through fourth grade to 22 students per teacher. But districts can seek waivers from the TEA if they’ve gone over the cap for certain reasons, including an unanticipated growth in students or a shortage of space.
The TEA nearly always grants the waivers, and this year state Education Commissioner Robert Scott expanded the reasons districts could use to include “financial hardship.”
The new category was the most cited by districts, said TEA spokeswoman Debbie Ratcliffe.[Emphasis added]
Districts faced unprecedented budget cuts this year, with state lawmakers allocating $2 billion less than schools historically would have received.
There’s a growing labor crisis in Texas schools, as districts respond to sweeping reductions in state education aid. From Corpus to Dallas, many districts have chosen to lay off some of their lowest wage earners, such as custodians and cafeteria workers.
In Dripping Springs, teachers now have 15 minutes to clean their own classrooms after school. San Antonio’s custodians don’t arrive until late in the school day, so food service workers there put kitchen duties on hold while mopping up lunchroom spills.
Rachel Martinez, executive vice president of the San Antonio Alliance of Teachers and Support Personnel, says the layoffs are tough on employees, but they also affect pupils.
“Our environments aren’t conducive to learning, you know, free of viruses and communicable diseases. There’s spills and upchucks, and they don’t have the capability to have that cleaned properly and immediately.”
She says she’s also worried about workers being injured trying to perform duties for which they weren’t trained, or simply trying to keep up with an increased workload. San Antonio custodian crews have largely been moved to off-campus pools, with each janitor responsible for cleaning about 30 percent more space than formerly.
The Texas unemployment rate reached 8.5 percent in August, its highest rate since June of 1987.
That’s an increase from 8.4 percent in July.
Those numbers come from the U.S. Department of Labor. The numbers were confirmed by the Texas Workforce Commission, which says the state lost 1,300 jobs in August. Texas gained 8,100 private-sector jobs, but those jobs were wiped out by job losses in the public sector.
The Perry appointed Texas Workforce Commission chair, (and former Texas GOP chair), is trying to spin this and blame it on the national economy. But he can’t have it both ways. If it’s the federal governments problem when the job numbers go bad, then they get the credit when the numbers are good. Informed Texans know that the Government job losses are a result of the austetity budget Perry and the GOP dominated Texas legislature passed earlier this year.
Texas’ seasonally adjusted unemployment rate was 8.5 percent in August, up slightly from 8.4 percent in July,
and below the national unemployment rate of 9.1 percent.
“Texas continues to feel the pressures of a stagnant national economy,” said Texas Workforce Commission (TWC) Chairman Tom Pauken. “Private sector gains were offset by Government losses of 9,400 jobs in August, including 11,500 jobs lost in Local Government.
Here’s a graph of the Texas unemployment rate over the years – the August numbers aren’t included yet.
It’s Labor Day 2011 and a year from now it will be the beginning of the stretch run in the 2012 Presidential Election. With an election that will likely have jobs as a very important issue, if not THE issue, it’s time we look at the state of labor and the Democratic Party in America.
“All that serves labor serves the nation. All that harms labor is treason. If a man tells you he trusts America, yet fears labor, he is a fool. There is no America without labor and to fleece the one is to rob the other.”- Abraham Lincoln
This past spring the nation witnessed an attack on organized labor unlike any other in the past 30 years. Public workers in Wisconsin, Illinois, Ohio, New Jersey, Missouri, Michigan and Minnesota have been made the scapegoat of their state’s economic crisis which is as phony as a three dollar bill given the fact that the crisis was not only caused by Wall Street, but also profited Wall Street as well. Another major factor to our nation’s economic woes that seldom is mentioned is the huge war budget wasted on the unjustified wars in Afghanistan, Iraq and now Libya.
Workers belonging to such unions as the American Federation of State, County & Municipal Employees, the American Federation of Teachers, the National Education Association and the public sector division of the Communications Workers were the target of a well planned, vicious assault by the Tea Party and other Republican extremists using the falsehood of “balancing the state budgets”. As was shown in Wisconsin and elsewhere the real reason for the anti-union attacks was to weaken and/or destroy public worker unions and their right to collective bargaining. The state budget of these states not unlike the state budget of Texas could have been balanced by means of taxing the profits of large corporations and the incomes of the wealthy. Of course such a move requires that state legislators to have courage and the wisdom to do so. As has been shown, most elected officials lack these essential qualities!
No, the answer is much simpler. He doesn’t realize he’s getting pummeled. He thinks this is all still a genius strategy to capture centrists by compromising on every single little thing. He is not trying to put on an appearance of weakness to lull his opponent into a false sense of complacency. He doesn’t even realize he is being weak. He’s the one with the false sense of complacency. As he’s getting knocked around the ring, he thinks he’s winning.
These guys in the Obama camp are in for a horrible, rude awakening. Sometime in the next year, they are going to blink and realize they are lying flat on their back on the canvas. Then as they finally stumble up, they’ll realize they should have started fighting 11 rounds ago. Then a panic will set in, but I’m afraid it will be too late by then.
Here is what all voters, and especially independents, despise and disdain in a politician — weakness. Nobody wants to see their leader get beat to a pulp every night and then bow his head again.
There is no secret, brilliant strategy. This White House is in a bubble. They think they’re winning when the roof is about to cave in.
No one, not even the president’s defenders, expect his coming jobs speech to mean anything. When the president spoke during a recent market swoon, the market dropped another 100 points. Democrats may soon have to confront an uncomfortable truth, and ask whether Obama is a suitable choice at the top of the ticket in 2012. They may then have to ask themselves if there’s any way they can push him off the top of the ticket.
That these questions have not yet been asked in any serious way shows how weak the Democratic Party is as a political organization. Yet this political weakness is not inevitable, it can be changed through courage and collective action by a few party insiders smart and principled enough to understand the value of a public debate, and by activists who are courageous enough to face the real legacy of the Obama years.
Obama has ruined the Democratic Party. The 2010 wipeout was an electoral catastrophe so bad you’d have to go back to 1894 to find comparable losses. From 2008 to 2010, according to Gallup, the fastest growing demographic party label was former Democrat. Obama took over the party in 2008 with 36 percent of Americans considering themselves Democrats. Within just two years, that number had dropped to 31 percent, which tied a 22-year low.
Of course, there are many rationalizations for Obama to remain the nominee. He’s faced difficult opposition. He’s passed major legislation. His presidency is historic. The economy is hard to resuscitate. But all such rationalizations evade the party’s responsibilities to actually choose the nominee best suited to win votes. If Obama looks unlikely to get enough votes to win, he should not get the nomination.
If would be one thing if Obama were failing because he was too close to party orthodoxy. Yet his failures have come precisely because Obama has not listened to Democratic Party voters. He continued idiotic wars, bailed out banks, ignored luminaries like Paul Krugman, and generally did whatever he could to repudiate the New Deal. The Democratic Party should be the party of pay raises and homes, but under Obama it has become the party of pay cuts and foreclosures. Getting rid of Obama as the head of the party is the first step in reverting to form.
So why isn’t there a legitimate primary challenger to Obama to make this case? Forty years ago, primaries were instituted in the Democratic Party as a response to party insiders having too much influence over nominations. These reforms were implemented before the prevalence of money in politics was as extreme as it is now. At this point, primary challenges are so expensive that a serious 2012 campaign would ironically require support of party insiders for viability. The party, inflexible as it was in 1968, is perhaps even more rigid today. As a result, no candidate has stepped up to challenge Obama in a primary, even though 32 percent of Democratic voters want one.
There is much to ponder as we head into election year. But we must find ways to bring the Democratic base out to vote at the local and state level. How to do that with a Presidential candidate that’s likely not to be firing up the base is what needs to be figured out. Because Democrats can’t win without the support of workers and unions, and workers and unions will suffer if pro-labor Democrats don’t win.
In case you haven’t noticed the GOP has a plan. Over the years it’s been called “Voodoo Economics” or “Trickle-down or Trickle-on Economics”, (depending on one’s vantage point). They talk of getting government so small it can be drowned in a bath tub. They denigrate social programs that provide medical care to the elderly and dignity to those who can’t take care of themselves, as well as keep the elderly and children whose parents die, out of poverty.
They want to take those social services away from the government and hand them over to for profit corporations, who they believe, (falsely, ignorantly, and often times corruptly), can do a better job. In other words they want to privatize government services and let their friends, and campaign contributors, profit from them. That’s their plan for education, and it will soon, if left unchecked, trickle-down to law enforcement, fire, EMS and all other government employees.
In the 11 years that Beatriz Roman worked at ASU, she waxed the floors and dusted the insides of five buildings. She even knew exactly how much toilet paper each building needed. Eight rolls, for every floor. Then, at the very end of last school year –
BEATRIZ ROMAN: The lady, she comes and she says, oh. I have bad news.
That lady was an ASU administrator.
ROMAN: Everybody lose their job. Everybody’s working only two more weeks.
The university laid off its entire custodial staff. All 191 were offered jobs with private companies that would take over ASU’s cleaning duties.
ROMAN: After this, I’m depressed. I’m very depressed.
Roman is a widow and the mother of a teenager. But she turned down the offer. In fact, only three people took the job. Custodians say the pay and vacation days were less. Health insurance premiums were more expensive. Plus, there were no state retirement benefits, and if Roman accepted the work, she’d lose her university severance package. That pays $1,100 bucks a month, the same as her previous salary after taxes. With a pet parakeet chirping behind her, I ask what happens when the money runs out in November. [Emphasis added]
ROMAN: Good question. Good question. I need find job. Soon.
The commissioners slashed $348,000 from the budget by cutting the 1.5 percent pay raise proposed for law enforcement. The court also cut the pay raise proposed for civilian employees from 3 percent to 1.5 percent, which saved $626,500.
The court also cut two full-time and one part-time clerical position from the Department of Public Safety office in Georgetown, which saved the county $65,500.
It was understandable when people would get up in arms about government overspending on defense contracts and too much waste., but we’re way beyond that now. Social Security, Medicare, Medicaid, teachers, cops, and firefighters those are needs, not luxuries or waste. Citizens in Williamson County and across this country have to wake up and realize what we’re losing with these austerity measures.
It seems logical that if they’re not going to use that money to hire workers then maybe it’s time the poeple, in the form of the government, started taxing that money and using it to create jobs. Our main economic problem is lack of demand. High unemployment means there are many people who can’t afford to buy stuff. Until they have jobs, and money, the can’t buy stuff. And until they start buying more stuff, that corporations make, the corporations won’t start hiring again. Therefore if the corporations won’t hire then the government must. There’s much to be done.
It’s taken decades for the anti-worker, cheap labor conservatism, to trickle-down to the local level but now it has. And unless it is stopped soon we will be paying our most needed public employees like they’re clerks at a convenience store.
[UPDATE]: From last night’s Countdown – The War on the Poor.
There is a perception that the only party that President Obama will stand up to is his own. And that he lets the other party walk all over him. That’s tough to refute but the President likely doesn’t see it that way. Obama’s risk aversion and need for compromise must be seen in the context of means and ends. His end is reelection, that is what is driving the means, and how he is treating his party and the opposition party.
And after reading and listening to it all the point that stands out over and over is that Obama’s main tactic is to look as if he’s above the fray while trying to get Republicans to agree with him, a so-called bipartisan compromise, on every issue. Therefore on most of his major accomplishments he is pulled to the right, at the expense of progressive and Democratic principles, and away from the base of his party. Perception becomes reality and he is seen as selling out his base to placate an uncompromising opposition. He’s never called the GOP’s bluff and that just adds to the frustration.
As the economy worsens, President Obama and his senior aides are considering whether to adopt a more combative approach on economic issues, seeking to highlight substantive differences with Republicans in Congress and on the campaign trail rather than continuing to pursue elusive compromises, advisers to the president say.
Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.
But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.
Even if the ideas cannot pass Congress, they say, the president would gain a campaign issue by pushing for them. [Emphasis added]
That is a microcosm of the problem the President’s critics on the left have with him. If the administration is seriously having an internal debate about whether to be more combative with, and highlight differences from, the GOP then they’re really far behind on strategy. But again he’s worried more about how to placate the GOP than his own party.
I think there are a few problems with this strategy. First, it’s going to make it harder to get re-elected if you don’t start focusing on the economy. Second, I’m not sure it’s a wise idea to tell people publicly, which they just did via the NYT, that you’re not going to try to help the economy because it’s too hard.
Now, the President probably sees this differently. He thinks that it’s impossible to do anything controversial, so it’s better to propose smaller thins that everyone can agree on:
So far, most signs point to a continuation of the nonconfrontational approach — better to do something than nothing — that has defined this administration. Mr. Obama and his aides are skeptical that voters will reward bold proposals if those ideas do not pass Congress. It is their judgment that moderate voters want tangible results rather than speeches.
“If you’re talking about a stunt, I don’t think a stunt is what the American people are looking for,” the White House press secretary, Jay Carney, told reporters on Wednesday. “They’re looking for leadership, and they’re looking for a focus on economic growth and job creation.”
I would agree with Romer:
“Playing it safe is not going to cut it,” said Ms. Romer, a professor of economics at the University of California, Berkeley. “Not proposing anything bold and not trying to do something to definitively deal with our problems would mean that we’re going to have another year and a half like the last year and a half — and then it’s awfully hard to get re-elected.”
What we’re seeing here is the President’s risk aversion having real world implications. He does not want to fight. So he’s only willing to settle for easy things. But the easy things don’t have as great an impact on the economy, and more generally our lives.
Just because something is hard to achieve doesn’t mean it’s impossible to achieve. It’s difficult to see the President’s strategy as some kind of “slow and steady wins the race” approach. It feels increasingly, instead, like he has a psychological aversion to conflict and avoids it all costs. That means that his decision making isn’t entirely rational.
More on the fear of conflict:
But there is little support for such an approach inside the administration. A series of departures has left few economists among Mr. Obama’s senior advisers. Several of his political advisers are skeptical about the merits of stimulus spending, and they are certain about the politics: voters do not like it.
Putting aside for a moment that the President’s politics experts seem to now be making economic policy, how about trying to change the voters’ minds with a comprehensive long-term media/PR strategy? Why is that, also, so averse to this administration? Probably because the President sees it too as “fighting.” Anything that you can’t agree on right away, and quietly, is bad. (And in all fairness, this is a bit of a red herring – the public was for the public option to the tune of 70% in the polls. It made zero difference to the President, he wasn’t going to push for it even though he promised it.)
It’s the inability to take the fight to the GOP by setting the agenda and not letting them set the agenda. As Drew Westen said on Charlie Rose, “Call Votes”. In essence send up a jobs bill and make the GOP vote against it. Every. Single. Day. And then go out and say I’ve sent a jobs bill up that will create X-number of jobs but the GOP keeps voting against it. That’s why you can’t find a job.
We all know the definition of insanity and we need different results. And if the President and his administration believe that if they keep doing small things will help him get reelected….well…maybe. But doing the same thing isnt’ likely to help create many jobs and will actually put his reelection at risk. That’s the conundrum. And without a change in strategy, some risk taking and demonizing of the GOP, we can expect more of the same results.
The continued systematic pursuit of obviously bad public policy is baffling. It’s not like it’s good politics. Does the Obama campaign staff really think they are gonna hold PA or OH with trade concessions to Korea? Do they think they will turn out voters in New Mexico on a deportation platform?
This isn’t hard. Hire people to build things with the free money the world is offering us.