Morning in Blue America - Will the GOP Kill the Recovery?

Both the House of Representatives and Senate have passed budgets that will savage the social safety net, slash spending except for defense which will increase, and transfer wealth from the poor and working classes to the wealthy.  The budgets must still be reconciled, but the only thing that will protect the American public is a veto by the White House.   Throughout the Obama presidency, the Republicans have sought to sabotage the economy rather than allow Obama have a successfully presidency.  These budgets are the latest incarnation of this effort.  Ironically, despite all these efforts of sabotage  and obstruction, the economy has improved, albeit more slowly than might otherwsie have been the case.  A column in the New York Times looks at the derangement of the GOP agenda and the danger these madmen and women pose.  Here are excerpts:

Two impossible things happened to the U.S. economy over the course of the past year — or at least they were supposed to be impossible, according to the ideology that dominates half our political spectrum. First, remember how Obamacare was supposed to be a gigantic job killer? Well, in the first year of the Affordable Care Act’s full implementation, the U.S. economy as a whole added 3.3 million jobs — the biggest gain since the 1990s. Second, half a million of those jobs were added in California, which has taken the lead in job creation away from Texas.

What we’ve been seeing at both the national and the state level is mainly a natural process of recovery as the economy finally starts to heal from the housing and debt bubbles of the Bush years.

But recent job growth, nonetheless, has big political implications — implications so disturbing to many on the right that they are in frantic denial, claiming that the recovery is somehow bogus. Why can’t they handle the good news? The answer actually comes on three levels: Obama Derangement Syndrome, or O.D.S.; Reaganolatry; and the confidence con.

Not much need be said about O.D.S. It is, by now, a fixed idea on the right that this president is both evil and incompetent, that everything touched by the atheist Islamic Marxist Kenyan Democrat — mostly that last item — must go terribly wrong. When good news arrives about the budget, or the economy, or Obamacare — which is, by the way, rapidly reducing the number of uninsured while costing much less than expected — it must be denied.

At a deeper level, modern conservative ideology utterly depends on the proposition that conservatives, and only they, possess the secret key to prosperity. As a result, you often have politicians on the right making claims like this one, from Senator Rand Paul: “When is the last time in our country we created millions of jobs? It was under Ronald Reagan.”

Actually, if creating “millions of jobs” means adding two million or more jobs in a given year, we’ve done that 13 times since Reagan left office: eight times under Bill Clinton, . . . .  and three times, so far, under Barack Obama. But who’s counting? . . . . The economy added 23 million jobs under Clinton, compared with 16 million under Reagan, but there’s nothing on the left comparable to the cult of the Blessed Ronald. 

Conservatives, on the other hand, want to block such things and, instead, to cut taxes on the rich and slash aid to the less fortunate. So they must claim both that liberal policies are job killers and that being nice to the rich is a magic elixir.

One enduring puzzle of political economy is why business interests so often oppose policies to fight unemployment. After all, boosting the economy with expansionary monetary and fiscal policy is good for profits as well as wages, yet many wealthy individuals and business leaders demand tight money and austerity instead.

As a number of observers have pointed out, however, for big businesses to admit that government policies can create jobs would be to devalue one of their favorite political arguments — the claim that to achieve prosperity politicians must preserve business confidence, among other things, by refraining from any criticism of what businesspeople do.

[T]he fact that we’re now seeing mornings in blue America — solid job growth both at the national level and in states that have defied the right’s tax-cutting, deregulatory orthodoxy — is a big problem for conservatives. Although they would never admit it, events have proved their most cherished beliefs wrong.

The GOP's Blindness to Objective Reality

Ever since Barack Obama's election in 2008 Republicans have done nothing but predict doom and gloom and then do all in their power, especially in Congress, to make the dire predictions come true regardless of the consequences inflicted on average Americans.  Behind much of it was the unspoken racism that motivates much of the Republican Party base, a base that is terrified of losing its white privilege and outraged that a non-white occupies the White House.  Yes, the economy needs to improve much more to benefit many Americans, but as a piece in Blue Virginia notes, things are far better now than when Barack Obama took office despite the constant GOP efforts at obstruction and economic sabotage.  What's most frightening is the blindness of many in the GOP due to their racism and bigotry.  Just think what could have been accomplished if the GOP had put the nation and average Americans ahead of destructive partisanship.  Here are some article excerpts:

[C]heck this out: six years into the presidency of Barack Obama, it turns out the U.S. economy is booming, the stock market is in record territory, wages are rising...etc. Or, as a headline today in the Washington Post put it: The boom is here: the economy just grew 5 percent, and it's not going to stop. Oh yeah, and let's not forget that we're in the midst of an energy boom, with falling gasoline prices, plummeting crude oil imports and booming wind and solar output. All this, by the way, just six years since the economy collapsed under President George W. Bush, and not even six years since President Obama inherited one of the worst economic situations since FDR took over from Herbert Hoover in 1932. 

For any observer not blinded by partisanship, right-wing ideology and/or animosity towards our nation's first African-American president, this is beyond impressive. It's also striking to consider the contrast between what Republicans predicted would happen and what actually happened. A few examples of the many ways in which Republicans have been (wildly) wrong the past 6 years include: 

*Republicans and Tea Partiers asserted, over and over and over again, that the Recovery Act of 2009 would not work. They were completely wrong. In fact, as it turns out, the Recovery Act ended up doing almost exactly what it was intended to do: provide classic Keynesian, counter-cyclical "stimulus" to an economy in desperate need of it. The only problem, frankly, was that it wasn't big enough, particularly in terms of aid to the states, and for that we have Republicans and a few conservadems to blame. If it weren't for them, we almost certainly would have come out of the recession earlier and stronger than we did. In short, the current economic recovery has come about in SPITE of Republicans (and a few conservadems). 

*Republicans and Tea Partiers called President Obama every name in the book, with "socialist" and even "communist" or "Marxist" being several of their favorites. Yet, just as in the case of Bill Clinton, the economy has boomed under this supposed "socialist," with the stock market - not exactly a bastion of "to each according to his need" types - now at record-high levels. 

*Repblicans and Tea Partiers claimed that the Affordable Care Act, aka "Obamacare," would be a disaster, the ruination of America, blah blah blah. In fact, it's been nothing of the sort. Instead, we're getting constant headlines like US uninsured rate heads toward new low and O-Care premiums stable nationwide and U.S. Experiences Unprecedented Slowdown In Health Care Spending. So much for Republicans predictions of doom on all those fronts. As for "Obamacare" being a "job killer," which we heard about a gazillion times from right wingnuts the past few years, let me simply refer you to the headlines and first couple paragraphs of this post, about the booming economy, soaring stock market, plummeting unemployment rate, etc.

*Republicans and Tea Partiers were also wildly wrong about the U.S. energy situation, from absurd claims that President Obama was causing higher gasoline prices to claims that he was stifling U.S. energy production. Instead, what we're seeing is an energy boom in the U.S. on all fronts, combined with low energy costs (including plunging costs for clean energy sources like solar and wind).

*Republicans and Tea Partiers ranted and raved about the deficit, ignoring a few important facts, like: a) President Obama inherited a deficit of $1.2 trillion from Bush/Cheney; and b) the deficit for 2014 was just $483 billion -- far less than half what President Obama inherited from Bush/Cheney. Of course, if Republicans really cared about the deficit, which they obviously don't based on their records when they were in the White House (see Reagan's and Bush's huge deficits, compare and contrast to Clinton's surpluses and Obama's sharp cuts in the deficit he inherited), they would have voted to repeal most of the Bush tax cuts. 

Just imagine how much more we could have made with a Republican party willing to work together for the good of the country, as opposed to working for President Obama to "fail?" It boggles the mind.

This list really could go on all day, getting into foreign policy as well (e.g., so much for right-wing claims that Vladimir Putin was kicking Obama's butt or whatever), but I think the point is clear by now. Bottom line: Republicans have been wrong on basically everything the past 6 years. Will they admit that they were wrong? Apologize for their overheated rhetoric and counterproductive actions during Barack Obama's presidency? Of course they won't!

When one considers the objective facts rather than being motivated by racism, bigotry and fear of others with different skin colors or sexual orientation, one has to wonder why anyone would vote Republican.  

California - The Left Coast Rising

There have been a number of studies suggesting that "liberal" states are faring better than "conservative" states in the aftermath of the great recession despite some initial difficulties following the burst of the housing bubble.  Now, as noted before, California and Kansas are providing studies in contrast as to what happens when one state implements the GOP's dream version of economic/tax reform while the other implements what the GOP base would describe as ruinous liberal policies.  The end result?  Kansas is in a meltdown while California is on the rise and out performing the nation on jobs and economic recovery. Will the GOP and its ignorance embracing base learn from this study in contrasts?  Of course not, outcomes and objective facts mean nothing to these people.  Instead, it is all about greed and ideology.  A column in the New York Times looks at this economic contrast.  Here are excerpts:

More recently, Kansas went all-in on supply-side economics, slashing taxes on the affluent in the belief that this would spark a huge boom; the boom didn’t happen, but the budget deficit exploded, offering an object lesson to those willing to learn from experience.

And there’s an even bigger if less drastic experiment under way in the opposite direction. California has long suffered from political paralysis, with budget rules that allowed an increasingly extreme Republican minority to hamstring a Democratic majority; when the state’s housing bubble burst, it plunged into fiscal crisis. In 2012, however, Democratic dominance finally became strong enough to overcome the paralysis, and Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare.

I guess we’re not in Kansas anymore. (Sorry, I couldn’t help myself.)

Needless to say, conservatives predicted doom. A representative reaction: Daniel J. Mitchell of the Cato Institute declared that by voting for Proposition 30, which authorized those tax increases, “the looters and moochers of the Golden State” (yes, they really do think they’re living in an Ayn Rand novel) were committing “economic suicide.” Meanwhile, Avik Roy of the Manhattan Institute and Forbes claimed that California residents were about to face a “rate shock” that would more than double health insurance premiums.

What has actually happened? There is, I’m sorry to say, no sign of the promised catastrophe.

If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers. Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housing bubble, is back to pre-recession levels.

Has there been any soul-searching among the prophets of California doom, asking why they were so wrong? Not that I’m aware of. Instead, I’ve been seeing many attempts to devalue the good news from California by pointing out that the state’s job growth still lags that of Texas, which is true, and claiming that this difference is driven by differential tax rates, which isn’t.

For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s housing prices. Despite the bursting of the bubble, home values in California are still double the national average, while in Texas they’re 30 percent below that average. So a lot more people are moving to Texas even though wages and productivity are lower than they are in California.

So what do we learn from the California comeback? Mainly, that you should take anti-government propaganda with large helpings of salt. Tax increases aren’t economic suicide; sometimes they’re a useful way to pay for things we need. Government programs, like Obamacare, can work if the people running them want them to work, and if they aren’t sabotaged from the right. In other words, California’s success is a demonstration that the extremist ideology still dominating much of American politics is nonsense.

Virginia Republicans have learned nothing from California and instead remain fixated on trying to follow Kansas's failed model.  For the Virginia GOP, the embrace of ignorance and failed ideology is a mark of honor.  

America's Failed Economic Recovery

Social mobility continues to plummet in America while increasing in what the Republicans like to call "Old Europe."  Who would have ever thought that Europe with its former rigid class systems and hereditary titles would provide more promise than America and the so-called American dream which is fading for many and those in the Millennial Generation in particular.  What's also amazing is that those pushing for a cruel oligarchy in this country - e.g. the Koch brothers and much of the GOP - seem to have forgotten that throughout history sooner or later the masses have revolted - sometimes violently - against oligarchs who have been suffused with greed and mistreated the rest of society.  A main editorial in the New York Times looks at how the future prospects for our younger generations is shockingly fading.  One has to wonder when the reckoning will eventually come.  Here are highlights:

The official line is clear: The worst is over, and recovery has given way to expansion.

But that’s not the whole story. Economic gains so far have mostly benefited those at the top of the income and wealth ladder. Worse, future growth is likely to be lopsided, because the foundation for broad prosperity is arguably the weakest it has been since World War II.

Take, for example, Americans age 25 to 34, the leading edge of the so-called millennials, the generation born in the 1980s and 1990s. They are worse off than Gen Xers (born from the mid-1960s to the late-1970s) were at that age and the baby boomers before them by nearly every economic measure — employment, income, student loan indebtedness, mobility, homeownership and other hallmarks of “household formation,” like moving out on their own, getting married and having children.

This group had the bad luck of entering the work force in the depressed and slow-growth years that started when the recession hit in 2007. Instead of spending the crucial early years of their work lives laying the groundwork for a solid economic future, many of them have struggled with unemployment and underemployment, and many have fallen so far behind where they would hope to be that recovering lost ground may well be impossible.

According to the latest census data, nearly 16 percent of those in their mid-20s to mid-30s were in poverty in 2012, compared with just above 10 percent of Gen Xers in 2000 and baby boomers in 1980. Nearly 14 percent of that age group were living with their parents in 2013, a higher percentage than in previous generations. And of those living at home, 43 percent (2.5 million people) would be counted as being in poverty if they were on their own.
Some of the trends in the latest data were evident before the recession, especially stagnating wages, delayed marriage and later childbearing. But the poor economy has intensified those conditions. For instance, in a study by the Pew Research Center of the entire millennial generation, 74 percent were unmarried; many of them said they wanted to marry but lacked the economic wherewithal.

What is shocking is that despite the known danger and despite the prolonged bad economy, more government resources have not been used to prevent and reverse such a huge waste of human capital. Instead, public resources for job creation and even for unemployment benefits have been too little and too late, if available at all.

Another shocker is that those in the 25-to-34 age group are the best educated cohort in American history, with more than a third having a bachelor’s degree or higher. Education is important. But clearly, education alone does not create jobs and opportunities that lead to prosperity. For that, a fair and functional economy is needed — one in which the government plays a robust role, alongside consumers and businesses, to promote full employment and to ensure a just distribution of gains.

Younger millennials are not appreciably better off than their older peers, though they have not yet lost as much ground. At the other end of the spectrum, many older Americans who lost jobs and assets in the recession also face an uncertain future.

Certain sectors of the economy, especially the financial markets, are indeed turning a corner. But true prosperity is impossible when the productive potential of young adults is being squandered.

Just as the GOP is courting long term political suicide by courting declining numbers of aging, angry white voters, so too are they setting the stage for a potential overthrow of the system they claim to honor.

Rich Man’s Recovery

The Republican Party's goal for America is a return to the Gilded Age when multimillionaires lived like royalty and the rest of us lived like serfs and feudal vassals.  Unfortunately, this goal is coming into fruition as social mobility is now greater in Europe than in America and the wealthy disparities are so great that they would shock banana republic rulers of old.  They myth of the American Dream is dying for most Americans and many realize that their children will not have a better life and more financial security that they or their parents enjoyed.  It is demoralizing, but this what is happening.  A column in the New York Times looks at the ugly reality.  Here are excerpts:

A few days ago, The Times published a report on a society that is being undermined by extreme inequality. This society claims to reward the best and brightest regardless of family background. In practice, however, the children of the wealthy benefit from opportunities and connections unavailable to children of the middle and working classes. And it was clear from the article that the gap between the society’s meritocratic ideology and its increasingly oligarchic reality is having a deeply demoralizing effect. 

The report illustrated in a nutshell why extreme inequality is destructive, why claims ring hollow that inequality of outcomes doesn’t matter as long as there is equality of opportunity. If the rich are so much richer than the rest that they live in a different social and material universe, that fact in itself makes nonsense of any notion of equal opportunity. 

By the way, which society are we talking about? The answer is: the Harvard Business School. . . .

The point, of course, is that as the business school goes, so goes America, only even more so — a point driven home by the latest data on taxpayer incomes. 

The data in question have been compiled for the past decade by the economists Thomas Piketty and Emmanuel Saez, who use I.R.S. numbers to estimate the concentration of income in America’s upper strata. According to their estimates, top income shares took a hit during the Great Recession, as things like capital gains and Wall Street bonuses temporarily dried up. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.

Only a small fraction of college graduates make it into the charmed circle of the 1 percent. Meanwhile, many, even most, highly educated young people are having a very rough time. They have their degrees, often acquired at the cost of heavy debts, but many remain unemployed or underemployed, while many more find that they are employed in jobs that make no use of their expensive educations. The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation.

[W]hatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy.

So what can be done? For the moment, the kind of transformation that took place under the New Deal — a transformation that created a middle-class society, not just through government programs, but by greatly increasing workers’ bargaining power — seems politically out of reach. But that doesn’t mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field. 

Take, for example, the proposal by Bill de Blasio, who finished in first place in Tuesday’s Democratic primary and is the probable next mayor of New York, to provide universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000. The usual suspects are, of course, screaming and talking about their hurt feelings; they’ve been doing a lot of that these past few years, even while making out like bandits. But surely this is exactly the sort of thing we should be doing: Taxing the ever-richer rich, at least a bit, to expand opportunity for the children of the less fortunate. 

Some pundits are already suggesting that Mr. de Blasio’s unexpected rise is the leading edge of a new economic populism that will shake up our whole political system. That seems premature, but I hope they’re right. For extreme inequality is still on the rise — and it’s poisoning our society.