Fast-forward to the present. In the industrial world, real interest rates average well below zero and markets suggest they will remain below zero for decades to come. The ratio of government debt to gross domestic product is very high and rising rapidly. And yet even with super-stimulative monetary and fiscal policy, growth is sluggish at best and, even a decade after the financial crisis, inflation has not, on average, risen to central banks’ 2 percent target. The core of the problem is that there is not enough private investment to absorb, at normal interest rates, all the private saving. The result is extremely low interest rates, weak demand, and low growth and inflation, along with the bidding up of the price of existing capital assets. What has happened to private saving and private investment? Many things, including increases in saving caused by people having fewer children, more inequality, longer retirement periods and increased uncertainty. Probably more important, demand for private investment has fallen off as the economy’s structure has changed. Computing power costs a tiny fraction of what it used to. Malls have been replaced by e-commerce. People prefer small urban apartments to large suburban houses. Cars and appliances need to be replaced less often. In any event, the end of labor force growth means less demand for new capital.
Self-Inflicted Wounds Piling on Higher Debt Levels while Strangling Our Future
A WaPo editorial lays waste to this idea Trump is responsible for a so-called great economy. Trump fiscal policies have actually become a part of the problem, relying on trickle-down economics by cutting taxes on the wealthy, which doesn’t trickle down so much as it spikes deficits. Thanks to that false impression of a strong economy, his fairly steady 40% approval ratings are being propped up higher than they would otherwise be, based on the artificial & temporary sugar-high of a deficit-fueled economy. It’s truly astounding how DC has stopped caring about our growing federal debt: apnews.com/
THE FEDERAL budget deficit reached $310 billion in the first four months of fiscal 2019, which began in October. That’s a 40 percent increase over the same period a year earlier (adjusting for technicalities that distorted the previous figures). The United States is on course for a $900 billion deficit this year, just as the Congressional Budget Office forecast — and the causes are plain to see. President Trump and a Republican Congress enacted massive tax cuts in December 2017 while imposing essentially zero restraint on federal spending. Barring policy change, the CBO projects deficits will begin exceeding $1 trillion per year in 2022 and will average 4.4 percent of national output for a decade thereafter, in contrast to an average of 2.9 percent over the past half-century .
Not to worry, the Trump administration responds. “Growth solves the problem,” White House economic adviser Larry Kudlow said, true to supply-side doctrine that holds that tax cuts pay for themselves by stimulating more output. In this respect, Mr. Kudlow is being bipartisan, sort of. Insouciance about deficits is in fashion among Democrats, too, including some who have embraced a dubious new concept known as “modern monetary theory,” a sort of left-wing analog to supply-side that holds, essentially, that the United States can engage in unlimited deficit spending financed by the Federal Reserve. With both political parties sending such blasé messages, and no signs — yet — of harm to the broader economy, it’s little wonder that only 48 percent of the public considers deficit reduction “a top priority,” according to a Pew Research Center poll taken in January.
For our part, we don’t think the deficit per se is likely to cause short-term economic harm, or that there’s a case for immediately adopting a zero-deficit budget. And we don’t know anyone who does think those things — notwithstanding the pummeling that straw man sometimes takes from the deficit doves. What we do believe is that fiscal prudence counsels against accelerated debt accumulation during a time of full employment, as opposed to trimming deficits and preserving fiscal space to deal with the next recession — among other priorities, foreseeable and otherwise, with which the country will be faced. We agree with CBO Director Keith Hall, who examined the latest numbers and remarked that “it’s hard to imagine this is sustainable ,” and with Fed Chair Jerome H. Powell, who told members of Congress at a Feb. 27 hearing that “the idea that deficits don’t matter for countries that can borrow in their own currency . . . is just wrong.”
In a healthy democracy, the budgeting process reflects a reasonable balance between the resources available and policy priorities, both present and future. Leaders persuade voters to accept trade-offs in the public interest. In an unhealthy democracy, leaders pretend that resources are unlimited and compete for voter favor by promising the moon. They engage in magical thinking. They opportunistically abandon their party’s supposed fiscal principles, as the Republicans have done under Mr. Trump. Judged by these criteria, alas, democracy in the United States is not healthy.
Art of the Deal?
Whether it’s dealing with the leaders of Russia, China or North Korea, or even negotiating with Pelosi & Schumer over immigration/the wall prior to the government shutdown, Trump has proven himself to be a surprisingly lousy dealmaker. He doesn’t prepare going in & it’s all about show rather than substance: the-theater-of-the-
President Trump, elected Republicans and Trump supporters are on quite a losing streak. They lost the House majority. They lost the shutdown battle. They lost the House vote on a resolution to block the wall. (They haven’t built an inch of new wall under Trump.) They lost on trade by their own terms — winding up with an unending tariff war, pain inflicted on American farmers and the biggest trade deficit in goods ever. They lost public support on the tax cuts — which opened the floodgates of red ink and are perceived as a gift to the rich and corporations. (No, workers didn’t get $4,000 raises as promised.) They have lost the climate-change argument with the public. They lost the effort to repeal the Affordable Care Act. So much losing. Trump hasn’t been able to deliver on other promises — reducing drug costs, bringing back coal, and most embarrassing for a developer, passing a major infrastructure bill. He talks and tweets and blames others. However, he is president, and he has shown time and again that the job is beyond him. This is a serious problem for a president who thinks he needs to be reelected to avoid indictment. (Even — God forbid — after a second term, state indictments can proceed and not all statutes of limitations on federal crimes will have run out. He can run, but he cannot permanently hide from the law.)
Democrats have a solid good argument that Trump’s willful ignorance, poor negotiating skills and vulnerability to flattery have hurt the position of the United States in the world and hurt many of his supporters at home. When he says things like he would be “very disappointed” (but doesn’t thinkhe will be!) in Kim Jong Un if North Korea’s Sohae Satellite Launching Station is under construction, he confirms the criticism that he has been duped, hired shoddy staff (including relatives who couldn’t otherwise have even gotten security clearances) or lacks smarts — or all of the above. (It doesn’t help that we know he forced schools he attended to hide his grades. Dim Donald, you might say.) The sole reason that Trump is hanging in there — other than Fox News and the rest of the right-wing propaganda machine — is the economy. If that slows this year or next, which many economists expect, there’s no telling how quickly big donors will abandon him. Democrats and Republican primary challengers hardly need to make the case that Trump is racist, dishonest and unethical. A large percentage of the electorate already buys that. The presidential contenders can let the House investigators show that he is corrupt, abused power and obstructed justice; they can let prosecutors make the case that Trump’s also a law-breaker. Trump’s 2020 opponents have a more devastating critique: He’s a loser, temperamentally and intellectually unfit from the start and incapable of learning on the job. It’s a powerful political argument against someone who depends on the image of toughness, and it has the benefit of being true.
Our disjointed hodgepodge of a healthcare insurance system is too confusing, too cumbersome & way too expensive. But it will be too hard to unravel with most Americans having their coverage tied in with their employers. The only way to proceed might be in fixing our government coverage to make it more efficient & affordable, letting it function in conjunction with private coverage, where in time Americans can evaluate whether our public plan ultimately proves better than the private ones. See the unique challenge America has with health care inside us-health-care-private-
So many of the migrants fleeing to our southern border are now families escaping extreme poverty & violence in their homelands why-migrant-
Even family farms are getting trampled under by the corporate giants: theguardian.com/
An interesting antitrust debate in our modern high-tech economy: theguardian.com/
Analysts anticipate a slowdown ahead: newyorker.com/news/our-
A stubbornly persistent issue: theatlantic.com/
Gutting funding to the IRS helps the GOP wealthy donors get away with the same type of tax cheating Trump has done throughout his career: thinkprogress.org/irs-budget-
There’s both a lot to like & not like in the House-passed H.R. 1 bill. The good parts are in cracking down on voter suppression, gerrymandering & dark money as revealed in the links below. But it would never pass the Senate because the GOP’s big donors are dead set against it. It’s just further proof GOP politicians aren’t really prioritizing the people:
Out on the Fringes
I don’t think Trump will be eligible to run for president next year, because constitutionally the impending discovery of his many crimes won’t let him. But the echo has made the GOP base extremely extreme, so Trumpism & far-right radicalism must be defeated at all costs. Us NeverTrumpers are fighting the good fight to retrieve the GOP back closer to the center & sanity. But the Dem base has also been shifting far to the fringes, which if their eventual nominee is painted by the GOP as socialist, it could render them unelectable. The state we find ourselves in is brilliantly articulated in this full op-ed posted from Rubin inside what-you-do-dont-do-
We have gone from a robust two-party democracy to one in which the Republican Party has lost moral legitimacy, intellectual honesty and fidelity to the Constitution, while the Democratic Party flirts with socialism, tribalism and isolationism. What is someone on the center-right or center-left, or just a plain old centrist, to do? For starters, you call out the Republicans with brutal honesty — as the good folks at the Bulwark and other
NeverTrump voices have done. When Republicans quiver and shy away from rebuking President Trump’s unconstitutional power grabs, when Trump lavishes praise on dictators, attacks the First Amendment and the idea of truth, and spouts economic nonsense, you speak out again and again, because each time you do, Trump’s malfeasance is revealed, his enablers are embarrassed and his opponents are emboldened. You root for the Trumpized GOP to lose, not only because it endangers the country but because only in utter defeat can it regenerate.
You do not spare Trump’s enablers from criticism, but rather expose and embarrass them as intellectual frauds and partisan bullies. Highlighting daily their refusal to put country above party and to take ownership of the most dangerous and objectionable administration in history is an important part of disabling Trump’s support system. (Their howls of protest signify that the attacks have hit home.) You also celebrate the tiny green shoots — 13 House GOP members and a few Senate Republicans who vote for a resolution halting the emergency declaration, a congressman who asks an appropriate fact-finding question at a hearing into Trump’s misconduct, sponsors of legislation to protect the special counsel and other Republican dissidents trying to preserve truth and decency in a party virtually devoid of both. You praise new groups such as Checks and Balances or Republicans for the Rule of Law, which do the daily work of blocking and tackling in the battle against Trump and Trumpism.
If you are intellectually creative and honest, you work at places such as the Niskanen Center to devise a wholly different intellectual framework and a new agenda to replace the antiquated and counterproductive platform that drove the GOP into an intellectual cul-de-sac. You support Republican primary challengers to Trump (as well as challengers to his sycophantic enablers) who are willing to call out Trump’s attacks on democratic norms and to defend principles such as free trade, speak honestly about climate change and provide an example of sane, responsible governance. You support the many fine state attorneys general and third-party groups litigating against Trump on the emoluments clause, the Muslim travel ban, the phony emergency declaration, First Amendment violations and more. You call out Republican voter suppression techniques and bogus claims of massive voter fraud, all designed to perpetuate power for a declining segment of the electorate.
You size up the Democratic Party, knowing in all likelihood that the race will come down to a choice between its nominee and Trump. You recognize the role of moderate Democratic voices who are able to win primaries and flip seats. You call out extremism and foolishness exhibited by the party’s far-left fringe, whose ideas are unworkable and scary — and whose favorite candidate, if nominated, would very likely enable Trump’s reelection. You encourage Democrats to adopt sound national security ideas, and you warn against protectionism and other populist inanities. You criticize their flirtation with tribalism and those who condone bad behavior in their own camp. By encouraging more centrist voices and calling out the same maladies that afflicted Republicans, you can help encourage Democratic primary voters to choose wisely and, whenever possible, encourage center-left/center-right alliances on everything from support for human rights to defense of the rule of law.
What don’t you do? You don’t worry whether it’s “working”; rather, you persist in fighting the good fight, knowing that today’s failures might lay the groundwork for tomorrow’s victories. You don’t allow the perfect to become the enemy of the good (or even the adequate). You don’t return to the clutches of a thoroughly rotten Trumpized Republican Party just because Democrats might follow the GOP’s example. And you don’t exclude the possibility of a third party or a replacement party. You surely don’t imagine that there is only one way to solve the problem of an unhinged Republican Party. No one should be under the illusion that the Trumpian fever will break on its own. It is only by cultivating democratic (small “d”) antibodies that there is the opportunity for the recovery of functional, pluralistic democracy. Considering Trump’s extraordinarily high disapproval numbers, the string of administration defeats in court, the 2018 midterm results, the plethora of investigations into Trump (for which there is majority support) and the upsurge in participatory democracy, it’s hard to argue that the Trump opposition is “failing.” In fact, over the past couple of years, there has been a whole lot of winning.
Fix It or Lose It
As I repeatedly warn, if we don’t find some way to fix modern-day capitalism for all workers, the most progressive Dems will ride the wave of the attitudes among young people into a more socialist-leaning agenda:
Dignity of Work
Our Ohio Senator Sherrod Brown has decided not to run for president, probably because he’d run into the same disadvantages as Elizabeth Warren & other Dem candidates face: https://www.thevoracs.
But restoring the dignity of work doesn’t necessarily mean resorting to some of the more expensive plans being floated by the most progressive Dem candidates, which might actually wind up squashing the American work ethic through a significant expansion of the safety net. So as a society when we embark on our key mission of putting workers in better, higher-paying occupations, not only can successfully accomplishing that help incentivize people to embrace their work, but along with that our country would have the moral mandate to disincentivize people from taking advantage of overly generous governmental benefits programs. If Dem candidates get too heavy-handed on a big-spending wish list, the GOP will have a field day painting it as socialism. And progressives should not be bashing capitalism as irredeemable, but instead could say it needs reformed so it can work for all. Government policies which can turn the tide & help provide true opportunity/careers for workers to earn a decent living, it’s at that point our nation can curtail government assistance that encourages a dependency mentality. Rampant freeloading & abusing the system cannot be acceptable, as the benefits should start going only to the truly needy.
The working class losing so much ground through the years is the primary economic challenge, which Dem hopefuls must appeal to them in winning back a constituency that had largely slipped away when Trump spread his magical pixie dust during the previous campaign. Look for candidates with realistic & thoughtful proposals & not just a basket of goodies: how-democrats-can-
Sherrod Brown is preaching a message he believes can win working-class voters for Democrats in 2020: the dignity of work. “Work hasn’t been rewarded in this country the way we like to think it was historically,” Brown told me in a recent interview. “No job is menial if you make an adequate wage. You really start with that. One job should be enough.” Brown is trying to bring back an old-fashioned, worker-centered populism to the Democratic Party. But he has decided that he won’t do that by running for president himself. The senator announced on Thursday that he would fight for the “dignity of work” from the United States Senate instead of pursuing the White House in the 2020 campaign. “I will keep calling out Donald Trump and his phony populism. I will keep fighting for all workers across the country.
Brown says this ethos is drawn from the words of Martin Luther King Jr., who once said that “all labor has dignity.” It is a belief that anybody who works a full-time job should be able to live a middle-class life — and a recognition that there are many kinds of “work” that we don’t treat as such. Brown has drawn from a half-century of economic data and liberal theory to formulate a comprehensive and accessible narrative about how the American economy has changed. Productivity and wages had once increased in parallel, but that connection broke starting in the 1970s. American workers kept increasing their productivity, but real wages have fallen. In short, work isn’t worth as much as it used to be. Brown lays the blame at the feet of corporations and their embrace of the gospel that their duty is to maximize their stock value. He says they’ve marginalized workers by eroding their collective bargaining power and through other forms of exploitation. He sees the worker-employer relationship as a fundamentally adversarial one.
“Something changed with Milton Friedman’s preaching … Friedman preached that companies had one loyalty and that is to stockholders,” Brown tells me. “It probably gave employers some economic and moral justification for doing what they might have wanted to do.” His prescription is a thorough yet knowingly practical one: a tax overhaul, a minimum wage hike, and a strengthening of worker rights. We’ve seen the corresponding collapse of wage security and benefits. The number of workers involuntarily working part time hit a historic high of 9 million during the Great Recession, and while it has receded in an improving economy, the number remains well above pre-recession trend lines. More workers are working two part-time jobs. Retirement benefits give higher-income workers an advantage. Most workers still do not have access to paid family leave. Paid vacation time for lower-income employees is rare. Brown says the fundamental problem is that the American political system — through the tax code, through monetary policy, through the turn from collective bargaining — has empowered corporations over workers. Work simply isn’t as valuable as it used to be. That’s what Sherrod Brown wants to fix.