A couple political, but not partisan, thoughts

  1. Paul Krugman highlighted Speaker Paul Ryan’s absurd comments denying Obama credit for the current state of the economy after Obama highlighted his actions in getting us to this stage in major portions of Obama’s State of the Union address on Tuesday.Speaker Ryan stated:

    “I think the Federal Reserve has done more,” he said. “What’s happening is people at the high end are doing pretty darn well because of loose money from the Fed. And all these regulations, all this uncertainty, all these taxes are giving us weak economic growth.”

    So, according to Ryan, Obama deserves no credit for the Bernanke led Fed monetary decisions back in 2011, since it was all Bernanke. Yet, back in 2011, then-House Budget Chairman Paul Ryan criticized those Bernanke Fed policies.

    Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee and a vocal skeptic of the Fed’s bond-buying effort, told Mr. Bernanke: “My concern is that the costs of the Fed’s current monetary policy — the money creation and massive balance sheet expansion — will come to outweigh the perceived short-term benefits.”

    Mr. Ryan described “a sharp rise in a variety of key global commodity and basic material prices,” and an increase in interest rates of longer-term Treasury securities. And while conceding that American consumers were not yet experiencing substantially higher prices, Mr. Ryan warned that “the inflation dynamic can be quick to materialize and painful to eradicate once it takes hold.”

    Mr. Ryan all but accused Mr. Bernanke of devaluing the dollar, saying, “There is nothing more insidious that a country can do to its citizens than debase its currency.”

    So Ryan’s argument is that Obama deserves no credit for Fed policy that led to our current state of the economy, but Ryan hated the Fed policy that led to our current state, and would have likely been dismantled and replaced them with an austerity plan that has worked oh so well for the rest of the world around us.

  2. This brings me to another point that seems like a somewhat common retort of the Obama presidency by right-of-center folks (that has leaked into the public consciousness generally). I was speaking to a relative over the holidays and his general view regarding current economic optimism went something like this: People are so quick to applaud Obama for restoring the economy, but let’s be honest, we were in such bad shape anyone could have made things better.Such a viewpoint underscores the tremendously horrible job our media does in explaining even the most basic policies we take as a nation to manage our economy. In 2008 (and even ’til this day) there’s a consensus from the right that the proper course of action in dire economic situations is to adopt more austere measures (aka spending cuts, decreasing welfare and job insurance benefits, etc.) to fight against troubles plaguing a lagging economy. It doesn’t matter the challenges facing that economy, whether they be major employment slack, an abnormal banking sector that isn’t loaning money as typically done, or a real estate market that was in tailspin due to the plethora of oversold, bad mortgages that were bundled with other good mortgages causing pretty much all of them to be tainted and therefore deeply hindering real-estate secured consumer spending that kept our economy afloat since right after the turn of the millennium. 

    The underlying economic policies of both parties is a hugely important difference between them and we have examples all around the globe of nations who embraced the same strategies backed by the GOP when recession hit. So there’s a major difference between the American economy over the past seven years, that welcomed investment by the Government to overcome decreased private spending, as opposed to nations who took a very different, much more austere plan, in Europe, South America, and Asia, who are still struggling—and creating downward pressures upon the world economy today.
    The bailout of General Motors. Ensuring that TARP was properly pushed and passed. Quantitative Easing. All examples of efforts Obama backed that, had they not been passed, would have left our country in an entirely different economic reality. In Europe, we watch Germany demand that debt ridden countries like Greece make good on their debts before assisting further. And we wonder why the U.S. Economy is very different than the EUs today. These things matter.

  3. Finally, a completely unrelated thought that I found intriguing from Christie’s State of the State. He announced an effort to increase access to care for mental health and substance abuse in his address.

    Today, I’m very proud to announce a historic financial commitment of more than $100 million to increase access to care for mental health and substance use.

    We’re going to provide more competitive reimbursement rates for services and providers.

    As demand for services continues to grow, we also need to widen access. Increased reimbursement rates will help improve critical services and provide more treatment capacity. The investment we’re making will change lives and get more people into treatment earlier, instead of the emergency room or prison later. It’s the fiscally responsible thing to do – and it’s the morally right thing to do.

    Let’s highlight that last sentence: It’s the fiscally responsible thing to do – and it’s the morally right thing to do. Fiscally responsible.

    I can’t see Christie winning the presidential primary with the current political winds. I’ve said it many times that 2016 feels eerily similar to 1968 in terms of historic relevance to the world of political science. Many people smarter than me believe we’re overdue for a political realignment of the parties, and the rise of Trump and Sanders feels like there might be something interesting going on.

    But I think at some point, Christie will play a role in rebranding the GOP, because, despite his actual policies’ dissonance, he understands how to pull at the heartstrings of normal, everyday people. That’s why that whole fiscally responsible thing intrigues me. Since Reagan, the GOP definition of fiscally responsible, at least when addressing populist ideas, is that cuts = fiscally responsible. Over this same period, democrats, in my opinion, less successfully, have argued that fiscal responsibility = finding savings.

    Christie’s solution is to invest $100 million into a program—not cut funding. That’s not a traditional GOP view, these days. Of course investments like this are estimated to produce $400 to $700 million, but that’s the type of argument liberals make when explaining why the Affordable Care Act, or food stamps, or the EITC, or unemployment insurance is a good deal. The GOP typically lambasts that sort of idea, since they feel government spending interferes with market forces and crowds out investments.

    I don’t really have an ultimate point for bringing this up. I merely find it intriguing that a Republican with such a big spotlight is making arguments like that. Feels modestly Keynesian. 

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