Facing the Reality of the Economy and the Ongoing Crisis of National Unemployment

http://www.nytimes.com/2011/01/03/opinion/03krugman.html?src=me&ref=general

All,

This is a big and much needed dose of REALITY from that increasingly rare stock of public figures in American life--a man who actually KNOWS what he's talking about! As usual the truly progressive and Nobel Prize winning economist tells us the real truth and what we can and must do about it with a refreshing clarity of language and rational thought that is deeply needed and appreciated. Thanks for the ever timely heads up on the economy Paul. You are a genuine public intellectual who actually provides information and insight that we can all readily grasp and use.

Kofi


OP-ED COLUMNIST

Deep Hole Economics
By PAUL KRUGMAN
January 2, 2011
New York Times

If there’s one piece of economic wisdom I hope people will grasp this year, it’s this: Even though we may finally have stopped digging, we’re still near the bottom of a very deep hole.

Fred R. Conrad/The New York Times
Paul Krugman

Why do I need to point this out? Because I’ve noticed many people overreacting to recent good economic news. What particularly concerns me is the risk of self-denying optimism — that is, I worry that policy makers will look at a few favorable economic indicators, decide that they no longer need to promote recovery, and take steps that send us sliding right back to the bottom.

So, about that good news: various economic indicators, ranging from relatively good holiday sales to new claims for unemployment insurance (which have finally fallen below 400,000 a week), suggest that the great post-bubble retrenchment may finally be ending.

We’re not talking Morning in America here. Construction shows no sign of returning to bubble-era levels, nor are there any indications that debt-burdened families are going back to their old habits of spending all they earned. But all we needed for a modest economic rebound was for construction to stop falling and saving to stop rising — and that seems to be happening. Forecasters have been marking up their predictions; growth as high as 4 percent this year now looks possible.

Hooray! But then again, not so much. Jobs, not G.D.P. numbers, are what matter to American families. And when you start from an unemployment rate of almost 10 percent, the arithmetic of job creation — the amount of growth you need to get back to a tolerable jobs picture — is daunting.

First of all, we have to grow around 2.5 percent a year just to keep up with rising productivity and population, and hence keep unemployment from rising. That’s why the past year and a half was technically a recovery but felt like a recession: G.D.P. was growing, but not fast enough to bring unemployment down.

Growth at a rate above 2.5 percent will bring unemployment down over time. But the gains aren’t one for one: for a variety of reasons, it has historically taken about two extra points of growth over the course of a year to shave one point off the unemployment rate.

Now do the math. Suppose that the U.S. economy were to grow at 4 percent a year, starting now and continuing for the next several years. Most people would regard this as excellent performance, even as an economic boom; it’s certainly higher than almost all the forecasts I’ve seen.

Yet the math says that even with that kind of growth the unemployment rate would be close to 9 percent at the end of this year, and still above 8 percent at the end of 2012. We wouldn’t get to anything resembling full employment until late in Sarah Palin’s first presidential term.

Seriously, what we’re looking at over the next few years, even with pretty good growth, are unemployment rates that not long ago would have been considered catastrophic — because they are. Behind those dry statistics lies a vast landscape of suffering and broken dreams. And the arithmetic says that the suffering will continue as far as the eye can see.

So what can be done to accelerate this all-too-slow process of healing? A rational political system would long since have created a 21st-century version of the Works Progress Administration — we’d be putting the unemployed to work doing what needs to be done, repairing and improving our fraying infrastructure. In the political system we have, however, Senator-elect Kelly Ayotte, delivering the Republican weekly address on New Year’s Day, declared that “Job one is to stop wasteful Washington spending.”

Realistically, the best we can hope for from fiscal policy is that Washington doesn’t actively undermine the recovery. Beware, in particular, the Ides of March: by then, the federal government will probably have hit its debt limit and the G.O.P. will try to force President Obama into economically harmful spending cuts.

I’m also worried about monetary policy. Two months ago, the Federal Reserve announced a new plan to promote job growth by buying long-term bonds; at the time, many observers believed that the initial $600 billion purchase was only the beginning of the story. But now it looks like the end, partly because Republicans are trying to bully the Fed into pulling back, but also because a run of slightly better economic news provides an excuse to do nothing.

There’s even a significant chance that the Fed will raise interest rates later this year — or at least that’s what the futures market seems to think. Doing so in the face of high unemployment and minimal inflation would be crazy, but that doesn’t mean it won’t happen.

So back to my original point: whatever the recent economic news, we’re still near the bottom of a very deep hole. We can only hope that enough policy makers understand that point.

Facing the Reality of Political Warfare in 2011--And Why It's Important

http://www.nytimes.com/2011/01/04/opinion/04herbert.html?_r=1&nl=todaysheadlines&emc=tha212

All,

The demagogic thugs, bullies, and gangsters who run and control the Republican Party are as usual out to destroy us all in the name and at the behest of the super wealthy elites and are more determined than ever that structural and institutional forms of racism, sexism, homophobia, militarism, and corporate domination rule the country with an iron fist. All these venal politicians need to succeed is electoral complicity and consensus by millions of reactionary, braindead, and largely bigoted and predominately white American poor, working, and middle class citizens who wouldn't know how to vote in their own objective political and economic self interest if their lives depended on it--- which tragically and not so ironically enough it actually does. So the real challenge for the many millions of the rest of us who don't subscribe to or support the blatant greed, hatred, mendacity, authoritarianism, and hypocrisy of the Right is to not cave in to and be shamelessly intimidated by these political cretins and their economic/ideological sponsors and benefactors. What that is going to require from us more than anything from this point on is real courage, commitment, and a sustained, well organized tenacity and insistence on an alternative vision that will systematically DEMAND of ourselves, the President, and Congress that we not be assaulted, exploited, defamed and openly subjected to contempt, ridicule, condescension, and abandonment by our government and other major social, cultural, and economic institutions. In other words: This is WAR and anyone who thinks that the phantoms and delusions of "bipartisanship" and unilateral "compromise" (read: abject submission) is not only fooling themselves but are ensuring that the Republican rightwing agenda will ultimately triumph in 2011 and far beyond on a massive scale that will make what the deadly criminals of the Bushwhacker regime did from 2000-2008 look like--dare I say it!--a mere tea party...

Kofi


OP-ED COLUMNIST

Get Ready for a G.O.P. Rerun
By BOB HERBERT
January 3, 2011
New York Times

You just can’t close the door on this crowd. The party that brought us the worst economy since the Great Depression, that led us into Iraq and the worst foreign policy disaster in American history, that would like to take a hammer to Social Security and a chisel to Medicare, is back in control of the House of Representatives with the expressed mission of undermining all things Obama.

Damon Winter/The New York Times
Bob Herbert

Once we had Dick Cheney telling us that Saddam Hussein had weapons of mass destruction and belligerently asserting that deficits don’t matter. We had Phil Gramm, Enron’s favorite senator and John McCain’s economic guru, blithely assuring us in 2008 that we were suffering from a “mental recession.”

(Mr. Gramm was some piece of work. A champion of deregulation, he was disdainful of ordinary people. “We’re the only nation in the world,” he once said, “where all of our poor people are fat.”)

Maybe the voters missed the entertainment value of the hard-hearted, compulsively destructive G.O.P. headliners. Maybe they viewed them the way audiences saw the larger-than-life villains in old-time melodramas. It must be something like that because it’s awfully hard to miss the actual policies of a gang that almost wrecked the country.

In any event, the G.O.P. has taken its place once again as the House majority and is vowing to do what it does best, which is make somebody miserable — in this case, President Obama. Representative Darrell Issa, the California Republican who is now chairman of the Oversight and Government Reform Committee, said recently on the Rush Limbaugh program that Mr. Obama was “one of the most corrupt presidents in modern times.” He backed off a little on Sunday, saying that what he really thinks is that Mr. Obama is presiding over “one of the most corrupt administrations.”

This is the attitude of a man who has the power of subpoena and plans to conduct hundreds of hearings into the administration’s activities.

The mantra for Mr. Issa and the rest of the newly empowered Republicans in the House, including the new Budget Committee chairman, Paul Ryan of Wisconsin, is to cut spending and shrink government. But what’s really coming are patented G.O.P. efforts to spread misery beyond Mr. Obama and the Democrats to ordinary Americans struggling in what are still very difficult times.

It was ever thus. The fundamental mission of the G.O.P. is to shovel ever more money to those who are already rich. That’s why you got all that disgracefully phony rhetoric from Republicans about attacking budget deficits and embracing austerity while at the same time they were fighting like mad people to pile up the better part of a trillion dollars in new debt by extending the Bush tax cuts.

This is a party that has mastered the art of taking from the poor and the middle class and giving to the rich. We should at least be clear about this and stop being repeatedly hoodwinked — like Charlie Brown trying to kick Lucy’s football — by G.O.P. claims of fiscal responsibility.

There’s a reason the G.O.P. reveres Ronald Reagan and it’s not because of his fiscal probity. As Garry Wills wrote in “Reagan’s America”:

“Reagan nearly tripled the deficit in his eight years, and never made a realistic proposal for cutting it. As the biographer Lou Cannon noted, it was unfair for critics to say that Reagan was trying to balance the budget on the backs of the poor, since ‘he never seriously attempted to balance the budget at all.’ ”

We’ll see and hear a lot of populist foolishness from the Republicans as 2011 and 2012 unfold, but their underlying motivation is always the same. They are about making the rich richer. Thus it was not at all surprising to read on Politico that the new head of the House Energy and Commerce Committee, Fred Upton of Michigan, had hired a former big-time lobbyist for the hospital and pharmaceuticals industries to oversee health care issues.

I remember President Bush going on television in September 2008, looking almost dazed as he said to the American people, “Our entire economy is in danger.”

Have we forgotten already who put us in such grave peril? Republicans benefit from the fact that memories are short and statutes of limitations shorter. It was the Republican leader in the House, Tom DeLay, who insisted against all reason and all the evidence of history that “nothing is more important in the face of war than cutting taxes.”

But that’s all water under the bridge. The Republicans are back in control of the House, ready to run interference for the rich as recklessly and belligerently as ever.

In 2011 We Must Face Reality Or Suffer The Consequences--Part One

http://www.huffingtonpost.com/2010/12/30/alters-the-promise-epilog_n_802866.html

All,

Like I've been saying for well over a year now, it's way past time for all of us to get our heads out of the clouds and shut down any more silly and useless adolescent dreaming about who or what Obama "could be/should be." More than ever it's time for all of us to be fully committed adult citizens and take some serious responsibility for honestly dealing with the blatant REALITY of who and what this man and his wayward administration actually is and isn't. Our watchword for 2011 must be: No More Excuses! We must incessantly hold both this President and ourselves fully and equally ACCOUNTABLE for what by any objective standard is a simply awful and obviously failing national economic policy. What this means is that if we truly want real reform--and not just some halfass token version of same-- we are going to have to organize on a national level to put immense political pressure on the White House and Congress. Needless to say the Republicans will absolutely refuse to do anything but destroy this Presidency and all the rest of us in the bargain so the real WEIGHT is gonna be on the President and the Democratic Party to actually deliver on their promises or at the very least FIGHT LIKE MANIACS against the inevitable rollbacks that are sure to come if the President and the Democrats in the House and Senate don't fiercely stand up to the additional 69 Republican rightwingers who were elected to the House and Senate during the November, 2010 midterms. While we obviously must continue to generally support the President vis-a-vis and in opposition to the Republican right and their corporate sponsors this fundamentally provisional political and ideological support MUST BE PRINCIPLED AND CRITICAL at all times to be of any real use or practical value to either him or us. If we don't do what is necessary to change the direction of this economy now during 2011 you can rest assured that Obama will be a one term President and go down to ignominious defeat in 2012--and most importantly of all WE will be wiped out and decimated by an intense and unrelenting national rightwing backlash that will absolutely destroy everything and everyone in its path in the aftermath of that defeat. Mark my words...

Kofi


Jonathan Alter's 'The Promise' Epilogue: Obama Team's Dysfunction Prompted Lack Of Focus On Jobs; Bill Clinton Annoyed At White House
by Marcus Baram
December 30, 2010
The Huffington Post \


Some revelations about the Obama administration detailed in the new epilogue to the upcoming paperback release of Jonathan Alter's bestseller, "The Promise," probably won't please too many folks at the White House. Alter claims that a dysfunctional relationship between top White House aides hurt the administration's policy on job creation, the Consumer Financial Protection Bureau was almost dropped from financial reform legislation and was only reinstated after complaints by Elizabeth Warren, and Bill Clinton continually grumbles about being disrespected by the administration.

The Obama administration's perceived failure to take laser-like aim at the unemployment crisis was partly due to the dysfunctional relationship between White House chief of staff Rahm Emanuel, top economic adviser Larry Summers and senior adviser David Axelrod, specifically the intransigence of Summers, according to Alter:

"The inability to pivot in 2010 to a single-minded focus on jobs was a by-product of what one senior aide called "dysfunction" between Emanuel, Summers, and Axelrod. Rahm had always admired Larry, but he was becoming exasperated with his failure to give him a jobs plan he could sell. 'Week after week, Rahm would say, 'Let's explore this' or 'How about that?' and Larry would slow-walk everything,' recalled one senior advisor. 'He basically doesn't believe in the government helping small business'."

Alter writes that the CFPB survived certain death only because of Warren's commitment:

"The most popular provision of Dodd-Frank almost didn't happen. In late 2009 Elizabeth Warren learned that a proposed bureau of consumer financial protection had been dropped from the bill. She went to the White House to object, and the bureau, to the dismay of predatory lenders, was reinstated."

Obama's relationship with the Clintons remains strained and Bill Clinton constantly complains in private about how he's been disrespected by the administration, writes Alter.

Though they talk frequently, the former president was annoyed that Obama didn't give him credit for helping to negotiate a spy swap that led to the release from Russian jails of four Russians who had been working for the CIA (in the wake of the bust of Russian spies living in American suburbs six months ago), Clinton's aides tell Alter. In addition, Clinton was miffed that Samantha Power, who insulted Hillary during the 2008 campaign, was chosen as an emissary to Bosnia in July. ("Bill Clinton might not have accepted the job, but he wanted to be asked," Alter writes.)

"An old friend compared him [Clinton] to a big puppy dog who just needed some attention to be happy and helpful."

Clinton felt dissed because, after negotiating the release by North Korea of two imprisoned American journalists, he was told to travel on a separate plane so as not to overshadow the arrival of the women. "Some of these guys in the White House act small," one aide told Alter.

And Clinton's team was angry that former protégés like Rahm Emanuel didn't show the former president proper respect. After Clinton "worked like a nerd" to prepare a detailed 30-page memo on how to incentivize banks with loan guarantees to spur job creation, the White House ignored the memo for a few months, and then treated Clinton like a "prop" during Obama's meeting with CEOs. When a Clinton aide complained to Emanuel, "Are you serious?", the chief of staff replied that Clinton should be grateful he was on the president's schedule at all, writes Alter.

"Clinton felt better disposed toward his 1992 opponent, George H.W. Bush... one senior aide described Bush as a 'father figure' to Clinton, who never knew his natural father..."