Economic Amnesia / Seize the Day

Economic Amnesia—It is an article of faith among the Tea Party movement that the “socialist” policies of Barack Obama have had little effect other than adding to the deficit and federal debt. Studies by the Obama administration and the Congressional Budget Office have found that to the contrary, government intervention meant the difference between a recession and a depression. But the Teabaggers, and the Palin-Gingrich crowd, dismiss administration and CBO economic analysis as compromised because of the taint of government involvement.

Harder to argue with Mark Zandi of Moody’s Analytics.

Zandi, the chief economist at Moody’s, and Princeton Professor Alan S. Blinder, who served on the Federal Reserve Board of Governors, used Moody’s Analytics’ modeling to measure what sort of bang the government got for its buck — or more precisely, for the $700 billion Troubled Asset Relief Program (Bush) and the $784 billion American Recovery and Reinvestment Act (ARRA) (Obama).

The economists fed two sets of variables into the same equation.

Factoring for the full range of federal economic spending (in other words, the economy as it exists today), “real GDP, which declined 2.4 percent in 2009, expands 2.6 percent in 2010 and 3.6 percent in 2011, with monthly job growth averaging near 100,000 in 2010 and above 200,000 in 2011.”

Calculations that omit the extraordinary economic policy measures look quite different: “Real GDP falls a stunning 7.4 percent in 2009 and another 3.7 percent in 2010. The peak-to-trough decline in GDP is therefore close to 12 percent, compared to the actual decline of about 4 percent. By the time the employment hits bottom, some 16.1 million jobs are lost in this scenario — about twice as many as were actually lost. The unemployment rate peaks at 16.5 percent. … This dark scenario constitutes a 1930s-like depression.”

The report, “How the Great Recession Was Brought to an End,” addresses critics who argue that the stimulus program failed because it did not keep unemployment below 8 percent. The critics ignore the fact that unemployment was at 8 percent when the ARRA passed and that most analysts, “including Moody’s Analytics, misjudged how serious the downturn would be.”

Zandi and Blinder conclude that the $784 billion stimulus package should have been larger, something that Paul Krugman, Jamie Galbraith, and other Keynesian economists argued when the stimulus bill was passed.

This is complicated analysis, not likely to convince someone dressed in colonial-period clothing and holding an “Obama is a Socialist” sign. Nonetheless, it is important material to introduce into what passes for public discourse in this country — as Congressional election campaigns begin to seize the attention of potential voters.

Seize the Day—”We believe we have compromised significantly, and we’re prepared to compromise further,” said firebrand Senator John Kerry, before environmental legislation got bogged down in the Senate in the spring.

In an article posted on the Nieman Foundation blog, environmental writer Bill McKibben argues that Kerry’s willingness to compromise is symptomatic of the incrementalism of mainstream environmental organizations, such as the Natural Resources Defense Council and the Environmental Defense Fund. McKibben described some of the environmental reality the Congress refuses to address:

The planet, according to the National Oceanic and Atmospheric Administration, has just logged the warmest decade, the warmest year, the warmest six months, and the warmest April, May, and June on record.

Nine nations recorded their all-time high temperature records in 2010, ranging from Russia’s 111 degrees to Pakistan’s 130 degrees.

A study by Canadian researchers describes how warmer water has reduced phytoplankton — the base of the marine food chain — by 40 percent since 1950.

McKibben is calling for a broad-based environmental movement that would use the Civil Rights movement as its model, and extend beyond the wealthy white demographic that has dominated environmental advocacy.

He points to the “Appalachia Rising” conference in Washington, D.C., on September 25-27, which will focus on coal mining and the use of coal as a fuel. The conference will be followed by a public protest on Monday, September 27, which the organizers say will include the possibility of “an act of dignified, non violent civil disobedience … for those who wish to express themselves by risking arrest.

Leave a Reply

Your email address will not be published. Required fields are marked *

We collect email addresses for the sole purpose of communicating more efficiently with our Washington Spectator readers and Public Concern Foundation supporters.  We will never sell or give your email address to any 3rd party.  We will always give you a chance to opt out of receiving future emails, but if you’d like to control what emails you get, just click here.

Sign up for The Washington Spectator's FREE e-Newsletter
Uncompromising reporting, progressive commentary – delivered monthly to your inbox.

Send this to a friend