I wonder if we (liberals) made a bad decision not to focus more on monetary policy solutions to our unemployment problems. I have taken a lot of my cues from Paul Krugman, and while he acknowledged that there were things the fed could do, he seemed to calling more strongly for fiscal stimulus.
There was a speech by the head of the Chicago Federal Reserve calling for greater fed action. His logic is simple and clear: the fed has a dual mandate - to maintain optimal levels of inflation and unemployment. We can say that the optimal levels are probably 2 percent for inflation and 6 percent for unemployment (a conservative estimate for full employment).
With unemployment 3 points higher than optimal, the fed should be doing way more. In fact, it should be willing to accept 3 percent inflation if it means bringing unemployment down to say 7 percent. And the Fed signaling their willingness to tolerate higher inflation is one of the non-standard tools Krugman said was possible to help bring down unemployment.
I - and many liberal economics commentators - love the speech. But I really think we should have been pushing for this much harder already. Fiscal stimulus was a non-starter. Obama couldn't achieve it. I believe he should have called for it and made Republicans look bad. But he couldn't get it. But he could have gotten more action from the Fed.
And he could have turned it into a great argument with Republicans. Imagine them fighting against monetary policy - so extreme they oppose Milton Freedman. And we could have had a debate about which is more important, inflation or unemployment? Republicans favor bankers, Democrats favor the unemployed.
In this case, all he had to do was convince the Fed that he was right - not ideologically extreme Republicans. And I think he could have won the debate as well.
But it's not too late (though Obama didn't mention it in his jobs speech). We need to push this front. Obama's jobs initiatives will be helpful (depending on how much is passed). But this could do a lot and sooner. And with less budget implications.
Friday, September 09, 2011
Failed Stimulus
I don't think this analysis of the stimulus is too off-base. Basically, the stimulus was poorly targeted. That is what happens when Congress gets to pass a stimulus. They see it as an opportunity to fund things they like, not necessarily things that will do the most for the economy.
I get that. I do. But I still think that a less-effective stimulus is better than no stimulus at all. It helped, but was too small and poorly targeted. And that is one reason we are where we are.
On a side note, I think they are unfair to Krugman. If I am not mistaken, I think he acknowledged that the stimulus was poorly targeted.
I get that. I do. But I still think that a less-effective stimulus is better than no stimulus at all. It helped, but was too small and poorly targeted. And that is one reason we are where we are.
On a side note, I think they are unfair to Krugman. If I am not mistaken, I think he acknowledged that the stimulus was poorly targeted.
Clean Air - Later
Last week, Obama announced he wouldn't allow the EPA to change the clean air regulations to toughen the ground level ozone standards. At some level, I get it. During a recession - or in this case a very weak recovery - government is reluctant to increase the costs on companies. Even in a situation when it seems companies don't lack money, they lack sales and any reason to hire and expand (ie demand is depressed).
But the way Obama did it seemed poor political strategy. What he should have said was, "Considering the state of our economy, I am being risk averse. I don't want to do anything that might add costs. But I want to be clear, we are not facing 9 percent unemployment because of regulations. And changing regulations won't get us out of the recession."
He should have used it as an opportunity to pick a fight with Republicans. Instead, once again he changed a policy and adopted Republican talking points. It made him look weak and unprincipled. And it made it look like Republicans are right about regulations.
But the way Obama did it seemed poor political strategy. What he should have said was, "Considering the state of our economy, I am being risk averse. I don't want to do anything that might add costs. But I want to be clear, we are not facing 9 percent unemployment because of regulations. And changing regulations won't get us out of the recession."
He should have used it as an opportunity to pick a fight with Republicans. Instead, once again he changed a policy and adopted Republican talking points. It made him look weak and unprincipled. And it made it look like Republicans are right about regulations.
Intelligence in Politics
I am sure I have written about this in the past, I want to add some new thoughts. With Michelle Bachman and Rick Perry in the running for the Republican presidential nomination, there is talk again about whether those two are smart enough to be president. Republicans often bristle at this and I think often misunderstand what is meant.
First, let me say that I agree that a president needs to be smart as a minimum qualification. But that isn't at all based on education. And the best way to illustrate this is to look at some examples. George W. Bush was educated at private high school and ivy league undergrad and business school (Exeter, Yale, and Harvard, respectively). But I would not consider him smart and often felt that he wasn't up to the job intelligence-wise.
Compare that to someone like Karl Rove, whom I do not like at all, but I would consider pretty smart. But Rove does not have a college degree. As you can see, that doesn't matter to me in terms of assessing his intelligence.
Much was made of Sarah Palin's peripatetic college history. Someone with her history could still be very smart. However it was used as another piece of evidence of her lack of intelligence - something people could tell based on how she answered questions.
The point is that many Republicans are very smart: John McCain (last in his class at Naval Academy but I don't hold that against him), John Boehner, New Gingrich (though he is accused of having an undisciplined mind), Mitt Romney, Mike Huckabee, John Huntsman, Tim Pawlenty, Bobby Jindal, Mitch McConnell. The problem many liberals have is with the few that squeak by that don't seem to be very smart. George W. Bush, Rick Perry (maybe less so), Michelle Bachmann, and Sarah Palin are the ones that come to mind that I would consider not up to the task.
To be clear, intelligence should be necessary, but not sufficient. John Kerry went to Harvard and is very smart. But I would say he might not have made the best president. And as smart as Obama is, he is not doing as well as many had hoped.
One last thing: I am realizing how Sarah Palin has set the bar lower in terms of intelligence. With her at one point considered a very strong contender for the nomination had she entered, I think we witnessed a new low (even Ann Coulter seems to admit that Palin isn't smart enough). And since she hasn't run, I feel so relived and am now more inclined to view Bachmann, Perry, and even Bush as smart enough since they are smarter than Palin. I don't think that is a good thing.
First, let me say that I agree that a president needs to be smart as a minimum qualification. But that isn't at all based on education. And the best way to illustrate this is to look at some examples. George W. Bush was educated at private high school and ivy league undergrad and business school (Exeter, Yale, and Harvard, respectively). But I would not consider him smart and often felt that he wasn't up to the job intelligence-wise.
Compare that to someone like Karl Rove, whom I do not like at all, but I would consider pretty smart. But Rove does not have a college degree. As you can see, that doesn't matter to me in terms of assessing his intelligence.
Much was made of Sarah Palin's peripatetic college history. Someone with her history could still be very smart. However it was used as another piece of evidence of her lack of intelligence - something people could tell based on how she answered questions.
The point is that many Republicans are very smart: John McCain (last in his class at Naval Academy but I don't hold that against him), John Boehner, New Gingrich (though he is accused of having an undisciplined mind), Mitt Romney, Mike Huckabee, John Huntsman, Tim Pawlenty, Bobby Jindal, Mitch McConnell. The problem many liberals have is with the few that squeak by that don't seem to be very smart. George W. Bush, Rick Perry (maybe less so), Michelle Bachmann, and Sarah Palin are the ones that come to mind that I would consider not up to the task.
To be clear, intelligence should be necessary, but not sufficient. John Kerry went to Harvard and is very smart. But I would say he might not have made the best president. And as smart as Obama is, he is not doing as well as many had hoped.
One last thing: I am realizing how Sarah Palin has set the bar lower in terms of intelligence. With her at one point considered a very strong contender for the nomination had she entered, I think we witnessed a new low (even Ann Coulter seems to admit that Palin isn't smart enough). And since she hasn't run, I feel so relived and am now more inclined to view Bachmann, Perry, and even Bush as smart enough since they are smarter than Palin. I don't think that is a good thing.
On Compromise and Obama
This is the second of two related pieces on Obama. The first talked about Obama's decision to be a moderate. This one will talk about Obama's belief in compromise above all else.
First, let me state clearly that I don't mind compromise. In fact, I think it is often necessary for anything to happen and for us as a society to progress.
It seems that the president has decided that voters want compromise. But he thinks that he has to start out by showing how willing he is to compromise. In other words, if he says the word compromise early enough and often enough, voters will see that he is the reasonable one and the Republicans the crazy ones.
But I don't think voters care when you say compromise, as long as you do compromise. In fact, in every situation, Obama has shown signs of good faith and not been rewarded by voters or his adversaries in the Republican party. He put forward a stimulus with significant tax cuts instead of making them demand it (and received 3 Republican votes for his troubles). He put forward a health care bill modeled on Romney's plan in Massachusetts instead of something more liberal (and received not votes). And his positioning on the debt limit has been nothing other than bending over backwards to show his willingness to compromise.
In none of these cases have voters shown signs of approving of his signs of good faith. And it certainly hasn't helped his negotiating position.
What he should do is start from a position of strength, and let the deal in the end be the sign of his willingness to compromise. And this would benefit liberal positions as well because he could spend time defending liberal ideals and then reach a compromise that has more of what he wants.
The bottom line is this: I and most voters want leaders to compromise, but we expect them to at least defend their position first.
First, let me state clearly that I don't mind compromise. In fact, I think it is often necessary for anything to happen and for us as a society to progress.
It seems that the president has decided that voters want compromise. But he thinks that he has to start out by showing how willing he is to compromise. In other words, if he says the word compromise early enough and often enough, voters will see that he is the reasonable one and the Republicans the crazy ones.
But I don't think voters care when you say compromise, as long as you do compromise. In fact, in every situation, Obama has shown signs of good faith and not been rewarded by voters or his adversaries in the Republican party. He put forward a stimulus with significant tax cuts instead of making them demand it (and received 3 Republican votes for his troubles). He put forward a health care bill modeled on Romney's plan in Massachusetts instead of something more liberal (and received not votes). And his positioning on the debt limit has been nothing other than bending over backwards to show his willingness to compromise.
In none of these cases have voters shown signs of approving of his signs of good faith. And it certainly hasn't helped his negotiating position.
What he should do is start from a position of strength, and let the deal in the end be the sign of his willingness to compromise. And this would benefit liberal positions as well because he could spend time defending liberal ideals and then reach a compromise that has more of what he wants.
The bottom line is this: I and most voters want leaders to compromise, but we expect them to at least defend their position first.
On Moderation and Obama
I respect the idea of moderation and centrism. The answer is sometimes in the middle. And moderates can do good to blunt the edges of the extremes on each side. But if you are going to be a moderate, you need to own it; in other words, it needs to come from core beliefs and not smell of political opportunism.
I can think of two examples of moderates that own it. David Brooks is a good example. He is a moderate conservative. Overall he believes in limited but energetic government. He is sometimes skeptical of government programs and thinks communities are better at solving problems. But he does believe government should do things like spend money on education and infrastructure.
Mitt Romney is another example - at least the Mitt Romney before he developed presidential aspirations. That Mitt Romney wants less taxes on businesses and fewer regulations. But he isn't opposed to new health care programs or social security. And he doesn't disbelieve science like global warming or evolution. That the current Mitt Romney no longer stands by those positions helps prove my point. By going more extreme, people don't believe he is genuine.
President Obama does not own his moderation. His previous positions sometimes show that he doesn't come by it naturally. And other times he shows it by trying to have it both ways.
Let's look at some examples for Obama. On same sex marriage, Obama has staked out an absurd position. He tries to support New York's law allowing same sex marriage, but he does this by nodding to states' rights. He also says that he personally supports civil union but that his position is evolving. So he is staking out a position in the middle - civil unions - but also winking to the left saying he really agrees with them.
As as a senator, Obama was a leading critic of the Bush administration on foreign policy. Yet as president, he has barely changed anything but the most extreme. He has ended the use of torture, but won't close Guantanamo Bay and uses drone attacks with reckless abandon. He even argued for war while receiving the Nobel Peace Prize. And his policy towards Israel has only barely changed compared to Bush. All of this lack of change has left the Muslim world liking him no more than Bush.
And most recently, he has committed to shrinking the budget. He uses language like, "Government needs to live within its means," but also says government needs to take care of its people. It's as if he wants to defend government spending.
Some see this as trying to be all things to all people. I see it as someone that believes in liberal values, but doesn't trust the voters to support him if he stands up for those things. He thinks voters want him to be moderate. But voters can tell when you aren't being yourself.
I can think of two examples of moderates that own it. David Brooks is a good example. He is a moderate conservative. Overall he believes in limited but energetic government. He is sometimes skeptical of government programs and thinks communities are better at solving problems. But he does believe government should do things like spend money on education and infrastructure.
Mitt Romney is another example - at least the Mitt Romney before he developed presidential aspirations. That Mitt Romney wants less taxes on businesses and fewer regulations. But he isn't opposed to new health care programs or social security. And he doesn't disbelieve science like global warming or evolution. That the current Mitt Romney no longer stands by those positions helps prove my point. By going more extreme, people don't believe he is genuine.
President Obama does not own his moderation. His previous positions sometimes show that he doesn't come by it naturally. And other times he shows it by trying to have it both ways.
Let's look at some examples for Obama. On same sex marriage, Obama has staked out an absurd position. He tries to support New York's law allowing same sex marriage, but he does this by nodding to states' rights. He also says that he personally supports civil union but that his position is evolving. So he is staking out a position in the middle - civil unions - but also winking to the left saying he really agrees with them.
As as a senator, Obama was a leading critic of the Bush administration on foreign policy. Yet as president, he has barely changed anything but the most extreme. He has ended the use of torture, but won't close Guantanamo Bay and uses drone attacks with reckless abandon. He even argued for war while receiving the Nobel Peace Prize. And his policy towards Israel has only barely changed compared to Bush. All of this lack of change has left the Muslim world liking him no more than Bush.
And most recently, he has committed to shrinking the budget. He uses language like, "Government needs to live within its means," but also says government needs to take care of its people. It's as if he wants to defend government spending.
Some see this as trying to be all things to all people. I see it as someone that believes in liberal values, but doesn't trust the voters to support him if he stands up for those things. He thinks voters want him to be moderate. But voters can tell when you aren't being yourself.
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