We are all very familiar with Romney's taped comments about how 47 percent of the country didn't pay income taxes and are therefore dependent on the system and don't take responsibility for their lives and think they are entitled to benefits. There has been a lot of discussion about this, some of it very good and smart. I want to add my thoughts here.
The first thing I should mention is how dishonest this comment is. A lot of others have pointed this out, but it bears repeating. First of all, that number is abnormally high due to the recession. It is usually 40% that don't pay income taxes. But of that 47 percent, 60 percent are working and paying taxes for social security and Medicare. Another 22 percent are retirees. About 8 percent are not paying any federal taxes because they are unemployed, students, or on disability.
So the 47 percent are not all unemployed people on welfare. Most are working or retired. But let's pretend that Romney had the right number - let's say he made the same comments about that 8 percent that are not paying any taxes and are not working. Or even better, let's say he had a number that included only those unemployed and ignored the students and people on disability. Romney's claim was that this small number of people can never be convinced to take responsibility for their lives.
If there is one thing that seems to be consistent for Romney over the years, it is disdain for the welfare. He claims he ran against Kennedy because he wanted to tell the world that Kennedy's policies created a permanent underclass - that by helping people with food stamps and cash assistance, we were actually hurting them.
There are so many things wrong with the statement and that outlook. Ezra Klein has a great post on how the poor actually are taking responsibility but are in fact drowning in responsibility. I completely agree with that post and couldn't have written it better. But I don't expect someone with Romney's history to know what Klein points out. But I do expect him to know how he lived his life.
Mitt Romney did not live his life, nor treat his children, in a way that suggests responsibility and success only comes through hardship and self-reliance. We know that Mitt Romney used his inheritance from his Dad to support himself through school. And good for him. He used free money to better himself and become self sufficient - free money that was way more than what people on welfare get.
Also, Mitt Romney isn't forcing his kids to become poor to teach them how to make it on their own. Instead, he has set up a family trust that has $100 million in it, and he made sure to avoid taxes as best he could. As David Brooks says in his great take down, middle - and upper I would add - class parents don't deny their kids to teach responsibility, they shower them with everything they can. The best schools, the best programs. They give them a comfortable life so that they are most likely to achieve success.
The point here is that there is a huge disconnect between how Romney found success and then how he treats his children, and how he thinks poor people should be treated to find success. He believes his kids will find success if they are showered with supports and provided with lots of money, and his Dad felt the same way. But he believes that the poor will only find success if they are starved of supports and money.
I don't think this disconnect is racism. I think it is forced on him by his conservative worldview. In order to believe that you care about people's success but also to believe that government is too generous, you need to believe that people need less support in order to succeed. And you believe this despite your own experience and behavior. In fact, this is the greatest trick conservatives play on the world: that the best way to help someone is to not help them at all. Then you can perceive yourself as generous and kind, but also feel like you should keep more of your money.
Unfortunately, it is wrong. The best way to help someone is to help them. Just like the best way to help your family is to help them. And you do that by providing them with lots of money.
Friday, September 28, 2012
Wednesday, September 26, 2012
QE3 (ie QEuntilitworks)
I have been meaning to write a quick post about this but haven't gotten the chance. I am really happy with the Federal Reserves decision to undertake QE3 - or what I am calling QEuntilitworks because of its open-ended asset purchases, which will continue until there is more progress in the economy. I am very glad the fed finally acted, and I am glad they are using some of their signaling power - basically saying they are willing to let inflation increase above what had previously been a 2% ceiling until things pick-up.
I want to say one more thing about this economic situation we are facing. In the more recent past, the debate among economists - between Friemdman's and Keynes's followers - was whether the best way to fight a recession was to use monetary (ie Federal Reserve) or fiscal (ie stimulus ie government spending) policy. And it seemed for a while that the monetarists were winning the argument (though even Republican presidents like George W. Bush implemented fiscal stimulus).
But during this crisis, Republicans have decided to go back in time and declare that we should do neither monetary nor fiscal policy - that we should let the recession play out. This puts them decades behind and much farther to the right of Milton Friedman.
But putting that aside, the debate over monetary versus fiscal policy has gotten really interesting during this recession. Although we have seen the bottom, we have also seen a slow recovery.
In other recessions, you might see Democrats push for fiscal stimulus while Republican push for monetary stimulus. And if Democrats can't get fiscal stimulus passed, at least monetary stimulus would be enacted by the Fed and the recovery would get going.
However, in this case (after Obama's large but not large enough stimulus failed to start a big recovery), the federal reserve felt it had run out of tools because they couldn't lower interest rates any further (the traditional tool to get growth going again). So Ben Bernake called on Congress to use fiscal stimulus - though in his vague I'm saying it, but not really, way.
So the Federal Reserve was stuck. They had two options. One: wait for Congress to agree to fiscal stimulus. Two: try riskier fed tools like more and more quantitative easing. They waited as long as they could and are now trying the risky option.
I do wish Bernake had been much more obvious in what he was calling for. The Federal Reserve is meant to be above politics so that it can act to help the economy even when politicians will not. But when they run out of tools, they should use their position as non-partisan actors and speak up clearly. He should have said, "The Federal Reserve is out of good, non-risky options. Therefore, we think Congress should pass and the president should sign a fiscal stimulus of X magnitude."
The fact is that we need the federal reserve to be above politics to help the overall economy. But there may be other times in the future when they are low on tools but where Congress has plenty of tools. In that case, they should make very clear and specific recommendations.
But since I don't see that happening here, I will say that I am at least glad that the Fed is willing to try the risky tools since Congress (ie Republicans) don't want to use their tools.
I want to say one more thing about this economic situation we are facing. In the more recent past, the debate among economists - between Friemdman's and Keynes's followers - was whether the best way to fight a recession was to use monetary (ie Federal Reserve) or fiscal (ie stimulus ie government spending) policy. And it seemed for a while that the monetarists were winning the argument (though even Republican presidents like George W. Bush implemented fiscal stimulus).
But during this crisis, Republicans have decided to go back in time and declare that we should do neither monetary nor fiscal policy - that we should let the recession play out. This puts them decades behind and much farther to the right of Milton Friedman.
But putting that aside, the debate over monetary versus fiscal policy has gotten really interesting during this recession. Although we have seen the bottom, we have also seen a slow recovery.
In other recessions, you might see Democrats push for fiscal stimulus while Republican push for monetary stimulus. And if Democrats can't get fiscal stimulus passed, at least monetary stimulus would be enacted by the Fed and the recovery would get going.
However, in this case (after Obama's large but not large enough stimulus failed to start a big recovery), the federal reserve felt it had run out of tools because they couldn't lower interest rates any further (the traditional tool to get growth going again). So Ben Bernake called on Congress to use fiscal stimulus - though in his vague I'm saying it, but not really, way.
So the Federal Reserve was stuck. They had two options. One: wait for Congress to agree to fiscal stimulus. Two: try riskier fed tools like more and more quantitative easing. They waited as long as they could and are now trying the risky option.
I do wish Bernake had been much more obvious in what he was calling for. The Federal Reserve is meant to be above politics so that it can act to help the economy even when politicians will not. But when they run out of tools, they should use their position as non-partisan actors and speak up clearly. He should have said, "The Federal Reserve is out of good, non-risky options. Therefore, we think Congress should pass and the president should sign a fiscal stimulus of X magnitude."
The fact is that we need the federal reserve to be above politics to help the overall economy. But there may be other times in the future when they are low on tools but where Congress has plenty of tools. In that case, they should make very clear and specific recommendations.
But since I don't see that happening here, I will say that I am at least glad that the Fed is willing to try the risky tools since Congress (ie Republicans) don't want to use their tools.
What to Expect if Obama Wins a Second Term
I'll keep this brief. Basically, I think there are three things we'll definitely see if Obama is reelected. First, he'll implement the Affordable Care Act, which will show the public what all the really good provisions are and keep it from being repealed. Second, he'll definitely work on a longer-term budget deal, which will probably give away too much. And I don't think he'll do much in the short term to help the economy. Instead he'll let the Federal Reserve do as much as it is willing and hope that is enough to cause the sputtering growth to pick up steam. And third, I think he'll really focus on immigration reform. I don't think Republicans can afford to spend too many more elections taking the far right position on this issue. And so I think Obama will push on this.
I don't think we'll see any efforts around global warming (ie cap and trade) unless the Democrats do the unthinkable and take back the House.
I don't think we'll see any efforts around global warming (ie cap and trade) unless the Democrats do the unthinkable and take back the House.
GOP VP Selections
I want to comment on the past two GOP vice presidential candidates. I realized after hearing Romney's convention speech that in both cases, the GOP presidential candidates chose a VP that undermined their argument against President Obama.
In 2008, one of John McCain's main attacks against Obama was that he wasn’t experienced enough. However, he then went on to choose Sarah Palin as his VP candidate - someone who was objectively as inexperienced and far less ready to be president.
Now Mitt Romney says, in his convention speech and many other places, that Obama failed because he has never been in the private sector. But he selected a VP candidate with even less private experience.
In both cases, it suggests that the GOP candidates didn't really believe one of their main attacks. If overall experience was key, you would want the next in line to also be experienced. If private sector experience is important, again you would chose the potential next-in-line to be someone with private sector experience.
In 2008, one of John McCain's main attacks against Obama was that he wasn’t experienced enough. However, he then went on to choose Sarah Palin as his VP candidate - someone who was objectively as inexperienced and far less ready to be president.
Now Mitt Romney says, in his convention speech and many other places, that Obama failed because he has never been in the private sector. But he selected a VP candidate with even less private experience.
In both cases, it suggests that the GOP candidates didn't really believe one of their main attacks. If overall experience was key, you would want the next in line to also be experienced. If private sector experience is important, again you would chose the potential next-in-line to be someone with private sector experience.
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