If you were shocked by Friday's job report, if you thought we
were doing well and were taken aback by the bad news, you haven't
been paying attention. The fact is, the U.S. economy has been stuck
in a rut for a year and a half.
Watching the evolution of economic discussion in Washington over
the past couple of years has been a disheartening experience. Month
by month, the discourse has gotten more primitive; with stunning
speed, the lessons of the 2008 financial crisis have been
forgotten, and the very ideas that g…
In about a month, if nothing is done, the federal government
will hit its legal debt limit. There will be dire consequences if
this limit isn't raised. At best, we'll suffer an economic
slowdown; at worst we'll plunge back into the depths of the 2008-09
Every once in a while a politician comes up with an idea that's
so bad, so wrongheaded, that you're almost grateful. For really bad
ideas can help illustrate the extent to which policy discourse has
gone off the rails.
What's in a name? A lot, the National Republican Congressional
Committee obviously believes. Last week, the committee sent a
letter demanding that a TV station stop running an ad declaring
that the House Republican budget plan would "end Medicare." This,
the letter insisted, was a false clai…
I often complain, with reason, about the state of economic
discussion in the United States. And the irresponsibility of
certain politicians - like those Republicans claiming that
defaulting on U.S. debt would be no big deal - is scary.
Six months ago President Obama faced a hostage situation.
Republicans threatened to block an extension of middle-class tax
cuts unless Obama gave in and extended tax cuts for the rich too.
And the president essentially folded, giving the GOP everything it
The past three years have been a disaster for most Western
economies. The United States has mass long-term unemployment for
the first time since the 1930s. Meanwhile, Europe's single currency
is coming apart at the seams. How did it all go so wrong?
When I listen to discussions of the federal budget, the message
I hear sounds like this: We must take drastic action immediately!
And we must keep taxes low, if not actually cut them further!
Last week, President Obama offered a spirited defense of his
party's values - in effect, of the legacy of the New Deal and the
Great Society. Immediately thereafter, as always happens when
Democrats take a stand, the civility police came out in force. The
president, we were told, was being t…
What have they done with President Obama? What happened to the
inspirational figure his supporters thought they elected? Who is
this bland guy who doesn't seem to stand for anything?
So the joke begins like this: An economist, a lawyer and a
professor of marketing walk into a room. What's the punch line?
They were three of the five "expert witnesses" Republicans called
for last week's congressional hearing on climate science.
"Liquidate labor, liquidate stocks, liquidate the farmers,
liquidate real estate." That, according to Herbert Hoover, was the
advice he received from Andrew Mellon, the Treasury secretary, as
America plunged into depression. To be fair, there's some question
about whether Mellon actually said that.
Recently William Cronon, a historian at the University of
Wisconsin, started a blog, "Scholar as Citizen," devoted to his
state's political turmoil. His first post explored the role of the
shadowy American Legislative Exchange Council in pushing hard-line
conservative legislation at the stat…
Last week, at a House hearing, Republicans lined up to grill and
attack Elizabeth Warren, the law professor who is in charge of
setting up the new Consumer Financial Protection Bureau.
Ostensibly, they believed that Warren had overstepped her legal
authority by helping state attorneys genera…
Count me among those who were glad to see the documentary
"Inside Job" win an Oscar. The film reminded us that the financial
crisis of 2008, whose aftereffects are still blighting the lives of
millions of Americans, was made possible by bad behavior by
bankers, regulators and, yes, economists.
It is a truth universally acknowledged that education is the key
to economic success. That's why, in an appearance Friday with
former Florida Gov. Jeb Bush, President Obama declared that "if we
want more good news on the jobs front then we've got to make more
investments in education."
Will 2011 be the year of fiscal austerity? At the federal level,
it's still not clear: Republicans are demanding draconian spending
cuts, but we don't yet know how far they're willing to go in a
showdown with President Obama. At the state and local level,
however, there's no doubt about it: …
Last week, in the face of protest demonstrations against
Wisconsin's new union-busting governor, Scott Walker -
demonstrations that continued through the weekend, with huge crowds
on Saturday - Rep. Paul Ryan made an unintentionally apt
comparison: "It's like Cairo has moved to Madison."
On Friday, House Republicans unveiled their proposal for
immediate cuts in federal spending. Uncharacteristically, they
failed to accompany the release with a catchy slogan. So I'd like
to propose one: Eat the Future.
We're in the midst of a global food crisis - the second in three
years. World food prices hit a record in January, driven by huge
increases in prices for wheat, corn, sugar and oils. This had only
a modest effect on U.S. inflation, which is still low by historical
standards, but it's having …
Last Saturday, The Financial Times reported, some of the world's
most powerful financial executives were going to hold a private
meeting with finance ministers in Davos, Switzerland, the site of
the World Economic Forum. The principal demand of the executives,
the newspaper suggested, would …
President Obama's State of the Union address was a ho-hum
affair. But the official Republican response, from Rep. Paul Ryan,
was really interesting. And I don't mean that in a good way.
Meet the new buzzword, same as the old buzzword. In advance of
the State of the Union, President Obama has telegraphed his main
theme: competitiveness. The president's Economic Recovery Advisory
Board has been renamed the President's Council on Jobs and
Competitiveness. And in his Saturday r…
My wife and I were thinking of going out for an inexpensive
dinner tonight. But John Boehner, the speaker of the House, says
that no matter how cheap the meal may seem, it will cost thousands
of dollars once you take our monthly mortgage payments into
On Wednesday in Tucson, President Obama called on Americans to
"expand our moral imaginations, to listen to each other more
carefully, to sharpen our instincts for empathy, and remind
ourselves of all the ways our hopes and dreams are bound together."
Those were beautiful words; they spoke t…
When you heard the terrible news from Arizona, were you
completely surprised? Or were you, at some level, expecting
something like this atrocity to happen?
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.
Oil is back above $90 a barrel. Copper and cotton have hit
record highs. Wheat and corn prices are way up. Overall, world
commodity prices have risen by a quarter in the past six
When historians look back at 2008-10, what will puzzle them
most, I believe, is the strange triumph of failed ideas.
Free-market fundamentalists have been wrong about everything - yet
they now dominate the political scene.
Like it or not - and I don't - the Obama-McConnell tax-cut deal,
with its mixture of very bad stuff and sort-of-kind-of good stuff,
is likely to pass Congress. Then what?
I've spent the past couple of days trying to make my peace with
the Obama-McConnell tax-cut deal. President Obama did, after all,
extract more concessions than most of us expected.
Back in 2001, President George W. Bush pulled a fast one. He
wanted to enact an irresponsible tax cut, largely for the benefit
of the wealthiest Americans. But there were Senate rules in place
designed to prevent that kind of irresponsibility. So Bush evaded
the rules by making the tax cut t…
The best thing about the Irish right now is that there are so
few of them. By itself, Ireland can't do all that much damage to
Europe's prospects. The same can be said of Greece and of Portugal,
which is widely regarded as the next potential domino.
Former Sen. Alan Simpson is a Very Serious Person. He must be -
after all, President Obama appointed him co-chairman of a special
commission on deficit reduction.
On Wednesday, David Axelrod, President Obama's top political
adviser, appeared to signal that the White House was ready to cave
on tax cuts - to give in to Republican demands that tax cuts be
extended for the wealthy as well as the middle class. "We have to
deal with the world as we find it,…
Eight years ago Ben Bernanke, already a governor at the Federal
Reserve although not yet chairman, spoke at a conference honoring
Milton Friedman. He closed his talk by addressing Friedman's famous
claim that the Fed was responsible for the Great Depression,
because it failed to do what was …
"How many of you people want to pay for your neighbor's mortgage
that has an extra bathroom and can't pay their bills?" That's the
question CNBC's Rick Santelli famously asked in 2009, in a rant
widely credited with giving birth to the tea party movement.
This is what happens when you need to leap over an economic
chasm - but either can't or won't jump far enough, so that you only
get part of the way across.
Last month a Chinese trawler operating in Japanese-controlled
waters collided with two vessels of Japan's coast guard. Japan
detained the trawler's captain; China responded by cutting off
Japan's access to crucial raw materials.
Here's the narrative you hear everywhere: President Obama has
presided over a huge expansion of government, but unemployment has
remained high. And this proves that government spending can't
A note to tea party activists: This is not the movie you think
it is. You probably imagine that you're starring in "The Birth of a
Nation," but you're actually just extras in a remake of "Citizen
What can be done about mass unemployment? All the wise heads
agree: There are no quick or easy answers. There is work to be
done, but workers aren't ready to do it - they're in the wrong
places, or they have the wrong skills. Our problems are
"structural" and will take many years to solve.
Last week Japan's minister of finance declared that he and his
colleagues wanted a discussion with China about the latter's
purchases of Japanese bonds, to "examine its intention" -
diplomat-speak for "Stop it right now." The news made me want to
bang my head against the wall.
Here's the situation: The U.S. economy has been crippled by a
financial crisis. The president's policies have limited the damage,
but they were too cautious, and unemployment remains disastrously
high. More action is needed. Yet the public has soured on
government activism, and seems poised …
This week, President Obama is scheduled to propose new measures
to boost the economy. I hope they're bold and substantive, since
the Republicans will oppose him regardless - if he came out for
motherhood, the GOP would oppose that. So he should put them on the
spot for standing in the way.
The last time a Democrat sat in the White House, he faced a
nonstop witch hunt by his political opponents. Prominent figures on
the right accused Bill and Hillary Clinton of everything from drug
smuggling to murder. And once Republicans took control of Congress,
they subjected the Clinton ad…
We need to pinch pennies these days. Don't you know we have a
budget deficit? For months, that has been the word from Republicans
and conservative Democrats, who have rejected every suggestion that
we do more to avoid deep cuts in public services and help the
The lights are going out all over America - literally. Colorado
Springs has made headlines with its desperate attempt to save money
by turning off a third of its streetlights, but similar things are
either happening or being contemplated across the nation, from
Philadelphia to Fresno.
I'm starting to have a sick feeling about prospects for American
workers - but not, or not entirely, for the reasons you might