Commentary Magazine


Topic: Robert Reich

Reich and the Worldview the Tax-Cut Deal Reveals

The liberal Robert Reich understands why, on an intellectual level, the Obama embrace of tax cuts is so significant:

Apart from its extraordinary cost and regressive tilt, the tax deal negotiated between the president and the Republicans has another fatal flaw. It confirms the Republican worldview. … By agreeing to another round of massive tax cuts for the wealthy, the president confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he’s also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.

Obama’s new tax compromise is not only bad economics; it’s also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reinforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.

Reich is wrong on substance, but he is, as Jennifer Rubin points out, right on narrative. And politics is about narratives as well as policies.

There are several things that explain the current liberal rage at Obama; kicking the intellectual props out from liberalism — arguing that tax cuts are critical to economic growth — is among them.

The liberal Robert Reich understands why, on an intellectual level, the Obama embrace of tax cuts is so significant:

Apart from its extraordinary cost and regressive tilt, the tax deal negotiated between the president and the Republicans has another fatal flaw. It confirms the Republican worldview. … By agreeing to another round of massive tax cuts for the wealthy, the president confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he’s also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.

Obama’s new tax compromise is not only bad economics; it’s also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reinforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.

Reich is wrong on substance, but he is, as Jennifer Rubin points out, right on narrative. And politics is about narratives as well as policies.

There are several things that explain the current liberal rage at Obama; kicking the intellectual props out from liberalism — arguing that tax cuts are critical to economic growth — is among them.

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Back to the Future

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world. Read More

Robert Reich, President Clinton’s secretary of Labor, has an op-ed in today’s New York Times in which he tries to explain why the recovery from the “Great Recession” has been so sluggish. He fails to do that, but the article is a window into why the Obama administration has failed so dismally in this area: liberals are hopelessly stuck in the past. And in order to remain so, they distort history and manipulate statistics.

As always, Reich blames the rich for making too much money, noting that while the top 1 percent had only 9 percent of total income in the late 1970s, today’s super-rich take in 23.5 percent. These figures are based on adjusted gross income reported in federal tax returns and so should be looked at carefully to see how they square with “compensation,” which is something very different. But Reich simply ignores the fact that whenever there has been a major technological development, from the full-rigged ship in the 15th century to the microprocessor in the 20th, there has always quickly followed an inflorescence of fortunes based on the new technology. This, inevitably, causes income inequality to widen. The poor don’t get poorer, the rich just get suddenly much richer. The more fundamental the new technology is, the more the gap will widen, and the microprocessor is the most fundamental new technology since agriculture 10,000 years ago.

Just look at the Forbes 400 list to see how many brand-new fortunes are based on the microprocessor. Seven of the top 10 are (neither Wal-Mart nor Bloomberg would have been possible without cheap computing power). Any attempt to flatten the income curve in these revolutionary terms and thus reduce inequality would inescapably reduce wealth creation.

He writes, “What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere.” That’s perfectly true. But the rich living in the Cayman Islands, China, and elsewhere do exactly the same thing, often investing in America, which enjoys robust capital inflows as well as outflows. We now have a nearly total global economy, especially when it comes to capital. Any attempt to change that would be disastrous for both the United States and the world.

He writes:

Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.

This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.

The Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

Where do I begin? The depression that began in 1929 came out of a severe depression in American agriculture, caused by a revival in European agriculture and falling food prices owing to land once devoted to fodder crops for horses and mules being turned over to production of human food as the internal combustion engine took over the transportation and farm-equipment sectors. It did not come out of excess personal debt and a real estate bubble.

They didn’t know in 1929 that you could avoid immediate financial calamity by flooding the economy with money? Here’s what Benjamin Strong, governor of the New York Federal Reserve and effectively head of the Fed, wrote in 1928. “The very existence of the Federal Reserve System is a safeguard against anything like a calamity growing out of money rates. … We have the power to deal with such an emergency instantly by flooding the Street with money.” The problem was that the Federal Reserve didn’t flood the economy with money after the crash in 1929 (Ben Strong died in late 1928) but kept interest rates high. An ordinary stock market crash and economic depression were turned into the Great Depression by horrendous government mistakes, of which the Fed’s was only one.

And if the New Deal was the way back to full recovery, why did it take 10 years (and suddenly vast orders for war materiél) to achieve it? Robert Reich should read Amity Shlaes’s The Forgotten Man: A New History of the Great Depression, which pretty well demolishes the now ancient notions about the New Deal that liberals cling to, sort of like the way people in fly-over country cling to guns and religion.

He writes,

In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes.

Ah, the good old days of 91 percent tax rates on those rascally rich guys! Of course, those were mere nominal rates, the rich didn’t pay anything like that much, because deductions and other tax fiddles were nearly limitless in those days. All interest rates were deductible, for instance, allowing someone in the 91 percent bracket to borrow money and have Uncle Sam pay 91 percent of the interest costs.

I could go on, but you get the picture.

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Obama Reaping What He Has Sown

A story in Politico argues:

The president’s reluctance to be a Democratic version of Ronald Reagan, who spoke without apology about his vaulting ideological ambitions, has produced an odd turn of events: Obama has been the most activist domestic president in decades, but the philosophy behind his legislative achievements remains muddy in the eyes of many supporters and skeptics alike. There is not yet such a thing as “Obamism.”

It’s not that muddy, actually. According to a Democracy Corp poll, fully 57 percent of likely voters consider Obama “too liberal.” And there is such a thing as Obamism; it is an unprecedented effort to increase the size, scope, reach, and cost of the federal government. Obamaism is in many respects the antithesis if Reaganism.

The Politico story also advances this thesis:

By declining to speak clearly and often about his larger philosophy – and insisting that his actions are guided not by ideology but a results-oriented “pragmatism” – [Obama] has bred confusion and disappointment among his allies, and left his agenda and motives vulnerable to distortion by his enemies.

But Americans consider themselves, by a margin of more than two-to-one, to be conservative rather than liberal. And as a general matter, the public, at least in national elections, punishes political figures who proudly flaunt their liberalism. For Obama to go further out of his way to lock in the impression that he’s a philosophical liberal would be evidence of a political death wish. The reason Obama won the presidency is that he convinced enough voters of being not as liberal as his legislative record indicated.

Then there’s this counsel from Robert Reich:

What may be missing from the White House is a clear and convincing narrative into which all the various initiatives neatly fit, so that the public can make sense of everything that’s done … Obama needs to connect the dots in a way that explains to the public what he’s done and where’s he’s taking the nation.

Of course; the main problem plaguing Obama and the Democrats is a lack of clear and convincing narrative. All the president needs to do is connect all those random dots. The public is just plain ignorant of what he’s done and where he’s taking the nation; if only they knew the true story: Obama has delivered us to the land of milk and honey.

The truth is that the nation sees all too well what he has done and where he’s taking the nation. The public is in the process of connecting the dots — and the picture that’s emerging is a most unpleasant one.

The problems facing the president are that the economy is slumping and jobs are disappearing, Obama’s policies are widely seen as ineffective, his claims and promises have been disproven time and again, and he’s viewed by a majority of the nation as too liberal and, increasingly, as inept.

The counsel provided to Obama in the Politico story is worthless or worse. Obama’s fundamental problem is reality, not optics, not missing narratives, not unconnected dots. His presidency is, at this moment, failing, as the result of a series of deeply unwise decisions. He and his party are reaping what they have sown.

A story in Politico argues:

The president’s reluctance to be a Democratic version of Ronald Reagan, who spoke without apology about his vaulting ideological ambitions, has produced an odd turn of events: Obama has been the most activist domestic president in decades, but the philosophy behind his legislative achievements remains muddy in the eyes of many supporters and skeptics alike. There is not yet such a thing as “Obamism.”

It’s not that muddy, actually. According to a Democracy Corp poll, fully 57 percent of likely voters consider Obama “too liberal.” And there is such a thing as Obamism; it is an unprecedented effort to increase the size, scope, reach, and cost of the federal government. Obamaism is in many respects the antithesis if Reaganism.

The Politico story also advances this thesis:

By declining to speak clearly and often about his larger philosophy – and insisting that his actions are guided not by ideology but a results-oriented “pragmatism” – [Obama] has bred confusion and disappointment among his allies, and left his agenda and motives vulnerable to distortion by his enemies.

But Americans consider themselves, by a margin of more than two-to-one, to be conservative rather than liberal. And as a general matter, the public, at least in national elections, punishes political figures who proudly flaunt their liberalism. For Obama to go further out of his way to lock in the impression that he’s a philosophical liberal would be evidence of a political death wish. The reason Obama won the presidency is that he convinced enough voters of being not as liberal as his legislative record indicated.

Then there’s this counsel from Robert Reich:

What may be missing from the White House is a clear and convincing narrative into which all the various initiatives neatly fit, so that the public can make sense of everything that’s done … Obama needs to connect the dots in a way that explains to the public what he’s done and where’s he’s taking the nation.

Of course; the main problem plaguing Obama and the Democrats is a lack of clear and convincing narrative. All the president needs to do is connect all those random dots. The public is just plain ignorant of what he’s done and where he’s taking the nation; if only they knew the true story: Obama has delivered us to the land of milk and honey.

The truth is that the nation sees all too well what he has done and where he’s taking the nation. The public is in the process of connecting the dots — and the picture that’s emerging is a most unpleasant one.

The problems facing the president are that the economy is slumping and jobs are disappearing, Obama’s policies are widely seen as ineffective, his claims and promises have been disproven time and again, and he’s viewed by a majority of the nation as too liberal and, increasingly, as inept.

The counsel provided to Obama in the Politico story is worthless or worse. Obama’s fundamental problem is reality, not optics, not missing narratives, not unconnected dots. His presidency is, at this moment, failing, as the result of a series of deeply unwise decisions. He and his party are reaping what they have sown.

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Flotsam and Jetsam

Did Obama mention this in Cairo? “A group of young Saudi men have launched a campaign to convince Saudi men of the unappreciated virtues of polygamy.  It is a response to young Saudi women uninterested in joining a polygamous marriage, older Saudi women divorcees and Saudi men unable or unwilling to support more than one woman. The campaign seeks to counter what Saudi traditionalists see as an increasingly negative stigma attached to polygamy.”

Did Democratic lawmakers actually buy the notion that the American people would learn to love ObamaCare? “Almost four months after the passage of major health care legislation, the law remains unpopular with the public. Nearly half of Americans (47%) disapprove of the health care law while just 35% approve of the measure. An overwhelming proportion of opponents of health care legislation — 37% of the public overall — favor repealing the legislation as soon as possible. Just 7% say they want to let the law stand and see how it works. Public opinion toward health care legislation remained very stable in the months leading up to the bill’s passage, and that has continued to be the case.” That miscalculation will likely end more than a few political careers.

Did you expect anything else? “South Carolina Sen. Lindsey Graham is sending strong signals that he may again buck his party and become the lone GOP senator on the Judiciary Committee to vote for Elena Kagan to be confirmed to the Supreme Court.”

Did Gen. Stanley McChrystal do us all a big favor? Gallup reports: “[Gen. David Petraeus] takes his new job as commander of U.S. and allied forces in Afghanistan with a remarkably positive image among Americans who know who he is. At the same time, Petraeus now faces the additional challenge of commanding a mission that the majority of Americans say is going badly. Americans’ views of the situation in Iraq improved during and after Petraeus’ tenure as commander in that country. The degree to which Petraeus will be able to shift Americans’ perceptions of the war in Afghanistan in similar fashion will have important consequences in many arenas, including the politics of the war in the U.S.”

Did you think in November 2008 that Barbara Boxer would now be in a toss-up race?

Did he check with Robert Gibbs? “House Majority Steny Hoyer (D-Md.) became the latest Democratic leader to voice confidence that the party will hold its majority in the House this fall.”

Did Robert Reich ever sound so smart? “Democrats have been almost as reluctant to attack inequality or even to recognize it as the central economic and social problem of our age. … As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. … Today’s cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever larger platoons of lobbyists and their hordes of PR flacks.” Hence, the “major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the ‘establishment’ and an increasingly mad-as-hell populace determined to ‘take back America’ from it.”

Did Obama mention this in Cairo? “A group of young Saudi men have launched a campaign to convince Saudi men of the unappreciated virtues of polygamy.  It is a response to young Saudi women uninterested in joining a polygamous marriage, older Saudi women divorcees and Saudi men unable or unwilling to support more than one woman. The campaign seeks to counter what Saudi traditionalists see as an increasingly negative stigma attached to polygamy.”

Did Democratic lawmakers actually buy the notion that the American people would learn to love ObamaCare? “Almost four months after the passage of major health care legislation, the law remains unpopular with the public. Nearly half of Americans (47%) disapprove of the health care law while just 35% approve of the measure. An overwhelming proportion of opponents of health care legislation — 37% of the public overall — favor repealing the legislation as soon as possible. Just 7% say they want to let the law stand and see how it works. Public opinion toward health care legislation remained very stable in the months leading up to the bill’s passage, and that has continued to be the case.” That miscalculation will likely end more than a few political careers.

Did you expect anything else? “South Carolina Sen. Lindsey Graham is sending strong signals that he may again buck his party and become the lone GOP senator on the Judiciary Committee to vote for Elena Kagan to be confirmed to the Supreme Court.”

Did Gen. Stanley McChrystal do us all a big favor? Gallup reports: “[Gen. David Petraeus] takes his new job as commander of U.S. and allied forces in Afghanistan with a remarkably positive image among Americans who know who he is. At the same time, Petraeus now faces the additional challenge of commanding a mission that the majority of Americans say is going badly. Americans’ views of the situation in Iraq improved during and after Petraeus’ tenure as commander in that country. The degree to which Petraeus will be able to shift Americans’ perceptions of the war in Afghanistan in similar fashion will have important consequences in many arenas, including the politics of the war in the U.S.”

Did you think in November 2008 that Barbara Boxer would now be in a toss-up race?

Did he check with Robert Gibbs? “House Majority Steny Hoyer (D-Md.) became the latest Democratic leader to voice confidence that the party will hold its majority in the House this fall.”

Did Robert Reich ever sound so smart? “Democrats have been almost as reluctant to attack inequality or even to recognize it as the central economic and social problem of our age. … As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. … Today’s cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever larger platoons of lobbyists and their hordes of PR flacks.” Hence, the “major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the ‘establishment’ and an increasingly mad-as-hell populace determined to ‘take back America’ from it.”

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Obama Emotionless Except When It’s Personal

Last November, which seems like a lifetime ago, in the context of anti-terror measures, a sharp observer spotted a common thread that connected Obama to his attorney general. Of Eric Holder, she remarked:

The dispassion, the self-reverence, the blindness of the man, are marvelous to behold, and so perfectly reflect the president he so perfectly serves. “Neutral and detached” people shall “understand the reasons why” he made those decisions, shall see he has left “the politics out of it,” and shall recognize what’s right–something the rest of us, benighted and bellicose souls that we are, have never managed to do with respect to the disposition of those committing mass murders of Americans in their ongoing war against our civilization.

It is more true today in the wake of excising “jihadist” and “Islamic fundamentalist” from our lexicon. Indeed, it extends to every area of governance.  The public doesn’t appreciate the gift of ObamaCare. The voters fail to understand that “costs” (that would be taxes) are needed to enact a massive cap-and-trade scheme. The Jews don’t comprehend that Obama has their interests at heart — go self-reflect, he instructs them. And he tut-tuts Jewish leaders who don’t “get” how his master plan for peace in the Middle East is unfolding. He judges, evaluates, and criticizes us — remaining above the fray.

Even Maureen Dowd stumbles upon the truth: “President Obama’s bloodless quality about people and events, the emotional detachment that his aides said allowed him to see things more clearly, has instead obscured his vision.” (And rendered him ineffective and increasingly unlikable.) Robert Reich similarly edges to the core problem:

The man who electrified the nation with his speech at the Democratic National Convention of 2004 put it to sleep tonight. … [H]e failed tonight to rise to the occasion. Is it because he’s not getting good advice, or because he’s psychologically incapable of expressing the moral outrage the nation feels?

When Obama drops the mask of detachment and reveals true emotion, it is for himself. What spurred the angry denunciation of Rev. Wright? Wright’s personal attack on him. What gets his goat? The media, which impose a 24/7 news cycle on him. What gets his blood boiling? The “insult” he perceives to him when Israel dared to announce a building project while his VP was visiting. Why was Obama annoyed with Daniel Ortega? He implied that Obama was responsible for the Bay of Pigs when he was but a child.

So we have a curious president — cold and distant when it comes to dangers from foreign foes, economic catastrophe, and environmental disaster, which wreck havoc on our lives, but filled with outrage at the slightest offense to himself. Now Bill Clinton was and is a renowned self-pitier. But at least he had the political smarts and acting skills (and to be fair, a real emotional connection to his fellow citizens) to project empathy and to tell us that he felt our pain. Obama can’t muster that. The lion’s share of his concern and emotional energy is reserved for himself. As his presidency comes crashing down around him, his self-concern will grow, the yelps of self-pity will intensify, and the complaints about dull-witted Americans and duplicitous opponents will multiply.

Last November, which seems like a lifetime ago, in the context of anti-terror measures, a sharp observer spotted a common thread that connected Obama to his attorney general. Of Eric Holder, she remarked:

The dispassion, the self-reverence, the blindness of the man, are marvelous to behold, and so perfectly reflect the president he so perfectly serves. “Neutral and detached” people shall “understand the reasons why” he made those decisions, shall see he has left “the politics out of it,” and shall recognize what’s right–something the rest of us, benighted and bellicose souls that we are, have never managed to do with respect to the disposition of those committing mass murders of Americans in their ongoing war against our civilization.

It is more true today in the wake of excising “jihadist” and “Islamic fundamentalist” from our lexicon. Indeed, it extends to every area of governance.  The public doesn’t appreciate the gift of ObamaCare. The voters fail to understand that “costs” (that would be taxes) are needed to enact a massive cap-and-trade scheme. The Jews don’t comprehend that Obama has their interests at heart — go self-reflect, he instructs them. And he tut-tuts Jewish leaders who don’t “get” how his master plan for peace in the Middle East is unfolding. He judges, evaluates, and criticizes us — remaining above the fray.

Even Maureen Dowd stumbles upon the truth: “President Obama’s bloodless quality about people and events, the emotional detachment that his aides said allowed him to see things more clearly, has instead obscured his vision.” (And rendered him ineffective and increasingly unlikable.) Robert Reich similarly edges to the core problem:

The man who electrified the nation with his speech at the Democratic National Convention of 2004 put it to sleep tonight. … [H]e failed tonight to rise to the occasion. Is it because he’s not getting good advice, or because he’s psychologically incapable of expressing the moral outrage the nation feels?

When Obama drops the mask of detachment and reveals true emotion, it is for himself. What spurred the angry denunciation of Rev. Wright? Wright’s personal attack on him. What gets his goat? The media, which impose a 24/7 news cycle on him. What gets his blood boiling? The “insult” he perceives to him when Israel dared to announce a building project while his VP was visiting. Why was Obama annoyed with Daniel Ortega? He implied that Obama was responsible for the Bay of Pigs when he was but a child.

So we have a curious president — cold and distant when it comes to dangers from foreign foes, economic catastrophe, and environmental disaster, which wreck havoc on our lives, but filled with outrage at the slightest offense to himself. Now Bill Clinton was and is a renowned self-pitier. But at least he had the political smarts and acting skills (and to be fair, a real emotional connection to his fellow citizens) to project empathy and to tell us that he felt our pain. Obama can’t muster that. The lion’s share of his concern and emotional energy is reserved for himself. As his presidency comes crashing down around him, his self-concern will grow, the yelps of self-pity will intensify, and the complaints about dull-witted Americans and duplicitous opponents will multiply.

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Is the Recession Over?

The Business Cycle Dating Committee of the National Bureau of Economic Research, which decides such things, said yesterday that it cannot yet be sure that the recession is over. But one member of the committee publicly dissented, saying that the recession actually ended last June.

So much for the idea that economics is an exact science.

Still, signs of recovery are not hard to find. The Dow Jones Industrial Average, a leading indicator, closed over 11,000 yesterday, for the first time since September 2008, at the height of the financial crisis. From its low in March 2009, the Dow has risen 68 percent. On the other hand, as economists love to say, unemployment (now 9.7 percent) remains near its peak of 10.2 percent, and most economists think it will remain high for a long time. Robert Reich, Clinton’s secretary of labor, explained why in yesterday’s Wall Street Journal.

It seems clear, though, that we are out of the worst of the woods. Banks have recovered and paid back most of the federal money pumped into them. Manufacturing has been increasing. The trade deficit has been rising, a sign of recovery.

And it is becoming clear that the Great Recession may have been a little less great than advertised, thank heavens. If 10.2 turns out to be the peak of unemployment (and, as firms start hiring again, more people, formerly discouraged, start looking for jobs, which can drive the rate back up), then unemployment this time around will not have been as bad as it was in the 1981-82 recession, when it peaked at 10.8 percent, let alone the Great Depression, when it peaked at over 25 percent. And the Dow has regained 58 percent of what it lost from it’s all-time high in October 2007, when it peaked at 14,164, to its bottom in March 2009, when it hit 6626. And did it in two and half years. By way of comparison, the Dow did not regain 58 percent of its 1929 high until 1950, 21 years later.

To be sure, September and October of 2008 were as scary a time in the American financial world as I have experienced in my lifetime — if a piece of cake compared with the winter of 1932-33. But the ensuing economic hard times were far less severe than seemed possible, even likely, in late 2008.

This country still has severe economic challenges facing it (the state and national deficits and unfunded liabilities being by far the greatest), but we’re much better off than many thought we would be a year ago.

The Business Cycle Dating Committee of the National Bureau of Economic Research, which decides such things, said yesterday that it cannot yet be sure that the recession is over. But one member of the committee publicly dissented, saying that the recession actually ended last June.

So much for the idea that economics is an exact science.

Still, signs of recovery are not hard to find. The Dow Jones Industrial Average, a leading indicator, closed over 11,000 yesterday, for the first time since September 2008, at the height of the financial crisis. From its low in March 2009, the Dow has risen 68 percent. On the other hand, as economists love to say, unemployment (now 9.7 percent) remains near its peak of 10.2 percent, and most economists think it will remain high for a long time. Robert Reich, Clinton’s secretary of labor, explained why in yesterday’s Wall Street Journal.

It seems clear, though, that we are out of the worst of the woods. Banks have recovered and paid back most of the federal money pumped into them. Manufacturing has been increasing. The trade deficit has been rising, a sign of recovery.

And it is becoming clear that the Great Recession may have been a little less great than advertised, thank heavens. If 10.2 turns out to be the peak of unemployment (and, as firms start hiring again, more people, formerly discouraged, start looking for jobs, which can drive the rate back up), then unemployment this time around will not have been as bad as it was in the 1981-82 recession, when it peaked at 10.8 percent, let alone the Great Depression, when it peaked at over 25 percent. And the Dow has regained 58 percent of what it lost from it’s all-time high in October 2007, when it peaked at 14,164, to its bottom in March 2009, when it hit 6626. And did it in two and half years. By way of comparison, the Dow did not regain 58 percent of its 1929 high until 1950, 21 years later.

To be sure, September and October of 2008 were as scary a time in the American financial world as I have experienced in my lifetime — if a piece of cake compared with the winter of 1932-33. But the ensuing economic hard times were far less severe than seemed possible, even likely, in late 2008.

This country still has severe economic challenges facing it (the state and national deficits and unfunded liabilities being by far the greatest), but we’re much better off than many thought we would be a year ago.

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Is ObamaCare Enough?

That’s what the White House and its spinners are telling us — that the passage of a “historic,” albeit much reviled, health-care bill will be enough to hold back the tsunami of anti-incumbency sentiment and abject disgust which voters are expressing toward the Democrat-controlled House and Senate. The political cost-benefit analysis — are more liberals bolstered or more independents turned off? — will be debated between now and November. But meanwhile, the black cloud of unemployment looms over the Democrats, who, after all, promised to focus their attention on job creation, but never really did.

The Hill reports that unemployment figures may become especially troublesome for some already vulnerable House Democrats:

Local unemployment rates higher than the national 9.7 average are further endangering House Democrats’ re-election chances.

For these Democrats, who hail from struggling states like Florida, Michigan, West Virginia, and Nevada, a 9.7 percent jobless rate that Republicans have called “completely unacceptable” would be a welcome improvement.

Vulnerable freshman Democratic Reps. Suzanne Kosmas and Alan Grayson represent swing districts that include parts of greater Orlando, where the unemployment rate in January 2010 was 12.4 percent.

Kosmas, a major GOP target this fall, represents a district that also contains the metropolitan area of Deltona and Daytona Beach, where 13 percent of the labor force was out of work.

“Where things are particularly bad, Democrats are in particular danger,” said David Wasserman, House editor for the Cook Political Report.

But 162,000 jobs were added last month (with the help of 50,000 temporary Census workers), boast the Democrats. Well, it’s less than meets the eye, as the Heritage Foundation (h/t Mark Hemingway) points out:

While the jobs report does indicate that 162,000 net jobs were created in March, almost 50,000 of those jobs were temporary government Census jobs that do not reflect any real economic progress. In total, the U.S. economy has now lost a total of 3.8 million jobs since President Barack Obama signed his $862 billion stimulus plan. We are 8.1 million jobs short of the 138.6 million he promised the American people. . .

And don’t fall for any White House claims that this belated recovery is due to the stimulus. As the Congressional Budget Office (CBO) admitted last month, its analysis of the stimulus’ job creating record was simply “essentially repeating the same exercise” as the initial projections. In other words, the CBO numbers on the stimulus don’t take any actual new real world data into account. Working with actual data, Veronique de Rugy of George Mason University’s Mercatus Center has found: 1) no statistical correlation between unemployment and how the $862 billion was spent; 2) that Democratic districts received one-and-a-half times as many awards as Republican ones; and 3) an average cost of $286,000 was awarded per job created. $286,000 per job created. That is simply a bad investment.

And if you think that this is only conservative nay saying, consider Robert Reich’s take on why the jobs’ picture is grim:

First, government spending on last year’s giant stimulus is still near its peak, and the Fed continues to hold down interest rates. Without these props, it’s far from clear we’d have any job growth at all.

Second, since the start of the Great Recession, the economy has lost 8.4 million jobs and failed to create another 2.7 million needed just to keep up with population growth. That means we’re more than 11 million in the hole right now. And that hole keeps deepening every month we fail to add at least 150,000 new jobs, again reflecting population growth.

A census-taking job is better than no job, but it’s no substitute for the real thing.

Bottom line: This is no jobs recovery.

So while the debate rages on as to whether ObamaCare is really going to protect incumbent Democrats, what’s certain is that they will be tagged with either ignoring or aggravating (for pushing a tax-and-spend, anti employer agenda) the bleak unemployment situation. The Obami may recite ad nauseam their claim that the stimulus plan saved or created jobs, but few voters believe it, and with good reason. The Democrats will therefore face an angry electorate demanding to know why lawmakers obsessed over something voters despised (ObamaCare) and ignored something they did care deeply about (jobs).

The Democrats’ real challenge, then, may be to fend off the argument from opponents that all that time spent jamming through ObamaCare evidences a serious disconnect with voters and a failure to appreciate their primary concern — restoring the economy and re-igniting job growth. Instead of thinking up ways to promote hiring, the Democrats have spent their time passing a hugely expensive health-care bill and plotting massive tax increases (including the expiration of the Bush tax cuts, which will fall heavily on small businesses) and new regulatory schemes (including cap-and-trade), which will only make employers more nervous about expanding their payrolls. You can see why the Democrats are bracing for yet another “change” election.

That’s what the White House and its spinners are telling us — that the passage of a “historic,” albeit much reviled, health-care bill will be enough to hold back the tsunami of anti-incumbency sentiment and abject disgust which voters are expressing toward the Democrat-controlled House and Senate. The political cost-benefit analysis — are more liberals bolstered or more independents turned off? — will be debated between now and November. But meanwhile, the black cloud of unemployment looms over the Democrats, who, after all, promised to focus their attention on job creation, but never really did.

The Hill reports that unemployment figures may become especially troublesome for some already vulnerable House Democrats:

Local unemployment rates higher than the national 9.7 average are further endangering House Democrats’ re-election chances.

For these Democrats, who hail from struggling states like Florida, Michigan, West Virginia, and Nevada, a 9.7 percent jobless rate that Republicans have called “completely unacceptable” would be a welcome improvement.

Vulnerable freshman Democratic Reps. Suzanne Kosmas and Alan Grayson represent swing districts that include parts of greater Orlando, where the unemployment rate in January 2010 was 12.4 percent.

Kosmas, a major GOP target this fall, represents a district that also contains the metropolitan area of Deltona and Daytona Beach, where 13 percent of the labor force was out of work.

“Where things are particularly bad, Democrats are in particular danger,” said David Wasserman, House editor for the Cook Political Report.

But 162,000 jobs were added last month (with the help of 50,000 temporary Census workers), boast the Democrats. Well, it’s less than meets the eye, as the Heritage Foundation (h/t Mark Hemingway) points out:

While the jobs report does indicate that 162,000 net jobs were created in March, almost 50,000 of those jobs were temporary government Census jobs that do not reflect any real economic progress. In total, the U.S. economy has now lost a total of 3.8 million jobs since President Barack Obama signed his $862 billion stimulus plan. We are 8.1 million jobs short of the 138.6 million he promised the American people. . .

And don’t fall for any White House claims that this belated recovery is due to the stimulus. As the Congressional Budget Office (CBO) admitted last month, its analysis of the stimulus’ job creating record was simply “essentially repeating the same exercise” as the initial projections. In other words, the CBO numbers on the stimulus don’t take any actual new real world data into account. Working with actual data, Veronique de Rugy of George Mason University’s Mercatus Center has found: 1) no statistical correlation between unemployment and how the $862 billion was spent; 2) that Democratic districts received one-and-a-half times as many awards as Republican ones; and 3) an average cost of $286,000 was awarded per job created. $286,000 per job created. That is simply a bad investment.

And if you think that this is only conservative nay saying, consider Robert Reich’s take on why the jobs’ picture is grim:

First, government spending on last year’s giant stimulus is still near its peak, and the Fed continues to hold down interest rates. Without these props, it’s far from clear we’d have any job growth at all.

Second, since the start of the Great Recession, the economy has lost 8.4 million jobs and failed to create another 2.7 million needed just to keep up with population growth. That means we’re more than 11 million in the hole right now. And that hole keeps deepening every month we fail to add at least 150,000 new jobs, again reflecting population growth.

A census-taking job is better than no job, but it’s no substitute for the real thing.

Bottom line: This is no jobs recovery.

So while the debate rages on as to whether ObamaCare is really going to protect incumbent Democrats, what’s certain is that they will be tagged with either ignoring or aggravating (for pushing a tax-and-spend, anti employer agenda) the bleak unemployment situation. The Obami may recite ad nauseam their claim that the stimulus plan saved or created jobs, but few voters believe it, and with good reason. The Democrats will therefore face an angry electorate demanding to know why lawmakers obsessed over something voters despised (ObamaCare) and ignored something they did care deeply about (jobs).

The Democrats’ real challenge, then, may be to fend off the argument from opponents that all that time spent jamming through ObamaCare evidences a serious disconnect with voters and a failure to appreciate their primary concern — restoring the economy and re-igniting job growth. Instead of thinking up ways to promote hiring, the Democrats have spent their time passing a hugely expensive health-care bill and plotting massive tax increases (including the expiration of the Bush tax cuts, which will fall heavily on small businesses) and new regulatory schemes (including cap-and-trade), which will only make employers more nervous about expanding their payrolls. You can see why the Democrats are bracing for yet another “change” election.

Read Less

Flotsam and Jetsam

Robert Reich doesn’t like ReidCare: “If you think the federal employee benefit plan is an answer to this, think again. Its premiums increased nearly 9 percent this year. And if you think an expanded Medicare is the answer, you’re smoking medical marijuana. The Senate bill allows an independent commission to hold back Medicare costs only if Medicare spending is rising faster than total health spending. So if health spending is soaring because private insurers have no incentive to control it, we’re all out of luck. Medicare explodes as well.”

Others don’t like it either. The Centers for Medicare and Medicaid Services actuary say it will increase health-care spending by $234B. And Sen. Bill Nelson says its a “non-starter.”

Ten senators write a letter complaining to Harry Reid about the deal, which doesn’t seem like it’s a deal at all.

Rasmussen tells us that Harry Reid trails all GOP challengers: “For now at least, his championing of the president’s health care plan appears to raise further red flags for the Democratic incumbent. Fifty-four percent (54%) of Nevada voters oppose the plan, while 44% favor it.”

Maybe that is Obama’s problem too: “Excluding the Rasmussen and Gallup overnight tracking polls, there have been seven major national surveys released this week. President Obama has recorded an all-time low job approval rating in six of the seven.”

Not good: “The last person to know that Sen. Max Baucus wanted a divorce may have been his wife of 25 years. It appears that Wanda Baucus was in the dark even as a member of Baucus’s staff — Melodee Hanes, the woman who is now his live-in girlfriend — was plotting out the senator’s life without a wife.” And it turns out Hanes got a political appointment at the Justice Department. Maybe it is time for him to go. “Say what you want about Republicans, but they have a much better sense than their opponents of when it’s time to grab one of their own and throw him off the sled to the wolves running behind.”

Makes you wonder what Chris Dodd was thinking when he asked for his help: “Vice President Joe Biden said Friday that Sen. Chris Dodd (D-Conn.) is ‘getting the living hell beat out of him, the living bejesus beat out of him.'”

An inconvenient poll: In the latest Ipos Public Affairs poll, 52 percent of adults think global warming isn’t happening or is happening mostly because of natural patterns while only 43 percent think it is due to human activity.

A very smart move Republicans should support: “U.S. President Barack Obama told lawmakers in private talks this week that he supported moving forward on stalled free trade deals with Colombia, Panama, and South Korea.”

If you loved Orin Hatch’s Chanukah tune, just wait until we get to Purim. No, really, he’s thinking about it.

Robert Reich doesn’t like ReidCare: “If you think the federal employee benefit plan is an answer to this, think again. Its premiums increased nearly 9 percent this year. And if you think an expanded Medicare is the answer, you’re smoking medical marijuana. The Senate bill allows an independent commission to hold back Medicare costs only if Medicare spending is rising faster than total health spending. So if health spending is soaring because private insurers have no incentive to control it, we’re all out of luck. Medicare explodes as well.”

Others don’t like it either. The Centers for Medicare and Medicaid Services actuary say it will increase health-care spending by $234B. And Sen. Bill Nelson says its a “non-starter.”

Ten senators write a letter complaining to Harry Reid about the deal, which doesn’t seem like it’s a deal at all.

Rasmussen tells us that Harry Reid trails all GOP challengers: “For now at least, his championing of the president’s health care plan appears to raise further red flags for the Democratic incumbent. Fifty-four percent (54%) of Nevada voters oppose the plan, while 44% favor it.”

Maybe that is Obama’s problem too: “Excluding the Rasmussen and Gallup overnight tracking polls, there have been seven major national surveys released this week. President Obama has recorded an all-time low job approval rating in six of the seven.”

Not good: “The last person to know that Sen. Max Baucus wanted a divorce may have been his wife of 25 years. It appears that Wanda Baucus was in the dark even as a member of Baucus’s staff — Melodee Hanes, the woman who is now his live-in girlfriend — was plotting out the senator’s life without a wife.” And it turns out Hanes got a political appointment at the Justice Department. Maybe it is time for him to go. “Say what you want about Republicans, but they have a much better sense than their opponents of when it’s time to grab one of their own and throw him off the sled to the wolves running behind.”

Makes you wonder what Chris Dodd was thinking when he asked for his help: “Vice President Joe Biden said Friday that Sen. Chris Dodd (D-Conn.) is ‘getting the living hell beat out of him, the living bejesus beat out of him.'”

An inconvenient poll: In the latest Ipos Public Affairs poll, 52 percent of adults think global warming isn’t happening or is happening mostly because of natural patterns while only 43 percent think it is due to human activity.

A very smart move Republicans should support: “U.S. President Barack Obama told lawmakers in private talks this week that he supported moving forward on stalled free trade deals with Colombia, Panama, and South Korea.”

If you loved Orin Hatch’s Chanukah tune, just wait until we get to Purim. No, really, he’s thinking about it.

Read Less

How Long Before Gore Endorses Obama?

After Ted Kennedy’s endorsement, the only question is when Al Gore will throw his support behind Barack Obama.

Don’t think for a moment that Gore isn’t considering it. What happened this weekend was the most dramatic change of tenor we have seen since Iowa caucus night. A new front opened up in the Democratic primary race. Hillary Clinton is no longer just battling Obama. She is defending the legitimacy of the Clinton era against all those who know it and are sick of it. A Gore endorsement of the rival to the wife of the man who made him vice president would be an unprecedented blow.

South Carolina was supposed to be insignificant win for Obama – even a part of the Hillary strategy. Dick Morris and others audaciously suggested that the Clintons wanted Obama to have a huge showing among black voters, sending a signal to white voters in other southern states that the contest was shaping up along racial lines. As Obama has emerged as a shrewd campaigner and rhetorical powerhouse, the transparent Clinton maneuvers to insert race into the campaign has simply forced even one-time cheerleaders to admit that Lady Macbeth and her husband must be stopped. Pete Wehner has a terrific piece on National Review Online describing how liberal stalwarts E.J. Dionne and Bill Greider have turned on the Clintons.

Suddenly the blood lust among Democrats to put a stake through the heart of the Clinton regime is palpable. John Kerry was uncharacteristically ahead of curve. So was Robert Reich, who was not only Clinton’s Secretary of Labor but a friend dating back to their Oxford days in the late 1960s. The Ted Kennedy endorsement can only be read as a message to the Democratic establishment that it is safe to come outside and declare your disgust with the Clintons.

So who will be next? John Edwards, some time later this week, will drop out of the race and endorse Obama, if only to create the illusion that he is a king maker. But what about Bill Richardson? Or Jimmy Carter? Geraldine Ferraro? Michael Bloomberg? For Gore, this opportunity to crown the next Democratic leader and simultaneously stab the Clintons in the back is simply too much to resist. Surely he is considering Macduff’s words from Act V: “Make all our trumpets speak; give them all breath,/ Those clamorous harbingers of blood and death.”

After Ted Kennedy’s endorsement, the only question is when Al Gore will throw his support behind Barack Obama.

Don’t think for a moment that Gore isn’t considering it. What happened this weekend was the most dramatic change of tenor we have seen since Iowa caucus night. A new front opened up in the Democratic primary race. Hillary Clinton is no longer just battling Obama. She is defending the legitimacy of the Clinton era against all those who know it and are sick of it. A Gore endorsement of the rival to the wife of the man who made him vice president would be an unprecedented blow.

South Carolina was supposed to be insignificant win for Obama – even a part of the Hillary strategy. Dick Morris and others audaciously suggested that the Clintons wanted Obama to have a huge showing among black voters, sending a signal to white voters in other southern states that the contest was shaping up along racial lines. As Obama has emerged as a shrewd campaigner and rhetorical powerhouse, the transparent Clinton maneuvers to insert race into the campaign has simply forced even one-time cheerleaders to admit that Lady Macbeth and her husband must be stopped. Pete Wehner has a terrific piece on National Review Online describing how liberal stalwarts E.J. Dionne and Bill Greider have turned on the Clintons.

Suddenly the blood lust among Democrats to put a stake through the heart of the Clinton regime is palpable. John Kerry was uncharacteristically ahead of curve. So was Robert Reich, who was not only Clinton’s Secretary of Labor but a friend dating back to their Oxford days in the late 1960s. The Ted Kennedy endorsement can only be read as a message to the Democratic establishment that it is safe to come outside and declare your disgust with the Clintons.

So who will be next? John Edwards, some time later this week, will drop out of the race and endorse Obama, if only to create the illusion that he is a king maker. But what about Bill Richardson? Or Jimmy Carter? Geraldine Ferraro? Michael Bloomberg? For Gore, this opportunity to crown the next Democratic leader and simultaneously stab the Clintons in the back is simply too much to resist. Surely he is considering Macduff’s words from Act V: “Make all our trumpets speak; give them all breath,/ Those clamorous harbingers of blood and death.”

Read Less




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