Tuesday, February 28, 2012

Idiots’ Delight

Fair warning, this month’s winner – yes, only one – is a doozy.  Over the last couple of years there have been many ridiculous, asinine statements uttered out of the mouths of buffoons.  Last year Herman Cain virtually stole the show all by himself with his now famous Libya interview.  Well, let’s just say Mr. Pizza ain’t got nothin’ on this dim bulb.

Without further ado:

Liz Trotta: It’s getting to the point where I’ve stopped being shocked by the daily banter of nonsense that spews out of the talking heads at Fox News.  But even I wasn’t prepared for what Trotta said recently regarding the recent rise in sexual assaults within the military.  Below is the exchange she had with Eric Shawn:

Shawn: So this is now causing a controversy?

Trotta: Well, it’s a controversy that won’t be a controversy because of political correctness. But we have women once more, the feminist, going, wanting to be warriors and victims at the same time. So what is the news? The news is that the Pentagon is going to add 14,000 more jobs for women in the military, but the overall ban against serving in the infantry, in special operations units, and combat tank units, is still in place. Well, you may ask, why did 140 women die in Afghanistan and Iraq if this ban was in place? Well, the whole way we wage war has changed enormously. No front lines, no clear delineation of where troops are. Women can be attached to battalions, but they can’t actually be in battalions. That would get down to the real guts of how we fight wars—and that is being a member of the infantry.

But while all of this is going on, just a few weeks ago, Defense Secretary Leon Panetta commented on a new Pentagon report on sexual abuse in the military. I think they have actually discovered there is a difference between men and women. And the sexual abuse report says that there has been, since 2006, a 64% increase in violent sexual assaults. Now, what did they expect? These people are in close contact, the whole airing of this issue has never been done by Congress; it’s strictly been a question of pressure from the feminists.

And the feminists have also directed them, really, to spend a lot of money. They have sexual counselors all over the place, victims’ advocates, sexual response coordinators. Let me just read something to you from McClatchy Newspapers about how much this position on extreme feminism is costing us. “The budget for the Defense Department’s Sexual Assault Prevention and Response Office leapt from $5 million in fiscal 2005 to more than $23 million in fiscal 2010. Total Defense Department spending on sexual assault prevention and related efforts now exceeds $113 million annually.” That’s from McClatchy Newspapers.

So, you have this whole bureaucracy upon bureaucracy being built up with all kinds of levels of people to support women in the military who are now being raped too much.

Shawn: Well, many would say that they need to be protected, and there are these sexual programs, abuse programs, are necessary—

Trotta: That’s funny, I thought the mission of the Army, and the Navy, and four services was to defend and protect us, not the people who were fighting the war.

Shawn: Well, you certainly want the people fighting the war to be protected from anything that could be illegal.

Trotta: Oh, look, I mean, that’s—nice try Eric. This whole question of women in the military has not been aired properly, and it’s the great sleeping giant.
OMG! You’d expect such a statement from the likes of a Rush Limbaugh, but coming from a woman – conservative or not – it’s beneath contempt.  As a man I was offended by the suggestion that just because men interact with women in close quarters they are naturally incapable of controlling their basic instincts.

To sum up, the reason rape is on the rise in the military is because feminists are pressuring the Pentagon into allowing women to serve openly next to their male counterparts near the front lines.  It’s got nothing to do with the fact that the perpetrators of these violent acts are sick individuals who should be held accountable for their deplorable conduct.  Indeed, in Trotta’s sick and twisted mind it’s the women who should have their heads examined.  After all, when you invade a man’s turf, take his job away from him and then have the nerve to be that close, what else should you expect?    

If this weren’t so pathetic, it would almost be humorous.  In fact, the first time I heard about it, I thought it was a fake news story from The Onion.  Nobody – not even a Fox pundit – could be that out to lunch.  Now that I’ve watched it several times, I realize that when it comes to depravity, the sky’s the limit, especially at Fox News.

Herman Cain, you may now pass Go and collect $200.

Sunday, February 26, 2012

The Fallacy of Starving the Beast

No matter how much evidence there is to disprove the Republican narrative that slashing spending is the key to true economic recovery, they remain obstinate.  The truth is that fiscal austerity actually accomplishes the opposite of the desired goal.  The more you slash spending, the more demand goes down, which in turn reduces revenues.  And that in turn increases the deficit.

While the U.S. economy is looking upbeat (as I mentioned earlier, I am cautiously optimistic) in Europe things are not quite so rosy.  And that's because leaders in that continent seem convinced that the only way to cure their ills is by starving the beast.

Paul Krugman's latest blog entry speaks directly to this issue and I thought it quite illuminating.  Krugman, as I have mentioned on several postings, has been the ONLY economist that has been proven right on virtually everything from TARP to the stimulus to the auto bailout to healthcare reform.  He's right here, too.

European Crisis Realities

This is not original, but for reference I find some charts useful. In what follows I show data for the euro area minus Malta and Cyprus — 15 countries. I use red bars for the GIPSIs — Greece, Ireland, Portugal, Spain, Ireland — and blue bars for everyone else.

There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth.

The Republican story is that it’s all about excessive welfare states. How does that hold up? Well, let’s look at public social expenditures as a share of GDP in 2007, before the crisis, from the OECD Factbook:

Hmm, only Italy is in the top five — and Germany’s welfare state was bigger.

OK, the German story is that it’s about fiscal profligacy, running excessive deficits. From the IMF WEO database, here’s the average budget deficit between 1999 (the beginning of the euro) and 2007:

Greece is there, and Italy (although its deficits were not very big, and the ratio of debt to GDP fell over the period). But Portugal doesn’t stand out, and Spain and Ireland were models of virtue.

Finally, let’s look at the balance of payments — the current account deficit, which is the flip side of capital inflows (also from the IMF):

We’re doing a lot better here — especially when you bear in mind that Estonia, a recent entrant to the euro, had an 18 percent decline in real GDP between 2007 and 2009. (See Edward Hugh on why you shouldn’t make too much of the bounceback.)

What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe. It’s not a perfect fit — Italy managed to have relatively high inflation without large trade deficits. But it’s the main way you should think about where we are.

And the key point is that the two false diagnoses lead to policies that don’t address the real problem. You can slash the welfare state all you want (and the right wants to slash it down to bathtub-drowning size), but this has very little to do with export competitiveness. You can pursue crippling fiscal austerity, but this improves the external balance only by driving down the economy and hence import demand, with maybe, maybe, a gradual “internal devaluation” caused by high unemployment.

Now, if you’re running a peripheral nation, and the troika demands austerity, you have no choice except the nuclear option of leaving the euro, coming soon to a Balkan nation near you. But non-GIPSI European leaders should realize that what the GIPSIs really need is a general European reflation. So let’s hope that they get this, and also give each of us a pony.

Tip of the Hat

Two short pieces - who said you needed to write a book? - that I found quite interesting from our friends on the other side of the aisle on two topics that are certain to be front and center this fall: the debt and taxes and President Obama's healthcare law. While there is a plethora of material from progressives out there on these issues, it's so much more satisfying when it comes - however grudgingly - from those inclined to embrace opposite view points.

No GOP Candidate Is Closing the Revenue Gap

Today the Committee for a Responsible Federal Budget released its scorecard of the Republican presidential candidates' long-term budget priorities. It turns out none of the candidates have budgets that can solve the long-term budget shortfall.

At the panel discussion about the report hosted by the New America Foundation, former Congressman Vic Fazio had troubling thoughts about the responsibility of the GOP's candidates' proposals:

"We have a historically low rate of taxation at 15% of GDP. Spending is at 23% of GDP. We have to move to close that gap. All of these proposals would widen it."

To be clear, Romney's plan seeks to reduce spending to 20% of GDP, and a growing economy could significantly expand tax revenues now slumping during the downturn. But the Governor's proposed tax cuts would cancel out some of these projected gains. The GOP's Norquistism remains the greatest sticking point to garnering good scores from impartial, non-partisan arbiters like this.
Committee member Alice Rivlin, former head of OMB and CBO, was especially gloomy:

"They all fail on the need to get more revenue."

How Romneycare Saves $

Freed Bauer draws attention to a new study which suggests—contrary to what the critics say—that Romneycare slowed the growth of health insurance premiums in Massachusetts:

In 2010, John F. Cogan, R. Glenn Hubbard, and Daniel P. Kessler published in Forum for Health Economics & Policy a report (“The Effect of Massachusetts’ Health Reform on Employer-Sponsored Insurance Premiums”) on the effects of Governor Mitt Romney's 2006 health-care reform in Massachusetts. This report suggested that, up until 2008, these reforms (hereafter referred to as "Romneycare") led to a relative increase in health-insurance premiums. This report was cited numerous times by opponents of Romney and helped fuel the belief that Romneycare caused health-insurance premiums to skyrocket in Massachusetts (even though Cogan et al. did not make this claim).

However, new data has now come out (covering through 2010), and this data tells a rather different story. It instead suggests that Massachusetts's health-insurance premium growth declined relative to the nation as a whole in the years since Romneycare has been enacted. From 2006 to 2010, employer-sponsored health-care premiums for a family rose about 19% in Massachusetts, while they rose about 22% in the US as a whole. Compare that to the period between 2002 and 2006, when Bay State family premiums increased 40% and US family premiums rose only 34.5%. Family premiums have seen the greatest reduction in growth since Romneycare; individual premiums have also slowed their rate of growth, though by not as much. For both family and individual premiums, the rate of growth fell below the national average in the period between 2008 and 2010.

Thursday, February 23, 2012

Going Off the Rails on the Crazy Train

Somewhere out there you just know Ozzy Osbourne is laughing his ass off.  The king of crazy, who once bit off the head of a dove during a concert, has had to play second fiddle to the GOP these days.  In what has to be considered the death wish scenario of a lifetime, Republicans are literally lining up to choose a candidate who has about as much chance of winning a general election as I do winning a Nobel prize.

In a stunning turn of events, the majority of Republican voters have basically decided that the objective of beating Barack Obama – which used to be número uno on their hit parade – now ranks as second behind authenticity.  In other words, even if it means losing in November, registered Republicans would rather cast their lot with a true believer in Rick Santorum over what many of them consider to be a fair-weather conservative in Mitt Romney.

That noise you hear is the roar of laughter coming from the White House.  First the economy starts to pick up; and now polls in Michigan and Arizona show the Tea Party-led Republicans jumping off the proverbial political bridge en mass. The only way this gets better is if we get a brokered Republican Convention and Sarah Palin becomes the nominee.  To quote Bill Maher, “Please, God, please.”

Actually, loathe though I am to agree with the Tea Party on anything, I have to give them some props here, if nothing else for taste.  While the former Massachusetts governor has been one of two Republican candidates not completely off the wall – the other one was Jon Huntsman – he’s about as authentic as a drag queen in a beauty pageant.  Whatever else you might say about Rick Santorum, he at least is the real deal.  And he’s also something else: he’s the first dyed-in-the-wool conservative who isn’t certifiable.  Myopic, misogynistic and homophobic, yes; but crazy? Hardly.

In the most bizarre primary season quite possibly since the nation’s founding, Santorum isn’t just the flavor of the month; he’s the perfect tonic for a base that’s fit to be tied and won’t compromise its core values, even if it means four more years of emperor Obama in the White House.  That he’s leading in the polls in Romney’s “native” Michigan is all you need to know about how this race has turned completely upside down.  The front runner status – once a given even among his skeptics – is now a distant memory in the Romney camp.  A loss in Michigan and Arizona next week and suddenly the nomination is anyone’s to win.

And that prospect has establishment Republicans practically shaking in their boots, not to mention feeling nauseous.  The two things they were hoping to avoid – a long, contested, drawn out primary and the emergence of a fringe candidate who doesn’t poll well among moderates and independents – are now staring them right in the face.  They’ll never admit it publicly, but privately the RNC is crapping its pants over the ramifications.  No matter how many times they parade their candidate down the runway, the faithful have refused to embrace him.  And now, after trying on every hat in the store, they’ve finally found one that fits perfectly.  Santorum doesn’t just drink the Kool-Aid, he bathes in it. He’s loved by both social and fiscal conservatives alike.  And, unlike Newt Gingrich, he hasn’t blown up virtually every bridge among his peers.

Don’t look now, but the guy everyone left for dead back in September, the guy yours truly called the runt of the GOP field, is less than a week away from putting a beat down on the heir apparent of the Republican Party and carving out his own path to the nomination.

All aboard the crazy train!

Sunday, February 12, 2012

Cooking the Numbers

Now that it has proven futile for Republicans and conservatives to poo-poo last month's jobs' report, the only logical alternative is for them to accuse the Bureau of Labor Statistics of cooking the numbers to make them look better than they actually are for the President.

First it's the liberal media that's in the tank for Obama; now the Department of Labor.  There's a clinical term for people who constantly believe that everybody is out to get them and only they know the truth.  It's called paranoia, and the Right is loaded with it.  If you doubt me just check out the speakers at this year's CPAC.  OMG, it was like a giant Sci-Fi and 9/11 Truthers convention all rolled up into one.

Anyway, while reading through the comments from my last blog I happened to come upon what I think is the best take on this whole non-issue: an article written in The New Yorker.  No doubt its author will be accused of being an elitist intellectual progressive snob - you know the kind who can think and doesn't believe that that should be a crime - but so be it.  It's a cross all of us have to bear these days.

No sense trying to dissect it or splice pieces of it into my post.  It deserves to be read in toto.  My only gripe is when he says "some Republicans and conservatives."  Other than that, I think he nailed it pretty effectively.

Bon Appétit.

The Jobs Report and the “Missing 1.2 Million”

My post about Friday’s jobs figures got folks riled up: some of you think I was shilling for Obama. That comes with the territory. I happen to be working on a longer piece about where I think Obama went wrong. Doubtless when that piece comes out, the President’s supporters will be up in arms.

But I would like to respond to something many commentators, on this site and others, have picked up upon: a suggestion that the Labor Department’s Bureau of Labor Statistics (B.L.S.) cooked the unemployment rate by removing 1.2 million Americans from the labor force. Some critics claim that these people should have been counted, and the unemployment rate should be considerably higher than 8.3 per cent.

Since the monthly jobs report is a bit complicated, let’s begin with how it’s put together. The payroll figures and the unemployment rate come from two different government surveys: one of businesses, the other of households. The unemployment rate comes from the household survey, which the Census Bureau carries out for the B.L.S., asking some sixty thousand households about their employment status during the previous month.

The unemployment rate is the percentage of the labor force that is out of work. According to the B.L.S., a person is in the labor force if he/she is working or actively looking for work. This excludes so-called “discouraged workers”—people who say they want a job but have given up actively looking because they believe that none are available. In January, there were 1.1 million of these folks, a figure that is little changed from a year earlier. (People serving in the military are also excluded from the labor force, which seems a bit odd, but that’s how it’s always been done.)

Bureau of Labor Statistics unemployment rate since 2001.

Now, let’s do a bit of arithmetic. In December, 2011, there were 153,887,000 people in the labor force, out of a total population of people sixteen and older of 240,584,000. If you divide the first figure by the second, you get the labor force “participation rate,” which was 64 per cent. In December, according to the household survey, 13,097,000 people were out of work. Dividing that figure by the labor force yields an unemployment rate of 8.5 per cent.

Now, let’s look at January, when the unemployment rate fell by two tenths of a per cent—or did it? Yes, it did. In January, the labor force was 154,395,000, and 12,758,000 people were jobless. A bit of long division produces an unemployment rate of 8.3 per cent.

The complicating factor is that at the start of every year, the B.L.S. updates its population estimates to reflect new information from the Census Bureau. This year, relying on findings from the 2010 Census, the B.L.S. raised its estimate of the sixteen-and-over population by 1,510,000, to 242,269,000.

This is where things get tricky. If the B.L.S. had assumed that all these newly counted people were in the labor force and working, the labor force would have swelled by 1.51 million, to about 155.9 million, and the January unemployment rate would have been lower: 8.2 per cent instead of 8.3 per cent. Similarly, if the B.L.S. had assumed that all 1.51 million of these people were in the labor force but out of work, the unemployment rate would have been higher—quite a bit higher, actually: 9.2 per cent.

What the B.L.S. actually did assert was that, of these 1.51 million people, just 258,000 were in the labor force: 216,000 were working and 42,000 were unemployed. Why did the B.L.S. do this? And what about the other 1,252,000 people—were they simply expunged from the work force for political reasons? No, they weren’t. I have seen no evidence to suggest that the statisticians in the B.L.S., or in any other government department, are politically motivated. In my experience, they are highly trained public servants who value their independence.

The B.L.S. explained that it adjusted the figures “because the population increase was primarily among persons 55 and older and, to a lesser degree, persons 16 to 24 years of age. Both these age groups have a lower rate of labor force participation that the general population.” The reason for that is no mystery: many older people retire; many young people go to high school and to college.

I agree that it seems a bit strange for the Census Bureau to discover another 1.5 million Americans, many of them senior citizens, who presumably have tax and Social Security records going back many years. But that’s just the way it is. All Census estimates are imprecise, and this revision was based on the latest and best information available.

The collation of the new population figures had nothing to do with the analysts at the B.L.S. (The Census Bureau is part of the Commerce Department.) They simply took the new information and tried their best to utilize it accurately. Since the adjustments they made didn’t have much impact on the labor force or the number of people employed, the unemployment rate was unaffected. But the increase in the population meant that the participation rate fell by 0.3 per cent, from 64 per cent to 63.7 per cent.

Some Republicans and conservatives are seizing upon this figure as evidence that the economy is still in the tank. It is certainly true that the participation rate is considerably lower than it was when Obama came to office, reflecting the fact that some people have dropped out of the labor force and fewer new workers have joined it. In January, 2009, the participation rate was 65.7 per cent. If it were still at that level, the unemployment rate would be two points higher.

But that doesn’t mean that the “real rate” is 10.3 per cent. It means that we have been through a long and severe recession, during which participation rates always decline, and that we still have a long way to go before getting back to a fully healthy economy. Which is precisely what Alan Krueger, the chairman of the White House Council of Economic Advisers, said on Friday.

After its most recent fall, the participation rate is now down to level not seen since 1982. It’s hardly a coincidence that 1982 was another year when the economy was coming out of a deep slump. If the economic recovery continues, the participation rate will pick up again, but slowly. Despite the vigorous recovery that the economy enjoyed in 1983 and 1984, the participation rate didn’t get back to 65 per cent until nearly the end of 1985. Indeed, it may be doubted whether we will ever attain previous peaks. The participation rate has been falling, on and off, since 2000, when it hit 67.3 per cent—as has the employment-to-population ratio, which is perhaps the broadest measure of activity in the labor market.

Bureau of Labor Statistics labor-force-participation rate since 1980.

During the eight years of the Bush administration, the participation rate fell by 1.5 per cent, from 67.2 per cent to 65.7 per cent; the population-to-employment ratio fell by a whopping 3.8 per cent, from 64.4 per cent to 60.6 per cent, most of which was concentrated in the recession year of 2008. In the ensuing three years, the participation rate has dropped another two per cent, and the employment-to-population ratio has dropped another 3.4 per cent.

The over-all picture, then, is of a labor market that is picking up but still operating at a much lower level of intensity than it did ten or fifteen years ago. Much of the shortfall is a lingering effect of the recession. But given that the participation rate and the employment-to-population ratio have been falling for more a decade, at least part of the change may well represent a permanent development caused by the aging of the baby boomers. Just how much, we won’t know until we’ve had a few more years of decent growth.

That doesn’t make a handy political slogan. But it’s about all we can say for sure.


Wednesday, February 8, 2012

A Funny Thing Happened On the Way to the Election

Hear it?  That’s the sound of the air escaping from the Republican balloon.  The news that the economy netted 243,000 jobs in January dropping the unemployment rate to 8.3 percent – the fifth straight month it has declined – no doubt dealt a serious blow to the doomsayer narrative that the GOP overlords have been spinning now for more than three years.  Since October ’09, when it peaked at 10.1%, the unemployment rate has dropped almost two whole points.  When you add up the employment gains just since last July, the economy has added over 1 million new jobs. 

More encouraging – or discouraging depending on your point of view – is that the trend is heading in the right direction.  Far from petering out, the recovery appears to be gaining momentum.  If the economy can continue netting 200,000 jobs per month, the unemployment rate will drop below that Mason/Dixon line of 8 percent right about the time Mitt Romney is wrapping up his Party’s nomination for President.  By November it might well be hovering around 7.5 percent.

Can you spell oops?

Naturally Republicans were hard at work dismissing the good news.  RNC Chairman Reince Priebus said that the January jobs’ numbers “remind us that our economy is far from fixed. That, by the president’s own standard, should make him a one-term president.”  John Boehner chimed in by saying that while the numbers were “welcome news,” unemployment is still “far too high.”  And Eric Cantor “congratulated” President Obama for finally acknowledging GOP initiatives.

And then there was the comment from the used-car salesman from hell: Mittens Romney.  “While we welcome a decline in unemployment, these numbers can't hide the fact that the President's policies have prevented a true recovery.”  Sometimes you get the feeling if Obama came up with a cure for the common cold Republicans would blame him for putting all those cold-remedy providers out of business.

Obama quickly countered his critics who were downplaying the good news by issuing a warning to Congress not to “muck” it up.  “The economy is growing stronger. The recovery is speeding up, and we’ve got to do everything in our power to keep it going.”

Of course the GOP really has no other alternative.  Any praise for Obama, no matter how faint, will deal a fatal blow to their chances in November.  Their only play is to keep piling on in the vein hope that those who are still unemployed and those who are still underemployed will remain frustrated just enough to allow them to accomplish the unthinkable.  The sad truth is the upswing in employment numbers could not have come at a worse time for them.  What was shaping up as a pretty good bet for a clean sweep for the Republicans in 2012 just a year ago, now is looking more and more like a long shot at best. 

Timing is everything in politics.  Just ask John Kerry.  He came this close to defeating George Bush in ’04.  Had the election been held a year later he would’ve cleaned his clock.  That’s the way it goes.  Sometimes it’s better to be lucky than good.  For the better part of three years Obama’s policies have been the only thing keeping the country from another Great Depression, but he has been the unluckiest president in history.  Now the tide is beginning to turn.  Slowly but surely the nation is emerging out from under the worst economic downturn since the 1930s.  The glass is more than half filled. 

But while Obama’s opinion polls are climbing, I remain cautiously optimistic.  Sure the jobs’ numbers are strong and the trend hopeful, but there is still a lot of time between now and November.  Anything can happen.  The Euro is still on shaky ground and consumer demand remains anemic.  A couple of bad months of employment numbers could set the economy back on its heals and toss a monkey wrench into the whole mix.  As the New England Patriots found out the hard way a third-quarter lead is meaningless.  You’re up by eight one minute; the next that long bomb down the sidelines ends up costing you the game.