Paul Krugman has a message for policy-makers: "Where we are is not O.K. Stop shrugging, and do your jobs"

Patrick Chappatte [click to enlarge]

"For more than three years some of us have fought the policy elite's damaging obsession with budget deficits, an obsession that led governments to cut investment when they should have been raising it, to destroy jobs when job creation should have been their priority. That fight seems largely won -- in fact, I don't think I've ever seen anything quite like the sudden intellectual collapse of austerity economics as a policy doctrine.

"But while insiders no longer seem determined to worry about the wrong things, that's not enough; they also need to start worrying about the right things -- namely, the plight of the jobless and the immense continuing waste from a depressed economy."

-- Paul Krugman, in his NYT column "The Big Shrug"

by Ken

Howie and I were talking the other day (or the other week?) about what is, I now gather the talk of the blogging community: the death of politics. Or rather, that fewer and fewer people seem interested in the stuff.

Which I understand completely. Things aren't bad enough to drive us into open revolt, or even vaguely mutinous disgruntlement, as might have been the case in the first year or two of the economic meltdown -- the vaguely mutinous disgruntlement, not the impulse to open revolt. We have learned enough about the corruption of our system, and the way in which it is controlled by our power elites, as to leave most of us throwing our arms up, saying, "WTF can we do anyway?"

And there's a tendency to answer: fry up some more bacon, and watch the new episodes of Game of Throw-Up.

Imagine Paul Krugman, then, trotting out the quaint idea that there are people in policy-making positions whose job it is to do something about the state of the economy.

"I've been in this economics business for a while," he begins today's NYT column, "The Big Shrug." "In fact, I've been in it so long I still remember what people considered normal in those long-ago days before the financial crisis."

In those ancient times, he says, "normal" meant:

* "an economy adding a million or more jobs each year, enough to keep up with the growth in the working-age population";

* "an unemployment rate not much above 5 percent, except for brief recessions";

* and "very few people out of work for extended periods."

"So how, in those long-ago days," he wonders, "would we have reacted to Friday's news" --

that the number of Americans with jobs is still down two million from six years ago, that 7.6 percent of the work force is unemployed (with many more underemployed or forced to take low-paying jobs), and that more than four million of the unemployed have been out of work for more than six months? Well, we know how most political insiders reacted: they called it a pretty good jobs report. In fact, some are even celebrating the report as "proof" that the budget sequester isn't doing any harm.

Krugman credits the Fed with at least -- once upon a time, which is to say last fall -- signaling a "willingness to do whatever it took to get unemployment down." But that passed, and now, he says, "sometimes it seems as if nobody in Washington outside the Fed even considers high unemployment a problem."

He wonders why this isn't "a major policy priority," and ventures three answers:

(1) "Inertia"

[I]t's hard to get policy changes absent the threat of disaster. As long as we're adding jobs, not losing them, and unemployment is basically stable or falling, not rising, policy makers don't feel any urgent need to act.

(2) "The unemployed don't have much of a political voice"

Profits are sky-high, stocks are up, so things are O.K. for the people who matter, right?

(3) "The monetary hawks"

[W]hile we aren't hearing so much these days from the self-styled deficit hawks, the monetary hawks -- economists, politicians and officials who keep warning that low interest rates will have dire consequences -- have, if anything, gotten even more vociferous. It doesn't seem to matter that the monetary hawks, like the fiscal hawks, have an impressive record of being wrong about everything (where's that runaway inflation they promised?). They just keep coming back; the arguments change (now they're warning about asset bubbles), but the policy demand -- tighter money and higher interest rates -- is always the same. And it's hard to escape the sense that the Fed is being intimidated into inaction.

"The tragedy is that it's all unnecessary"

Krugman allows that "you hear talk about a 'new normal' of much higher unemployment," but insists that "all the reasons given for this alleged new normal, such as the supposed mismatch between workers' skills and the demands of the modern economy, fall apart when subjected to careful scrutiny."

If Washington would reverse its destructive budget cuts, if the Fed would show the "Rooseveltian resolve" that Ben Bernanke demanded of Japanese officials back when he was an independent economist, we would quickly discover that there's nothing normal or necessary about mass long-term unemployment.

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Someone Needs To Tell Obama There's A Great Democratic Candidate Running For Governor Of New Jersey

Last year Obama beat Romney in New Jersey 2,117,175 (58%) to 1,472,709 (41%). In 2008 he had beaten McCain with 57%. Yesterday Obama supporters in the Beltway media were touting how the Republican plans to sabotage the Affordable Care Act could well backfire on GOP governors and legislators who are obstructing it. Jonathan Cohn was all over the success in California, where the ACA is driving the cost of health care down. "Based on the premiums that insurers have submitted for final regulatory approval," he wrote, "the majority of Californians buying coverage on the state's new insurance exchange will be paying less-- in many cases, far less-- than they would pay for equivalent coverage today... Unfortunately, millions of uninsured and under-insured Americans live in places like Florida and Texas, where there is far less sympathy-- and a great deal more hostility-- to the idea of Obamacare. It’s entirely possible that the insurance bids in those states will be a lot higher, precisely because state officials there are doing nothing to help and quite a bit to hurt implementation. But if that happens, blame won’t belong with the heath care law or the federal officials in charge of its management. It will belong with the state officials who can’t, or won’t, deliver to their constituents the benefits that California’s officials appear to be providing theirs."

Brain Beutler at TPM was also warning Republican saboteurs: "[A]ll the states trying to make the law fail will look very stupid and terribly craven if California pulls this off. Their predictable claims that Obamacare is all screwed up won’t be very persuasive if a giant, historically mismanaged state like California can make it work well." And Ezra Klein says if the GOP hopes rest on failure in California, they're in trouble:

Of course, California and Oregon are managing Obamacare particularly well. But the state-by-state nature of the Affordable Care Act creates really unusual political dynamics around how the law is perceived in its first year.

Imagine it’s the end of 2014. California now boasts a working, near-universal healthcare system. Nothing perfect, but clearly a success after the first year of implementation. Texas, meanwhile, is a bit of a mess. They didn’t allow the Medicaid expansion so the state’s poorest residents got nothing. They didn’t help with the exchanges, or the outreach, so there aren’t many choices, and premiums aren’t as low one might hope.

Viewed in isolation, Texas’s problems would be deadly for the law. But viewed next to California, they might mainly be a problem for the political class in Texas, which has failed to implement a clearly workable law.

Krugman, of course, is smarter:

The Affordable Care Act, aka Obamacare, is a policy Rube Goldberg device-- instead of doing the simple, obvious thing, which would just be to insure everyone, it basically relies on a combination of regulations and subsidies to rope, coddle, and nudge us into a rough approximation of a single-payer system. There were reasons for this, of course, mainly political: a complete displacement of the existing system would have been both too destructive of powerful interests and too radical for voters.

He also notes that the California preliminary numbers are "looking very good, with costs coming in below expectations." He concludes the same way, that "Predictions that Obamacare will be a big political issue are probably right-- but not in the way gleeful conservatives imagined." So where does that leave Chris Christie and, more important, the citizens of New Jersey. Christie has made a determined effort to pass himself off as a "mainstream moderate" and, partly because of Obama, many low-info folks-- mostly out of state, but some in New Jersey as well-- believe it. Earlier this week, John Nichols, writing for The Nation nailed it. "When New Jersey Governor Chris Christie was asked in mid-May about his political bona fides, he replied, 'I’m a damn good Republican and a good conservative Republican.' Believe what he says-- especially the 'conservative' part. Sure, Christie goes out of his way to say nice things about President Obama, who worked closely with the governor to provide immediate and essential support to New Jersey communities battered by Superstorm Sandy. And yes, Christie’s been willing to call out some of the most absurd excesses of his fellow Republicans. But these gestures are about style, not policy. The first-term governor has been meticulous about positioning his fall re-election campaign as a “bipartisan” effort. Christie knows that New Jersey, which gave Obama 58 percent of the vote last November and sends two Democrats to the US Senate, has a long history of preferring Republican moderates-- like former Senator Clifford Case and former Governor Christine Todd Whitman-- over conservatives.

Christie is no moderate. He’s a social conservative who opposes reproductive rights, has defunded Planned Parenthood and has repeatedly rejected attempts to restore state funding for family planning centers. He has vetoed money for clinics that provide health screenings for women, including mammograms and pap smears. He vetoed marriage equality.

Christie’s consistent when it comes to reading from the right’s playbook. The governor announced early in his tenure that he was pulling New Jersey out of a regional carbon emissions reduction program, and then declared his intention to scale back the state’s renewable energy targets. And in the midst of this election year, he vetoed a plan for early voting-- a move that, as the state’s largest newspaper suggested, Christie “knows will play well with Republicans nationally,” given that they “have led previous efforts to suppress voter turnout by curtailing early voting hours.”

Christie is at his most militant when it comes to implementing the austerity agenda associated with the most conservative Republican governors. There’s a credible case to be made that he is “doing a Scott Walker on New Jersey,” as a Garden State headline suggested in early May, after the governor proposed gutting civil service protections. Christie makes no bones about his admiration for the Wisconsin governor, whose anti-labor crusade inspired mass protests, a recall attempt and miserable job-creation numbers. And Walker says he’s taken inspiration from Christie, who since his 2009 election has been bashing public employees, ripping teachers and matching tough talk with even tougher cuts.

The Newark Star-Ledger says Christie “has made his battle with unions a centerpiece of his first term,” and the governor doesn’t disagree, declaring, “I think unions are the problem.” Under Christie, the minimum retirement age for state employees has been increased, as have contribution requirements for benefits and pensions. He’s attacked tenure protections for teachers, and according to the New Jersey Education Association, since Christie’s election “teachers and school employees have seen their budgets slashed, their colleagues laid off, their class sizes increased.” It’s not just the public sector that has taken hits: the governor has used his veto pen to block minimum-wage hikes and pay-equity legislation, and he has cut the earned-income tax credit for the working poor. At the same time, Christie has rejected tax hikes for billionaires and found plenty of money for corporate tax breaks and giveaways.

As with other governors who have gone the austerity route, Christie is proving that budget cuts and constant wrangling with unions is bad for the economy. New Jersey’s unemployment rate has been way above the national average since 2011; it’s currently the seventh-highest in the country and the worst in the region. New Jersey also has the nation’s second-highest percentage of mortgage loans in foreclosure. And the highest local property taxes.

And as for Obamacare, well Christie called Medicaid expansion provision needed to implement the Affordable Care Act. "extortion" and all of last year, he blustered about not letting New Jersey be part of it. Last July, at the Brookings Institution he stated that he was "glad that the Supreme Court ruled that extortion is still illegal in America. That’s a relief because Obamacare, on Medicaid to the states, was extortion. It essentially said, ‘You expand your program to where we tell you, and if you don’t, we’re taking all the rest of your money away.’ That’s extortion. It was a whole bunch of nice words in a bill, but it was extortion. I’m really glad that a majority of the Supreme Court still supports the proposition, as a former prosecutor, that extortion is still illegal, even when done by the President of the United States.”

Before that he was urging Republicans in Congress to repeal it. When asked by Wall Street shill Maria Bartiromo if he was for repeal, he responded "Yeah, I did not favor Obamacare in the first place. I thought it was too big a grab by the federal government for our health care system. It should not have been voted on in the form that it was in the first place. Business folks are very concerned, and they're sitting on a lot of capital because they're just not sure of how much more cost the government is going to load onto them not only through Obamacare, but through the higher taxes the president is talking about." So he vetoed a bill from the legislature implementing the healthcare exchange for New Jersey citizens. December, 2012, while Christie was visiting President Obama in the White House to coordinate efforts after SuperStorm Sandy:

“New Jersey Governor Chris Christie said on Thursday he vetoed a bill that would have created a health insurance exchange for his state under President Barack Obama's signature healthcare program. Christie, a Republican who has nurtured a reputation as a cost cutter, cited uncertainty over what such an exchange would cost the state and over what kind of flexibility New Jersey will have in managing it. "I will not ask New Jerseyans to commit today to a state-based exchange when the federal government cannot tell us what it will cost, how that cost compares to other options, and how much control they will give the states over this option that comes at the cost of our state's taxpayers," Christie said in a statement.”

Realizing he would lose his reelection bid if he kept obstructing Obamacare, by the end of February of this year he was waving the white flag. The far right Weekly Standard was incensed: "In attempting to justify his desire to aid and abet Obamacare, Christie spoke about what would have happened if he had decided differently: 'Let me be clear, refusing these federal dollars does not mean that they won’t be spent.  It just means that they will be used to expand health care access in New York, Connecticut, Ohio, or somewhere else.' ...This claim, of course, has no basis in fact."

You may have seen the stir yesterday when Obama appointed former congresswoman Ann Marie Buerkle to the Consumer Product Safety Commission. He had to appoint a Republican, but Buerkle is not ordinary Republican. A dead-end teabagger, obstructionist and nihilist, Buerkle is an insane choice for any job. Why not a mainstream conservative instead of a raging reactionary? It wasn't Obama's worst political decision this week, though. The White House also announced that he would be visiting his old pal Christie at the Jersey Shore Tuesday. No one thinks New Jersey's Democratic gubernatorial nominee, Barbara Buono, is going to have an easy time beating Christie, but why is Obama screwing around this way when this is the next big election coming down the pike?

While in New Jersey, Obama will deliver remarks about “expanding economic opportunity for middle class families who were hard hit by the storm” and meet with residents who have benefited from the federal recovery efforts.

...This trip comes at a fortuitous time for both Obama and Christie. Obama will be highlighting one of his administration’s successes and trying to change the subject from the scandals of recent weeks as the nation returns from the Memorial Day weekend.

Christie, whose post-Sandy actions sent his approval ratings skyrocketing, is in the midst of a re-election campaign against a little funded Democrat. Having Obama heap praise on him can only help in heavily Democratic New Jersey.

Reading that and writing this post helped me make the decision to endorse Barbara Buono on the DownWithTyranny ActBlue page, our first candidate of 2013. We've been watching her campaign since early this year and we've been impressed-- and convinced she can beat Christie... especially if Obama stops boosting him. Anyone think he would ever do something like this to a Democratic Establishment hack like Terry McAuliffe in Virginia? Let's just hope Obama witnesses a classic Christie-out-of-control moment on the Boardwalk... like this  one from last year, when someone seemed to interfere with his 8th ice cream cone:

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It Wasn't A Happy May Day, Not In Europe-- And Probably Not At Chez Paul Ryan

Except for Seattle, it was a pretty quiet May Day here in the U.S. where Boehner, Ryan, Miss McConnell and Obama are introducing the devastating Austerity agenda more gradually than they did in Europe. May Day was marked by protests by workers across the globe, starting in Asia, with as many as 150,000 demonstrators getting the ball rolling in Jakarta, while smaller protests sprang up in Seoul, Phnom Penh, Dhaka and Manila.

With 80 countries around the world marking May 1 as a public holiday, Istanbul's Taksim Square was in lockdown on Wednesday, after the Turkish government banned May Day protests there.

The square is the site of a 1977 May Day massacre in which dozens of people died under disputed circumstances.

Al Jazeera's Hashem Ahelbarra, reporting from Istanbul, said: "There have been scuffles, particularly in areas that lead to Taksim Square, which has been sealed off.

"Protesters say they should be given access to celebrate May 1 in a place of symbolic importance; they want to honour the memory of those who were killed here. There is a tug of war under way between the government and people."

...In Moscow, the Russian capital, authorities sanctioned 16 separate rallies, including one led by Vladimir Putin's ruling United Russia party.

Other groups, including the Communist Party, are holding gatherings of their own. Up to 90,000 people are expected.

Protests in Greece were widespread and included a major transport workers strike but were generally peaceful. There were demonstrations in 80 Spanish cities, were Austerity is especially catastrophic to a devastated middle class and where the unemployment rate in 27%. And in Italy, the new Pope took the side of working people over the oligarchs and plutocrats. It must have infuriated Catholic fascists in America like Paul Ryan to see Pope Francis denouncing Austerity yesterday.

Pope Francis on Wednesday urged political leaders to make every effort to create jobs and said unemployment was caused by economic thinking “outside the bounds of social justice.”

“I call on politicians to make every effort to relaunch the labor market,” the Argentine pope told thousands of followers at his weekly general audience in St. Peter’s Square, which coincides with May Day demonstrations around the world.

“Work is fundamental for dignity,” he said.

“I think of labor market difficulties in various countries. I think of people, not just young people, who are unemployed often because of an economic conception of society based on selfish profit outside the bounds of social justice,” he said.

Paul Krugman warned his European counterparts they were heading in the wrong direction-- and still are. "Sometimes," he prodded, "economists in official positions give bad advice; sometimes they give very, very bad advice; and sometimes they work at the OECD."

It’s almost exactly three years since the Paris-based OECD gave what may have been the worst advice of any major international organization-- worse than the European Commission, worse than the ECB. Not only did it join in the demand for fiscal austerity, it also demanded that the US start raising interest rates rapidly, so as to head off the threat of inflation-- even though its own models showed no such threat.

So here we are three years later. No inflation takeoff in America (and the Fed trying to find ways to boost demand at a zero rate); austerity economics has crashed and burned; the latest numbers from Eurostat look like this:

And what is the OECD’s chief economist (still the same person) saying?

The euro zone is at risk of snatching defeat from the jaws of victory by abandoning efforts to cut budget deficits and fix long-standing economic problems, the Organization for Economic Cooperation and Development‘s chief economist warned Monday.

…Mr. Padoan said the growing perception that austerity has been futile is incorrect.

“Fiscal consolidation is producing results, the pain is producing results,” he said.

He added that euro-zone policy makers need to do a better job of communicating their successes to a weary population.

I believe that’s eurospeak for “the beatings will continue until morale improves.”

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