Author Archive | susie

Confusion-Based

Steve Benen with a piece on how a Republican survey of the Tea Party activists found they don’t seem to know much about the things that have them so upset:

Bruce Bartlett reported today on the survey’s results, and found that for an anti-tax group, “they don’t know much about taxes.”

Indeed, it appears much of the Tea Party crowd is simply clueless about the issues they claim to care the most about, wildly exaggerating federal tax rates, how much a median family pays in taxes, and what’s changed since President Obama took office.

In short, no matter how one slices the data, the Tea Party crowd appears to believe that federal taxes are very considerably higher than they actually are, whether referring to total taxes as a share of GDP or in terms of the taxes paid by a typical family.

Tea Partyers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today, and only 4% thought they were lower; the rest said they are the same.

As noted earlier, federal taxes are very considerably lower by every measure since Obama became president…. No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama’s policies.

Inside Man

In-depth piece in The Atlantic about how Tim Geithner managed the Wall Street crisis – and why:

What can’t be disputed is that the decision to focus on risk management rather than size carries the same political disadvantages Geithner’s plan for recovery did. By allowing Wall Street’s major institutions to continue unmolested—even as they exploit the government’s guarantee by paying themselves huge bonuses—the administration appears weak and indulgent, and deaf to the public’s desire for retribution. When Obama introduced the Volcker rules and started talking about wanting to pick a fight with Wall Street, he was at last succumbing to this pressure.

The depressing coda to all this is likely to be financial reform that falls short of even Geithner’s plan. Partly this is because the administration didn’t challenge many of the constraints that were already in place. But mostly it is because even the biggest crisis since the Great Depression hasn’t changed Washington’s ideological outlook nearly so much as it has everybody else’s. Three decades’ faith in deregulation and the power of the market makes a lasting impression. Most members of Congress have enough political sense to criticize Wall Street bankers. But meaning it enough to push tougher reforms is still regarded as slightly unsophisticated, as the handful of congressmen who’ve tried can attest.

Before passing the administration’s plan, the House weakened oversight, carved loopholes for derivatives trading, and cut commonsense measures like one requiring financial firms to offer “plain vanilla” alternatives to complicated (and profitable) products like mortgages. The Senate seems poised to weaken things further. All of this happened as a wave of anger was gathering force. When it broke, with the Republican victory in Massachusetts, it seemed to finally sweep away some long-held illusions, causing many Democrats to realize how sharply at odds their beliefs are with popular sentiment. Only now, too late, are those beliefs beginning to ebb.

The economic recovery has eased the urgency for reform that existed a year ago. Even if the administration changed course and pushed for strenuous measures, Obama and Geithner probably lack the credibility to pull them off. What successes they’ve achieved are obscured by high unemployment and anger at Wall Street, reflecting the inadequacy of their stimulus and the fallout from their recovery and reform plans. “We managed the economic recovery like we were investment bankers,” a senior adviser to Vice President Biden complains. What chance there may have been for tough reforms came early in the crisis, when public anger was peaking and banks were weak, and any such reforms probably would have required someone other than Geithner, the face of the bailouts, as their champion.

Geithner doesn’t breed nuance of opinion. You’re either for him or against him, and popular sentiment leans strongly toward the latter. But it’s possible to view him as someone who was indispensable in halting the crisis (his understanding of Wall Street’s psychology was particularly valuable) while still doubting whether someone so steeped in the institutional cultures of Washington and Wall Street has the necessary distance to direct their reform.

The angry uprising that stopped the Obama agenda in its tracks is part of the steep political cost of following the Geithner Plan—a cost that seems to keep rising, even as the fiscal cost continues to fall. Even the most prominent indicator of recovery, the robust stock market, has come to seem a curse, by reinforcing in the public mind how quickly Wall Street has recovered while everyone else is left to endure. And Obama can’t really tout all that he’s done without also drawing attention to his gentle treatment of Wall Street.

Depending on your point of view, this is either a cruel or a fitting irony. By placing his chips on Geithner a year ago, Obama was betting that a strategy of growth under any circumstances was the right move, and that devising new rules was best left to insiders. But even Geithner isn’t sure that the public will come to see it that way: “In the end, what people care about is, what did you do? Did it make things better or not? That’s what you’ll be judged by. Now, will it vindicate the president over time? It should, but I’m not sure it will. I think probably not. The country is dramatically better off today. People say the financial strategy was politically costly for us. And I say to them, relative to what? Would it have been better to have the stock market where it was in March, the economy still falling, and unemployment much higher?”

Real unemployment numbers are almost as bad as they were in the Last Depression. We should shut up and be grateful it’s not worse? How much worse does it need to get?

News From Inside The Bubble

Via Digby. Wall Street is thrilled that so many people are still unemployed!

The number of newly laid-off workers requesting jobless benefits fell slightly last week for the third straight time. But initial claims remain above levels that would signal net job gains.

New claims for unemployment aid fell 5,000 to a seasonally adjusted 457,000, the Labor Department said. That nearly matched analysts’ estimates of 455,000, according to Thomson Reuters.

The four-week average of jobless claims, which smooths out volatility, dropped to 471,250. Still, the average has risen by 30,000 since the start of this year. That’s raised concerns among economists that persistent unemployment could weaken the recovery.

The average number of weekly jobless claims remains above the 400,000-to-425,000 level that many economists say it must fall below before widespread new hiring is likely.

No Jobs for You

I continue to worry that at some point, Wall Street will convince the administration that it would be a great psychological ploy to cut off unemployment compensation to convince the market there’s a recovery.

And if they do that, all hell will break loose:

March 16 (Bloomberg) — U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today.

The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.

“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average — not enough to bring the jobless rate down substantially.

Today’s projections are in line with the 10 percent average unemployment forecast for this year in last month’s budget plan. Christopher Rupkey, chief financial economist at Bank of Tokyo Mitsubishi UFJ Ltd. in New York, said the administration’s language risks damping expectations for a recovery.

“They need to work on the message, and right now the message is that there is not a lot to be hopeful about,” Rupkey said. “Warning about a slow jobless recovery can help make it a reality.”

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