Wonkbook: Boehner's revisionist economic history
The real problem in American politics right now isn't simply that the two parties can't agree on what to do about the economy. They can't agree on what is happening to the economy.
Yesterday afternoon, Speaker John Boehner took to the Economic Club of Washington, DC to offer his take. Boehner argued that our ongoing malaise is entirely the fault of an overly meddlesome and expansive government. As I noted in an earlier post, his speech didn't mention Wall Street or foreclosures our household debt or the Eurozone. It wasn't a description of our current woes that many Democrats -- or many economists -- would recognize. And so it didn't lead to a set of solutions that many Democrats would find congenial.
But this wasn't the first time Republicans and Democrats had sharply disagreed on the nature of our economic problems. The Financial Crisis Inquiry Commission, which was supposed to produce a bipartisan report modeled off of the 9/11 Commission, also failed to find agreement, and not one Republican voted for the same explanation as any Democrats (if you're interested, there's a great Planet Money podcast on the FCIC's split).
Nor is it the case that there's unity among Democrats on the causes of our ongoing economic troubles. Earlier this week, Delaware Senate Tom Carper said, "the best jobs bill that can be passed is a comprehensive long-term deficit-reduction plan. That's better than everything else the president is talking about -- combined." I heard a similar account from a top House Democrats I spoke with yesterday morning. Believing that deficit reduction offers a way out of 9 percent unemployment implies a very different analysis than the one that, say, Paul Krugman would offer, in which high household debt has led to weak aggregate demand and the economy needs spending, not austerity, to recover.
My suspicion is that some of these analyses are working backwards from the political actor's preferred conclusions: Boehner's agenda is less government, and so he has settled on a theory of the crisis that fits his preferred solution. Carper supports jobs programs, but his longtime interest is deficit reduction, and so he's drawn to arguments touting the power of the policies he has wanted all along. The Republicans on the FCIC commission were, in their telling, concerned that the Democrats' explanation was simply a justification for further regulation. But the fact remains that three years into the crisis, there's very little consensus in Washington about the sort of crisis we're in, and the sort of policies needed to get us out.
1) John Boehner wants the supercommittee deal to be all spending cuts, report Paul Kane and Rosalind Helderman: "House Speaker John A. Boehner (R-Ohio) on Thursday reaffirmed GOP opposition to any tax increases to solve the nation’s deficit problem, signaling a swift return to the trench warfare that characterized the debt and spending debate of early summer. Boehner said that the special committee seeking long-term debt reduction should achieve its mandated $1.5 trillion in savings entirely by cutting federal agency spending and shrinking entitlement programs. 'When it comes to producing savings to reach its $1.5 trillion deficit-reduction target, the joint select committee has only one option: spending cuts and entitlement reform,' Boehner said in a speech to the Economic Club of Washington...Boehner’s speech established that there has been little change in the fundamental positions that gridlocked Washington during the past few months."
Read Boehner's speech: http://bit.ly/qZjclC
2) My take: Boehner's speech did not offer a plausible narrative of our economic crisis. "If you listened to Speaker John Boehner’s speech before the D.C. Economic Club today, you heard a very specific story explaining why unemployment is stuck at 9 percent: 'it’s not because the American people have lost their way,” he said. “It’s because their government has let them down.' But Boehner never mentioned Wall Street, or foreclosures. There was no talk of consumer debt or weak demand. Nothing about underwater homeowners or European crises. If liberals sometimes go too far in thinking the government can solve every problem, conservatives sometimes go too far in thinking the government causes every problem. And that’s where Boehner went today."
3) Republicans are rolling together their spending bills into one omnibus, reports David Rogers: "Reversing their past rhetoric, House Republicans are actively considering plans to bundle the 12 annual appropriations bills into a single omnibus package that meets spending targets set in the August budget accord and can be enacted before the December showdown over further deficit reduction. Speaker John Boehner (R-Ohio) was described as still nervous about the strategy, given the resistance he risks from conservatives and his own past criticism of such big budget packages...Indeed, with the new fiscal year just two weeks away, the House has completed only six of the dozen annual bills -- none of which have cleared Congress -- and the GOP leadership has no plans for doing more this fall. Instead, a continuing resolution, or CR, to keep the government operating through Nov. 18 will be voted on next week, and this will define a window in which an omnibus can be written and debated by both houses."
4) The White House is doubling down on clean energy loans, reports Andrew Restuccia: "The Energy Department (DOE) is not backing down in its efforts to support clean energy companies, despite Republicans pummeling the Obama administration for approving a $535 million loan guarantee to a now-bankrupt solar firm. The department could approve as many as 15 renewable energy loan guarantees by the end of the month when a program launched under the stimulus law ends. The approvals could open up the Obama administration to more criticism from Republicans, who have raised broad concerns about the administration’s investments in clean energy in the aftermath of California-based Solyndra's bankruptcy...To date, the DOE has finalized 17 loan guarantees for a range of solar, wind and geothermal projects. The department has issued 15 conditional commitments that must be finalized by the end of September."
5) The Fed is intervening in the Eurozone crisis, report Neil Irwin and Michael Birnbaum: "Worried that a mounting debt crisis in Europe could trip up the global economy, the Federal Reserve opened its vault Thursday to the central banks of other countries in an effort to head off a crippling shortage of dollars. The main recipient of the Fed’s money is the European Central Bank, which will in turn extend dollar loans to banks in the nations that use the euro currency. Those banks do significant business in dollars, for instance making loans to customers operating around the world, and have been finding it harder to raise dollars from anxious investors. The initiative, which entails temporarily swapping dollars for foreign currencies, also involves the central banks of Britain, Switzerland and Japan...By tapping the Fed for dollars, the other central banks are taking advantage of long-standing arrangements, first put in place four years ago at the outset of the global financial crisis to prevent bank lending from freezing up."
6) A new book paints a damning portrait of Obama's economic team, reports Mark Landler: "A new book claims that President Obama’s response to the economic crisis was hampered by a White House economic staff plagued by internal rivalries, a domineering chief adviser and a Treasury secretary who dragged his feet on enforcing decisions with which he disagreed. The book, by Ron Suskind, a former Wall Street Journal reporter, quotes White House documents that say Mr. Obama’s decisions were routinely 're-litigated' by the chairman of the National Economic Council, Lawrence H. Summers. Some decisions, including one to overhaul the debt-ridden Citibank, were carried out sluggishly or not at all by a resistant Treasury secretary, Timothy F. Geithner, according to the book...Several top female aides -- including Anita Dunn, who was the communications director, and Christina Romer, the chairwoman of the Council of Economic Advisers -- told the president about being talked over in meetings by male colleagues or cut out altogether."
Late night interlude: Neon Indian plays "Polish Girl" on Late Night with Jimmy Fallon.
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Still to come: Foreclosures are rising again; Medicare advantage premiums are falling; the FAA won't shut down; Boehner wants to hold up the next highway bill to get more offshore drilling; and the greatest local taxidermy ad in the history of local taxidermy ads.
Foreclosures are ramping up again, reports Brady Dennis: "The nation’s banks have ramped up foreclosure actions recently against delinquent homeowners, nearly a year after revelations of fraudulent filings and other questionable documentation practices slowed the number of foreclosures to a trickle, according to new data released Thursday by RealtyTrac. Across the country, foreclosure filings were up 7 percent in August over the previous month, though some states saw significantly larger jumps. Default notices increased by 55 percent in California, 46 percent in Indiana and 42 percent in New Jersey. The numbers represent the biggest month-over-month increase since August 2007. Last September, several major banks, including Bank of America, halted new foreclosures after rampant problems with their legal paperwork throughout the country came to light, prompting questions about who exactly owned the properties being foreclosed upon. Much of the controversy centered on robosigning."
The House may be open to a bigger SEC budget, reports Andrew Ackerman: "House Financial Services Committee Chairman Spencer Bachus (R., Ala.) said he believes increasing the Securities and Exchange Commission's budget ought to be considered as part of broader efforts to make the agency more efficient. 'My personal view is that an increase in funding is necessary as part of the reform process,' Rep. Bachus said in opening remarks at a hearing Thursday on the agency. Rep. Bachus's remarks are significant because Republican lawmakers have sought to curtail spending by the agency despite an avalanche of new mandates under last year's Dodd-Frank financial-regulatory overhaul. In July, Republican House appropriators approved a bill that would maintain the SEC's current budget level of $1.185 billion, citing the broader debate about the need to slash the country's deficits as well as the agency's past failures, particularly leading up to the financial crisis."
Both parties are too optimistic about government's planning abilities, writes David Brooks: "The Democrats, besotted by the myth that the New Deal ended the Great Depression, have consistently overestimated their ability to turn the economy around. They regard the Greek crackup as a freakish, unlucky break, even though this sort of thing is a typical feature of a financial crisis. Republicans, who should know better, also have an inflated sense of the power of government. In the presidential debates, Rick Perry, Mitt Romney and Jon Huntsman argue about which one oversaw the most job creation during his term as governor, as if governors have an immediate and definable impact on employers’ hiring decisions. The reality, of course, is that the economy is not a patient. It is a zillion, zillion interactions. Government is not a doctor. Most of the time, it is a clashing collective enterprise that is occasionally able to produce marginal change, for good and for ill."
Conservatives are getting more open to letting people die, writes Paul Krugman: "In the past, conservatives accepted the need for a government-provided safety net on humanitarian grounds. Don’t take it from me, take it from Friedrich Hayek, the conservative intellectual hero, who specifically declared in 'The Road to Serfdom' his support for 'a comprehensive system of social insurance' to protect citizens against 'the common hazards of life,' and singled out health in particular...Health care was one of those areas where even conservatives used to be willing to accept government intervention in the name of compassion...As many observers have pointed out, the Obama health care plan was largely based on past Republican plans, and is virtually identical to Mitt Romney’s health reform in Massachusetts. Now, however, compassion is out of fashion -- indeed, lack of compassion has become a matter of principle, at least among the G.O.P.’s base."
Adorable babies eating and sleeping adorably interlude: Luna's hunger and drowsiness do battle with each other.
Medicare Advantage premiums are falling, reports Phil Galewitz: "The nearly 12 million senior citizens enrolled in private Medicare health plans will see their monthly premiums drop by an average of 4 percent while benefits remain stable next year, the Obama administration officials announced Thursday. In addition, they said, premiums fell by an average of 7 percent this year, much higher than the 1 percent the government projected a year ago. The plans, called Medicare Advantage, are offered by health insurance companies as an alternative to traditional, government fee-for-service Medicare. Enrollment in the plans, which now cover about a quarter of all Medicare beneficiaries, is expected to grow by 10 percent in 2012, said Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services. Blum said health plans are also lowering co-payments and deductibles."
The jobs bill would raise taxes on health care, reports Matt Dobias: "The White House wants another shot at requiring some Americans to pay more for their employer-backed health coverage, despite a previously tepid response from the very same lawmakers needed to advance the proposal. Nearly imperceptible to all but the most trained tax policy eyes, President Barack Obama’s blueprint to boost employment hinges partly on a provision that makes health plans taxable for individuals who make more than $200,000 and couples making more than $250,000. 'If your incomes are above those levels, and you benefit from employer-sponsored health insurance, you’re going to have to pay a modest amount of tax on the value of the health insurance,' explains Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities."
An FAA shutdown has been averted, reports Ashley Halsey: "Senate leaders struck a last-minute deal Thursday to avert the second partial shutdown of the Federal Aviation Administration in as many months. A bill that extended funding for the FAA and for highway and transit projects bogged down unexpectedly this week when Sen. Tom Coburn (R-Okla.) objected to a mandate that states spend 10 percent of their federal funding on landscaping, pedestrian safety and bike paths. Under a compromise reached Thursday night, Senate leaders promised Coburn that the mandate would be dropped from a long-term highway funding bill expected next year...Once he was appeased, the Senate approved the extension bill, ending the threat of another partial shutdown of the FAA at midnight Friday. The House passed extensions this week."
The Senate has passed a $7 billion disaster relief bill, reports Rosalind Helderman: "The Senate voted Thursday to spend $7 billion on emergency disaster relief over the next year, as Democrats and Republicans from storm- and tornado-ravaged states joined for a forceful show of support for storm victims that will set up a showdown with the House on disaster funding. The measure passed 62 to 37 as eight Republicans defied their party leadership, which had rejected the measure as an unnecessary political sideshow and backed the spending. 'We can spend hundreds and hundreds and hundreds of billions of dollars to rebuild Iraq and Afghanistan. Let’s spend a small amount of money to rebuild America for Americans,' said Sen. Patrick J. Leahy (D-Vt.), whose state has been hit hard by flooding as a result of Hurricane Irene, as Democrats savored a rare legislative victory."
The House voted to back Boeing in its labor dispute, reports Steven Greenhouse: "The House voted on Thursday to approve a Republican-backed bill that would prohibit the National Labor Relations Board from trying to block Boeing from operating a new $750 million aircraft assembly line in South Carolina. The largely party-line vote was 238 to 186. Republicans denounced the labor board’s case against Boeing, asserting that the board was overreaching its authority and should not be dictating where companies can locate their operations. But many Democrats and union leaders condemned the legislation, arguing that it undercut an independent federal agency and favored Boeing, a potent lobbying force and prominent political donor...The bill, called the 'Protecting Jobs from Government Interference Act,' is expected to face a battle in the Democratic-controlled Senate."
The conservative constitutional vision is radical, writes Ruth Marcus: "A white paper by the liberal Center for American Progress spells out the potential consequences of the constitutional conservative vision. Programs such as Social Security, Medicare and Medicaid would be deemed to exceed the federal government’s enumerated powers. The federal government would cease to have any role in education, eliminating funding for public schools and college financial aid, and in combating poverty, ending food stamps and unemployment insurance. Laws on everything from child labor to food safety would be overturned...But the emergence of the constitutional conservative argument has real-world consequences -- even without a constitutional conservative in the White House. It shifts the legal debate significantly rightward, energizing and empowering conservative judges and justices."
Of course Social Security is a Ponzi scheme, writes Charles Krauthammer: "In a Ponzi scheme, the people who invest early get their money out with dividends. But these dividends don’t come from any profitable or productive activity -- they consist entirely of money paid in by later participants. This cannot go on forever because at some point there just aren’t enough new investors to support the earlier entrants...Now, Social Security is a pay-as-you-go program. A current beneficiary isn’t receiving the money she paid in years ago. That money is gone. It went to her parents’ Social Security check. The money in her check is coming from her son’s FICA tax today -- i.e., her 'investment' was paid out years ago to earlier entrants in the system and her current benefits are coming from the 'investment' of the new entrants into the system. Pay-as-you-go is the definition of a Ponzi scheme."
Our nation's job creators interlude: Ojai Valley Taxidermy's TV ad.
Boehner plans to hold up the next highway bill to extract drilling concessions, reports Alexander Bolton: "House Speaker John Boehner (R-Ohio) said Thursday that Congress should tie the next highway bill to an expansion of domestic oil and gas drilling. 'I’m not opposed to responsible spending to repair and improve infrastructure,' Boehner said during a speech at the Economic Club of Washington. 'But if we want to do it in a way that truly supports long-term economic growth and job creation, let’s link the next highway bill to an expansion of American-made energy production.' Improving infrastructure, Boehner said, would make it easier to transport oil, gas and other energy sources across the country. 'There’s a natural link between the two: As we develop new sources of American energy, we’re going to need modern infrastructure to bring that energy to the market,' Boehner said, arguing that expanding domestic energy production would improve the economy and create jobs."
The EPA's delaying action on climate change, reports Brad Plumer: "Earlier today, EPA Administrator Lisa Jackson announced that the agency would miss its agreed-to Sept. 30 deadline for new climate-change rules. Normally, that wouldn’t be headline-worthy. Air-pollution regulations are, after all, big and complicated. The EPA often asks for extensions so that staffers can have more time to thrash out the technical details. It’s not always a big deal. But seeing as how, just last month, the White House scrapped its anticipated ozone rules -- after many months of delays and requests for extensions -- any sign of toe-dragging by the EPA is likely to come in for scrutiny...Environmentalists are particularly sensitive to the possibility that the Obama administration is wavering -- particularly because, at this point, EPA regulations are the only viable option for tackling global-warming pollution in the United States."
Regulators can and should clamp down on oil prices, writes Bernie Sanders: "The American people have a right to know why oil prices are artificially high. The CFTC report proved that when oil prices climbed in 2008 to more than $140 a barrel, Wall Street speculators dominated the oil futures market. Goldman Sachs alone bought and sold more than 860 million barrels of oil in the summer of 2008 with no intention of using a drop for any purpose other than to make a quick buck. Wall Street, of course, wants to hide this information. They don’t want the American people to know the extent to which speculators keep oil prices artificially high and the great damage that does to our economy...The commodity regulators’ claim that they cannot end excessive oil speculation because they lack sufficient data is nonsense. As the information I released makes clear, the commission has been collecting this information for more than three years. The time for studying is over. It is time for action."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.