{"id":2687,"date":"2010-08-27T03:04:11","date_gmt":"2010-08-27T10:04:11","guid":{"rendered":"http:\/\/www.politicsplus.org\/blog\/?p=2687"},"modified":"2010-08-27T03:04:11","modified_gmt":"2010-08-27T10:04:11","slug":"is-it-really-a-recovery","status":"publish","type":"post","link":"https:\/\/www.politicsplus.org\/blog\/2010\/08\/27\/is-it-really-a-recovery\/","title":{"rendered":"Is It Really a Recovery?"},"content":{"rendered":"

Geithner, Bernanke and Summers keep telling us that we are in a recovery.  Are they lying? Yes and no.  Easy street never had a recession, as they are the beneficiaries of the Republicans\u2019 No Millionaire Left Behind<\/em><\/strong> policy. Wall street is recovering, thanks to Bernanke\u2019s protect the uber-rich.  Main Street has to sit in the back of the bus.  And Tin Pan Alley is reeling, as collapsing state budgets weaken the safety net.  Paul Krugman, makes some excellent points, but ignores the keys to solving the crisis.<\/font><\/p>\n

\n

\"27unemployed\"<\/a> What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned. <\/p>\n

But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that\u2019s not true: this isn\u2019t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact. <\/p>\n

The small sliver of truth in claims of continuing recovery is the fact that G.D.P. is still rising<\/strong>: we\u2019re not in a classic recession, in which everything goes down. But so what? <\/p>\n

The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down<\/strong>. Yet growth is currently running somewhere between 1 and 2 percent<\/strong>, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won\u2019t matter whether the G.D.P. numbers are slightly positive or slightly negative. <\/p>\n

All of this is obvious. Yet policy makers are in denial<\/strong>. <\/p>\n

After its last monetary policy meeting, the Fed released a statement declaring that it \u201canticipates a gradual return to higher levels of resource utilization\u201d \u2014 Fedspeak for falling unemployment. Nothing in the data supports that kind of optimism<\/strong>. Meanwhile, Tim Geithner, the Treasury secretary, says that \u201cwe\u2019re on the road to recovery.\u201d No, we aren\u2019t. <\/p>\n

Why are people who know better sugar-coating economic reality? The answer, I\u2019m sorry to say, is that it\u2019s all about evading responsibility<\/strong>. <\/p>\n

In the case of the Fed, admitting that the economy isn\u2019t recovering would put the institution under pressure to do more. And so far, at least, the Fed seems more afraid of the possible loss of face if it tries to help the economy and fails than it is of the costs to the American people if it does nothing, and settles for a recovery that isn\u2019t. <\/p>\n

In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small<\/strong>. True, it was enough to limit the depth of the slump \u2014 a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus<\/font><\/strong> \u2014 but it wasn\u2019t big enough to bring unemployment down significantly. <\/p>\n

\"Wealth Now, it\u2019s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn\u2019t have gotten a bigger plan through the Senate. And he certainly couldn\u2019t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism<\/strong>. But they\u2019ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody<\/strong>. And the likely result in November \u2014 big gains for the obstructionists \u2014 will paralyze policy for years to come<\/font><\/strong>. <\/p>\n

So what should officials be doing, aside from telling the truth about the economy? <\/p>\n

The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash<\/strong>. Nobody can be sure how well these measures would work, but it\u2019s better to try something that might not work than to make excuses while workers suffer. <\/p>\n

The administration has less freedom of action, since it can\u2019t get legislation past the Republican blockade<\/strong>. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners<\/strong>. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families<\/strong> \u2014 yes, Republicans will howl, but they\u2019re doing that anyway<\/font><\/strong>. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it\u2019s time to act<\/strong>?… [emphasis added<\/em>]<\/p>\n<\/blockquote>\n

Inserted from <NY Times<\/a>><\/p>\n<\/p>\n

Krugman\u2019s ideas should be implemented, because everything he said is true.  However, what he left unsaid is more important.<\/font><\/p>\n

For starters, Obama should fire Geithner, Bernanke, and Summers.  No, I\u2019m not going Boehner bonkers.  I have been calling for their termination since the day after their appointments, because I knew what they would do.  They should  replaced with progressives. That would turn Boehner a brighter shade of orange.<\/font><\/p>\n

The Senate Dems should finally grow a pair and change the rules on the first day of the next session in January.  On that day, it requires a simple majority.  They should end the filibuster and one person holds.<\/font><\/p>\n

Congress must reinstate Glass-Steagall to reinstate the separation between commercial and investment banks.  What incentive do commercial banks have to lend when speculating yields faster profit?<\/font><\/p>\n

Easy Street has had it far too easy far too long.  The Republicans\u2019 No Millionaire Left Behind<\/em><\/strong> plan has skewed the distribution of wealth to such an extreme that the bottom 40% of Americans own only 0.2% (that\u2019s 1\/5 of 1%) of the wealth.  Let Republicans scream about redistribution of wealth.  It\u2019s a lie.  Republicans were redistributing wealth the entire time what was supposed to trickle down gushed up.  Democrats must recover part of that wealth for Main Street and Tin Pan Alley with a major tax increase on the top 1%, close the hedge fund managers\u2019 loophole, and end corporate welfare.  In the 1950s and 1960s the top marginal tax rate was over 90%.  The economy thrives and the rich had plenty left for ostentatious living.<\/font><\/p>\n

Solve the Social Security issue by removing the income cap.<\/font><\/p>\n

Stop no-bid government contracts and cost overruns that invite waste, fraud and abuse.<\/font><\/p>\n

And I could add more.<\/font><\/p>\n

What would you add?<\/font><\/p>\n

Most important, we need to keep the party that caused this mess, the party that openly promises to return to the same policies that caused it, out of power.<\/font><\/p>\n

Every Republican in office is one Republican too many!<\/font><\/strong><\/h6>\n","protected":false},"excerpt":{"rendered":"

Geithner, Bernanke and Summers keep telling us that we are in a recovery.  Are they lying? Yes and no.  Easy street never had a recession, as they are the beneficiaries of the Republicans\u2019 No Millionaire Left Behind policy. Wall street is recovering, thanks to Bernanke\u2019s protect the uber-rich.  Main Street has to sit in the […]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,5],"tags":[],"class_list":["post-2687","post","type-post","status-publish","format-standard","hentry","category-editorial","category-politics","category-19-id","category-5-id","post-seq-1","post-parity-odd","meta-position-corners","fix"],"_links":{"self":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts\/2687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/comments?post=2687"}],"version-history":[{"count":0,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts\/2687\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/media?parent=2687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/categories?post=2687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/tags?post=2687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}