Sometimes As Bad As Crossfire
I do like Bill Maher’s show, but sometimes it gets me as upset as the CNN show Crossfire used to, in that obvious right-wing lies get spewed without any rebuttal from Maher or his left-wing or moderate guests–even when the lies are obvious and the rebuttals well-known.
His panel guests this week were Melissa Harris-Perry, Rick Lazio, and Larry King. Harris-Perry, the liberal, is a writer and former professor of politics and African-American studies at Princeton. Rick Lazio, the conservative, is a former Republican Congressman from New York.
Lazio was spouting all kinds of BS throughout the show. One of his big points was about how the stimulus failed–that it did not accomplish anything, and had in fact a negative effect. He trotted out the tired old statistic that When Obama took office, the unemployment rate was 7.8% and it went up to 10.1% from there.
Forget that Lazio, like all conservatives, forgets to mention that in the previous year, under Bush, the rate jumped from 5.0% to 7.8%–a more significant jump–or that it was on an upward incline when Obama took office, meaning that inertia was bound to carry it that way.
I say to forget that because they are moot points. What nobody said on the panel, and everyone should have known, is the well-known fact that unemployment is a lagging indicator, and it usually takes three quarters for changes in the real world to be reflected in the unemployment rate.
Taking into account an accurate reading of the unemployment rate, we see that Bush took unemployment all the way from 5% in January 2008 to 10.1% in October 2009. That’s three quarters after he left office, so that’s when his effect stopped. Obama’s effects are seen from that point onward–which means that Obama has seen the unemployment rate down from 10.1% to the current 9.1%. That’s still a sucky number, but the idea that Obama’s policies made unemployment increase are a bald-faced lie–and I think Lazio knows that full well. It just makes for an easy talking point that’s much harder to explain is wrong–but shame on Maher and Harris-Perry for not catching something they should, by now, know well.
But that’s only half the lie shot down–the other half is that the stimulus failed. I have covered that in depth in this post, pointing out that job creation was plummeting to staggering depths and showed no sign of improving–but when Obama came in to office and instituted the stimulus, the numbers turned on a dime, in a way they never do naturally, and shot straight back up in the opposite direction.
Again, we have not yet returned to the place we’d like to be. Job creation is still lackluster–but light-years better than Bush left us with. The stimulus worked, and worked magnificently. The only problem is that we needed more than magnificent, we needed miraculous. And we could have gotten that, had the stimulus had more spending on things like infrastructure and less in the way of tax cuts for people who didn’t need them, as Krugman pointed out. And who was mostly responsible for changing the stimulus into something half as much as it needed to be? Well, Obama let them do it, but in the end, it was the Republicans who short-circuited the recovery. The stimulus itself worked.
Harris-Perry gets credit for making that last point–that we needed more spending–but she did not make the whole point. Granted, she’s not an economist, but she missed the greater argument which could have sent Lazio down in flames.
Lazio also made the argument that Obama has failed to pull us out of the economy, and used other recessions to make that point, noting that “in 1982, Reagan inherited a 10 or 11% unemployment rate; coming out of that recession, they ended up creating about 14 million jobs.” Guess what? Lies.
OK, first, the unemployment rate was 7.5% when Reagan entered office. Taking the lagging indicator into account, we move to October, when it was 7.9%. Then it became Reagan’s figure, and over the following year, rose to 10.8%. It then stayed in double digits until June 1983, almost two and a half years after Reagan took office, and did not drop below Reagan’s inherited 7.9% until February 1984.
Had Obama performed like that, Lazio would be even more aggressive in his criticism. Instead, he trots Reagan out as the hero standing heads and shoulders above Obama. A liar and a hypocrite.
Also, remember that Lazio held Obama responsible for the unemployment rate the moment he took office–by that metric, Reagan did not lower unemployment below his inherited rate until May 1984–a full year later in his term than where Obama is now. Even more hypocrisy.
Next, the 1981 recession started in July 1981, six months after Reagan entered office. Again, Lazio claims Obama immediately owned unemployment, a 9-month lagging indicator, but Reagan “inherited” a recession that began six months after he took over. I will not argue that Reagan was responsible for the recession, but that Lazio is being brazenly dishonest in comparing the two.
Furthermore, Lazio expects Obama to pull out of a recession twice as deep as the 1981 recession even faster than Reagan pulled out of his.
Worse, Lazio then uses a job creation number–14 million jobs–that spans the whole of Reagan’s two terms in office. Obama hasn’t had that kind of time yet–but in the past 14 months, 1.8 million new jobs have been created. What’s more, if you compare the number of jobs created relative to the 820,000 that were lost in his first month in office, where Bush left him–taking that as a baseline, 20 million jobs are now held that would not have been had we just maintained that level. That’s an artificial number, of course, job loss could not have been sustained long at that level–but it demonstrates the hole Obama has dug us out of.
Another way of looking at it: Starting a full year after each president took office, allowing each one time to dig himself out of whatever hole the previous occupant had dug for him, Obama has created a net total of 1.6 million jobs. Over the same period in his first term, Reagan lost 1.25 million jobs.
Despite the fact that Obama was handed the worst recession since the Great Depression, and when Reagan took office, there was not yet a recession and he had positive job growth.
These lies are blatant, egregious, and hypocritical to the extreme–but went almost unanswered on the show.
On this show, even Larry King managed to frustrate me. First of all, King tried to take the moral high ground in the Edwards case, making a very pointed remark that “In the era of 24 hour news, he’s judged guilty already, right? I believe in not guilty till proven, so why don’t we wait?”
This incensed me because, back in 2000, when Chandra Levy went missing, The Larry King Show more or less became the Let’s Convict Gary Condit in the Public Eye Show, with Nancy Grace on all the time proclaiming his guilt, with Ann Coulter, Barbara Olsen, and Laura Ingraham echoing her, and King himself casting aspersions. During July and August, King hosted roughly 40 shows on the topic, almost every night, in fact, until 9/11 took over the headlines. He issued a “standing invitation” for Condit to appear on his show, and repeatedly hammered away at how Condit not “coming forward” made him look suspicious.
This, in fact, is what made me stop watching his show. Keep in mind that King stood to profit handsomely were Condit to appear on his show. Keep in mind that King himself was perhaps the primary reason the case remained in the public attention for so long, placing even more pressure on Condit. Also keep in mind that if you have been wrongly accused of a crime and might stand trial, appearing on TV and talking about the case is the most monumentally stupid thing you could ever do, and any lawyer would tell you that immediately.
Nevertheless, King, on his show, said that he found it dubious that Condit was not appearing on TV and spilling his guts–King said that it’s what he would do, and he found it telling that Condit was not doing it, supporting the idea that Condit was guilty, or at least sure looked that way.
So, to have King now acting all non-judgmental, criticizing the TV talking heads for jumping to conclusions, after what he did to Condit–that just struck me as the most hypocritical thing imaginable. Well, almost–Republicans tend to do stuff that bad on a daily basis, but outside of that.
Maybe King has changed his beliefs on this and regrets what he did to Condit–who was eventually cleared of wrongdoing–but he sure hasn’t said so, not that I know of.
Then he said something almost as stupid:
I’ve been interviewing economists over the years. Answer me something. The deficit. I’ve heard about the deficit for fifty years. Did the deficit ever call you? Did the deficit–what did the deficit ever do to you? I don’t understand what the deficit does…
Hmm. Let’s see. The deficit adds to the debt. The debt is currently over $14 trillion. Last year alone, we paid more than $400 billion just to service the debt, to pay interest on it. That’s a huge chunk of the deficit right there. Not to mention that if we were spending that much on, say, infrastructure, every year, our economy would be in far better shape.
$400 billion could buy 18,000 new schools–or five thousand magnificent new schools, an average of a hundred for each state. Each year. One year of interest payments on the debt would pay for a manned mission to Mars. It could pay to convert most of America to solar energy.
So, Larry, that’s what the deficit has been doing to you. It’s been robbing you, and all of us.
Which brings up another Lazio distortion–that Bush wasn’t responsible for half the national debt. Technically, maybe–it’s $14 trillion and counting only from Bush’s first day in office to his last, it increased by $5 trillion–but if you count the money that Obama had to spend because Bush committed the nation to spending that money, not to mention the fact that Bush was handed a surplus and was the one who turned that around–then it is more than fair to say that Bush, all by himself, is responsible for half the U.S. national debt., and possibly more.
I swear, I have to stop watching this program. It gets me all wound up and makes me spend hours writing blog posts.
>but when Obama came in to office and instituted the stimulus, the numbers turned on a dime, in a way they never do naturally, and shot straight back up in the opposite direction
I disagree with this; employment can’t just free fall to zero, it’s going to stop somewhere.
http://research.stlouisfed.org/fred2/series/PAYEMS
>The only problem is that we needed more than magnificent, we needed miraculous. And we could have gotten that, had the stimulus had more spending on things like infrastructure
Stimulus is just kicking the can down the road. The problem is the dollar is too strong, and oil is too expensive. Our economy can’t compete with $10/day Chinese labor and it was structured for $20 oil and not $145 oil
> Obama has created a net total of 1.6 million jobs.
No, two trillion in deficit spending has kept the machine together.
>Over the same period in his first term, Reagan lost 1.25 million jobs.
This was mostly due to Volcker spiking the interest rates:
http://research.stlouisfed.org/fred2/graph/?g=Iw
In this chart the Fed’s interest rate is in blue. Note how high it goes for most of 1981.
The red graph shows negative growth in # of workers, basically it’s clear the workforce shrank 0.5%/year after interest rates were pushed up in 1980 and 1981.
>and when Reagan took office, there was not yet a recession and he had positive job growth.
No, jobs were crashing in 1980-81 due to the high interest rates:
http://research.stlouisfed.org/fred2/graph/?g=Iy
The big take-away here is that interest rates were used to throttle the economy back, but after the 1990 recession debt has taken over making the economy less responsive to monetary stimulus. Plus the 2010s are much different from the 1970s in terms of employment and rich/poor divide.
>These lies are blatant, egregious, and hypocritical to the extreme–but went almost unanswered on the show.
Few people know anything, really. I’ve been simply immersed in economic matters since 2008, and I think I’ve figured out a lot of important angles that aren’t entirely obvious about the economy, how it got here and where it’s going.
continued . . .
>The debt is currently over $14 trillion. Last year alone, we paid more than $400 billion just to service the debt
$200B, actually. The other $200B is going to the intragovernmental trust funds, who need the money : )
>that Bush wasn’t responsible for half the national debt. Technically, maybe–it’s $14 trillion and counting only from Bush’s first day in office to his last, it increased by $5 trillion
First of all, we need to ignore the trust fund debt since that was pre-programmed back in 1983.
The best way to figure this out is to use debt to the penny:
09/28/2001 3,339,310,176,094.74 (beginning of FY02, Bush’s first budget)
01/16/2009 6,308,564,856,414.67 (last full day of the Bush presidency)
03/30/2009 6,753,702,140,034.65 (end of 2Q09)
06/30/2009 7,174,912,385,059.26 (end of 3Q09)
09/30/2009 7,551,861,558,736.77 (end of FY09)
So, being most generous to Bush, ending his responsibility at his last day in office, we see a $3T rise in the national debt — 91%!
Being symmetric, counting 8 full fiscal years, it’s ~130%, but that counts some of the new stimulus so that’s probably “unfair” to some extent.
But certainly counting 2Q09 (end of March) is reasonable, and there you can see the 100% debt increase.
But hidden in this story is the true crime of the Bush years, which was allowing other forms of debt to skyrocket:
http://research.stlouisfed.org/fred2/graph/?g=Iu
The blue line is percent YOY increases in household debt, and red is YOY increase in business debt. The tech bubble and recession is plainly visible, as is the 1997-2007 boom in real estate lending.
This is the money graph though:
http://research.stlouisfed.org/fred2/graph/?g=Iv
That’s the annual increase in household and business debt.
TWO TRILLION a year 2006-2007. This was a colossal credit bubble. If this was intentionally allowed, they were probably just hoping to get through 2008. If unintentional, these people are idiots.
oops I screwed up a graph. Here’s the fix:
>Over the same period in his first term, Reagan lost 1.25 million jobs.
This was mostly due to Volcker spiking the interest rates:
http://research.stlouisfed.org/fred2/graph/?g=Iz
In this chart the Fed’s interest rate is in blue. Note how high it goes for most of 1981.
The red graph shows annualized loss of jobs in % (it is job growth inverted to make it easier to compare to interest rates). Note how in the late 1970s the slope of the fed rate matches the slop of job losses!
Then in mid-1981 Volcker saw less people getting laid off and decided to really f- over the economy with almost 20% interest rates!
After he did that you can see the people with jobs fall 3% in response.
I saw a considerable portion of Maher’s show too and I also felt that Lazio was making points with lies that went unrebutted.
First and foremost, in this kind of setting Dems/Liberals need to come out of the box with the point that tax breaks, especially for the rich, don’t help the economy, if they did, after Bush we’d have an unemployment rate below 3%.
Dems have to start with that. Clinton raised taxes and created 22 million jobs, balanced the budget and enjoyed the largest peace time increase in GNP in history. END OF STORY!!! – and then leave it at that. Enfeeble those rascals.
That will force the rascals to back peddle and defend tax cuts. When they are done, then the lib can counter with: “Okay, so tax cuts don’t grow the economy or jobs, but tax increased can and do… history shows that, so, we’ve settled that point, ….” and then go on to pin the thugs on other points. Especially the dangers that come with concentration of wealth.
In regard to Reagan, that recession doesn’t compare to the current one. The sense of doom wasn’t like this. At no point did it seem like the end of the world or the decline of the United States. It was an inflationary recession and it could be and was cured by monetary policy.
The problem with the current crisis is that it is a deflationary one – that is demand deficient: interest rates are up against the zero bound, therefor the only policies that will work are demand bias policies.
That means implementing stimulus spending. Yes Obama’s stimulus was at the very least one third of what was required, and made more enfeebled still by the tax cuts built into it. The increase in spending at the federal level BARELY covered the decrease in spending at the state level.
In South Korea they implemented a stimulus that was equal to 25% of GNP over four years and allowed its currency to fall 30% for a time (its still down about 12%). Korea had .02% growth in 2009, 7% growth in the first quarter of 2010, and over 5% over all in 2010. Remarkable. They had 3% unemployment in 2010. Those numbers were so good that Korea started to deflate them out of embarrassment of success in a world suffering.
Stimulus is not a long term solution. Demand side bias means finding ways to give workers greater bargaining power. First I’d raise the minumum wage to $10. Then I’d pass card check. Finally I’d pass medicare for all and allow people to monetize healthcare benefits they get from employers. All those things would Increase demand remarkably. To keep deficits down I’d jack up the tax rates to the Reagan level – let Republicans scream that Reagan’s taxes were bad (50%).
On Maher’s show he had a guest that brought up something interesting: tariffs.
According to this guest, the U.S. has 2% tariff. I think he advocated 10%. I’m not sure I’d agree with that, but if the rest of the world has a 6% tariff, and ours is 2%, I’d consider raising ours to 4 or 5 percent. That too would increase demand for labor. I’d also match tariffs with high tariff countries. If India really does have 22% tariff, then we should put that kind of tariff on anything we receive from India – especially outsourcing of services.
The only thing Obama can do now to improve employment is to force a conclusion to the war in Libya, good or bad, maybe release some petroleum from strategic reserve, crack down on illegal immigration employment, and reduce the number of foreigners working here, spend whatever money he has left over from TARP and the stimulus and whatever he can generate from issuing executive orders.
Personally, Obama is a major disappointment. He is a the DISCO president: Democrat in skin color only, he is, in fact, a republican. The same way a rose is a rose even if it’s called a democrat.
The country is totally hosed. The situation is beyond belief.
Despite Obama’s poor performance, the fact is, all of this belongs on the head of Bush and the Republicans (and blue dog democrats). If Bush doesn’t get elected, 9/11 doesn’t happen (Bush ignored terrorism as an issue before 9/11 despite or out of spite for Clinton having told him it was his biggest concern coming into office. So no Bush, no 9/11, no tax cuts for the rich, no lax enforcement of tax code and regulations, no massive increase in H1B visas, no economic melt down.
The inflection point between an upward slope and a down ward slope is the Bush election. By 2008 that becomes a steep dive. That means every policy choice he made was a failure. Obama creates an inflection point, but not between a downward slope and an upward slope: instead Obama creates a decline from a steep decline to a more gradual decline.
By the way, a stimulus equivalent to Korea’s would have been about $4 trillion. Anything less than $1 trillion just wasn’t serious. The Republicans punked Obama.
Obama deserves to lose the next election, but in no way does America come out a winner in the next election. The real decline begins to happen in 2013. And it doesn’t matter who wins the election. By 2016, you will not recognize the United States. Then again, I don’t recognize it now.