The Recession Ends. Then What?

Sep 24, 2012

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about?

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI's Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:

As Mike points out, "Right now the debates seem very focused on things very specific to this recession," such as what the Federal Reserve could do to make things better or whether we should reduce mortgage burdens to boost consumption. Those are "very technical and very important debates to be having," he points out, "but they’re very narrow to the moment we’re in right now." Once we one day leave these issues behind, what will liberals decide to promote? And will we all be able to get on board?

The first issue Josh sees rearing its head is what we consider the "natural" rate of unemployment to be. Right now it's pretty obvious that unemployment is too high. At what point does it fall so much that some people, including the Fed, start to say it shouldn't go any lower? This question will have larger implications as well. As Mike says, "You see policy experts running around trying to figure out how to boost the wages of the lower quintile, but we know what has done it in the past 30 years, and it’s when unemployment is below 5 percent for a sustainable period of time." In fact, he says, a low unemployment rate "is the ultimate jobs program, it is the ultimate policy solution," and boosts wages for everyone -- not just those at the bottom.

What else will we squabble over when the economy once again booms? Bivens predicts social insurance programs -- Social Security, Medicaid, and Medicare -- will have to be on the agenda. And related to that will be just how high we can go with tax rates on the rich. "Obviously you can have a fairness argument and a just deserts argument, but the economic case is pretty clear that [tax] rates [on the wealthier] could go much higher," Mike says. "But we’re seeing resistence to just getting to near 40 percent at this point." Brace yourself, political battles are coming.

Watch the full episode below, in which Mike and Josh discuss how little we all take home and whether inequality and the social safety net have anything to do with it:

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The Recession Ends. Then What?

Sep 24, 2012

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI's Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI's Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:

As Mike points out, "Right now the debates seem very focused on things very specific to this recession," such as what the Federal Reserve could do to make things better or whether we should reduce mortgage burdens to boost consumption. Those are "very technical and very important debates to be having," he points out, "but they’re very narrow to the moment we’re in right now." Once we one day leave these issues behind, what will liberals decide to promote? And will we all be able to get on board?

The first issue Josh sees rearing its head is what we consider the "natural" rate of unemployment to be. Right now it's pretty obvious that unemployment is too high. At what point does it fall so much that some people, including the Fed, start to say it shouldn't go any lower? This question will have larger implications as well. As Mike says, "You see policy experts running around trying to figure out how to boost the wages of the lower quintile, but we know what has done it in the past 30 years, and it’s when unemployment is below 5 percent for a sustainable period of time." In fact, he says, a low unemployment rate "is the ultimate jobs program, it is the ultimate policy solution," and boosts wages for everyone -- not just those at the bottom.

What else will we squabble over when the economy once again booms? Bivens predicts social insurance programs -- Social Security, Medicaid, and Medicare -- will have to be on the agenda. And related to that will be just how high we can go with tax rates on the rich. "Obviously you can have a fairness argument and a just deserts argument, but the economic case is pretty clear that [tax] rates [on the wealthier] could go much higher," Mike says. "But we’re seeing resistence to just getting to near 40 percent at this point." Brace yourself, political battles are coming.

Watch the full episode below, in which Mike and Josh discuss how little we all take home and whether inequality and the social safety net have anything to do with it:

 

Crossroads image via Shutterstock.com.

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Mitt Romney's 47% Remarks: Wrong on the Facts, Not Just the Rhetoric

Sep 18, 2012Jeff Madrick

Americans who rely on government programs aren't "takers." They're people who have been left behind by our economy.

Americans who rely on government programs aren't "takers." They're people who have been left behind by our economy.

Mitt Romney’s “off-the-cuff” remarks that nearly half of Americans are “dependent” on government and believe they are “victims” who are “entitled to health care, to food, to housing, to-you-name-it,”  were widely publicized. This is in fact old saw for a certain kind of anti-government conservative. I have given talks deep in conservative territory where courteous memebers of the audience would come up to me afterwards and say they agree we should pay taxes for infrastructure but not for giveaways “to those people.”

But coming from a presidential candidate of one of the major parties, such remarks are stunning. Moreover, Romney later claimed he stood by them. He insulted half the American people; at least the people who spoke to me were talking about perhaps only one quarter of them! Romney also used the once-ubiquitous claim by conservatives that only half of Americans pay income tax. 

There was widespread criticism of Romney's rhetoric, but the stronger case against his condescending and elitist remarks is to present the facts, of which he seems happily unaware. Fortunately, the Tax Policy Center and the Center on Budget and Policy Priorities have pointed out that the large majority of Americans pay federal taxes when payroll taxes for Social Security and Medicare are included. The only Americans who don’t pay taxes are some of the elderly, the poor, and the young.
       
But it is the dependency issue that requires real information. Income for the lower half of American earners has been growing very slowly since the late 1970s -- more or less when Ronald Reagan took office. Compared to economies overseas, the wage performance has been just plain bad. 
        
Why? The declines of unions, the refusal to raise the minimum wage with inflation, and the increased pressure by Wall Street to minimize expenses in the short run -- typically labor expenses -- have all contributed. So have rapidly lost manufacturing jobs and globalization in general. Finally, on average economic growth was slow in the 1980s until the mid-1990s. Only in the late 1990s did growth push the unemployment rate down adequately to boost incomes for the lower half. In the 2000s, we had adequate growth but little job or wage growth. Without social programs like the Earned Income Tax Credit, the lower half would have hardly seen incomes grow at all.
      
Was dependency a cause of low incomes? This is easily refuted nonsense. Had social programs hurt rather than helped Americans, poverty rates would have been low in the 1950s. As Michael Harrington alerted America, the poverty rate was probably 30 percent in the 1950s. Finally, the U.S. government computed a poverty line -- a low one, mind you. It found the poverty rate at about 22 percent. 
      
Why? Couldn’t have been dependency. The War on Poverty had not yet begun. By the 1970s, however, the poverty rate was down to 11 percent. As Social Security expanded, elderly poverty rates fell from 50 percent to about 10 percent. And so on. These are the purposes of government, Mitt.
      
On our Rediscovering Government website you can find a set of charts and an important summary paper by Lane Kenworthy on this issue.
 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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Central Banks Are Saving Democracy From Itself

Sep 17, 2012Jeff Madrick

We may want more democratic control over the Federal Reserve, but its independence is allowing it to push back against austerity.

We may want more democratic control over the Federal Reserve, but its independence is allowing it to push back against austerity.

The Federal Reserve's recent announcement of aggressive new policies is more than a little welcome. It involved a new round of quantitative easing focused on mortgage-backed securities, but more importantly, a statement that the Fed would keep rates low for a long time, even if the unemployment rate begins to fall markedly. In other words, the Fed will be more tolerant of rising inflation. A couple of points are clear and have been widely discussed:
 
First, more inflation is what this economy needs. It will reduce “real” interest rates down the road. It will also reduce the level of debt, which will now be paid off in somewhat inflated dollars. Lenders will pay the price; borrowers will benefit.
 
Second, the Fed is at last accepting its dual mandate, which is not only to keep inflation in check but also to keep unemployment in check as well. Inflation got almost all the focus since Paul Volcker’s reign in the early 1980s.
 
Third, inflation targeting as almost the sole purpose of any government policy is now either not applicable to current circumstances or never really was the answer to our prayers. The main claimant on the uses of either hard or soft inflation targeting was none other than Ben Bernanke himself. He was the champion of the Great Moderation, which held that less GDP volatility and low inflation were admirable ends in themselves -- proof of a nearly perfectly managed economy.  
 
Never mind that growth in the late 1990s was supported by high-tech speculation in the stock market, or that growth in the early 2000s was supported by a housing bubble and crazy, risky practices on Wall Street. And forget that job growth was the worst of the postwar period under George W. Bush, even before the 2008 recession, and wages had been performing poorly for 30 years. It was all really great, said Bernanke, and only a few mainstream economists disagreed.
 
But there is another point that needs emphasis and is being passed over. This one is about democracy. Bernanke is acting aggressively because the American Congress and president are locked in an austerity embrace. Fiscal stimulus is now turning into de-stimulus. Even the president’s budget calls for fiscal restraint. The deficit bugaboo is strangling the world.   
 
Those who want to make the Fed more subject to democratic control – and to a degree, I am sympathetic -- should heed a lesson here. Democracy -- that is, a democratically elected Congress and president -- is choosing a damaging course of austerity. In Europe, it is far worse. 
 
Needed policies are coming from America’s central bank, which was deliberately created as an independent entity. Note that it is Romney who is saying he wants Bernanke out of there and crying wolf about inflation. Bernanke, not subject to the whims of democracy, has had the courage to change his own thinking. He knows the consequences of tight policy now.
 
So what do we do? We should be a little modest about the universal benefits of democracy. For example, I think democracy may yet work to end the severest levels of austerity in Europe. People are mad. Governments are changing for the better. Demoracy in America is the only answer to an ever-richer and more powerful oligarchic class in the U.S., which wants to lower taxes, limit regulations, and cut government into ever smaller pieces.
 
But we must also deal with the disturbing fact that one of the least democratic of our institutions, the Fed, is the only one saving the day now. The same is true in Europe, where the European Central Bank is now acting intelligently, in contrast to the fiscal hawks dominated by the German policymakers and apparently supported by a majority of the German people. This issue is not simple.
 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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How to Make Work Pay Again

Sep 13, 2012Richard Kirsch

The latest Census data prove that we need to start rebuilding the American middle class, and a new report shows how it can be done.

The latest Census data prove that we need to start rebuilding the American middle class, and a new report shows how it can be done.

Yesterday the U.S. Census Bureau reported that family income in the U.S. dropped to its lowest level in 16 years. The key thing in this news is that the drop is not just over the last three years, during the Great Recession. The squeeze on the middle class isn’t new, it wasn’t caused by the recession, and it won’t be fixed as we come out of the recession. If we’re going to rebuild the middle class, we need an agenda aimed at making work pay in the 21st century.   

That’s why I worked with more than 20 groups who understand the daily struggles of working families on a new report we’re releasing today, 10 Ways to Rebuild the Middle Class for Hard Working Americans: Making Work Pay in the 21st Century. The report is a road map for addressing the truth that we don’t just have a jobs problem; we have a good jobs problem.

Before we get to what we do about it, we need to confront the fact that even though the proportion of Americans with a college education doubled in the past three decades, the share of working people with a decent job dropped. Six out of ten (58 percent) jobs now emerging from the recession are low-wage. On top of that, the jobs projected to have the most openings between now and 2020 are mostly low-wage and require no more than a high school education. So there is no reason to think things will get better unless we act.

One set of solutions proposed in 10 Ways to Rebuild the Middle Class is to tackle the lack of support and protections for low-wage workers. A first step is to restore the minimum wage, which buys 30 percent less now than it did 40 years ago. The minimum wage for tipped workers is $2.13 an hour, the same as it was in 1991. One in five workers would get a pay raise if the minimum wage were increased. That includes workers who get paid just above today’s minimum wage, who would also benefit as the legal floor got raised.

Remarkably, four out of ten private sector jobs – including the great majority of low-wage jobs – do not give employees any paid time off if they are sick or need to care for an ill family member. In response, Connecticut and several cities have passed paid sick days ordinances. The federal government and states and localities should update basic labor standards to include this essential benefit to working families.

The report recommends tough enforcement, with meaningful penalties, of laws that unscrupulous employers now routinely flout. Many employers of low-wage workers routinely steal wages by not paying the minimum wage, not paying for overtime, or simply not paying workers at all. Other employers misclassify workers as “independent contractors” in order to get out of paying payroll taxes or benefits and hire “permatemps.” Worker safety and health is another area where measly penalties, weak enforcement, and widespread retaliation against workers who dare to speak up allow employers to keep low-wage workers in hazardous work conditions every day. 

It will take systemic solutions to address the broader problem of stagnant wages. A crucial step is to uphold the freedom of workers to organize a union by modernizing the National Labor Relations Act and stopping employers from harassing organizing efforts with virtual impunity. Nothing in our nation’s history has done more to bring workers decent pay, benefits, and dignity at work than organized labor. The factory workers of the mid-20th Century didn’t have a college education; they organized unions. The low-wage workers of the 21st Century – the housekeepers and janitors and home health aids and retail clerks – will only be able to get decent wages and become part of the middle class when they are able to effectively organize to bargain collectively.

Other proposals in the 10 Ways to Rebuild the Middle Class report would create new social insurance protections for the 21st Century, just as Medicare, Social Security, and Medicaid were key to fighting poverty and building the middle class in the last century. The nation took one major step in 2010 with the passage of the Affordable Care Act, which in 2014 will enable working families to get affordable health coverage even if they don’t get it on the job.

The report proposes two other steps to provide families more security in their work and in their retirement. Though today’s norm is for all the adults in a family to be in the workforce, only one in ten workers (12 percent) has paid family leave through work to care for a new child or a sick family member. A solution is to establish a national family and medical leave insurance program, similar to Social Security and successful programs in California and New Jersey, for workers to draw on when they are out on family leave.

To address the fact that pensions have been replaced by thread-bare 401Ks over the past 30 years, the report recommends establishing new pooled and professionally managed retirement plans for those who rely solely on Social Security and 401Ks, which would pay a defined amount – a pension – each month.

In addition to these and other steps, 10 Ways to Rebuild the Middle Class recognizes that a foundation of improving work is full employment. That is why we need to stop laying off public workers and outsourcing jobs overseas.  It's also why we should create millions of jobs now by investing in infrastructure and a green economy.

Rebuilding the middle class is about more than assuring that every working American can support his or her family with dignity and security. It’s about powering the economy forward in the 21st Century. The middle class is the engine of our economy, an engine that can only be rebuilt by making today’s jobs good and tomorrow’s jobs better.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

Construction worker image via Shutterstock.com.

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The Michigan Clean Energy Roadshow: Success Stories Pave the Road for a Clean Energy Future

Sep 12, 2012Cory Connolly

Michigan, once the industrial capital of the United States, has the opportunity to create jobs and economic opportunity while paving the way forward for a clean energy future. 

Michigan, once the industrial capital of the United States, has the opportunity to create jobs and economic opportunity while paving the way forward for a clean energy future. 

In 2008, the state of Michigan made a commitment to clean energy, to the environment, to economic opportunity, and – most of all – to people. Public Act 295, passed in 2008, set the framework for the development of Michigan’s clean energy economy by establishing a renewable portfolio standard (RPS). A renewable portfolio standard (also called a renewable electric standard or clean energy standard) mandates that electric providers generate a certain percentage of electricity from renewable resources by a set date. For Michigan’s RPS, the percentage was 10 percent and the date was 2015. A renewable portfolio standard is the most popular strategy for promoting the development of clean energy sources like wind, solar, and hydro in the United States today. There are 28 other state-level renewable portfolio standards in the U.S. with varying goals and timelines.

At the federal level, in 2011, President Obama called for a “clean energy standard” of 80 percent by 2035 and a similar act called the “Clean Energy Standard Act” was proposed this past spring in the Senate. This past week at the Democratic National Convention, the Democratic Party endorsed such a standard as well. Global investment reached $263 billion in 2011, and is expected to continue to grow. A national RPS or clean energy standard has the potential to make the United States a leader in the global clean energy market, and Michigan has the potential to lead this charge. 

In Michigan, the adoption of an RPS has caused a significant uptake in clean energy installations and investment in the industry. Since 2008, Michigan has installed over 1,200 megawatts of new generating capacity – that’s enough power to run 240,000 homes. While the numbers are exciting, in Michigan the clean energy economy is about more than just numbers and figures – it’s about the people and the opportunities behind clean energy. Two weeks ago, I traveled Michigan as a part of MiGrid, a Michigan-based company, and we started telling the story of the state’s clean energy opportunities through the Michigan Clean Energy Roadshow. The MiGrid team visited over 25 clean energy sites and interviewed over 25 business owners, experts, and Michigan residents. Highlighting the successes of Michigan’s RPS and other clean energy efforts in the state, MiGrid is educating, engaging, and empowering people and helping to build clean energy jobs and economic opportunities.

Without a doubt, Michigan’s 2008 RPS is one of the most modest in the country; however, it was designed with that intention. In 2008, a more aggressive RPS wasn’t politically feasible, so policymakers chose an incremental approach that could serve as a proof of concept for Michigan. Currently, Michigan only receives 3.6 percent of its energy from renewable sources, but is on pace to increase that to 8.4 percent by 2013 and to 10 percent – the RPS goal – by 2015. This incremental approach has proven not only that clean energy can succeed in Michigan, but that Michigan is ready for an even more ambitious approach to clean energy moving forward – as is the rest of the country.

In fact, clean energy has been a bright spot in the Michigan economy. Home to an industry cluster of advanced battery manufacturers, Michigan is reclaiming its place in the automobile industry. In 2010, according to Clean Edge, Michigan had the most clean energy patents of any state. And, according to Environmental Entrepreneurs, Michigan, with 1,319 anticipated jobs created, ranked fourth among states in new clean energy jobs this quarter.  In total, according to a recent Bureau of Labor and Statics report, Michigan is home to over 80,000 “green collar” jobs.

While these industry-wide statistics speak loudly, possibly the most convincing evidence of Michigan’s clean energy economy are the numerous wind and solar installations popping up across the state. Whether it’s the recent solar installation at IKEA in Canton, wind turbine blades coming through the port in Muskegon, or the introduction of solar at Ypsilanti’s Corner Brewery, there are stories of clean energy all over the state. Innovative manufacturers and companies are also redefining Michigan’s economic landscape. The Detroit-based PowerPanel is a prime example; the new company is manufacturing an innovative combined solar hot water and solar photovoltaic panel that simultaneously generates electricity and hot water.  Energetx Composites, a company highlighted in this year’s State of the Union, was started by the owners of S2 Yachts – a manufacturer of Tiara Yachts and Pursuit Boats – and now manufactues wind turbine blades. These are just a handful of the types of success stories that were captured during the Michigan Clean Energy Roadshow and that continue to provide a foundation for a more radical energy transition in Michigan. 

Building from these successes, the Michigan Energy, Michigan Jobs campaign (also known as 25 by 25) is supporting a more ambitious path forward for Michigan. Included as a ballot initiative this November, the campaign is supporting an increased RPS or RES of 25 percent by 2025. Included in November’s election as a ballot initiative, the 25 percent by 2025 is anticipated to attract 10 billion dollars in investment to Michigan and create 74,000 jobs. Such an increase would nearly double the clean energy jobs in Michigan and may show what job-creating potential a clean energy standard could have nationally. Additionally, for Michigan, the initiative would reduce the $1.7 billion that Michigan spends importing coal from out of state each year. As Michigan’s installed clean energy capacity nearly triples in the next three years, the clean energy economy will continue to move forward with or without the passage of the ballot initiative. However, the passage of 25 by 25 this November would catapult Michigan to the forefront of the clean energy economy in the United States and, in turn, help the United States compete globally.

From seeing these businesses, job creation, and installations and hearing their stories throughout the state, it is clear that a transition to clean energy is inevitable in Michigan. Still, citizens and policymakers in many cases remain unaware of the economic opportunity and stories behind clean energy. As Skip Pruss points out in a recent op-ed in the Detroit Free Press, Michigan has the opportunity lead in this sector, but it must seize it.

The clean energy economy should be about people, and therefore it should start with people. Through increased awareness of and familiarity with clean energy systems, Michigan residents and Americans more generally will be able to fully engage in the clean energy economy. A recent report documents the “contagious” nature of solar installations: “there is a positive, statistically significant, causal effect of previous nearby installations on a household’s decision to adopt solar panels…A one percent increase in the zip code installed base leads to approximately a one percent increase in the zip code adoption rate.” As the report points out, the results of increased exposure to clean energy systems add up. Taking this idea to a broader level, broadcasting and uncovering the successful strategies and the benefits of clean energy in Michigan can serve to stimulate growth in this sector in other states and at the national level.

Clean energy, in Michigan and across the globe, has the potential to transform how economies work and where and how energy is generated. This November, when Michigan votes on the 25 by 25 ballot initiative, it won’t be determining whether clean energy has a place in Michigan; what will be on the line is the degree and the trajectory of Michigan’s clean energy transformation. Michigan was once one of America’s industrial capitals with the automotive industry. Can it pave the way forward again?

MiGrid will be releasing videos, interviews, and pictures from the Michigan Clean Energy Roadshow in the coming weeks. For more information about the MiGrid and the Roadshow please go to to mi-grid.com

Cory Connolly is a Roosevelt Institute | Pipeline Fellow focusing on the development of the clean energy economy and a member of MiGrid.

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Konczal and Grunwald: Could the Stimulus Have Been Better Without Being Bigger?

Sep 10, 2012

We've all heard the standard arguments about the stimulus: progressives think it should have been bigger, while conservatives think it was a pork-filled monstrosity.

We've all heard the standard arguments about the stimulus: progressives think it should have been bigger, while conservatives think it was a pork-filled monstrosity. But in the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Mike Konczal talks to Michael Grunwald, author of The New New Deal, about four stronger criticisms of the bill from the left.

Konczal notes that it probably wouldn't have been possible to pass a larger stimulus through Congress, but his first question is "Why didn't we have a WPA? President Roosevelt went out in one month and hired like four million people," so if we're facing a similar jobs crisis now, "why don't we just go and hire five million people to do whatever?"

Next, the Michaels discuss President Obama's rhetorical pivot toward deficit reduction and "the idea that you couldn't pass the first stimulus, you couldn't do more to expand the economy, without also bringing down the long-term debt," which led Obama to "straitjacket himself on this issue of worrying about the bond market."

Third, Konczal argues that "President Obama very much looked at how to attack the problem of unemployment as a budgetary phenomenon as opposed to using every lever at his disposal," including the Federal Reserve and the nationalized GSEs. Rather, he chose to "kick the can on housing, hoping unemployment would come down in two years."

Finally, Konczal says "the New Deal brought in kind of a new contract with government" that involved the creation of a safety net and a much stronger role for the federal government in the economy. He and Grunwald explore whether Obama's policies have the potential to create another paradigm shift that is "fundamentally a new kind of social reality, a political reality."

For more, including details on what was actually in the stimulus and how it reflected President Obama's broader agenda, check out the full video below:

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Konczal and Grunwald: Could the Stimulus Have Been Better Without Being Bigger?

Sep 10, 2012

We've all heard the standard arguments about the stimulus: progressives think it should have been bigger, while conservatives think it was a pork-filled monstrosity. But in the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Mike Konczal talks to Michael Grunwald, author of The New New Deal, about four stronger criticisms of the bill from the left.

We've all heard the standard arguments about the stimulus: progressives think it should have been bigger, while conservatives think it was a pork-filled monstrosity. But in the latest episode of the Roosevelt Institute's Bloggingheads series, Fireside Chats, Mike Konczal talks to Michael Grunwald, author of The New New Deal, about four stronger criticisms of the bill from the left.

Konczal notes that it probably wouldn't have been possible to pass a larger stimulus through Congress, but his first question is "Why didn't we have a WPA? President Roosevelt went out in one month and hired like four million people," so if we're facing a similar jobs crisis now, "why don't we just go and hire five million people to do whatever?"

Next, the Michaels discuss President Obama's rhetorical pivot toward deficit reduction and "the idea that you couldn't pass the first stimulus, you couldn't do more to expand the economy, without also bringing down the long-term debt," which led Obama to "straitjacket himself on this issue of worrying about the bond market."

Third, Konczal argues that "President Obama very much looked at how to attack the problem of unemployment as a budgetary phenomenon as opposed to using every lever at his disposal," including the Federal Reserve and the nationalized GSEs. Rather, he chose to "kick the can on housing, hoping unemployment would come down in two years."

Finally, Konczal says "the New Deal brought in kind of a new contract with government" that involved the creation of a safety net and a much stronger role for the federal government in the economy. He and Grunwald explore whether Obama's policies have the potential to create another paradigm shift that is "fundamentally a new kind of social reality, a political reality."

For more, including details on what was actually in the stimulus and how it reflected President Obama's broader agenda, check out the full video below:

 

Construction image via Shutterstock.com.

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New Deal Numerology: Conventional Methods

Sep 7, 2012Tim Price

This week's numbers: 60; 45; 10; 26; 15

60... is a predestined number. That’s how many years it’s been since either party had a brokered convention in which its candidate was not chosen by the first ballot. And the last candidate to win afterward was FDR, which was step one in his plan to make all his successors feel inferior.

This week's numbers: 60; 45; 10; 26; 15

60... is a predestined number. That’s how many years it’s been since either party had a brokered convention in which its candidate was not chosen by the first ballot. And the last candidate to win afterward was FDR, which was step one in his plan to make all his successors feel inferior.

45... is a subliminal number. That’s how many times the words “job” or “jobs” were mentioned in Barack Obama and Mitt Romney’s acceptance speeches. They both even gave a shout-out to the founder of Apple just to juke the stats.

10... is a faithful number. That’s how many times the Republican Party’s 2012 platform mentions God, who commanded His followers, "thou shalt not take my name in vain unless you think it could score some bad headlines for your political opponents."

26... is a representative number. That’s how many women spoke at the Republican convention, including entertainers. Democrats topped that on day one, but to be fair, they weren’t asking speakers to submit to an ultrasound before taking the stage.

15... is a trashy number. That’s how many hours Charlotte’s sanitation workers were expected to work for seven days a week leading up to and during the DNC. The Democrats didn’t do anything to help, but hopefully they at least sorted their recyclables.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.

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Romney Will Solve the Crisis with the Exact Same GOP Plan of 2008, 2006, 2004...

Aug 31, 2012Mike Konczal

Romney's five-point plan to adress the specific aspects of our current jobs crisis recycles, nearly word for word, plans from far different economic times.

Romney's five-point plan to adress the specific aspects of our current jobs crisis recycles, nearly word for word, plans from far different economic times.

I've been watching the 2012 Republican National Convention, trying to get a sense of what the conservative diagnosis is for our weak economy and what they'd do in response. Is it the bizarro stimulus of raising interest rates, balancing the budget, and forcing foreclosures? Is there a secret housing plan? Or will it be a program of Reactionary Keynesianism, with an expanded military, massive tax cuts for the rich, and a SuperDuperCommittee to recommend tax expenditures that will go nowhere?

I take these arguments seriously -- I actually really enjoy making maps to help explore them. One argument worth bringing up is the idea that they are just proposing to do the policies they want all the time anyway -- the policies they wanted in 2008, or 2006, or 2004 -- but are pretending there's a reason it would be extra important given our current recession.

So on August 30th, 2012, with unemployment at 8.3 percent and with a serious long-term unemployment problem, Mitt Romney gives the RNC acceptance speech. He outlines a plan to create 12 million jobs in the next four years. As Jared Bernstein pointed out, that's what Moody's says will be created anyway. But forget that. How will Mitt Romney do this? He has a five point plan (numbers in [brackets] here and in the rest of the post are added by me):

And unlike the president, I have a plan to create 12 million new jobs. It has 5 steps.

[1] First, by 2020, North America will be energy independent by taking full advantage of our oil and coal and gas and nuclear and renewables.

[2] Second, we will give our fellow citizens the skills they need for the jobs of today and the careers of tomorrow. When it comes to the school your child will attend, every parent should have a choice, and every child should have a chance.

[3] Third, we will make trade work for America by forging new trade agreements. And when nations cheat in trade, there will be unmistakable consequences.

[4] Fourth, to assure every entrepreneur and every job creator that their investments in America will not vanish as have those in Greece, we will cut the deficit and put America on track to a balanced budget.

[5] And fifth, we will champion SMALL businesses, America’s engine of job growth. That means reducing taxes on business, not raising them. It means simplifying and modernizing the regulations that hurt small business the most. And it means that we must rein in the skyrocketing cost of healthcare by repealing and replacing Obamacare.

So his plan focuses on domestic energy production, school choice, trade agreements, cutting spending, and reducing taxes and regulations. This must be a set of priorities reflecting our terrifying moment of mass unemployment, right?

Let's flash back to September 4th, 2008, at the RNC where John McCain is giving his speech accepting the 2008 Republican presidential nomination. Unemployment is 6.1 percent, though the Great Moderation is coming to an end; within a year it'll be close to 10 percent. Two weeks later, as Lehman Brothers was collapsing, McCain would say "the fundamentals of our economy are strong." What were his recommendations for the economy in that nomination speech?

I know some of you have been left behind in the changing economy, and it often sees that your government hasn't even noticed... That's going to change on my watch...

[3] I will open new markets to our goods and services. My opponent will close them...

[4] I will cut government spending. He will increase it...

[5] We all know that keeping taxes low helps small businesses grow and create new jobs...

[4] Reducing government spending and getting rid of failed programs will let you keep more of your own money to save, spend, and invest as you see fit...

[2] Education -- education is the civil rights issue of this century. Equal access to public education has been gained, but what is the value of access to a failing school? We need to shake up failed school bureaucracies with competition, empower parents with choice...

[1] We'll attack -- we'll attack the problem on every front. We'll produce more energy at home.. Senator Obama thinks we can achieve energy independence without more drilling and without more nuclear power. But Americans know better than that.

It's the same exact agenda. Specifically, the Romney agenda for job creation in 2012 is stuff that John McCain wanted to do anyway in 2008.

Let's go back further. On September 2nd, 2004, George W. Bush is at the RNC, giving his speech accepting the nomination to run for a second term as President of the United States. Unemployment is 5.4 percent. A major housing bubble is kicking into high gear, and the country is debating the aftermath of the invasion of Iraq and the future of the War on Terror. A few months later, people will be talking about a permanent Republican majority. What are some priorities for a second George W. Bush term in creating jobs?

To create more jobs in America, America must be the best place in the world to do business.

[5] To create jobs, my plan will encourage investment and expansion by restraining federal spending, reducing regulation and making the tax relief permanent.

[1] To create jobs, we will make our country less dependent on foreign sources of energy.

[3] To create jobs, we will expand trade and level the playing field to sell American goods and services across the globe.

[5] And we must protect small-business owners and workers from the explosion of frivolous lawsuits that threaten jobs across our country. Another drag on our economy is the current tax code, which is a complicated mess...

[4]  To be fair, there are some things my opponent is for. He's proposed more than $2 trillion in new federal spending so far, and that's a lot, even for a senator from Massachusetts.

It's the same agenda, mentioned back to back almost in the same order. Bush mentioned No Child Left Behind several times, though I'm not sure if that matches up with the school choice of [2] in Romney's economic plan for school choice, so I excluded [2]. It's always time for cutting spending, more oil drilling, free trade, and lower taxes and regulation to fix the economy.

Let's do one last one. January 31st, 2006, George W. Bush is giving his State of the Union address. Unemployment is 4.7 percent. With the economy healthy and growing (in Bush's mind), now is the time to build on the strengths and address the weaknesses of the economy. What does he suggest?

Our economy is healthy and vigorous, and growing faster than other major industrialized nations...

[5] Because America needs more than a temporary expansion, we need more than temporary tax relief. I urge the Congress to act responsibly and make the tax cuts permanent.

[4] Keeping America competitive requires us to be good stewards of tax dollars. Every year of my presidency, we've reduced the growth of nonsecurity discretionary spending. And last year you passed bills that cut this spending.

[3] Keeping America competitive requires us to open more markets for all that Americans make and grow... With open markets and a level playing field, no one can out- produce or out-compete the American worker...

[1] Breakthroughs on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025.

Again, President Bush mentions No Child Left Behind, but I'm not sure whether it overlaps with [2].

But the same exact playbook is there in 2006, as it was in 2004 and 2008, and as it is in 2012. Domestic oil production, school choice, trade agreements, cut spending and reduce taxes and regulations -- it's been the conservative answer to times of deep economic stress, times of economic recovery, times of economic worries, and times of economic panic. Which is another way of saying that the Republicans have no plan for how to actually deal with this specific crisis we face.

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George W. Bush image via Shutterstock.com.

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