Liberals and their language

George Will, picking up on some themes we have blogged about here, notes not only the ineffectualness of liberal solutions to our economic woes, but how they are running away from their own language:

In societies governed by persuasion, politics is mostly talk, so liberals’ impoverishment of their vocabulary matters. Having damaged liberalism’s reputation, they call themselves progressives. Having made the federal government’s pretensions absurd, they have resurrected a supposed synonym for the government, the “federal family.” Having made federal spending suspect, they advocate “investments” — for “job creation,” a euphemism for stimulus, another word they have made toxic.

Barack Obama, a pitilessly rhetorical president, continues to grab the nation by its lapels, demanding its attention, and is paying the price: The nation is no longer listening. This matters because ominous portents are multiplying. [Will goes ahead and cites some of them, including the bright idea of the administration's economic advisors to purposefully induce inflation]  . . .

It is a wonder, this faith-based (and often campus-based) conviction that the government that brought us the ethanol program can be trusted to precisely execute wise policies that will render the world predictable and progressive. . . .

The economic policy the “federal family” should adopt can be expressed in five one-syllable words: Get. Out. Of. The. Way. Instead, Energy Secretary Steven Chu, whose department has become a venture capital firm for crony capitalism and costly flops at creating “green jobs,” praises the policy of essentially banishing the incandescent light bulb as “taking away a choice that continues to let people waste their own money.” Better to let the experts in his department and the rest of the federal family waste other people’s money.

 

via Our floundering ‘federal family’ – The Washington Post.

China as economic savior?

Europe is in  even worse economic shape than we are, with first Greece and now Italy being so indebted that they are threatening to pull down the whole Euro-zone house of cards.  And even Germany, still an economic powerhouse, may not have enough money or the will to bail everyone out.   Fareed Zakaria calls on the only country with the financial wherewithal to bail out Europe:  China

The time has come for China to adopt a broader concept of its interests and become a “responsible stakeholder” in the global system. The European crisis will quickly morph into a global one, possibly a second global recession. And a second recession would be worse because governments no longer have any monetary or fiscal tools. China would lose greatly in such a scenario because its consumers in Europe and America would stop spending.

Of course, China would have to get something in return for its generosity. This could be the spur to giving China a much larger say at the IMF. In fact, it might be necessary to make clear that Christine Lagarde would be the last non-Chinese head of the organization.

In a world awash in debt, power shifts to creditors. After World War I, European nations were battered by debts, and Germany was battered by reparation payments. The only country that could provide credit was the United States. For America, providing desperately needed cash to Europe was its entry into the councils of power, a process that ultimately brought a powerful new player inside the global tent. Today’s crisis is China’s opportunity to become a “responsible stakeholder.”

via How China can help Europe get out of debt – The Washington Post.

Why wouldn’t that work with us?  Maybe China would bail us out.  Of course, China would have to get something in return.  Maybe we could just sell ourselves to China.  Maybe Beijing would let us be a semi-autonomous region.

The former Soviet Union promised to bury us.  But that was in a time when nations dominated each other by war or the threat of war.  Now nations can substitute economic for military power and just buy up the countries they want.  If things get worse, don’t you think lots of Americans would be willing to give up their liberty and their sovereignty for some personal affluence?

Of course, you don’t have to sell out to China to make that kind of bargain.  Maybe the much-hailed “China model” of an authoritarian government that controls the economy while exploiting the free market will be the ideology that gets us out of our current economic malaise.  That platform would probably get a lot of votes.

Poverty rate soars to one in six

According to the latest census data, nearly one in six Americans are poor:

Amid a still struggling economy, more people in America fell below the poverty line last year, according to new census data released Tuesday.

The nation’s poverty rate rose to 15.1% in 2010, its highest level since 1993. In 2009, 14.3% of people in America were living in poverty.

“The results are not surprising given the economy,” said Paul Osterman, author of “Good Jobs America,” and a labor economist at MIT. “You would expect with so many people unemployed, the poverty rate would go up. It’s just another sign of what a difficult time this is for so many people.”

About 46.2 million people are now considered in poverty, 2.6 million more than last year.

The government defines the poverty line as income of $22,314 a year for a family of four and $11,139 for an individual. The Office of Management and Budget updates the poverty line each year to account for inflation.

via Poverty rate rises as incomes decline – Census – Sep. 13, 2011.

 

The housing market & the economy

Attention is now on “jobs, jobs, jobs.”  Earlier, the attention was on “economic stimulus.”  But many economists are saying that those emphases miss the big problem that is dragging the economy down and preventing consumer spending:  the mortgage crisis in the housing market.

Almost half of America’s mortgages are “underwater,” with the amount owed being more than the property is worth.  That hurts the banks and other lenders, since the collateral they are holding is not enough to cover the value of the loans they have made.  The collapse of house prices might at least help people to buy homes, but the lenders now have to be especially stingy in making loans.

And for  homeowners, the loss of their home’s value a loss of their major capital.  For many of them, their home was a major part of their retirement plan–sell the big house, buy a condo now that the kids are gone, and live off the rest.

Housing woes impact the job market too, since lots of people are employed in construction and in the manufacture of consumer goods that go into the new houses.

Does anyone have any ideas for reviving the housing market?

 

(See  Obama jobs plan: Economists give good reviews but say more needed on mortgage debt – The Washington Post.)

Provisions of Obama’s jobs plan

The president unveiled his jobs package last night to a joint session of Congress.  Here are the main provisions of the $447 billion plan:

-EMPLOYEE TAX CUTS. A deeper payroll tax cut for all workers. Congress in December cut the payroll tax, which raises money for Social Security, from 6.2 percent for every worker to 4.2 percent, for all of 2011. Obama’s proposals would cut that tax even further – to 3.1 percent – for all workers in 2012. The tax applies to earnings up to $106,800. The estimated cost is $175 billion.

- EMPLOYER TAX CUTS. A payroll tax cuts for all business with payrolls up to $5 million. Obama’s proposal would cut the current 6.2 percent share of the payroll tax that employers pay to 3.1 percent. As with employees, that tax applies to annual employee earnings of $106,800. The White House says 98 percent of businesses have payrolls below the $5 million threshold. In addition, Obama proposes that businesses get a full payroll tax holiday for additional wages resulting from new hires or increased payrolls. The estimated cost is $65 billion.

- PUBLIC WORKS. The president proposes spending $30 billion to modernize schools and $50 billion on road and bridge projects. He also calls for an “infrastructure bank” to help raise private sector money to pay for infrastructure improvements and for a program to rehabilitate vacant properties as part of a neighborhood stabilization plan. The estimated total cost of all those programs is $105 billion.

-UNEMPLOYMENT BENEFITS. If approved by Congress, the proposal would continue assistance to millions of people who are receiving extended benefits under emergency unemployment insurance set up during the recession. That program expired in November but Congress renewed it for 2011. If not renewed again, it would expire at the end of this year, leaving about 6 million jobless people at risk of losing benefits. The president also wants to spend extra money on states that help long-term unemployed workers though training programs. One model cited is a Georgia program that lets people receiving unemployment benefits obtain job training at a company at no cost to the employer. The estimated cost is $49 billion.

-LOCAL GOVERNMENT AID. The ailing economy has forced state and local governments to lay off workers. Money that states and municipalities received in the 2009 stimulus package has been running out. Obama proposes spending to guard against layoffs of emergency personnel and teachers. The estimated cost is $35 billion.

-EMPLOYER TAX CREDITS. The president proposes a tax credit of up to $4,000 for businesses that hire workers who have been looking for a job for more than six months. The estimated cost is $8 billion.

-EQUIPMENT DEDUCTION. Wary of imposing a burden on business, Obama wants to continue for one year a tax break for businesses, allowing them to deduct the full value of new equipment. Previously, companies could only deduct 50 percent of the value. The president and Congress in December negotiated that provision into law for 2011, but it is set to expire at the end of this year. The estimated cost is $5 billion.

via Highlights of Obama’s jobs plan – Sacramento News – Local and Breaking Sacramento News | Sacramento Bee.

Lots of reliance on tax cuts.  I thought that was a Republican tactic that  Democrats scorn in their crusade for new revenue.  Isn’t all this help for business  what Democrats usually mock as “trickle down economics” and help for the rich?  There is, of course, lots of government spending of money that we do not have.

Do you think this will get Americans working again?

Economic purgatory

Here is a rather more optimistic assessment of the economy, based on the plans of America’s business executives.   I cite it, though, for the figure of speech in the final paragraph:

Washington policymakers are entering a crucial period for the nation’s stalling economy, starting with President Obama’s address to Congress about jobs on Thursday, but the fate of the recovery ultimately depends on decisions being made elsewhere: inside corporate America.

So far, business leaders have been standing firm, with senior executives making few revisions in the plans they had drawn up for expansion and hiring, according to interviews and a review of more than three dozen recent conference calls that executives have held with financial analysts. Even the wild swings on Wall Street during this cruel summer have not knocked executives off track.

But while companies are not undertaking new rounds of layoffs, hiring does not seem poised to take off. Executives speak of the same sluggish but steady job creation that has been underway for months continuing through the end of the year.

The cautious approach taken inside executive suites was also reflected in the grim jobs report from the Labor Department on Friday. While it showed that the nation’s job creation had ground to a halt in August, the private sector continued adding jobs slowly. After adjusting for workers on strike, mostly at Verizon, and employment cuts by government, the report revealed that private employers added the modest net sum of 62,000 jobs.

That result was consistent with the reflections of top executives, such Ronald L. Sargent, the chief executive of office-supply retailer Staples.

“I’m not an economist at all,” Sargent said in a conference call in mid-August with analysts to discuss quarterly earnings. “But from what I see, we have no chance at another recession. I think we’re probably more likely to stay in economic purgatory for a while longer, but I don’t have any worries about a double dip at this point.”

via Despite stock volatility, executives moving ahead with growth plans — for now – The Washington Post.

We are in economic purgatory!  We are being punished for our sins!  But we are still saved, eventually.   And government efforts to get us out are nothing but indulgences.  We can buy them, if it makes us feel better, but they don’t really work.  Can there be free forgiveness in the economics realm, or that just in the spiritual kingdom?


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