Negative Outlook?: 1/26/14

Wednesday, January 29, 2014

liberal versus conservative

Obama's Big Gamble by Greg Sargent

...But he then doubled down on precisely the argument that is the main point of contention with Republicans, arguing that the primary challenge we face is stagnating economic mobility and widening inequality, and crucially, that only an agenda of robust government intervention can reverse the larger trends underlying those problems and restore economic mobility and the American dream.

The current political tug of war breaks down as follows. Republicans want the Obama era to be seen as one of excess liberal governance thwarting our economic potential, leading to widespread misery. The primary vehicle for this argument is Obamacare — government interference is only leading to lost coverage, higher premiums, and crushed jobs. Only electing Republicans to Congress can act as a check on unbridled liberal governance and restore market-powered prosperity.

Democrats want to persuade Americans that only they have an actual policy program to deal with our primary problems — that the gains from the recovery are not broadly shared, that wages have stagnated, and that there aren’t enough jobs. The Dem case is that the Republican arguments against Obama’s signature domestic achievement are really a proxy for the same old GOP trickle down ideology, that only getting government out of the way — and keeping taxes and regulations low on rich people and job creators — can unleash the market potential that will miraculously lift up everyone below them.

White House advisers say they think that if the argument is understood on the latter terms — in the 2014 elections in particular — they will have the advantage. So yesterday’s speech was the start of a broader effort to use whatever “bully pulpit” powers the presidency has to shift the argument onto that turf.

But as Dean Baker points out, conservatives use the government to redistribute upwards.

Fed day

Fed Decision Day: What to Watch For by Binyamin Appelbaum

President Obama gave a long speech Tuesday night about the things government can do to help the economy without ever mentioning the Federal Reserve. Presidents rarely do. But it’s also the case that folks at the White House, like most Fed officials, think the central bank already has done as much as it should.

The Fed ended 2013 by announcing that it would begin to reduce its extraordinary efforts to stimulate the economy. At the end of its first policy-making meeting of 2014 on Wednesday, it is likely to announce that the retreat will continue.

This is also the last meeting for the Fed chairman, Ben S. Bernanke, who will step down on Friday after leading the central bank for eight years. After failing to foresee the financial crisis, he led the Fed’s aggressive efforts to contain the damage, and then its more tentative campaign to help restore the flow of economic activity.

He said at the beginning of his second term that he hoped to see that effort through to completion, but with the retreat barely begun, a significant part of Mr. Bernanke’s legacy will be shaped by the performance of his successor, Janet L. Yellen.

Here are three things to watch on Wednesday:

1. Twice is a pattern

Fed officials have given every indication that they plan to reduce their monthly accumulation of Treasury and mortgage-backed securities by $10 billion at the January meeting, just as they did at their last meeting in December. That, in turn, would reinforce the expectation that the Federal Open Market Committee will do the same thing when it next meets in March.

Investors will be watching the language of Wednesday’s statement for any sign that the Fed has doubts about the wisdom of maintaining that pace, like a weakening in the Fed’s description of the economic outlook.

2. What happens after the unemployment rate hits 6.5 percent?

The unemployment rate used to be a pretty decent proxy for the health of the labor market. But its rapid fall to 6.7 percent in December, from a peak of 10 percent in 2009, probably overstates the actual improvement in the labor market. The rate is based on the number of people who are looking for work, and a lot of people have given up. Some have settled into retirement or qualified for disability benefits, but others may simply be waiting for economic conditions to improve.

The Fed has said since December 2012 that it plans to keep short-term interest rates near zero at least as long as the unemployment rate is above 6.5 percent. With the unemployment rate about to drop below that threshold, a number of Fed officials have said that the central bank needs to clarify its plans.

The Fed took a stab at the problem in December, saying that it intended to keep interest rates near zero “well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation” remains modest.

That’s a thin reed, particularly for a central bank that has described forward guidance as its most powerful means of stimulating the economy. But in deciding whether to say more, the Fed is wrestling with the balance between precision and accuracy. Precision increases the power of forward guidance, but only if investors believe the Fed will hew to its plans. And the decision to taper bond purchases has already shown that officials are nervous about doing too much.

3. Hey, aren’t you guys in charge of inflation?

The pace of price increases remains sluggish and, with each passing month, the confidence of Fed officials that inflation will rebound gets a little harder to justify.

The Fed says that it wants annual inflation of about 2 percent, but last year the Consumer Price Index rose by just 1.5 percent. (A second measure, which the Fed regards as more reliable, will be published Friday.)

The Fed’s official statements have reflected growing concern about low inflation. In its December statement, the Fed said that “inflation persistently below its 2 percent objective could pose risks to economic performance.”

Strikingly, a number of Fed officials also have expressed puzzlement, saying that they do not understand why prices are rising so slowly.

Tuesday, January 28, 2014

Lost Girl

(Zoie Palmer as Lauren on the run.)

i09 reviews "Lovers.apart" from Lost Girl

Obama's 2013

What Obama Is Really Trying to Do in the State of the Union Address by Jonathan Chait

...What, then, has the administration done with the last year? The first thing it did was wage a political war to assert, or reassert, the basic legitimacy of the executive branch. In my preview of Obama’s second term, I wrote, “The necessary predicate [for a successful second term] is for Republicans to accept Obama as a legitimate president.”

In 2013, Republicans were not prepared to make that concession. The congressional GOP undertook a campaign to strip Obama of the normal presidential powers, in two ways. One was by using the threats of a government shutdown and a debt default as “leverage,” which could force the president to surrender policy concessions to Congress without any policy trades. The second was an unprecedented move to blockade any appointment at all to vacant executive branch and judicial positions. Much of the drama of 2013 was consumed with Obama and his Democratic allies successfully beating back this ambitious Republican effort to reshape the power dynamic between the branches of government.

The end results — new limits on the filibuster, and the crushing of the hostage-taking strategy — were not preordained. (Indeed, most pundits predicted Obama’s counterattack would fail. Here’s Chris Cillizza predicting last summer that Senate Democrats would never limit the filibuster; here are various pundits predicting Obama would have to pay a debt-ceiling ransom.) But if Obama had not beaten back the assault on the presidency, he would now be in no position to carry out the work his administration is undertaking.

For instance, having managed to install a chairman of the Consumer Financial Protection Bureau, the administration has finalized key rules in the Dodd-Frank law. Those regulations have received little attention, but the end result is that even many liberal skeptics now say the law is far tougher on Wall Street than they originally believed. And having filled the vacancies on the crucial D.C. Circuit Court, the administration is much better positioned to defend itself from the inevitable legal attacks on its regulations on the environment and elsewhere.

The other major implementation project of 2013 was the Obamacare rollout. That, of course, was an utter debacle of such a scale that even mentioning the administration’s successes alongside it has a mordant, pitiful ring of “Other than that, how did you enjoy the play, Mrs. Lincoln?” The shoddy website helped launch a wave of disastrous news coverage, spreading out to other, more predictable transition problems, like people who received cancellation notices. The failed Obamacare launch has dragged the president’s approval ratings into anomalously low territory, threatening to turn the midterm elections, which already favored the GOP, into a chance to hand Republicans control of the Senate.

Those low approval ratings provide the impetus for Obama’s splashy new message. Everything about Obama’s messaging — the image of vigorous unilateral action, the laser focus on jobs, the small but popular policy initiatives attached to it — serve the goal of patching up the president’s standing and framing the Washington story in the most favorable terms possible. The State of the Union address is not an effort to fundamentally reorient the administration’s strategy. It’s a campaign to mend the political damage from the botched Obamacare launch.

Catherine Rampell

David Leonhardt: "The wheel keeps spinning in the econo-journo-world: Congrats to my friend @crampell, now an op-ed columnist at WaPo. She'll be great."