On TAP: Kuttner + Meyerson

February 14, 2018

Ban Entitlements. My friend Drew Westen, author of the classic book on political language, The Political Brain, observes that Republicans run rings around Democrats when it comes to the Orwellian use of political language, and that Democrats often step on their own strengths.

For instance, as Westen observes, Democrats should never, ever use the budgetary term entitlements to describe our two most cherished Democratic programs, Social Security and Medicare. Democrats use the term either because they want to sound like savvy wonks, or out of sheer laziness.
To normal ears, the word has a negative connotation. People who are narcissistic are often described as “entitled.” They are not fun to be around.
Why in the world should we describe an earned, tax-supported, beloved program of social insurance as an “entitlement”? It would be hard to think of a worse term. It sets up the argument that these benefits should be taken away from all those undeserving, entitled people.
The word entitlement is bad enough in the bowels of OMB, but should never be used on the campaign trail. Just plain Medicare and Social Security are recognizable names with very positive voter approval.
I recently heard an otherwise savvy political operative describe conservative voters in a swing district as “pro-life.” No, they’re not. They are anti-reproductive rights. (Is that so hard to remember?)
When the right trains Democrats to unthinkingly use the right’s language, we are in big trouble. Indeed, if you define pro-life as actually helping the living, it’s Democrats who are pro-life.
Maybe we should appropriate the term "pro-life" for any beneficial social outlay and thereby muddle its political value to the right. (What do you mean you want to cut outlays for foster-care, home care, elder care, disability, etc. Aren’t you pro-life?)
Pay close attention to language, Democrats. Voters might be listening. 

February 13, 2018

As the Senate begins its deliberations on DACA, the ICE Deport Anyone Campaign rolls on. On the Prospect home page today, we’ve posted an article by David Bacon on the efforts of California unions to defend immigrants—and not just their own members—from expulsion, and co-published a piece with Capital & Main on the 5,000 DACA recipients in California who are teachers.

In its zeal to meet deportation quotas, ICE has shown complete indifference to such trivialities as whether their detainees have committed serious crimes or are esteemed members of their communities. As a piece in Monday’s Washington Post documented, ICE arrested 37,734 “non-criminals” in 2017, breaking up families and communities in the process.

The closest parallel in American history to ICE’s current expulsion mania is the grim saga of the Fugitive Slave Act. The act, passed by a Southern-dominated Congress in 1850, effectively gave police power to slaveholders and their agents to go into the non-slave states of the North to capture and re-enslave African Americans who’d achieved the status of free men and women by crossing the Mason-Dixon line. Then as now, federal law conscripted the local authorities in Northern states—where the pursued were welcome—to cooperate with the hunters, and on occasion federal forces were sent to help in the apprehensions.

And then as now, the reason that federal forces were sent was that many in those Northern states sought to thwart the slaveholders and the soldiers. African Americans concealed their hunted brothers and sisters, on a couple of occasions overpowering the slaveholders to free them again. State and local governments passed laws forbidding such cooperation, much as California has passed such laws today. Masses of people turned out to protest the seizures, just as rapid response teams do today.

Underpinning both these abysmal episodes in our history is a sectionalized racism. The Fugitive Slave Act effectively imposed Southern slave codes on Northern states that had no desire to enforce them. The ICE raids impose the racism and xenophobia of the worst parts of Trump’s base, disproportionately clustered in heavily white regions home to few if any immigrants, on states like California and New York, where immigrants are not just welcome but an axiom of local life.

In response, a number of local and state governments have offered legal assistance to ICE arrestees and forbidden police cooperation with them, while activists have turned out in the streets and the courts to support the detainees. All necessary actions, but there’s still more that could be done. At least so long as ICE continues to arrest and deport immigrants with no regard for what they’ve done and who they are, ICE agents should be treated as Northerners treated the slaveholder-kidnappers. Sit-down demonstrations obstructing ICE offices seem a good way to start.

February 12, 2018

Can you dig this? Trump’s $1.5 trillion infrastructure plan is another bait and switch. For starters, it’s dead on arrival, since Congress just concluded a two-year budget deal after massive horse-trading. Legislators are not about to reopen negotiations.

It’s bizarre that Trump releases his budget after rather than before this deal. It’s one more sign of his irrelevance.

As for the proposed infrastructure plan, it proposes $200 billion of actual federal spending over a decade. The rest is supposed to be private money, with the idea that a federal match will somehow coax out private investment—at a ratio of 6.5 to one.

But here’s the problem. True investments in public works do not produce private returns. That’s why they have to be public.

For private investors to make money on long term investments in things like better electrical grids, green transition, water and sewer, protections against storm surges and sea level rise, replacement of aging bridges, tunnels and roads, better rail, and so on, investors want large profits.

And there are only three ways to get those profits. You can pass the costs along to taxpayers. Or you can pass the costs along to ratepayers. Or Republicans at the federal and state level can rig the tax code so that massive tax breaks can be offered to private investors.

All of this is more costly and less efficient, as well as less fair, than straight ahead public investment funded by direct government bonds or taxes.

This is dumb, dumb policy, aimed at further enriching the rich and denuding the public realm. And if voters don’t see through it, Trump is smarter than the public.

NPR reported that Democrats will back this scheme because they are so eager to get infrastructure spending. I sure hope that’s wrong. Democrats need to be leading the charge for the real deal, not Trump fakery.

February 9, 2018

When Obama was president, Republicans made a huge deal about deficits bankrupting the country, refusing to adequately fund the recovery program and demanding deep cuts in federal spending. Now that Trump is in, deficits suddenly don’t matter.

The tax cut will add a trillion dollars to the national debt. The budget deal that was recently struck to keep the government open restores both military and some domestic social spending that was cut by Republican congresses during the Obama presidency—adding more deficit.

The deficit, and with it the national debt, is projected to start rising again, after coming down during Obama’s presidency. Deficit hawks are going nuts.

But Democrats should resist the temptation to pile on. Within very broad limits, there is nothing wrong with deficits and public borrowing, so long as money is put to good use. We came out of World War II with a much larger debt ratio—and that ushered in a 30-year boom. Winning that war was a good use of public debt.

A trillion-dollar tax cut for the rich, however, is not good use. Spending that money on infrastructure would be fine, and the time to have done that was while federal borrowing costs (interest rates) were low. Overspending on the military today is not a good use either.

Both Bill Clinton and Barack Obama made the economic and tactical error of making deficit reduction per se a major public issue. They thereby helped Republicans deny government the resources to rebuild America’s public household, and entrenched the conservative idea in the public mind of budget balance equaling fiscal virtue.

Keynes wept!

Deficits are often just what’s needed, and not all deficits are created equal. Fiscally, let’s whack Trump where he deserves to be whacked—for a needless and regressive tax cut. When the Democrats get back in, they will need to double down on public investment. 

February 8, 2018

I have two quite opposite reactions to President Trump’s desire to have his own version of a Red Square Roll-Out-The-Nukes-and-Salute! parade.

The first is to note the absurdity of all this. At a time when even hard power is best measured by a nation’s development of things like quantum computing, our new tanks aren’t really a good measure of our might. More fundamentally, this isn’t really an American tradition, and in its sure-to-be-Trumpified version, it will likely come off as more than a little Graustark, or perhaps Duck Soup, with a chorus singing the Trumpian version of “Hail, Hail, Fredonia.” All in all, given the character of the president, a spectacle both ominous (this moron may actually want to use these weapons) and ridiculous.

My second reaction, though, may well be to hold the ridicule. That is, it’s fine to ridicule Trump, who fairly personifies the ridiculous, but ridiculing the military is something else again. As Andy Levison, our pre-eminent scholar of the white working class, has noted, one defining element of that group’s beliefs is its support for the military. That’s in large part because the military offers working-class Americans a path to doing serious, valued work, in which achievement is rewarded, at a time when few other such options are open to them. To be sure, some of that work goes on in wars that shouldn’t be fought in the first place, but that’s hardly the fault of the enlistees. There’s no reason, in other words, to ridicule them.

So: To the extent that this parade is Trumpified—to the extent that it comes off as a Hail to the Chief sashay, as goose-stepping comes to Mar-a-Lago—then yes, ridicule is required. But ridicule the military (which didn’t ask for this march) and the men and women who fill its ranks? No way.

February 7, 2018

Poor Trump. He brags on the stock market and then the stock market tanks. Now, it’s made up about half of his losses.

I've been waiting for Trump to tweet that Monday’s sickening market slide was the Democrats’ fault. They spooked investors by refusing to approve his wall; or by failing to applaud his State of the Union address; or maybe by threatening his very presidency, the source of everything good in the economy.

Trump is implicated in the wildly gyrating stock market in one respect. Investors have been wary that central banks will spoil the party by raising interest rates. The Republicans claimed that their tax cut will pay for itself, but the nonpartisan Congressional Budget Office calculated that the tax changes will add a trillion dollars to the national debt over a decade. Then came the latest report by the Labor Department, showing that low unemployment is finally spurring some wage growth.

When central bankers see deficits and rising wages, they worry about inflation and they raise interest rates. That’s not good for an overheated stock market.

Liberals can enjoy Trump’s rhetoric getting tripped up by a swooning market. But before they succumb to the temptation to blame it on him, please consider that this is a little tricky.

First, we liberals like full employment and wage growth. We also don’t believe that higher deficits, within broad limits, cause higher interest rates. That’s the result of the Federal Reserve’s inflation obsession, not a fundamental law of economics.

It’s certainly true that Trump’s form of economic stimulus—massive tax cuts for the rich—is about the most inefficient and inequitable form of stimulus one can imagine. It would have been far better to spend that trillion on infrastructure and jobs. We should be whacking Trump for that.

As for the stock market, it will stabilize or decline, depending on the whims of investors and speculators and the perversity of the Fed. The stock market is one more market that’s far from efficient.

Trump is a fraud and a fool, but not every bad thing that happens is his doing. It’s not even clear that having some air come out of an overheated market is all that bad.

February 6, 2018

The last couple days’ stock market swoon has a multitude of causes, not least the inherent instability of markets. One perennial cause for such drops, however, is the fear of inflation, of higher interest rates and tighter credit. Which, in our shareholder-uber-alles form of capitalism, translates into a phobia of rising wages.

By any measure, it’s hard to find very much that could have triggered this fear. In January, wages were reported to be 2.9 percent higher than they were the previous January, which, however, was the highest such increase in several years. As my colleague Justin Miller has noted, much of that increase was the result of January 1 statutory hikes in the minimum wage in roughly a dozen states. More generally, however, wages have been piddling along for the past 40 years, while capital income has ballooned.

As America has never bred many Marxists, the belief that capital and labor are inherently in conflict has never gotten much purchase here. During the three decades after World War II, the power of unions and of New Deal institutions yielded a broadly shared prosperity. That was supplanted during the past four decades, however, by a return to what looks—grimly—like a more normal capitalist order, in which capital and labor are indeed counter-posed, with capital coming out on top. I doubt you’ll find many Marxists among the institutional investors, much less the algorithms, that have tanked the market in recent days, but they sure seem to subscribe to the capital vs. labor formulations: If wages rise, their rate of capital return may slow to just three or four times the rate of wage increases. Pity.

February 5, 2018

The stock market is plummeting, with the Dow losing well over a thousand points in three trading days. What’s at work?

For starters, the market has been rising at a completely unsustainable rate, driven by low interest rates, stock buybacks, high corporate profits, and investor expectations of even dizzier heights. At some point, it had to come down to earth, even with the pro-corporate tax-cuts.

In addition, the declining unemployment rate has been translating into (modest, long-overdue) increases in workers’ wages. This tends to spook markets, not just because bosses don’t like giving workers pay increases (true, but oversimplified), but also because central bankers tend to worry excessively about inflation.

If low unemployment causes workers to command higher pay, and employers don’t take the cost out of profits but pass it along in the form of higher prices, inflation ensues. Projected inflation rates are still very low by historical standards—with global trade, weakened unions, and the gig economy, workers just don’t have that much bargaining power, even at 4 percent unemployment rates.

Even so, investors correctly worry that myopic central bankers will tighten money at the slightest sign of inflation. And tighter money means slower growth and higher returns in the bond market, both of which are bad for stocks. So investors, having enjoyed average gains of more than 20 percent over the past year, head for the exits.

So, is this the big one: the end of a steadily rising bull market in stocks that is now in its ninth year, the second-longest one on record? (If I knew the answer to that, I would not be writing this post; I’d be in the south of France.)

Whether this is a momentary glitch, or the beginning of a long-awaited “correction” in stock prices of 20 percent or more, depends on whether most investors decide to be prudent rather than greedy, or whether a majority of investors think the market will keep going up.

But one thing is clear. Central bankers have an unfortunate habit of needlessly choking off recoveries due to excess inflation phobia. If investors expect central banks to run true to form, the market is likely to keep declining and the great, post-collapse bull market could be over.

February 2, 2018

My friend Tom Edsall wrote a very smart column in The New York Times on Trump’s immigration offer to the Democrats. Edsall quotes a number of political scientists and strategists, but the bottom line is: Take the deal.

Trump is offering to more than double the number of number of young people brought here illegally as children who can qualify for citizenship. In exchange, Democrats must support $25 billion for Trump’s wall, as well as his unsavory demands to limit so-called chain migration and to end the visa lottery.

Why take the deal? Because Trump’s strategy jams the Democrats. If the Dreamers are deported, much of the Hispanic community will blame the Democrats as well as blaming Trump. But conversely, if the number of Dreamers is more than doubled, it splits Trump’s base, especially immigration hard-liners.

Yes, the other elements of the proposed deal are odious, but all of them can be fought another day. For instance, construction of the wall can be suspended, after the Democrats take back Congress. The issue of whether to have a visa lottery, a decidedly secondary issue, can be revisited another day. Likewise the details of which family members legal immigrants can bring in.

Chuck Schumer, who has flatly said no way, should think again. The Democrats should turn the tables on Trump by simply announcing that they will take his deal, in the interest of the Dreamers. Other aspects of immigration policy have been repeatedly revised over the last century, and will continue to be.

Then we will find out if Trump is for real on this—or whether the offer is one more Trump lie.

February 1, 2018

When is a commitment of $1.3 trillion worth precisely zero? When Donald Trump makes it in his State of the Union address.

On Tuesday night, Trump promised that he’d put before Congress a massive investment in infrastructure, to the tune of $1.5 trillion. What he neglected to say was that just $200 billion of that would actually be federal dollars. The balance would be funds that he hoped—if conditions were right, if the wind was from the east, if the weather was sunny and the creek didn’t rise—would come from state and local governments and private investors. That is, from sources the federal government does not control.

Traditionally, the federal government has picked up the lion’s share of infrastructure spending—and since that hasn’t amounted to all that much in recent decades, we have some of the industrialized world’s worst roads, rails, and airports to show for it. State and local governments, which often have limited bonding capacity and which can’t run deficits (unlike the feds), have seldom been able to pick up as much as half the cost of such projects, even during these decades when those projects have been too few and far between.

For a number of months, however, the word in Washington was that Trump’s administration would pony up no more than 20 percent of the trillion dollars it was touting. In the SOTU, however, that trillion magically grew to a trillion and a half, while the federal commitment remained anchored at $200 million, which would come to 13-and-a-third percent of the newly enlarged commitment.

So why stop there? Since the federal share won’t go any higher than that $200 mill, why not pledge a $5 trillion infrastructure project? A $10 trillion project? Once you begin taking credit for projects to be funded (or not) by other people’s money, resulting from other people’s autonomous decisions, there’s a whole lot you can take credit for. Why not take credit not just for the federal tax cut but for state and local tax cuts, too? Trump has gone beyond the doctrine of l’état c’est moi. L’état plus the 50 little états and Lord knows how many cities, counties and private investors—they’re all, as Trump sees them, moi, aussi.