Billionaire Pete Peterson is spending lots of money to get people to worry about the debt and deficits, and National Public Radio is doing its part to try to promote Peterson’s cause with a Morning Edition piece that began by telling people that the next president “will have to wrestle with the federal debt.”
This is not true, but Peterson apparently hopes that he can distract the public from the factors that will affect their lives, most importantly the upward redistribution of income, and obsess on the country’s relatively small deficit. (A larger deficit right now would actually promote growth and employment.)
According to the projections from the Congressional Budget Office, interest on the debt will be well below 2.0 percent of GDP when the next president takes office. This is lower than the interest burden faced by any pre-Obama president since Jimmy Carter. The interest burden is projected to rise to 3.0 percent of GDP by 2024 when the next president’s second term is ending, but this would still be below the burden faced by President Clinton when he took office.
Furthermore, the reason for the projected rise in the burden is a projection that the Federal Reserve Board is projected to raise interest rates. If the Fed kept interest rates low, then the burden would be little changed over the course of the decade. Of course, the Fed’s decision to raise interest rates will have a far greater direct impact on people’s lives than increasing interest costs for the government. (The president appoints seven of the 12 voting members of the Fed’s Open Market Committee that sets interest rates.)
The reason the Fed raises interest rates is to slow the economy and keep people from getting jobs. This will prevent the labor market from tightening, which will prevent workers from having enough bargaining power to get pay increases. In that case, the bulk of the gains from economic growth will continue to go to those at the top end of the income distribution.
The main reason that we saw strong wage growth at the end of the 1990s was that Alan Greenspan ignored the accepted wisdom in the economics profession, including among the liberal economists appointed to the Fed by President Clinton, and allowed the unemployment rate to drop well below 6.0 percent. At the time, almost all economists believed that if the unemployment rate fell much below 6.0 percent, inflation would spiral out of control. The economists were wrong; inflation was little changed even though the unemployment rate remained below 6.0 from the middle of 1995 until 2001, and averaged just 4.0 percent for all of 2000. (Economists, unlike custodians and dishwashers, suffer no consequence in their careers for messing up on the job.)
Anyhow, if the Fed raises interest rates to keep the labor market from tightening, as it did in the late 1990s, this would effectively be depriving workers of the 1.0-1.5 percentage points in real wage growth they could expect if they were getting their share of productivity growth. This is like an increase in the payroll tax of 1.0-1.5 percentage points annually. Over the course of a two-term president, this would be the equivalent of an 8.0-12.0 percentage point increase in the payroll tax.
That would be a really big deal. But Pete Peterson and apparently NPR would rather have the public worry about the budget deficit.
Economist Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. A version of this post originally appeared on CEPR’s blog Beat the Press (5/28/15).
On Wednesday, the US Department of Justice dropped the hammer on FIFA, the world governing body of soccer, indicting nine senior FIFA officials and five sports marketing execs on charges of corruption, wire fraud, racketeering, and money laundering.
Allegations of bribery have long plagued FIFA, especially since its controversial decision to grant Qatar the 2022 World Cup. But much worse is the plight of South Asian migrant workers brought in to build the stadium infrastructure there: Since 2010, more than 1,200 migrant workers have died in Qatar under hazardous working conditions, and a 2013 Guardian investigation found that at least 4,000 total are projected to die before the 2022 World Cup even starts. And as we reported yesterday, Nepalese workers weren't even allowed to return home after the country's recent devastating earthquake.
Christopher Ingraham at the Washington Post put that toll in perspective in a striking infographic. He compared the number of workers who died in the run-up to several Olympics and World Cups with the number of those who have died in Qatar so far. It's horrifying:Christopher Ingraham/Washington Post
Nebraska legislators on Wednesday overrode the Republican governor's veto to repeal the state's death penalty, a major victory for a small but growing conservative movement to end executions. The push to end capital punishment divided Nebraska conservatives, with 18 conservatives joining the legislature's liberals to provide the 30 to 19 vote to override Gov. Pete Ricketts' veto—barely reaching the 30 votes necessary for repeal.
Today's vote makes Nebraska "the first predominantly Republican state to abolish the death penalty in more than 40 years," said Robert Dunham, executive director of the Death Penalty Information Center, in a statement shortly after the vote. Dunham's statement singled out conservatives for rallying against the death penalty and said their work in Nebraska is "part of an emerging trend in the Republican Party." (Nebraska has a unicameral, nonpartisan legislature, so lawmakers do not have official party affiliations.)
For conservative opponents of the death penalty, Wednesday's vote represents a breakthrough. A month ago, overcoming the governor's veto still looked like a long-shot. Conservatives make a number of arguments against the death penalty, including the high costs and a religion-inspired argument about taking life. "I may be old-fashioned, but I believe God should be the only one who decides when it is time to call a person home," Nebraska state Sen. Tommy Garrett, a conservative Republican who opposes the death penalty, said last month.
"I think this will become more common," Marc Hyden, national coordinator of Conservatives Concerned About the Death Penalty, said in a statement following the repeal vote. "Conservatives have sponsored repeal bills in Kansas, Montana, Wyoming, South Dakota, Missouri, and Kentucky in recent years."
But conservative opponents of the death penalty have a tough slog ahead. Though support for the death penalty has reached its lowest point in 40 years, according to the latest Pew Research Center survey, 77 percent of Republicans still support it.
“Have Democrats Pulled Too Far Left?” asks a New York Times op-ed (5/27/15). Because this question is always answered affirmatively by corporate media, you don’t even have to note that the author, Peter Wehner, “served in the last three Republican administrations” to know that the answer is going to be yes.
Despite the predictable thesis, however, the column still manages to surprise with its degree of intellectual dishonesty. Wehner’s thesis is that Barack Obama has “moved to the left” compared to “centrist New Democrat” Bill Clinton. But whenever Wehner makes a claim that can be checked—that isn’t simply empty rhetoric, like his assertion that Obama “has often acted as if American strength is a problem”—again and again it turns out to involve some numbers game.
Take Wehner’s claim that while Clinton
endorsed a sentencing policy of “three strikes and you’re out,”…Obama’s former attorney general, Eric H. Holder Jr., criticized what he called “widespread incarceration” and championed the first decrease in the federal prison population in more than three decades.
“Mr. Clinton lowered the capital-gains tax rate; Mr. Obama has proposed raising it,” Wehner says. Clinton lowered the rate capital gains were taxed at to 20 percent; under Obama it went up—to 20 percent.
“Mr. Clinton cut spending and produced a surplus,” writes Wehner. “Under Mr. Obama, spending and the deficit reached record levels.” From 1993 through 2000, Clinton reduced the US budget imbalance as a proportion of US GDP by 6 percentage points; from 2009 through 2014, Obama reduced it by 7 percentage points.
Wehner adds as “another bellwether” the fact that Hillary Rodham Clinton “is decidedly more liberal than she and her husband once were.” One example of this: “She has remained noncommittal on the Trans-Pacific Partnership, the free-trade agreement that has drawn ire from the left”—but which has been strenuously pushed by Barack Obama, though Wehner does not acknowledge this as evidence of Obama’s centrism.
But perhaps the most deceptive part of Wehner’s op-ed is when he blames Obama’s supposed shift to the left for the failing fortunes of the Democratic Party:
After two enormous losses by Democrats in the 2010 and 2014 midterm elections, Republicans control the Senate and the House of Representatives. There are currently 31 Republican governors compared with 18 for Democrats…. The Obama years have been politically good for Mr. Obama; they have been disastrous for his party.
Surely Wehner remembers that after the first half of Clinton’s first term, Republicans controlled both the House and the Senate for the remainder of his administration—exactly as happened under Obama. There were 30 Democratic governors when Clinton took office, and 19 when he left; there were 29 when Obama took office, and currently there’s 18.
It’s true that Obama has been been bad news for his party—but as FAIR has long pointed out, that’s true of Clinton as well. An honest appraisal of the administrations of both Clinton and Obama, with their emphasis on deficit-cutting and corporate-friendly trade deals, reveals both Democrats to be establishment centrists—and centrist politics, contrary to what the punditocracy would have you believe, do not have a particularly winning record at the ballot box.
The Associated Press (5/23/15) reported on what reporter Ken Dilanian called efforts by Congress “to prevent an interruption in critical government surveillance programs” by extending a section of the PATRIOT Act set to expire May 31.
If you’re more worried about the government spying on you than you are about the government losing “valuable surveillance tools”—well, I guess AP is not the news service for you, then.
One such PATRIOT Act preservation effort is labeled a “compromise” by AP—Senate Intelligence Committee chair Richard Burr’s proposal to extend the NSA’s bulk collection of domestic phone records until 2017—in what AP calls a “transition.”
As Marcy Wheeler of Expose Facts (5/26/15) points out, Burr’s plan would actually not be a simple extension of the PATRIOT Act’s Section 215, but instead would be “a breathtaking expansion of surveillance authority, probably even bigger than the FISA Amendments Act passed in 2008.” Among the Burr bill’s special features, Wheeler writes:
The bill basically would create its own mini Espionage Act, just for Section 215, creating a 10-year prison term for anyone who knowingly communicates information about Section 215 collection to an “unauthorized person.”
That’s interesting, because before Dilanian wrote about Burr’s “compromise,” he put this passage into his story:
But if Section 215 expires without replacement, the government would lack the blanket authority to conduct those searches. There would be legal methods to hunt for connections in US phone records to terrorists, said current and former US officials who spoke on condition of anonymity because they were not authorized to discuss the matter publicly. But those methods would not be applicable in every case.
So “current and former US officials” spoke without authorization to Dilanian about Section 215—thereby committing the very crime that this “compromise” bill would punish with a 10-year prison sentence.
Wheeler points out that the anonymous officials who talked to Dilanian, while not legally authorized to do so, probably had the unofficial sanction of their superiors:
If the earlier reports were based on a sanctioned leak, there’s little chance US intelligence officials sharing information they clearly identified as classified would be sent to prison for 10 years. But sources who might provide the kind of information that would make this debate useful would face prison terms. For journalists to deem such a bill a “compromise” would be to suggest they’re okay working exclusively with one-sided official leaks.
Where would you go if you wanted to smoke weed? Well you might start in Colorado or Washington, the two states where it's legal to smoke it recreationally (although that landscape is always shifting). But what if you didn't care about the law, and you just wanted to blaze based on financial considerations? Well, you'd probably still head to Colorado or Washington, according to a new map from Forbes:Map courtesy of Forbes
Forbes used data from priceofweed.com, which gets its data by "crowdsourc(ing) the street value of marijuana from the most accurate source possible: you, the consumer." One might say stoners aren't the best source of financial data, but, then again, there isn't much stoners are more serious about than what they shell out for weed.
So good on you, Oregon, Colorado, Washington, California. And bad on you, Iowa, Pennsylvania, Virginia.
(h/t The Independent)