US Politics: Borrow And Spend Conservatism Marches On

[denstorebog]

3 hours ago, Paladin of Ice said:

The ones in South Georgia and Oklahoma didn't go nearly as well,

Depends on your parameters. Special election dynamics and everything, but the OK one came close to setting the record for biggest election-to-election swing ever. So if you start by accepting that we were never going to win it, you can't ask for much more.

[mormont]

12 hours ago, chuck norris 42 said:

What is the problem with media? The message was the North Koreans had a strategy to charm the South Koreans away from the Americans and it worked. 

And what was that strategy, and how did it work, and how do we know it worked?

The answers to all of those questions involve the words 'media coverage', and a surefire way to ensure media coverage is to put a presentable youngish woman at the forefront of the story and have her behave in certain socially-proscribed ways. As happened here. 

[OldGimletEye]

Take notes and then file them away. Because when Republicans try to disown Trump, they may come in handy when it’s time to point fingers and name names.

https://nymag.com/daily/intelligencer/2018/02/conservatives-and-the-cult-of-trump.html

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Before joining the administration, current White House deputy press secretary Raj Shah called Donald Trump “deplorable” and described the leaking of audio of him boasting of sexual assault “some justice,” Olivia Nuzzi reports. Shah is far from alone. Not long ago, a report surfaced that Environmental Protection Agency administrator Scott Pruitt warned that, if elected, Trump would take “unapologetic steps to use executive power to confront Congress in a way that is truly unconstitutional,” and in another interview, called him “a very blunt instrument as the voice of the Constitution.”

 

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At a meeting of the Republican National Committee earlier this month, at least one member went so far as to suggest Trump has surpassed their most sacred icon: “Reagan was my all-time favorite in my lifetime,” said Iowa Republican National Committeeman Steve Scheffler. “At least until now.”

I think this is Republican speak for: Hey man, I’ll kiss your ass down on Main Street and give you a couple of hours to draw a crowd.
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You might want to sit down for this because I’m about to throw out a bombshell revelation here;

Yes, Jaime Dimon is a clown.

I know it’s a real shocker. Hope I didn't cause anyone to start hyperventilating over this shocking news.

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“It is clear that the banks have too much capital.” Jamie Dimon (CEO, JPMorgan), Annual Letter to Shareholders, April 4, 2017.

 

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In this primer, we explain the nature of bank capital, highlighting its role as a form of self-insurance providing both a buffer against unforeseen losses and an incentive to manage risk-taking. We describe some of the challenges in measuring capital and briefly discuss a range of approaches for setting capital requirements. While we do not know the optimal level of capital that banks (or other intermediaries) should be required to hold, we suggest a practical approach for setting requirements that would promote the safety of the financial system without diminishing its efficiency.

 

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We do not know the optimal capital ratio for banks. But, in contrast with the Treasury (and with Jamie Dimon), we believe that current capital requirements are not high enough. Our practical suggestion is to raise capital requirements gradually until we observe either a reduced supply of bank credit or a shift of risk-taking to de facto banks. Absent these negative side effects, more bank capital means a safer financial system without loss of efficiency.

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Interesting reading for the week end.

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The goal of this paper is to give a unified explanation of five puzzling trends in the US macroeconomic data. We pursue the hypothesis that an increase in monopoly profits, along with forces that have reduced the natural rate of interest, have been key drivers of these trends. Towards that goal, we build a quantitative model of the US economy that includes imperfect competition, barriers to entry, the trading of pure profits, and realistic asset pricing. We then explore how the economy responds to changes in market power and interest rates, and find thatour model is able to quantitatively match all of the trends.

 

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Our model has a straightforward way of generating these patterns: the conclusions of the model follow directly from our modifications to the standardneoclassical model. An increase in firms’ market power leads to an increase inpure profits, thus an increase in the market value of stocks (which hold the rights to these pure profits).

Probably a good reason not to crow about the Stock Market too much.

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The increase in market power also has implications for income inequality. With higher pure profits, workers receive a lower share of output and capitalists a higher share. Since individuals with higher incomes receive a larger percentage of their income as capital income, and the poorest individuals generally do not hold financial assets, this mechanism will tend to increase income inequality

 

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The increase in market power has important implications for corporate tax policy. Standard economic theory tells us that taxing pure profits is generally a good idea (Guo and Lansing (1999)), while taxing capital income may not be a good idea (Judd (1985)). As shown by Guo and Lansing (1999), the optimal tax on corporate profits depends on the relative size of capital income to pure profits. Even in an economy with a moderate profit share (on the order of 8%), relatively high levels of corporate income taxes are optimal, especially with interest de-ductibility and accelerated depreciation. Traditionally, it has been thought that the level of pure profits in the economy was small – a common citation is Basu and Fernald (1997)’s estimate of 3%. With a profit share of 15-20%, as ouranalysis suggests, high level of corporate taxes may be optimal

 

[Yukle]

14 minutes ago, mormont said:

And what was that strategy, and how did it work, and how do we know it worked?

The answers to all of those questions involve the words 'media coverage', and a surefire way to ensure media coverage is to put a presentable youngish woman at the forefront of the story and have her behave in certain socially-proscribed ways. As happened here. 

Agreed, sadly.  And there is a tendency to draw false equivalencies based on these.

I think Ivanka Trump is an enabling idiot. But I also absolutely defend her against comparisons with her and the Kim family. Other than being a woman near a male leader lacking morality.

But the Trumps are not the Kims. They are bad, but not even comparable to what goes on in North Korea.

[Gorn]

7 hours ago, unpaid comintern said:

what the fuck?!

https://www.politico.com/magazine/amp/story/2018/02/13/immigration-visas-economics-216968?__twitter_impression=true

liberalism is a brain disease

Wow. A mainstream US publication proposes a "your personal immigrant slave" visa, and it passes almost without comment.

[DMC]

16 minutes ago, Gorn said:

Wow. A mainstream US publication proposes a "your personal immigrant slave" visa, and it passes almost without comment.

I don't see the value in commenting on every half-baked idea dreamed up by an op-ed columnist.  Way too time consuming.

[OldGimletEye]

New York time says "liberal leaning economist". I'd call them, largely, the reality based community.

If the Robert Lucas's, Casey Mulligans, and Robert Barros still want to defend their RBC models, then I guess they can go ahead. But, seriously, they deserve to be horsed laughed out of the room. 

Remember the skills gap or allegedly unemployment was "structural"? Remember inflation around the corner?

Time now for some people to fess up to the errors of their conservative ways.

https://www.nytimes.com/2018/02/11/upshot/liberals-wanted-fiscal-stimulus-conservatives-delivered-it.html

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For years, many liberal economists have argued that a little more federal spending and a higher budget deficit would create a stronger economy.

Now, they’re getting their wish, or at least a fun-house mirror version of it. All it took was total Republican control of the government. 

I think the key take away here is that conservative debt concern trolling is about as credible as conservative asset mispricing concern trolling.

Neither is done in particular good faith.

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This sudden reversal has the economists who have long argued we should run the economy a little hot — that is, stimulate it using the government’s power to tax and spend — in something of a quandary.

Uh not really. I think with inflation below target, we could spend a little more. What's objectionable is what the money is spent on --- ie tax cuts for the rich. And then secondly, the timing is terrible. And thirdly, when the FED reaches it target, the tax cuts will then likely cause "crowding out" and will be hard to turn off.

Anyway, you don't change your basic model because who happens to be in office. That's what Republicans do.

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Liberal skeptics of this new age of anti-austerity also don’t like the timing. Mr. Bernstein, no one’s idea of a deficit hawk, notes that never in its modern history has the United States run deficits as large as those now on the horizon while the unemployment rate was as low as it is now. That creates the risk that the government will have less capacity to respond to future recessions.

They and the reality based community should be extremely pissed off about the timing.

But you know, Republicans always got to fuck up everything they touch.

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Advocates of fiscal stimulus during the 2008 recession and the slow recovery argued that crowding out wasn’t a valid fear during that time. Vast economic resources, including workers and machines, were sitting on the sidelines, so the government had room to stimulate without causing a rise in interest rates.

Well it wasn't a valid concern. If the FED is committed to holding down interest rates or lowering them, then really how do you argue crowding out? You'd have to be a real John Bonehead (remember when bonehead said so back in the day) to think so.

[Fez]

4 hours ago, dmc515 said:

I'm not one to spike the football, but if the Trump era has taught us anything it's that we should.  I can't help but mention that Charlie Cook in his most recent op-ed sounded strikingly like I did last week in my argument with @Kalbear as it related to the economy.  Used the exact same data from the Quinnipiac poll - with reservations - and everything:

And yet polls continue to creep upward for Trump and the GOP; the latest Politico poll even had Republicans LEADING the generic house ballot by +1. The more Democrats focus on immigration, the more they're fucked; unless the economy crashes. They're losing their edge on health care and the economy, the two issues that were driving their advantage. Right now, all that non-partisans are seeing is that the economy is doing well, their taxes went down thanks to Trump, and Democrats are out-of-touch focusing on issues that don't affect them.

The special elections are still going well because of how motivated the base is, but Republicans have fully united around Trump (well over 90% approval with them, whereas it had been creeping below 80%) and independents have not moved en masse to Democrats. 

[Shryke]

1 hour ago, Fez said:

And yet polls continue to creep upward for Trump and the GOP; the latest Politico poll even had Republicans LEADING the generic house ballot by +1. The more Democrats focus on immigration, the more they're fucked; unless the economy crashes. They're losing their edge on health care and the economy, the two issues that were driving their advantage. Right now, all that non-partisans are seeing is that the economy is doing well, their taxes went down thanks to Trump, and Democrats are out-of-touch focusing on issues that don't affect them.

The special elections are still going well because of how motivated the base is, but Republicans have fully united around Trump (well over 90% approval with them, whereas it had been creeping below 80%) and independents have not moved en masse to Democrats. 

Motivating the base is how you win elections. Especially mid-terms.

[Mr. Chatywin et al.]

14 hours ago, The Anti-Targ said:

The problem is, the public keeps feeding them.

And nothing will stop it either. It’s why people like NASCAR crashes and slow moving train wrecks. We feed into it. What exacerbates it is these people live for it. Otherwise they wouldn’t have made their names as reality TV stars (and that’s what Trump is. We need to stop calling him a business man. He hasn’t been that since the early 90’s when his company collapsed.).

[Fez]

14 minutes ago, Shryke said:

Motivating the base is how you win elections. Especially mid-terms.

When you go from a +13 average in polls to a +6.7 average over two months, you're doing something wrong. Doesn't matter if your base is still motivated.

[Kalbear]

6 hours ago, dmc515 said:

I'm not one to spike the football, but if the Trump era has taught us anything it's that we should.  I can't help but mention that Charlie Cook in his most recent op-ed sounded strikingly like I did last week in my argument with @Kalbear as it related to the economy.  Used the exact same data from the Quinnipiac poll - with reservations - and everything:

 

Not sure how this is winning the argument; having someone else have the same opinion as you doesn't make your opinion more correct. And again, Republicans went from -10 to -5, hardly indicating a wave.

[Maithanet]

19 minutes ago, Fez said:

When you go from a +13 average in polls to a +6.7 average over two months, you're doing something wrong. Doesn't matter if your base is still motivated.

Sort of, but part of it was that +13 might be unsustainable in today's hyperpartisan climate.  There are definitely some Republicans and Republican leaning independents that want to give Trump the benefit of the doubt. Trump defending America from illegal immigrants may be BS, but it's still much firmer political ground than tax cuts for the rich or slashing health care coverage.  DACA is popular, but plenty of independent voters don't particularly care, and they aren't going to vote democrat on their behalf. 

[Fez]

17 minutes ago, Maithanet said:

Sort of, but part of it was that +13 might be unsustainable in today's hyperpartisan climate.  There are definitely some Republicans and Republican leaning independents that want to give Trump the benefit of the doubt. Trump defending America from illegal immigrants may be BS, but it's still much firmer political ground than tax cuts for the rich or slashing health care coverage.  DACA is popular, but plenty of independent voters don't particularly care, and they aren't going to vote democrat on their behalf. 

That's the key thing there. A lot of the districts that Democrats need to win, thanks to gerrymandering there isn't enough of a base for that to be enough for the win. So if we're sliding back to a base election, rather than a wave against Trump, it means Democrats may win 15-20 seats (all the Clinton-won Republican-held districts that don't have very strong incumbents) but that's not enough to take the House. And it means Democrats would probably win the senate race in Nevada, and maybe Arizona, but likely lose North Dakota, Indiana, Missouri, and West Virginia (Manchin's numbers have plummeted since Pence attacked him).

A base election isn't enough, unless the Republican base is super depressed, and the fact that they're rallying around Trump suggests they aren't. Maybe they still won't be motivated enough, but there's a difference between state legislative special elections and the mideterms.

[Maithanet]

15 minutes ago, Fez said:

That's the key thing there.

But what's the solution?  Republicans are setting the agenda and playing offense.  When they were attacking health care and giving away money to corporations, democrats were really good at amping up public opposition for it.  But on immigration that is harder because it doesn't effect most people directly, even if you want to protect DACA recipients in the abstract.  So Democrats can either fight for DACA and risk turning off independent voters or accept that DACA recipients are going to be deported and that Latino groups will be outraged that Democrats are so wimpy. 

Democrats are currently trying to split the difference - protect immigrants if possible but rejecting the outrageous Trump demands.  I suspect no deal will happen and DACA recipients will get deported.  Then Democrats can move on to the next issue and hope that Latino voters will (correctly) blame Republicans for being terrible, rather than Democrats for failing to stop the Republicans. 

[S John]

15 minutes ago, Maithanet said:

But what's the solution?  Republicans are setting the agenda and playing offense.  When they were attacking health care and giving away money to corporations, democrats were really good at amping up public opposition for it.  But on immigration that is harder because it doesn't effect most people directly, even if you want to protect DACA recipients in the abstract.  So Democrats can either fight for DACA and risk turning off independent voters or accept that DACA recipients are going to be deported and that Latino groups will be outraged that Democrats are so wimpy. 

Democrats are currently trying to split the difference - protect immigrants if possible but rejecting the outrageous Trump demands.  I suspect no deal will happen and DACA recipients will get deported.  Then Democrats can move on to the next issue and hope that Latino voters will (correctly) blame Republicans for being terrible, rather than Democrats for failing to stop the Republicans. 

I do believe that they need to stay in this realm as much as possible.  I'm not sure if maybe the argument is too complex to be boiled down into a sound-byte or slogan, or whatever - but Dems need to be hammering Republicans on the deficit. 

Republicans have finally given up the sham of being fiscally conservative. For years now Republicans have used fiscal conservatism as an excuse not to support numerous programs that might benefit the public (healthcare, education, etc) citing budget and deficit concerns. Now that we all know that running up a huge deficit for future generations to bear doesn't matter to them they are going to have to explain to the public what the real reason is that they don't support these things.

Seems to me if politicians are going to go hog wild on running up a deficit, it shouldn't be much of a choice for the average voter between whether or not they'd like to see that money spent in areas that will benefit the general public, or if they'd like to see it spent giving tax breaks to the donor class.

[Mr. Chatywin et al.]

7 hours ago, dmc515 said:

I'm not one to spike the football, but if the Trump era has taught us anything it's that we should.  I can't help but mention that Charlie Cook in his most recent op-ed sounded strikingly like I did last week in my argument with @Kalbear as it related to the economy.  Used the exact same data from the Quinnipiac poll - with reservations - and everything:

 

I’ve only been arguing that Obama needed to spike the football for like six years now…..

6 hours ago, Yukle said:

Agreed, sadly.  And there is a tendency to draw false equivalencies based on these.

I think Ivanka Trump is an enabling idiot. But I also absolutely defend her against comparisons with her and the Kim family. Other than being a woman near a male leader lacking morality.

But the Trumps are not the Kims. They are bad, but not even comparable to what goes on in North Korea.

How do you think the Trumps would behave if they had Kim’s power though?

Would Mueller still be……alive?

[Ormond]

For a different sort of political issue, a friend who's a chemistry professor in California just posted this on Facebook:

https://arstechnica.com/science/2018/02/california-green-lights-initiative-thats-a-conspiracy-theorists-dream/

This is about a proposed initiative on the California ballot, where the government has just given the go-ahead for the organizers to try to gather signatures to get it on the ballot.

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The initiative would eliminate vaccination requirements for schools and daycares, banish genetically modified organisms, and prohibit basic water treatments with fluoride and chlorine. The initiative would ban more than 300 chemicals, including fire retardants, and it would order the removal of smart meters. These, the initiative claims, are “neither smart nor meters but intermittent samplers, not accurate, not accountable, [that] emit and receive unnecessary radiation.”

This will need 365,880 valid signatures on petitions to actually make it onto the ballot. Any Californians want to comment on how likely it is to get that number of signatures? It's called the "California Clean Environment" initiative, which I am afraid will make it sound so good to people they will want to sign the peititions.

[DMC]

3 hours ago, Fez said:

And yet polls continue to creep upward for Trump and the GOP; the latest Politico poll even had Republicans LEADING the generic house ballot by +1.

Yeah that poll was discouraging (although self-admittedly they've always tracked considerably lower than the mean on the generic ballot), as was the most recent Economist/YouGov numbers.  Before that, looked like the generic ballot was ticking up in February polls.

3 hours ago, Fez said:

The more Democrats focus on immigration, the more they're fucked; unless the economy crashes.

Not sure how much you can blame this on their "focus" on immigration.  Just helped the opposition pass a budget deal without doing anything on DACA, and it's the Republicans as much as the Dems that are debating immigration reform in the Senate (not that I think voters are paying attention to this, nor that anything is going to come of it).  I think the numbers simply reflect more favorable views on the economy.  Plus, obviously on immigration the GOP has a very unpopular decision staring them in the face if they fail to get a fix on DACA in the next few weeks.

42 minutes ago, Fez said:

A base election isn't enough, unless the Republican base is super depressed, and the fact that they're rallying around Trump suggests they aren't. Maybe they still won't be motivated enough, but there's a difference between state legislative special elections and the mideterms.

Agreed.

1 hour ago, Kalbear said:

Not sure how this is winning the argument; having someone else have the same opinion as you doesn't make your opinion more correct.

It was an enjoyable coincidence, and strikingly so that he used the Quinnipiac numbers.  Let me have my fun, Goodell.

1 hour ago, Kalbear said:

And again, Republicans went from -10 to -5, hardly indicating a wave.

Don't know why this is "again."  I agree the generic ballot numbers are concerning.

[Shryke]

1 hour ago, Fez said:

When you go from a +13 average in polls to a +6.7 average over two months, you're doing something wrong. Doesn't matter if your base is still motivated.

Are you? That's not necessarily true at all. Maybe the other side is just getting over their demotivation. Look at Alabama. It's as much a story of Republicans not showing up as Democrats showing up. Which often has nothing to do with anything the Democrats do.