US Politics: Borrow And Spend Conservatism Marches On

[Shryke]

6 hours ago, unpaid comintern said:

the democratic party: why expect better?

What you mean to say here is "West Virginia:why expect better?"

Which, I mean, yeah. You can't expect much better from WV.

[Shryke]

1 hour ago, chuck norris 42 said:

Is there any chance that there will be a surge of independents that are fiscally conservative? Based on by rough observations of the US and my own country Australia, political parties don't want to commit to paying down the budget. 

No. Those voters do not exist. Not in numbers sufficient to matter.

[Yukle]

6 minutes ago, Shryke said:

No. Those voters do not exist. Not in numbers sufficient to matter.

It wouldn't matter even if they did, since the USA has only a very loose relationship between the votes cast and the outcome in their legislature.

[LongRider]

2 hours ago, Pony Queen Jace said:

The problem is that we are not given services in exchange for our taxes.

Wal-Mart gets our tax money.

PREACH!   

[Shryke]

4 minutes ago, Yukle said:

It wouldn't matter even if they did, since the USA has only a very loose relationship between the votes cast and the outcome in their legislature.

Much more then you'd think. The Republican party version of conservatism looks as it does today because it reflects their voting base more and more as time goes on. And that is one primarily founded on grievance, especially racial, and authoritarianism and has basically no concern for the fiscal conservative breached by the establishment/intellectual conservative movement. Trump basically schooled all the other candidates because he exploited this divide. (not intentionally of course, he's just one of them so he speaks like one of them)

[The Anti-Targ]

2 hours ago, chuck norris 42 said:

Is there any chance that there will be a surge of independents that are fiscally conservative? Based on by rough observations of the US and my own country Australia, political parties don't want to commit to paying down the budget. 

Whenever right wing parties are in govt, if they ever get sustained surpluses they are used to cut taxes rather than pay off debt. And whenever right wing parties run deficits for long enough, they feel the need to cut taxes anway, because that's what they do and they try to convince everyone that cutting taxes will improve the govts revenue position, because growth.

Left wing parties probably have the better record of using surpluses to pay off debt, but people expect left wing parties to continue to pump money into social programmes and services. So people get a bit pissy when there are decent surpluses but no major increases in social spending, and paying debt is not sexy. So voters decide that if the left isn't going increase social spending when times are good, might as well elect the other lot because at least they are offering a tax cut. 

[Altherion]

1 hour ago, Pony Queen Jace said:

The problem is that we are not given services in exchange for our taxes.

This is basically it. Of course, it is abstractly known that taxes pay for services, but changes in tax structures don't appear to result in changes in those services. For example, the most recent tax law results in me getting slightly more money each month -- not much more, but enough to be noticeable. Is there a corresponding change in services? Not one that I can see.

[DMC]

13 hours ago, Shryke said:

He's been as reliable as you can hope for from a guy elected in state that went for Trump by like the highest margin in 2016 (as I recall).

He's held the line on a bunch of key issues for the Democrats this Congress.

WV had the highest vote percentage for Trump, beat Wyoming by a point, although Wyoming had a higher margin (only 22% voted Clinton compared to WV's 26%). 

Anyway, yep, don't know how you're gonna do better than Manchin in West Virginia.  He was with the Dems on health care and, albeit with some rhetorical equivocating, with them on the tax bill.  Looking at major votes, the only close ones he voted with Trump/GOP are a couple of abortion votes.  That's entirely understandable given his constituency.

[OldGimletEye]

On 2/11/2018 at 3:42 PM, chuck norris 42 said:

Is there any chance that there will be a surge of independents that are fiscally conservative? Based on by rough observations of the US and my own country Australia, political parties don't want to commit to paying down the budget. 

To my knowledge, Australia has a debt/GDP ratio of about 40%. That seems quite healthy.

I of course, don't know the current deficit projections in Aulstralia, but if conservatives are there are saying there is some kind of debt crises there, that seems to be kind of bullshit. In fact, I might call it conservative bullshit.

The US situation of course is different. We're over 100%, but even that is really not that scary. What is a bit scary is when effective interest rate payments on the debt, R, exceeds nominal GDP growth, which by basic debt math, means the debt/GDP ratio will not converge to some number, which according to the CBO  happens in the 2040s.

And to be clear no nation needs to "pay down the debt". At the end of World War 2, the US had a debt/GDP ratio of about 120%. The UK was about 250%. By the 1970s the US was in the 30s and the UK around 50%. Neither country "paid back" the debt. Both countries simply outgrew their debt ratios. I'm not saying this what your saying, but I want to make this clear, as there seems to be often confusion on this point.

And of course when US conservatives talk about "fiscal responsibility" they basically mean gutting Social Security, Medicare and so forth. It's just a smoke screen for them.They don't talk about it because they are really interested in fiscal responsibility. And gutting most of those programs would be unpopular, even with so called "fiscally responsible independents".

[ants]

2 hours ago, OldGimletEye said:

To my knowledge, Australia has a debt/GDP ratio of about 40%. That seems quite healthy.

I of course, don't know the current deficit projections in Aulstralia, but if conservatives are there are saying there is some kind of debt crises there, that seems to be kind of bullshit. In fact, I might call it conservative bullshit.

......

And to be clear no nation needs to "pay down the debt". At the end of World War 2, the US had a debt/GDP ratio of about 120%. The UK was about 250%. By the 1970s the US was in the 30s and the UK around 50%. Neither country "paid back" the debt. Both countries simply outgrew their debt ratios. I'm not saying this what your saying, but I want to make this clear, as there seems to be often confusion on this point.

......

The issue in Australia isn't so much the current level, but how fast its growing.  It was 10% in roughly 2008, pre-GFC.  Most (smart) people don't mind it increased post GFC (indeed, Australia didn't go austerity and was one of the only countries not to go into recession), but its still growing now, and given the current economy's strength that is a bit more concerning.  We got used to living off high mineral prices, and those probably aren't coming back.  

On the other paragraph, this would be easier if OECD countries actually had any inflation.  People forget when talking about inflation being good for borrowers, that governments are big borrowers.  

[OldGimletEye]

On 2/11/2018 at 9:29 PM, ants said:

The issue in Australia isn't so much the current level, but how fast its growing.  It was 10% in roughly 2008, pre-GFC.  Most (smart) people don't mind it increased post GFC (indeed, Australia didn't go austerity and was one of the only countries not to go into recession), but its still growing now, and given the current economy's strength that is a bit more concerning.  We got used to living off high mineral prices, and those probably aren't coming back.  

On the other paragraph, this would be easier if OECD countries actually had any inflation.  People forget when talking about inflation being good for borrowers, that governments are big borrowers.  

What's its projected GDP growth in the future and deficit/GDP ratio in the future. And what's the effective interest rate cost?

[Yukle]

Almost no country in the world is debt free. This is a function of interest. All countries are not only repaying the principle, but the interest on it. This interest is extra deficit that didn't exist at the time the loan was originally issued. Therefore, over time, the amount of money owing in the world well and truly exceeds the amount of total money that exists.

[Jace, Extat]

3 hours ago, Yukle said:

Almost no country in the world is debt free. This is a function of interest. All countries are not only repaying the principle, but the interest on it. This interest is extra deficit that didn't exist at the time the loan was originally issued. Therefore, over time, the amount of money owing in the world well and truly exceeds the amount of total money that exists.

That's some real talk, homie. My neighbor's kitty can't hold them feels with his little paws homie.

 

[Yukle]

@Pony Queen Jace, I often find your mode of speech difficult to comprehend.

I cannot tell what you mean in this case.

[Mexal]

10 hours ago, Altherion said:

This is basically it. Of course, it is abstractly known that taxes pay for services, but changes in tax structures don't appear to result in changes in those services. For example, the most recent tax law results in me getting slightly more money each month -- not much more, but enough to be noticeable. Is there a corresponding change in services? Not one that I can see.

There won’t be because we just borrow more to continue to pay for those services. That’s part of the issue. A 5% debt/GDP ratio in almost full employment ain’t good.

[The Anti-Targ]

1 hour ago, Mexal said:

There won’t be because we just borrow more to continue to pay for those services. That’s part of the issue. A 5% debt/GDP ratio in almost full employment ain’t good.

Indeed if govts could only borrow for capital expenditure and wre not allowed to borrow for operational expenses people would notice when taxes go down so do services.

[Fragile Bird]

I see people in the WH are singing their little hearts out to the media! So many leakers!

They say Trump has been calling Porter a 'sick puppy' at the WH, so it validates the idea that there's no way he will publicly condemn a man for abusing a woman unless that man is a Democrat, whether or not he admits the abuse. Republicans are all deniers and deserve the assumption of innocence.

[Paladin of Ice]

In today's episode of the Trump admin looking out for the little guy: Mick Mulvaney pulls Consumer Financial Protection Bureau lawsuit against an online lender that charged 950% interest, has financial backers convicted of racketeering, and broke both federal and state laws in its lending practices.

Quote

The CFPB is considered a powerful and independent watchdog. But many Republicans have wanted to shut it down since Day 1 because they think it's too powerful. Mulvaney is one of them. As a congressman, Mulvaney called the agency a "sick sad joke." He drafted legislation to abolish it. So people at the bureau were shocked when the president appointed him to run this consumer protection agency.

Within weeks of coming on board, Mulvaney has worked to make the watchdog agency less aggressive. Under his leadership, the CFPB delayed a new payday lending regulation from going into effect and dropped an investigation into one payday lender that contributed to Mulvaney's campaign. In another move that particularly upset some staffers, the new boss also dropped a lawsuit against an alleged online loan shark called Golden Valley Lending. The suit says the lender illegally charges people up to 950 percent interest rates. It took CFPB staffers years to build the case.

"People are devastated and angry — just imagine how you would feel if years of your life had been dedicated to pursuing justice and you lose everything," says Christopher Peterson, a former Office of Enforcement attorney at the Consumer Financial Protection Bureau who worked on this particular case early on.

Peterson believes that had the lawsuit been pursued and the CFPB won, it could have clawed back money to help thousands of people who have allegedly been hurt by the lender.

Bonenfant sent NPR a screenshot from the Golden Valley website. It says on her $900 loan, her scheduled payments in less than 12 months will total $3,735, or more than four times what she borrowed.

...

Bonenfant has so far paid more than $3,000 to Golden Valley and rung up more than $1,000 in overdraft fees at her bank.

When she showed it to her boss, he called the loan's terms "illegal."

Lawyers at the CFPB came to a similar conclusion. That's why back in April, the bureau sued Golden Valley Lending for unfair, deceptive and abusive business practices.

The lawsuit was moving forward until Mulvaney came on board, when it was suddenly dropped.

"Dismissal of this lawsuit shows an outrageous disregard for the rule of law," says Peterson, who calls the lender "one of the worst of the worst" for swindling many people around the nation out of tens of millions of dollars.

A key backer of Golden Valley was recently convicted of racketeering charges in a case involving another online lender, according to court documents. Given this history, Peterson wonders why Mulvaney dropped the lawsuit against Golden Valley.

"The Trump administration is just going to turn them loose and let them off the hook despite the fact they were making 950 percent interest rate loans to struggling families in ways that were illegal and unauthorized under both state and federal law," Peterson says.

Mulvaney declined requests for an interview. In an email, his press representative first said the decision to drop the Golden Valley lawsuit was made by "professional career staff" and not Mulvaney.

But several CFPB staffers that NPR spoke to say that's not true. The staffers, who spoke on condition of anonymity for fear of losing their jobs, say Mulvaney decided to drop the lawsuit even though the entire career enforcement staff wanted to press ahead with it.

After repeated questioning from NPR, Mulvaney's press person acknowledged that Mulvaney was indeed involved in the decision to drop the lawsuit.

Here's your daily reminded that Republican politicians hate a judiciary that gets in the way of one party rule.

Quote

Trump likes to denounce and threaten judges courts that thwart his will. But the political threat to courts did not begin with Trump and will not end when he is gone. It is part of a civic rot that is eating at the vitals of our democracy, and it is getting worse.

As one example, imagine you are a justice of the United States Supreme Court. Plaintiffs belonging to your old political party ask you, on flimsy legal grounds, to block a lower court order.

Meanwhile, those plaintiffs announce they don’t plan to obey the lower court order no matter what you decide.

Are they even trying to conceal their contempt for courts—and, for that matter, for you?

That was the litigation tactic adopted by Michael Turzai and Joseph Scarnati, two Republicans who are respectively the speaker of the Pennsylvania State House of Representatives and the President of the Pennsylvania State Senate, in an emergency stay application filed with Justice Samuel Alito. The application asked Alito to block a decision of Pennsylvania’s State Supreme Court. That decision—rendered as an order on January 22 and explained in a lengthy opinion on Thursday—invalidated the system of U.S. House districts approved by the Republican legislature for election of members of the U.S. House next fall.

The state court held that the partisan nature of the district plan violated the Pennsylvania Constitution’s requirement of “free and equal” elections. The court ordered the legislature to draw up a new congressional district plan in time for the congressional elections this November.

Every first-year law student knows federal courts have no authority to overrule a state’s Supreme Court about what that state’s constitution means. “[W]hile a state court’s construction of a state constitution would ordinarily not be this Court’s concern,” the stay application said, “where a state court’s purported interpretation is not interpretation at all, but rank legislation at the expense of the branch of state government charged with legislation under federal law, this court is both empowered and duty-bound to intervene.”

...

In general, the Pennsylvania officials’ argument was so weak that it hardly seemed like a legal argument at all. Those of a cynical turn of mind might read it as, “we know you’re not supposed to, but we are putting ‘federal law’ in italics, bro, because we really really need you to help us out—because otherwise we might lose as many as six House seats.’”

Alito rejected the application on his own, without referring it to the full court; as Amy Howe noted in SCOTU Sblog, this “strongly suggests that he did not view the case as an even remotely close call.”

Astonishingly, as Alito was pondering the request to throw the U.S. Supreme Court under the bus, Senate President Scarnati was also informing the Pennsylvania Supreme Court that he had no intention of obeying its stupid order anyway. “In light of the unconstitutionality of the Court's Orders and the Court's plain intent to usurp the General Assembly's constitutionally delegated role of drafting Pennsylvania's congressional districting plan,” Scarnati’s lawyer wrote to the Pennsylvania justices, “Senator Scarnati will not be turning over any data identified in the Court's Orders.”

Appellate lawyers generally consider “I don’t have to obey no stinking order” a high-risk argument strategy. It tends to leave any judge with an ever-so-slightly jaundiced view of the party invoking it.

The optics get worse when that claim is coupled with the venerable “you didn’t do what we wanted so we will get you thrown off the bench” move, last seriously employed at the federal level in the failed 1804 impeachment of Justice Samuel Chase. Nonetheless, immediately after Alito rejected the GOP application, Republican State Representative Cris Dush released a memo to his fellow legislators demanding the impeachment of the five members of the state court (all Democrats) who voted in the majority. Because the decision “blatantly and clearly contradicts the plain language of the Pennsylvania Constitution,” Dush said, the offending justices have “engaged in misbehavior in the office.”

Other Pennsylvania Republicans, meanwhile, filed a challenge to two of the justices’ participation, alleging that they had expressed opposition to partisan gerrymandering, and thus are tainted by bias.

...

Readers in North Carolina may find the fracas oddly familiar-sounding. After Republicans gained control of the legislature there in 2011, state courts blocked a number of their conservative innovations, including an attempt to abolish teacher tenure and a measure to bar the state’s Democratic governor from appointing a majority on local election boards.

The Republican legislative majority struck back. It has done away with the state’s public financing system for judicial elections (thus making candidates dependent on big donors), and has voted to require every judicial candidate to run under a partisan label (thus making judges explicitly partisan). It also abolished the party primaries for judicial office—meaning that incumbents would face multiple challengers rather than one strong one. When vacancies occurred on the state court of appeals, legislators “unpacked” the court, abolishing the open seats, to prevent the Democratic governor from appointing new judges.

The Republicans then offered redrawn judicial district maps that would have made the bench radically whiter and redder. When these ran into heavy weather, they canceled this year’s judicial elections altogether. They proposed making every judge run for re-election every two years. They are now mulling a plan to abolish judicial elections altogether, so that the legislative majority can name an all-Republican pool of candidates for every judgeship in the state. In other words, one way or another, the state courts are to be annexed to the power of the Republican legislative majority.

This partisan assault on the courts is only the tip of a nationwide spear—Republican efforts to purge and remodel state courts to make sure they follow the party’s line. A report issued February 6 by the Brennan Center for Justice at New York University outlines 31 measures pending in 14 state legislatures designed to weaken state court independence by bringing selection more closely under partisan control, making impeachment and removal easier, or permitting legislatures to override adverse court decisions.
 

 

[Rippounet]

On 10/02/2018 at 3:41 AM, OldGimletEye said:

I know I've beat this drum about a billion times. But, the main problem is that policy rates are extremely low. If the FED rate was at 6% like it was back in the 1990s the current bubble wouldn't be so worrisome. But, the low FED rate is what makes the current bubble a bit worrisome, plus paired with the insane political environment, brought on by you guessed it the conservative clown crew. They were incapable of dealing with the last ZLB episodes, and it doesn't seem they have changed their views much, although they have been consistently wrong over the last 10 years.

I kind of understand that, but I'm also interested in how we got here, because it might affect our understanding of the current situation. And although I'm probably (certainly) simplfying things too much, I'm tempted to think that the policies of the last decades go a long way to explain it:
- Wealth inequality: by keeping salaries low as well as downsizing, corporations increased their profits that were mostly paid out in dividends. This hurt the middle-class big time (when we look at the changes in the share of income for the different types of households). These dividends were in turn used by private investors.
- Neo-liberal public policies: by lowering taxes, US government gave extra billions to large corporations and billionaires, to be used for investment.
With inflation being kept low, it seems to me that these two factors converge to inject a shitton of money in the global economy. That seems to be what some people call the "politics of supply" these days, by opposition to Keynesian "politics of demand."
But of course, such "politics of supply" can only do so much, because, well, you still need demand to justify supply. So you get massive investments in the financial sector, which leads to asset mispricing and bubbles. And while bubbles have been fairly visible to everyone, I wonder if the same can be said about asset mispricing. Because the Dow Jones went from about 2000 in early 1982 to 16,000 in late 1999. You've got to wonder what the actual growth of US corporations looked like, because it can't possibly have been multiplied by eight... So what is the Dow Jones supposed to represent exactly?
All this is a long-winded way of saying that even if the FED rate was higher, the ability of central banks to affect the economy may be seriously limited by other economic factors. There may already be too much money in the system and too little demand - at least in Western countries.
This would also explain two tendencies of the neo-liberal economy: the explosion of derivative financial products and the burning desire to privatize everything (education, justice, healthcare... ). All this money needs to be invested somewhere. In order for growth to be maintained, new avenues for investment need to keep appearing. But since the purchasing power of the masses has been shrinking for decades and will continue to for the foreseeable future, doesn't this make the entire system remarkably vulnerable to increasingly bigger crises?

Again, I probably don't understand this shit and over-simplify everything...

[Mr. Chatywin et al.]

I try to always avoid making fun of people because of how they look, but sometimes you see something you can't unsee. Marc Short, WH Director of Legislative Affairs, looks like the real life version of Dr. Finkelstein, the mad scientist from A Nightmare Before Christmas who created Sally. The dude always gives me the creeps.