The Ticker Quick Views on Politics, Economics and Finance
In the past few days, I have read numerous disquisitions on what John Maynard Keynes meant when he said, "In the long run we are all dead." Economists, journalists and bloggers have rushed to defend Keynes against accusations that his childless state somehow made him disregard the long run in favor of short-term stimulus policies.
I'll leave "long run" to the etymologists. What struck me about the outpouring is just how many advocates there are for more government spending. When the economy is depressed, the government needs to borrow and spend so we have the means to spend, Keynes argued. It's that simple.READ MORE
Yesterday, in an interview with Bloomberg Television, House Speaker John Boehner warned that the U.S. government must balance its budget. After all, he said:
We have spent more than what we have brought into this government for 55 of the last 60 years. There’s no business in America that could survive like this. No household in America that could do this. And this government can’t do this.
It’s hard to think of better evidence for the sustainability of budget deficits than the fact that we have run them for 55 of the last 60 years. If our fiscal practices haven’t caught up to us after 60 years, when will they? Or does Boehner take a David Stockman-like position that the last several decades of American advancement have in fact been a ghastly failure?READ MORE
Yesterday, the New York Post broke the story that Chris Christie covertly had a weight-loss procedure known as gastric banding in February.
The New Jersey governor, and possible 2016 presidential contender, said, “I know it sounds crazy to say that running for president is minor, but in the grand scheme of things, it was looking at Mary Pat and the kids and going, ‘I have to do this for them, even if I don’t give a crap about myself.’”READ MORE
The Senate Judiciary Committee will begin writing the immigration-overhaul legislation today. The measure is likely to clear the panel, without modifications, in the next two weeks.
There is potential subplot, a narrative worthy of Hollywood. That is the contest, with implications for national Republican politics, between two freshman Cuban-American senators: Marco Rubio of Florida, a member of the bipartisan gang that assembled the draft bill, and Texas' Ted Cruz, a member of the committee. Both are solid conservatives and both have their eye on the 2016 Republican presidential nomination.READ MORE
How much bigger would a large U.S. bank's balance sheet look if it had to follow the same accounting rules that European banks do? We're starting to get a peek.
Of the six largest U.S. banks, so far only Citigroup Inc. and Morgan Stanley have filed their first-quarter reports with regulators. Citigroup showed $1.88 trillion of assets as of March 31 using U.S. accounting standards, which let companies show "net" figures on their balance sheets for derivatives and certain other types of financial instruments.READ MORE
You could say Jamie Dimon is the Houdini of Wall Street, wiggling out of one embarrassing situation after another. But can he maneuver out of his most recent tight spot?
Two companies that advise shareholders on corporate governance are supporting proposals to oust some of JPMorgan Chase & Co.'s board. They also favor splitting Dimon's roles as chairman and chief executive officer into two.READ MORE
In Silicon Valley these days, the only thing more valuable than Bitcoins is an H1-B visa -- the document that allows skilled, non-immigrant foreigners to work in specialized industries, particularly in high-tech. The lack of qualified homegrown talent has caused plenty of hand-wringing in Washington over the need to attract our best and brightest students to the so-called STEM fields (science, technology, engineering and math).
But if nurturing future scientists and mathematicians is so crucial to our nation's future, someone forgot to tell the folks down in Bartow, Florida.READ MORE
Matthew C. Klein
It's intellectually immature to critique an idea by going after the person who came up with it, rather than the logic of the idea itself. That didn't stop Niall Ferguson, a distinguished Harvard historian, from implying that Keynesian economics could be explained by Keynes's homosexuality and lack of children. (Ferguson has since apologized "deeply and unreservedly" for comments "that were as stupid as they were insensitive.")
Regrettably, Ferguson isn't the only person to suggest that Keynes's analysis should be discounted because of his personal qualities. In 2008, N. Gregory Mankiw, the chairman of the Harvard economics department (and a senior adviser to President George W. Bush and Mitt Romney), wrote that "passing a larger national debt to the next generation may look attractive to those without children" before going on to note that "Keynes himself was childless."READ MORE
In a column last week I criticized Paul Krugman’s apparent belief that people who disagree with him -- let’s say about half the country -- are knaves, fools or sociopaths. I said his disdain was not just absurd but also politically counterproductive. Krugman responded to my “screed,” as he called it. His main point was that the disagreement over fiscal stimulus isn’t really a political disagreement at all. On one side, you have people who accept some simple, uncontested facts; and on the other, you have people too knavish, stupid or sociopathic to understand when those facts are patiently explained to them.
In particular, he argued, the debate over the fiscal stimulus has nothing to do with the proper scale and scope of government -- an issue on which he seems to concede (somewhat to my surprise) that reasonable people may disagree. Whatever you think about the proper scale and scope of government, he says, you should be willing to go for a big fiscal stimulus when interest rates are at zero and demand is lacking. This has nothing to do with values or ideologies.READ MORE
Since the release of the Oregon Health Study last week, conservative columnist Ross Douthat and liberal blogger Matt Yglesias have both written articles broaching the idea that the government should offer poor people more cash benefits in place of health benefits. Douthat argues more broadly for re-conceiving health insurance as something akin to homeowners insurance: a backstop against catastrophic losses, not a comprehensive package covering everyday expenses.
They might be right. But they are eliding a key reason that the U.S. -- along with every other advanced country -- has health-care policies aimed at providing people with coverage for both routine and extraordinary expenses. The Douthat and Yglesias plans would each make insurance against catastrophic losses universally available and provide redistribution from the rich to the poor, but they would do much less than Obamacare (or even the status quo) to redistribute from the healthy to the sick.READ MORE
Modern fiscal policy doesn’t work the way it did in the days of John Maynard Keynes and President Franklin Delano Roosevelt. When Roosevelt increased federal spending from 1941 to 1945, the money went almost exclusively to direct purchases of goods and services. Today, fiscal stimulus happens mainly through taxes and transfers.
Tax revenues fall automatically in recessions, and governments back that up with lower tax rates and/ or new credits and deductions. On the spending side, extra outlays on unemployment benefits and other transfers greatly exceed extra outlays on infrastructure and other purchases. This modern kind of fiscal stimulus is supposed to work by stabilizing disposable income. Stabilize that, the thinking goes, and you stabilize output and employment.READ MORE
To hear some conservatives tell it, the Republican Party's history on race relations is nothing to be ashamed of. Sure, Strom Thurmond and other racists switched from the Democratic to the Republican coalition at the very moment when Democrats were abandoning segregation and embracing civil rights for blacks. But that wasn't because of race. It was because of [insert something about "constitutional principles" and "states' rights" here].READ MORE
Bloomberg News reporters Liz Capo McCormick and Dan Kruger have an article out today: "Bond Buyers See No 1994 as Bernanke Clarity Tops Greenspan."
No one will take issue with the clarity part. Former Federal Reserve Chairman Alan Greenspan made an art form of obfuscation. Ben Bernanke, on the other hand, has elevated communication to a "policy tool." I will leave it to the reader to assess when too much is enough.READ MORE
In China, it’s often said that a person who commits fraud is “hanging out a sheep’s head to sell dog meat.” The meaning is wide-ranging -- and metaphorical. But recently, thanks to a stream of food scandals, the folk saying has begun to bear an uncanny relationship to the truth.
Last Thursday, China’s Ministry of Public Security announced that in February police arrested 63 people involved in selling rat meat mixed with mink, fox, gelatin, red food coloring and nitrates -- as lamb.READ MORE
Warren Buffett says he supports Jamie Dimon keeping his dual roles as chairman and chief executive officer of JPMorgan Chase & Co. And his remarks have been getting a lot of attention in advance of JPMorgan's annual meeting on May 21 in Tampa, Florida.
“I’m 100 percent for Jamie,” Buffett, 82, said in a Bloomberg Television interview on May 2. “I couldn’t think of a better chairman.” He made similar comments this morning on CNBC. (In my May 3 column, I made the case for why Dimon should give up the chairman's post.)READ MORE
In my column this week, I describe former Arizona Representative Gabrielle Giffords' new life as a gun-control advocate. There also was a Giffords in a previous generation, though only 20 of the 535 current members of Congress were serving then.
He was Jim Brady, the talented press secretary for the newly elected President Ronald Reagan. On March 31, 1981, a gunman shot Reagan outside a Washington hotel and injured several others, including Brady.READ MORE
Jonathan Chait pushes back against the claim that the Oregon Health Study has major policy implications:
The Oregon study does not raise particular questions about the efficacy of Medicaid; it raises questions about the efficacy of medical care in general. Measuring the impact of medicine is just really hard to do, yet almost nobody would volunteer to follow this frustrating fact to its logical conclusion and forgo the benefits of modern medicine.
That’s not the logical conclusion at all. Chait is right that the disappointing results from Oregon -- two years of Medicaid coverage did not demonstrate improvements in physical health compared with being uninsured -- say more about the value of health insurance in general than of Medicaid specifically. But there are a lot of ways to react to the finding other than ignoring it or deciding it doesn’t matter if people have access to medical care.READ MORE
After today’s good jobs report, my colleague Ramesh Ponnuru needles Paul Krugman: “So, I assume Krugman will now concede that market monetarism is working.”
Market monetarism, as advanced by Ponnuru and the economist David Beckworth, among others, holds that aggressive monetary policy is a sufficient force to smooth out business cycles. They favor aggressive monetary action and fiscal austerity, on the ground that monetary forces can offset any fiscal contraction.
If it hadn't been for yesterday's report on initial jobless claims, which fell to a five-year low, expectations for today's employment report would have been horrendous. Instead, they were just lousy.
With that in mind, the jobs numbers delivered a pleasant surprise. Non-farm payrolls increased 165,000 in April; the private sector added 176,000 jobs. March's 88,000 increase was revised up, as was February's, by a combined 114,000. With the exception of hiring for the decennial census in May 2010, the February increase of 332,000 was the largest since November 2005.READ MORE
First, there was "Lincoln," the Steven Spielberg hit about the political ingenuity of a man who was president 150 years ago.
Then, there was "Obama," the spoof at the White House Correspondents' Association dinner, about the man who is president now. ("I mean the guy's already a lame duck," Spielberg says in the clip. "So why wait?")READ MORE