In general, for much of the fall, there have been plenty of encouraging signs of a growing economic recovery. Economic growth, job creation, consumer confidence, housing, and auto sales have all pointed in the right direction, raising hopes of a more robust 2013.
But as the year draws to a close, the skies are not without storm clouds. The latest ISM manufacturing figures were released this morning, and they were not encouraging. What's more, Neil Irwin reports that GDP figures for the 4th quarter keep getting revised in the wrong direction.
The bottom is falling out of economic forecasters' expectations for U.S. economic growth in the final months of 2012. And if some of the more bearish estimates prove accurate, it will be the weakest rate of growth since the start of 2011.
Macroeconomic Advisers had been projecting a 1.4 percent annual rate of GDP growth in the fourth quarter. On Friday it revised that estimate down to 1.1 percent Friday morning–and then again to 0.8 percent Friday afternoon. J.P. Morgan slashed its number to 1.5 percent from 2 percent. Tom Porcelli of RBC cut his estimate all the way from 1 percent to 0.2 percent.
There are a variety of factors contributing this, including the effects of Hurricane Sandy, but the consensus seems to be that the U.S. economy will enter the new year limping along.
And that leads to a larger political question that's gone largely overlooked: are policymakers in Washington stuck in the wrong conversation?
Fiscal talks are, of course, very much on the minds of the political world, as Congress and the White House debate how best to tackle debt reduction. But the nature of the debate is focused around austerity measures of one form or another, in order to prevent more sweeping austerity measures from kicking in automatically at the end of the month.
And the point of an austerity agenda is to take capital out of the economy, deprioritize growth, and focus on deficits. Is it too late to suggest policymakers forget about debt reduction and start taking economic growth seriously again?
There is some precedent for this. Two years ago at this time, Republican lawmakers said they feared a debt crisis, but in reality, their principal concern was over extending Bush-era tax rates. Eventually, GOP leaders struck a deal with the Obama White House -- Republicans would ignore the deficit to get what they wanted (extended tax breaks) and in exchange, Democrats could ignore the deficit to get what they wanted (a payroll tax break and extended unemployment benefits). Collectively, both sides agreed that reducing the deficit just wasn't especially important.
And two years later, it's still not. The United States can still borrow easily; interest rates are low; and inflation is practically non-existent. By some measures, foreign investors will pay us to borrow their money, which Washington can then invest in job creation.
To his credit, President Obama's first official bid in the fiscal talks included the right priorities -- jobless aid, infrastructure spending, etc. -- but his plan was still a debt-reduction offer, which made it a progressive approach to a conservative goal.
It's not exactly on the table, but there's no reason we couldn't see a resolution to the current standoff that's similar to the one we saw two years ago. I'm certainly not privy to the behind-the-scenes negotiations, but I wonder what would happen if congressional Republicans offered Democrats meaningful economic stimulus to boost growth and create jobs, in exchange for another extension of Bush-era tax rates and a promise to get around to austerity measures at some point down the road?
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I think the President's offer is right where it should be, and the GOP can respond however they want.
There are pro-growth ways to handle the deficit, and ways that are not so pro-growth. Frankly, continuing the Bush tax cuts for millionaires is not high on the list of pro-growth policies.
Further, Obama needs to set precedent here which will be important for the next 4 years. The fiscal "slope" is nothing to be feared, and if anything the R's are more afraid of it than the D's. So take it or leave it, Boehner. Or at least make a counter-proposal.
Otherwise, we'll talk again after the Inaugural.
Steve,
I don't beleive that the Republicans will never trade an extension of the Bush tax cuts in exchange for a stimilus package - NOT without "entitlement" (earned benefit) cuts, too.
They, and the DC Village PunTWIT People, want their pound of flesh, AND they want buckets of blood.
It always strikes me that people talk about the amount of capital in the economy but they never talk about where it actually "Is".
A lot of it is tied up in personal fortunes, tax shelters and any number of other schemes designed to keep it from going back into the market.
That is what makes the whole talking point about "Job Creators" mythical. Truly there are people with Capitol to spend and invest out there but they simply don't. If they did we would have had a far more robust recovery a lot sooner.
These men and women like to play at being like the robber barons of old without the smallest degree of the "Nobles oblige" toward the country or its people that made those fortunes possible.
Plus, the robber barons of today have figured out a way to make record profits in an anemic economy. Their primary objective is to protect those profits, not to improve the economy for all.
Exactly. Henry Ford made a ridiculous amount of money by making sure that all his people made Enough money to buy the things they were making.
These people don't want to "Make" anything anymore they only want to Sell stuff, and most of it is absolute crap and counting on people not to notice.
Expecting Congress to ever "get it" is a fool's errance. Mark Twain had it right 140 years ago: "Consider a congressman, then consider an idiot. Ah, but I repeat myself."
As to the morons who can pass the IQ test low enough to become Villagers, one need only look at Rome in the terminal stages of Empire to see a similar situation. I think Fellini would have a hard time doing a "Washington Satryicon".
Gad, I get so depressed when I see comment threads like this.
Puhleeze. Do you actually think people with money stuff it in the mattress, or bury it out back in a mason jar. Really? No, they put it in a bank, or in stocks and bonds, or whatever else, available for use by anyone with an idea and a track record.
Right. They don't want to make more money by spending and investing because? The people you have labeled the greediest on the planet for some reason don't want more money? Does that make sense? Did they get religion or something?
Absolutely true. People do not go into business to take care of the economy for all. They go into business to make money for themselves. That used to be considered a good thing.
Lastly, do you consider your grocery store to be a "great vampire squid"? How about your optometrist, or your landscape guy? Apple maybe, or Amazon, or Boise Cascade?
This general animus toward business is wrong. Yes Goldman sucks, but lumping in every business in with them is unproductive and encouraging business to hoard. I mean really, when was the last time you into a hiring interview and told the employer he was a robber baron and generally despicable? And you wonder why hiring is slow?
If you don't know the difference between Goldman Sachs and the corner grocery, that might explain the Republicans' economic "policies"...
People aren't spending like they used to, after what Bush put us through. When he said, "shop" we had already made up our mind. " No", was the answer, the answer was mute. When you see our manufacturing start to blossom and grow, like the Adelveis, then we will shop. When the stores start to lower their prices drastically, then we will shop. When you see gas prices go down and groceries go down in price, then you will see us shop. When our bills start getting lowered, then we will shop. Right now, I'm more concerned about buying a stairway to heaven, more than anything else.
Until a basic understanding that peoples' purchasing power is what drives an economy, we are doomed to slow growth. The wealth hidden offshore needs to be repatriated immediately. Tax the hell out of it unless returned at current rates now. When the money is back in the states it can be taxed based on how much is spent, the more invested in wages, benefits and research, the lower the rate. Having billions hidden may make someone feel like King Midas, but how much wealth is necessary to feel comfortably wealthy? When is it greed for greed's sake?
The longer this drags on, the more I'm of the opinion that we shouldn't do anything. Let the taxes go up, let the sequestration kick in, let GDP grow however it grows, 2% or whatever. It will force the economy, real estate, banking, interest rates, and job growth to resettle by itself and create a long term stability. And it will force the idiot government to come up with some sort of long term solutions to debt, deficits, trade imbalances, budgets, etc.
If, somehow, the government and agencies figure out how to stimulate a 5, 6 or 8% GDP growth, all that will do is create another bubble that will pop in 3, 5 or 10 years and we will be right back where we are today, with the same problems, and no solutions.
John, you speak a certain truth that resonates at a deeper level.
The politicos and punditry skate on the surface where they either don't see or won't admit to seeing a deeper truth - after all, there's no money in deep truth (or in any truth for that matter).
The best thing that can happen is we just go off the cliff. Government is too big, the debt too high. "Nobody" wants to be the ones to take the cut, and nobody wants to take the blame for making them.
So, let it go off the cliff. CHOP CHOP CHOP! The bill has come due. No more make pretend, time to start taking our medicine. The longer we put it off, the worse will be the consequences!
If you haven't seen it yet, take 2.5 minutes (that's how long the video lasts) and watch Robert Reich at this link: http://front.moveon.org/dear-democrats-please-stick-to-these-8-principles-from-robert-reich/?rc=fb.fan. And keep the heat on your Congressmen, and encourage your friends to do the same. It's our country's economic health that's at stake.
Definitely! Why anyone would not invest in infrastructure, when so much of what we have is due to investments that are now 50 or more years old, just boggles the mind. And education, one of the best investments this nation has ever made was the GI Bill after WWII; the ROI was incredible. Dr. Reich's eight points are right on target.
Krugman should replace Gietner, look at the EU as a model of austerity (double dip) and get ready for asphalt roads being plowed under because gravel is so Paul Rayn.
The Do Nothing Congress (worse since 1947) should do what they do best: Nothing.
Let ALL the tax cuts expire, and return us to the halcyon days of Clinton.
When the economy improves, both sides can say "See? We take full credit for our wise governance!"
Actually, they're the worst ever, not even up to the 1946-48 standard.
If the economy is cooling, then construction firms are hungry and it is a good time to get necessary work done.
For example, there are thousands of condemned abandoned buildings owned by the City of Baltimore. Tearing these buildings down does not require significant planning or environmental impact statements and can be done relatively quickly. Doing so would improve neighborhoods by removing crack houses and other dangers and would employ entry level construction workers.
Such a program would likely be applicable to Philadelphia, Richmond, Cleveland, Detroit, and many other older cities. Money spent removing city-owned blight would improve the business climate in these cities and more than pay for itself.
If we are wealthy enough for the GOP to propose increasing the defense budget by 20% a year and build more blue-water ships for the navy that does not want them, then we are wealthy enough to remove dangerous buildings that have been dumped on our cities by the private sector.
I strongly disagree with the idea of this last line - "I wonder what would happen if congressional Republicans offered Democrats meaningful economic stimulus to boost growth and create jobs, in exchange for another extension of Bush-era tax rates and a promise to get around to austerity measures at some point down the road?"
As someone who works in the investment industry, I have had to listen to people drone on and on about the crippling "uncertainty" to the point that the word makes me want to throw up. Generally I think those people are full of it (when has our economic outlook ever been "certain"? During the Depression of the 30s? WWII in the 40s? Threat of nuclear annihilation in the 50s and 60s? Vietnam and stagflation in the 70s? The rise of Japan and collapsing Soviet Union in the 80s? But I digress...). HOWEVER, I think they have a point on one thing - running the entire US government on a series of year-to-year measures is no way to manage an economy. For all the wailing and gnashing of teeth that would take place in some circles if taxes go up, if the issue is finally put to bed for the next 8-10 years then people can at least start to plan for it and move on to more important matters like growing the economy. That's why the President needs to get this done NOW, when he is in his strongest position after winning re-election, and not do just another one year extension. Another short-term solution only gives those on the right the excuse they need to keep obstructing and stalling, in the hopes that in a year's time they can try to win the battle again.
America was given an economy lobotomy by the GOTP. Amercia* needs some stem cells..
Just a few thoughts, in 2009 the GOTP ran on a platform of jobs, jobs, jobs - that is until they got the gavel then it became - wombs, wombs, wombs!
Two, "our economy" has shifted from being "producers" to consumers - Americans cannot continue to spend money that WE don't have with our shrinking pay-checks so maybe "the conversation" that needs to be had is when do WE (Congress) actually start getting serious about ensuring job growth in this nation!
Third - the rethugniCons seem to have a price tag for everything and yet they know the value of nothing! America is not the FIRE SALE, and WE have to stop pretending that everything has a price - we have infrastructure that needs to be replaced, we have to educate future generations and we're currently 17th in the world, we need investments into R&D, and then there is alternative energy that must be developed!
The mindless piddling, whining and divisive blather on the right is neither helpful or necessary and at what point are these moronic prostitutes going to get serious about anything other than protecting their Congressional seats? When the GOTP are actually educated about how the government works, what their jobs are, and are willing to work for ALL Americans and NOT just party and the 2%, then I suppose we can talk; in the meantime the President needs to stay exactly where he is policy wise and let the GOTP get themselves out of the mess that they've created!
what gives the right "the excuse " to obstruct this failures agenda at every opportunity is.....HIS RECORD. Between the unemployment rate, DOUBLE the number of Americans on foodstamps today and today it was announced that American manufacturing is at it's lowest point since this failure has taken office... WHAT about his record says "he deserves a free hand on the economy"?
Blaming the current President for the effects of the economic collapse caused by the previous President is like blaming the ER doctor for wounds resulting from your drunken driving.
Scott, you lost and you lost badly. The American people want to give Obama's approach a try. It was in all the papers. Our reelected President is going to be President for the next four years. Get over it.
Know how D-E-M-O-C-R-A-C-Y works? Put it this way, champ...popularity contests don't actually work. Governing is 3 branches...and you need ALL of them. This president has failed badly. No free hand "because he won the popularity contest". * Sheesh * And after FOUR YEARS of failure..this boob owns it. NOBODY ELSE.
Scott, How would you suggest Pres. Obama should have gotten his America Works bill through Congress? Is there anything that he could have done that would have made the Teapartiers happy and that wouldn't have resulted in the destruction of the bill?
The answer is obvious, so now let's discuss who to get rid of in order to improve the economy.
There was already one "job's bill" passed. What was the results? it lined the pockets of Governors of Dem states. Another one when the first did nothing? How about we propose LEGISLATION that actually HELPS American business and not pass more and more EPA regs that put more and more Americans out of work? Manufacturing at it's lowest point since this guy took office and business leaders themselves blame this President for what has transpired these last 4 years.
Doctor, I still have scars from crashing into a tree while drunk four years ago. After all this time, they must be your fault!
BTW, history suggests recovery from a major financial crisis takes an average of ten to twelve years. This is why there should be a firewall between the banking industry and Wall Street.
That we are going to have a recession sometime in the next couple of years is as certain as the sunrise. What we need is a long term plan to reduce the deficit while growing our economy. The President has proposed one. The Republicans are refusing to counter. This isn't hard, let the Bush tax cuts expire. Cut the defense budget and other programs dramatically. That will throw us into a recession early next year, but we will be able to stimulate our way out of it by cutting taxes on the middle class and furthering healthcare reform.
You want a tax plan everybody should love--how about freeing the 1.8 trillion in after tax corporate profits by encouraging dividends. Tax dividends at ordinary income rates but make them deductible at the corporate level. Remove the "they are being taxed twice" excuse.
So....tax profits twice (Not like American Business is on it's last leg now) cut Defense spending (Not Social benefits although defense IS in the constitution) The other party says NO..Now, let's look to "Compromise" Benefits without being reformed will not survive without reforms and this President's business attitude for the last four years has been a dismal failure and American manufacturing output is at it's lowest point since this guy took office.....WHO should "Compromise"?
Well, at least one that people have a hard time objecting to publicly: how about funding the IRS to actually collect taxes owed? Right now about $300 billion a year are not collected, largely due to inadequate funding for enforcement.
Every dollar spent on income-tax enforcement results in more than $10 in extra revenue. Give the IRS another $20 billion and the net improvement in revenues is a ten-year figure of $1.8 trillion dollars. All with no changes to current law, no new taxes.
That's half way to the $4 trillion "grand bargain" for nothing but enforcing the laws we already have.
When you see a politician oppose this, just remember who he's representing: tax cheats. Not that he's going to admit it, of course.
scott
Welfare appears twice in the Constitution. Once in the Preable "Promote the general Welfare" and in Article 1 Section 8 clause 1:The Congress shall have Power To lay Taxes, Duties, Imposts and Excises, to pay thew Debts and provide for the common Defence and general Welfare of the United States"
The definition of Welfare in the 18th century was "Health, happiness and prosperity" These Social program do just that, promotes health, happiness and prosperity. Please also note that Congress has the power to lay taxes. That's their job. What Norquist proposes with his tax pledge is un-Constitutional. If had ever really read the Constitution you'd know that. I have been studying the Constitution for over 20 years so I am little more familiar with it than most folks.
Really you should read up on the Constitution it's a really remarkable document.
Oh I forgot to point out that Article 1 Section 8 Clause 1 states that Congress has "the power... to pay the Debts". In other words it's Congress's obligation to pay the debts of this country. That's what it was empowered to do under the Constitution to do. Not paying debts would be un-Constitutional. Hey Republicans do you hear that?
That whole section (Article 1 Section 8) needs to be studied further today. Especially points 1, 2 and 17
http://constitutionus.com
We really need to study our Constitution more to understand the events. Especially now. "Regulate Commerce" is also in there.
I recommend a reading from time to time.
Everybody keeps saying the right is unwilling to work towards compromise. But in the same paragraph talk about standing firm and do nothing by letting the bush cuts expire. Seems incredibly hypocritical. Obama said Bush was unpatriotic for the deficit then racks up even more than he did. Seems incredibly hypocritical. Obama ran on the promise of transparency but relents to let us much of anything. Seems incredibly hypocritical. etc. etc.
So tell me, How is that Leadership?
And yes i fully expect hate, intolerance and personel attacks for posting here, its OK. You cant offend me.
The President put forth a plan, then Boehner laughs and scoffs with nothing but vague numbers to put forward. We had to presume what they want is what Ryan put forth.
It's pretty telling when they just criticize the President, but not offer a counter.
I would ask the same question. What kind of leadership is Boehner showing by saying he is flabbergasted and that they are nowhere, when the was a plan there and no counter.
I call it MISleading to say the President needs to lead, when he already put it on the table and the Rs say let's walk away and figure out how to pin our inaction of the President.
So, there we have it. Nowhere? No jobs bill, not even a veterans jobs bill can go forward.
BLOCKED by the idiotic requirement for 60 votes!
http://thecaucus.blogs.nytimes.com/2012/09/19/veterans-jobs-bill-blocked-in-the-senate/
It had 58 votes! Some Republicans!
Jobs is the first priority NOW, the economy would recover and revenues go UP with more people on the job and higher wages.
http://www.politicususa.com/real-job-creator-obama-doubles-bushs-jobs-numbers.html
So no, I'm not going to attack you. I am upset that there are avenues to better places, but we are unable to pass anything for the current ills in favor of something in the far off future and we argue over retaining low tax rates for wealthy people and putting lower incomes at risk NOW does not equate into this by those folks standing up for wealthy and leaving grandma to choose medicine or heat.
This is the thing I would like the Rs to understand. The debt was not going to be paid in full for ANY of this, not Ryan's plan either.
We need people to sacrifice, so tell us why Granny and Children must sacrifice more and not the wealthy.
They do not want to negotiate, only call the plan the President put forth a joke. Now they decide they have to put anything out there, but no specifics.
And Boehner says it is a status quo election. BULL! De NILE. They must not attempt to put this on the back of the least well off. The people did NOT vote for cutting Medicare, they voted for tax rate increases for upper income.
JOBS were reviled for 4 years, even though there was stimulus to keep jobs and the Senate just filibuster (read the GOP Blocked) the veteran's jobs bill.
They cannot blame this on Ds. They again stick fingers in the eyes of the voters in order to rescue the high income tax rates. This is not going to hurt the uber-rich. But middle poor, sick and elderly would feel pain-again?
The Rs do want to play politics with the least able to pay. We've seen higher costs and jobs cutting by those who HAVE low tax rates already.
How do they continue to argue their phony trickle down arguments?
Bear in mind that to the PoG, "economic growth" means combining deregulation and high-end tax cuts with austerity.