Category: Economic Policy

Keep Your Politics Off Of My Economy

The Daily Escape:

Rachel Carson National Wildlife Refuge, Kennebunk, ME – January 2023 photo by Eric Storm Photo

From the WaPo:

“The economy posted another consecutive quarter of steady expansion between October and December, with economic activity increasing at a 2.9% annual rate. Consumer spending contributed to the strong fourth-quarter showing, especially given the slumps in large parts of the economy, including housing and manufacturing.”

The latest GDP figures show we have a resilient but slowing economy. Some of the slowdown is intentional, brought on by the Federal Reserve’s aggressive increases in interest rates as a way to control our high inflation. The Fed raised interest rates seven times last year, expecting that higher borrowing costs would lead businesses and households to cut back enough to slow the economy and curb price increases.

That’s happened in the real estate market, and to a lesser degree, in manufacturing. WaPo quotes Joseph LaVorgna, chief economist at SMBC Nikko Securities America:

“You may see [growth] and think the economy is out of the woods, but that would be entirely the wrong read….There are a lot of variables that are all pointing in the same direction: There’s a housing recession. Manufacturing looks like it’s approaching recession. We’re seeing weakness in temp hiring. And it’s doubtful we’ve felt the full effects of all of the Fed’s rate hikes.”

So Biden can take credit for an excellent recovery so far, but many major banks are still forecasting an economic downturn this year. As Diane Swonk, chief economist at KPMG says: (emphasis by Wrongo)

“Momentum has already begun to slow in response to rate hikes, but the bulk of the slowdown is yet to come….The Fed’s goal is to let growth stall out in 2023.”

So are we in for a bad downturn that will persist through the 2024 elections? It’s a possibility if we keep playing politics with the economy.

We need to let people know that inflation has been easing month after month while the unemployment rate has held steady at about 3.5%. The year-over-year change in the consumer price index peaked at just over 9% in June, and since then it’s fallen to just under 6.5%. Other inflation indicators like the producer price index (PPI) have trended lower from prior highs as well.

And the world’s biggest inflation scold, economist Larry Summers who has been saying for 2+ years that we need a deep recession to drive out high inflation is sounding less hawkish: (brackets by Wrongo)

“I still think it’s going to be hard…[but]…You have to recognize that the figures are better than somebody like me would have expected three months ago. It’s still a very difficult job for the Fed, but the situation does look a bit better.”

From prior experience, Larry knows how to prepare, cook, and eat crow.

Can the Democrats and Republicans get out of the way of our currently good economic growth? From Heather Cox Richardson:

“On Monday the Wall Street Journal reported that median weekly earnings rose 7.4% last year, slightly faster than inflation. For Black Americans employed full time, the median rise was 11.3% over 2021. A median Hispanic or Latino worker’s income saw a 4.8% raise, to $837 a week. Young workers, between 16 and 24, saw their weekly income rise more than 10%. Also seeing close to a 10% weekly rise were those in the bottom tenth of wage earners, those making about $570 a week.”

Overall, the economy seems to be on solid ground at least for now. But the average American probably doesn’t view it that way.

And who will the voter reward or blame in 2024? We’ve seen that the House Republicans want to hamstring Biden and the national economy by holding the debt limit increase hostage to budget cuts, possibly in Social Security and Medicare.

So the Dems countered by asking new Speaker McCarthy for a plan on what would be axed from the social services budget. Now, Roll Call is reporting that the GOP seems to be changing their strategy on the fly:

“House Republicans are mulling an attempt to buy time for further negotiations on federal spending and deficits by passing one or more short-term suspensions of the statutory debt ceiling this summer, including potentially lining up the deadline with the end of the fiscal year Sept. 30.”

They’re trying to time the engineering of a debt default crisis to coincide with the government’s new fiscal year, thinking this creates a “mega crisis” of default/government shutdown that will bring Biden to agree to the egregious spending cuts the MAGAs want.

But this should help Democrats. First, Democrats will be able to point to the MAGA cuts as being far outside the American mainstream. Second, the GOP reckless attempt at hostage-taking will be on display just as the election season ramps up.

Are the wheels of the Republican clown car already coming off?

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What’s The GOP Plan For Negotiating On The Debt Limit?

The Daily Escape:

Dream Lake, Estes Park CO – January 2023 photo by Rick Berk Photography

(Wrongo and Ms. Right send healing thoughts to friend and blog reader Gloria R.)

We’re all aware that House Republicans are refusing to lift the debt ceiling unless Biden gives them well, something? And Republicans still haven’t decided what they want. The GOP also wants a balanced budget, but they can’t say what should go, or what should stay.

From the WaPo: (Brackets by Wrongo)

“They [GOP] say they want to reduce deficits — but meanwhile have ruled out virtually every path for doing so (cuts to defense, cuts to entitlements, wiping out nondefense discretionary spending, or raising taxes).”

The fact that Republicans are up in the air about what to do highlights the likely Democratic strategy is against their threats about the debt ceiling. Again, from the WaPo:

“Sensing Republicans are on the verge of a blunder in their schemes to use the debt ceiling to hold the economy hostage and try to extract draconian spending cuts, the White House has developed a two-part response strategy.

Part 1: Lay out the simple argument that Republicans are recklessly inviting an economic meltdown even by talking about a possible default.

Part 2: Force House Republicans to put forward a plan on the table and watch as they struggle with the fallout.”

The Democrats along with Senate Minority Leader McConnell (R-KY) are daring Republicans to put forward a plan. Senate Majority Leader Schumer (D-NY) said:

“If House Republicans are serious about taking the debt limit hostage in exchange for spending cuts, the new rules that they adopted require them to bring a proposal to the floor of the House and show the American people precisely what kind of cuts they want to make….”

Everyone who follows politics knows that Republicans never take much interest in fiscal sobriety when their Party is in control. They agreed to raise the debt limit three times while Trump was in power.

It seems that Republicans are doing the Democrats’ job for them. They are asking for an economic catastrophe and seeking draconian cuts that their base doesn’t want.

Consider the Republican desire to reduce our deficits. They have pledged to balance the budget (that is, to have a zero annual budget deficit) within 10 years. But they haven’t laid out any plausible mathematical path for getting there. And of the current debt ceiling, 90% of it was committed before Biden took his job.

Some Republican House members want to cut military spending, an idea that both Speaker Kevin McCarthy (R-CA) and Rep. Jim Jordan (R-OH) are on board with. But others, including House Appropriations Chair Kay Granger (R-TX), have said defense spending cuts aren’t on the table. Rep. Michael Waltz (R-FL) said:

“We’ve got to get spending under control, but we are not going to do it on the backs of our troops and our military,”

Waltz thinks Republicans should focus on “entitlements programs,” such as mandatory spending programs like Social Security, Medicare, and Medicaid. But the bi-partisan popularity of these programs makes them hard to cut.

And last Sunday, Rep. Nancy Mace (R-SC) was asked to name one thing she was willing to suggest as a spending cut. She instead stated things she wouldn’t put on the table:

“Well, obviously no cuts to Medicare or Medicaid or Social Security….That’s a nonstarter for either side.”

Wrongo has repeatedly suggested tax increases which would help lower deficits, but Republicans have ruled that out.

Instead they’ve changed the House rules so tax cuts will be much easier to pass, and tax increases harder to pass. The House’s rules package now says that any increase in taxes would require a three-fifths vote (60%) rather than a simple majority as previously.

They’ve also proposed doing away with income taxes, payroll taxes, estate taxes and even the IRS itself in favor of a supersized sales tax that would provide most revenue to the government. Republicans would substitute a 30% sales tax on all purchases and in exchange, do away with income, Social Security and Medicare taxes.

That means workers would keep the gross amount of their paychecks. But it also means that buying everything from groceries to automobiles would be hugely more expensive. It also provides a big tax cut for the wealthy and businesses.

The result is a smaller tax burden for the highest earners and a bigger one for people in the middle.

Once you reject trimming entitlements or defense spending and bake in the cost of the GOP’s proposed tax cuts, you’re left with an additional $20 trillion hole in the Federal budget over the next decade.

OTOH, the White House is expected to release its detailed budget in early March. It will build on budgets it has released previously. Republicans want Biden to negotiate on what to do about money we’ve already spent.

Try doing that with YOUR creditors.

 

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Monday Wake Up Call, MLK Jr Day – January 16, 2023

The Daily Escape:

It’s MLK day, so let’s talk about a topic that was near to his heart: economic inequality. Since 1980, economic inequality has been increasing between the top 1% and the bottom 90% of Americans. It’s become so great that today, America now faces the same level of economic inequality that existed before the Great Depression.

Here’s a chart from Elise Gould and Jori Sandra of the Economic Policy Institute (EPI) showing the percentage change in annual wages by income group for the last 40 years:

From the EPI article: (emphasis by Wrongo)

“The level of earnings inequality that existed in 1979 could have simply continued…to today. Instead, we have seen a growing concentration of earnings at the…very top of the earnings distribution, while the bottom 90% has experienced meager gains. Wages for the top 1% grew more than seven times fast as wages for the bottom 90% between 1979 and 2021. The top 1% now amasses a record share of total earnings, while the bottom 90% share of earnings has hit a historic low.”

Slow growth in real (inflation-adjusted) hourly wages for the vast majority of workers has been a defining feature of the US labor market for most of the last 40 years. Only for about 10 years after 1979 did workers see consistent positive wage growth: in the tight labor market of the late 1990s and in the five years prior to the pre-pandemic labor market peak in 2019.

While some low-wage workers have experienced high wage gains after America reopened from Covid, the truth is that most haven’t even kept pace with where they were in 1979.

Today is Martin Luther King Day in America. We mostly celebrate Dr. King’s birth rather than acknowledging what he was arguing for when he was killed. His focus at the end was on both economic justice, and voting rights. Perhaps more than any other leader in American history, King could see the different strands of political and social injustice. He was able to tie them together to form a coherent narrative, one that was capable of leveraging dissent for concrete policy change.

Those were the enduring lessons of Dr. King’s life.

There’s less than three months between the observance of King’s birthday and his death. The way each is recognized by politicians reveals the contradictions in his legacy. Most politicians extol the virtues of racial equality, while most ignore King’s criticisms of economic injustice.

From his April 30th speech in Atlanta: (emphasis by the Wrongologist)

“A true revolution of values will…look uneasily on the glaring contrast of poverty and wealth with righteous indignation. It will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, ‘This is not just’
this business of…injecting poisonous drugs of hate into the veins of peoples normally humane….cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense
than on programs of social uplift is approaching spiritual death.”

As the EPI report above shows, over the last four decades, policies promoted by the GOP have reduced the opportunities for most workers to achieve wage growth at rate similar to the top 10%.

Time to wake up America! Develop your narrative, one that fights against economic injustice and for voting rights. Add any other issues that are pertinent to you. Take your narrative to your neighbors. Then work to get out the vote.

To help you wake up, watch “People Get Ready”, a Curtis Mayfield tune that foretold the turning tide in the battle for racial equality. It topped the R&B charts after its 1965 release by The Impressions. It’s been covered by scores of artists, including Bob Dylan, Bruce Springsteen and by Rod Stewart and the late Jeff Beck, who died last week. Early in their careers, in 1969, Beck and Stewart performed together in the Jeff Beck Group. Here’s Beck’s official music video for “People Get Ready” featuring Rod Stewart:

Jeff Beck was one of one as a guitarist. There was no one better. He had the mindset of a jazz musician playing blues rock. His guitar sound wasn’t anything like traditional jazz guitar. He didn’t cut his teeth playing the old jazz standards, but he could improvise something fresh every time. OTOH, Wrongo didn’t love Beck the recording artist.

Rod Stewart has a secret hobby; he builds model trains. He would take his trains on tour with him, requesting an extra room so he could work on them while staying in hotels. Stewart recently unveiled his 1,500 square-foot replica of post-war Chicago and New York railway systems that took him 23 years to build.

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Could A Discharge Petition Force The House To Vote On A Debt Ceiling?

The Daily Escape:

Cold morning on the Snake River, Grand Teton NP, WY – January 2023 photo by Laura Phelps Sundria

We haven’t written about discharge petitions in a few years. But with the likely control of much of the House’s agenda by the Freedom Caucus, they may become important. From the WSJ:

“Democrats and some centrist Republicans are in early, informal conversations about dusting off a rarely used parliamentary procedure that could force a vote to raise the nation’s borrowing limit, ahead of a showdown in coming months over government spending. The process, known as a discharge petition, requires 218 signatures, regardless of party—a majority of the House—to dislodge a bill from committee and move it to the floor.”

The tactic is seen as a way to potentially circumvent efforts by House GOP leadership and the Freedom Caucus to block a debt-ceiling increase. Congress must raise the debt ceiling to allow the Treasury Department to issue more debt to pay for existing US government financial obligations. At stake is the government’s creditworthiness, which also undergirds much of both the American and global financial system.

A default or even the expectation of a default on the US debt, could trigger a lowering of the US credit rating, raising our government’s borrowing costs for years. It could also bring financial panic or tip the economy into a recession. More from the WSJ:

“…McCarthy reiterated Tuesday he wants to use the debt ceiling as leverage to cut spending. ‘This is our moment to change the behavior to make sure, that hardworking taxpayer, that we’re not wasting their money,’ he said on Fox News.”

Playing politics with the debt limit is stupid. Hold that thought and read this from Ryan Grim at the Intercept: (brackets and emphasis by Wrongo)

“When the House Republicans enacted new rules for the 118th Congress on Monday [they included a rule] that preserves the traditional right of rank-and-file members of Congress to bypass House leadership and put legislation on the floor directly if they obtain the signatures of a majority of the chamber. This opens a handful of legislative opportunities for Democrats, despite Republican ideological cohesion.”

He means a discharge petition. Normally, the House Majority Leader sets the floor schedule, in collaboration with the House Rules Committee, but a discharge petition can automatically pull a bill from committee and move it to the floor. Since Democrats currently hold 212 seats in the 118th Congress (one is vacant), if they can find six Republican votes, they could bring a bill to the floor. For most of the Democrats’ agenda, six opposition votes might be a high hill to climb.

But a discharge petition to raise the debt ceiling is one tool that could work. It would give any like-minded Republicans a route around their own leadership and could be the way the House votes to avert a financial crisis (assuming Democrats could find six Republicans who are unwilling to risk a US government debt default).

That may be possible since there are 18 House Republicans who were elected last fall in districts Biden won in 2020.

If a discharge petition is to be used as a workaround for the looming debt crisis, Democrats would have to move fairly quickly. The rules to bring a bill to the floor of the House require that first, the bill would have to be introduced and referred to committee, according to House rules and precedents. Then 30 legislative days have to pass. A legislative day is one in which the House is in session and then adjourns.

If 218 signatures are collected, an additional seven legislative days need to pass, at which point a motion to discharge the bill would come to the floor on either the second or fourth Monday of the month.

Any motion to discharge filed in February or March ought to be ready for a floor vote by summer. Although the Treasury Department hasn’t given an exact date when default will occur, the expectation is that it will occur in the summer.

Discharge petitions have been successful in the past. It has played a role in shaking loose some historic pieces of legislation, including the Civil Rights Act of 1964 and Equal Rights Amendment in 1970. More recently, a successful petition in 2015 reauthorized the Export-Import Bank, which the Republican House majority adamantly opposed.

We’ll see if McCarthy will stand up to his cobbled together majority and bring a clean debt limit bill to the floor. If not, we’ll see if there are at least six Republicans in the House who have backbones and love their country.

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Monday Wake Up Call – December 12, 2022

The Daily Escape:

Oak Creek in snow, Sedona, AZ – November 2022 photo by Ray Redstone Photography

What is it with our national politicians? There are only a few days left for the House and Senate to increase the country’s debt limit, but both Parties have been screwing around, and now it looks like they may punt the problem to the incoming Congress.

From the NYT:

“Congressional leaders have all but abandoned the idea of acting to raise the debt ceiling this month before Democrats lose control of the House, punting the issue to a new Congress when Republicans have vowed to fight the move, and setting up a clash next year that could bring the American economy to the brink of crisis.”

The plan had been for Democrats to act during the lame-duck post-election session to increase the legal borrowing limit. That would take advantage of the Dems’ final month of control of both Houses of Congress. It would head off a pissing contest with Republicans when they take over the House in January. Republicans have threatened to block the increase once they are in charge of the House. They plan to hold it hostage until the Democrats agree to substantial cuts to domestic spending and Social Security, Medicare, and Medicaid.

There are several problems here. The debt ceiling which the US will reach sometime next year; the expiration of the last stopgap funding bill that expires on Dec. 16; and passing an overall budget for the current fiscal year.

The Dems had planned to attach a series of other priorities to the big funding package, including the reform of the Electoral Count Act (ECA), a critical reform that helps prevent election denier shenanigans in 2024. On December 3, Wrongo warned that this was a high risk gambit: (emphasis by Wrongo)

“…the Democrats need Mitch McConnell and other GOP Senate leaders to agree to attach ECA reform to a spending bill and enlist the 10 GOP Senators to support it. That means the GOP controls whether this bill is enacted.”

Now we’re hearing that the leadership of both Parties can’t get to an agreement on the big package. More from the NYT:

“Republicans and Democrats remain at odds over how to split funding between military and social programs. Talks are set to continue through the weekend ahead of the Dec. 16 deadline, though aides said lawmakers could pass a one-week stopgap bill to give negotiations additional time.”

So America’s Christmas present from Congress will be no Electoral Count Act reform and no new budget, and no debt ceiling increase. Instead, we’ll get another Continuing Resolution that will fund the government until early in 2023 when the Republicans will try once again to toss the US credit rating off a high cliff with their far Right ideological theories on US government debt.

Under the last debt limit increase passed late in 2021, the federal government can borrow $31.381 trillion. Total national debt has been slightly above that level, but since a small portion of the debt is exempt from the debt ceiling, we’ve stayed in compliance. As of last week, total debt subject to the debt limit got as close as $31.345 trillion.

The consequences of failing to extend the debt limit are immediate and bring great risk. For example, it could force the government to choose between paying Social Security checks or paying the interest due on the country’s debt. That happened in 2011, when Congressional Republicans pressured President Obama to accept similar spending cuts in exchange for raising the debt limit.

That standoff led to downgrading the credit rating of the US. It rattled American investors and the US economy. This time, it could have global economic implications, given that the world is facing a global recession.

Before you say: Well, these birds learned this lesson back then, so they surely will make a deal this time. Consider that Goldman Sachs reports that less than a quarter of Republicans and less than a third of Democrats who will serve in the House in 2023 served there in 2011.

Time to wake up, Congress! Sure, some of you are very old, and want to go home for the holidays. But we pay you to fix things, not to make them worse. Schumer and Pelosi should make them all stay in DC until they vote on what the country needs.

To help them wake up, watch, and listen to a live version of the Allman Brothers’ “Midnight Rider” with Vince Gill, Gregg Allman and Zac Brown from a 2014 performance at the Fox Theater in Atlanta. One of the wonders of live music is what happens when artists collaborate in a live setting:

We’re also seeing Chuck Leavell on keyboards and Kenny Aronoff on drums.

Sample Lyric:

And I don’t own the clothes I’m wearing
And the road goes on forever
And I’ve got one more silver dollar
But I’m not gonna let ’em catch me, no
Not gonna let ’em catch the midnight rider

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Thanksgiving Week

The Daily Escape:

Turkeys on the fields of Wrong – November 2018 photo by Wrongo

(This is the last column before Thanksgiving. Words from Wrongo will resume on 11/28.)

Thanksgiving is Wrongo’s favorite holiday. As a secular holiday, you’re not required to do anything. The celebration is subdued, and around here, we focus on gratitude. Wrongo always thinks about how grateful we should be to live in this wonderful country of ours, and how grateful we are for all of America’s gifts.

We’re lucky to live in a land of plenty: Most of us have employment, most have access to quality healthcare. Most of us have a warm place to sleep at night, most have hope for their kids’ future.

There are many of us who do not have those things, and it is our collective responsibility to help them get to a place where they are physically and mentally secure. They need our help. And we know what to do, and we know how  to do it.

This is our 2498th column. Wrongo wants to thank all who have stuck around since the beginning in 2010. He thanks all of you who read it now, and that includes readers in more than 60 countries. Special thanks to long haulers Monty B, Fred VK, David P, Pat M, and Terry McK, among others. Wrongo is very grateful to all of you!

Wrongo’s wish is that you allow yourself to feel gratitude today and share it with those around you. The secret of life is to affect others in a positive way.

We’re truly grateful for those who came before us, and to our family members and friends who we can’t be with today. We’re thankful to those who are on the front lines in military service, or at home in our hospitals, schools, firehouses, and police stations. Happy Thanksgiving!

The NYT has an article about how online gambling companies have gotten their noses under the tents at colleges and universities:

“In order to reap millions of dollars in fees, universities are partnering with betting companies to introduce their students and sports fans to online gambling.”

The Times says that Michigan State University’s athletic department inked a deal with Caesars Sportsbook in 2021. Caesars proposed a deal worth $8.4 million over five years. Michigan signed on the line. Other schools have also struck deals to bring betting to campus. More from the NYT:

“After Louisiana State University signed a similar deal in 2021 with Caesars, the university sent an email encouraging recipients — including some students who were under 21 and couldn’t legally gamble — to “place your first bet (and earn your first bonus).”

Since the Supreme Court’s decision in 2018 to let states legalize online betting, gambling companies have been working to convert traditional casino customers, fantasy sports aficionados and players of online games into a new generation of digital gamblers.

And universities, with their captive audience of easy-to-reach students, have emerged as an especially enticing target. So far, at least eight universities have become partners with online sports-betting companies.

And a dozen other universities’ athletic departments and booster clubs have also signed agreements with brick-and-mortar casinos. For example, Turning Stone Resort and Casino is the official resort of Syracuse University’s ‘Cuse Athletics Fund. These gambling partnerships bring in funds that schools can use to sign marquee coaches and build their sports teams.

Wrongo rarely gambles, but he has a mostly lassiez faire attitude about it. He’s skeptical about prohibiting it. But the idea by universities of “let’s introduce our students to online gambling for our profit” sounds, well, wrong. The hypocrisy here is that the sports betting companies are offering “a piece of the action” to schools that not long ago swore that gambling would ruin college sports.

It isn’t exactly the same, but do you recall that back in the 80s, banks introduced credit cards and credit card debt to students? And how did that work out? You can almost imagine hearing: “Want to go double or nothing on those student loans, kid?” The most relevant quote from the NYT is:

“College athletics have become profit maximizing opportunities for athletic directors and coaches.”

Wrongo thinks this has nothing to do with the educational mission of colleges and universities. OTOH, the ol’ ball coach is saying: “Wanna bet”?

Let’s cruise into the holiday by listening  to a tune that is new to Wrongo, Josh Groban’s “Thankful” performed live from his “Noel” album. It’s on point with Wrongo’s thinking about Thanksgiving:

Lyrics:

Somedays we forget
To look around us
Somedays we can’t see
The joy that surrounds us
So caught up inside ourselves
We take when we should give.

So for tonight we pray for
What we know can be.
And on this day we hope for
What we still can’t see.

It’s up to us to be the change
And even though we all can still do more
There’s so much to be thankful for.

Look beyond ourselves
There’s so much sorrow
It’s way too late to say
I’ll cry tomorrow
Each of us must find our truth
It’s so long overdue

So for tonight we pray for
What we know can be
And every day we hope for
What we still can’t see

It’s up to us to be the change
And even though this world needs so much more
There’s so much to be thankful for

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Is “Yellowstone” A Political Show?

The Daily Escape:

Early snow, Zion NP, UT, November 2022 photo by Bob Busund

After friends and many family members said that they really liked the TV show “Yellowstone”, Wrongo and Ms. Right watched the 2-hour season premiere on Paramount on Sunday night to see if we should commit to watching all five seasons.

Wrongo’s hot take is that the show is “The Sopranos” with horses. There’s some family intrigue like on “Succession” but the Logan Roy family isn’t directly responsible for killing people or animals at the volume of Montana’s John Dutton family.

Since its launch in 2018, Yellowstone has become one of TV’s most-watched dramas. January’s fourth-season finale had over 9 million viewers the night it aired. By comparison, HBO’s Succession drew 1.7 million for its third-season finale a few weeks earlier.

From the NYT:

“John Dutton, a Marlboro Man Tony Soprano, runs the Yellowstone Ranch like a quasi-mob. His wranglers, many of them ex-cons, are branded with a “Y” to mark them as his. When they’re not breaking horses, they’re breaking his enemies’ faces (and often one another’s).”

We watched the season-five opener where patriarch John Dutton becomes governor of Montana, basically running on a platform of “Why do I have to do everything myself”? He owns the largest ranch in Montana but feels that the whole world is conspiring against him. Specifically, it’s a cabal of greedy tycoons who want to buy Dutton’s property and build casinos, condos, and ski chalets on it.

So the main fight is between rich, white-collar city folk who have degrees and suits. The Dutton’s hate those people who fly in from California and then get their (relatively) small farms qualified for tax breaks. The Dutton’s enemies are the bankers and lawyers who are part of the scheming to take Dutton land.

It seems that John Dutton is defending his land and way of life from educated, monied outsiders who rarely actually go outside. Since his enemies mostly live on the coasts, the show is a kind of Red vs. Blue allegory.

Yellowstone’s message is that if you live in rural America, other Americans envy you. You have something they want. Even if you are land poor, you’re richer than they are. And they’ll try and take it from you if you let them.

There’s a market reality to that thinking. Nationwide, available farmland is scarce. Last year, values increased by 12.4% to an average price of $3,800 an acre. Elsewhere, the NYT reports that: (emphasis by Wrongo)

“… the supply of land is limited. About 40% of farmland in the United States is rented, most of it owned by landlords who are not actively involved in farming. And the amount of land available for purchase is extremely scant, with less than 1% of farmland sold on the open market annually.”

Both small and beginning farmers are being priced out of farmland. And Bill Gates is the largest owner of farmland in America. Like wealth, land ownership has become concentrated in fewer and fewer hands. And thus, land costs more, resulting in a greater push for more intensive industrial farming techniques to generate higher returns.

One report found that just 1% of the world’s largest farms control 70% of the world’s farmland. And the biggest shift in recent years from small to big farms was in the US. No wonder then, that Yellowstone has a big and loyal audience in America’s heartland. Land is power, land is wealth, and importantly, land remains a way to sort both race and class in America.

Yellowstone is described as a “red-state show”. Based on watching just two hours, Wrongo can see that, but as the NYT says:

“On one level, the appeal of “Yellowstone” is apolitical and as old as TV. It’s a big, trashy, addictive soap about a family business, like “Dallas”

It speaks the language of today’s culture wars with a country accent. We found the family members in Yellowstone both hard to like, or root for, but the show gives them enemies who seem worse. So you can maybe accept the amorality of it.

Wrongo doesn’t see it as a Conservative show in a political sense. The issues Yellowstone raises about land stewardship and big business are relevant, and not just in rural America. But from Wrongo’s limited experience with the show, the plot is more about romance, violence and feuds, along with beautiful horses and Montana scenery.

Dutton’s trying to conserve his family’s land. If you think about it, that’s not something today’s conservatives are at all interested in doing. Developers on the coasts are happy to pave over everything, and very, very few of them are liberals and/or Democrats.

And you don’t have to be politically conservative to want to preserve our natural world.

Will we watch more? Depends on what else is on.

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What Was The Dems’ Closing Argument?

The Daily Escape:

Valley of Fire SP, NV – November 2022 photo by Carol Cox

It’s Election Day. Over the next few days, the mainstream media, and self-appointed pundits like Wrongo will try to make sense of what the vote tallies mean for America and for the two Parties. Regardless of the outcome, many things will be very different in 2023.

Here’s Sherrilyn Ifill with a great closing argument for voting rather than standing on the sidelines:

“Voting this year is not only political, it’s personal. To vote is to speak. To vote is to declare that you will not be written out of the definition of who can claim their right to this national identity. To vote is to fight. Voting is not the only way to fight, but it is one of our most powerful weapons. Wield it with power and determination. And leave no power on the table.”

The one overriding issue in this midterm election has been inflation. The media won’t let go of it, and the glare effect of inflation makes some voters think that the economy is also terrible. And it hangs over the closing arguments of all Democrats because the Republicans falsely say that the sole cause of inflation is that the Biden administration’s spending like crazy.

The truth is that about 54% of the current inflation rate is due to elevated corporate profits.

Prices are rising not just because of worker’s wages. The cost of labor is increasing at a slower rate than inflation. Raw materials are not the prime driver of increased inflation either. Companies are raising prices above and beyond costs because they can.

Unless companies can reduce their cost of bringing products to market, the only way to increase the firm’s markup is by increasing its selling price. Kevin Drum has helpfully taken a look at that for us:

The blue line represents the total cost of employing somebody, including all wages and benefits. Since 2020 it’s risen at less than the rate of inflation. The red line represents after-tax profits as a share of gross value added, (markup to economists). Before 2020 it rose roughly in line with inflation, but since 2020 it’s skyrocketed.

From Drum: (emphasis by Wrongo)

“Corporations are increasing prices…and blaming it on inflation. But it’s not because of inflation. It’s a cause of inflation. Prices are rising….mainly because companies are raising prices above and beyond that for no special reason except that they can. And all of us are paying the price.”

Economist Robert Reich points out that corporations can jack up prices today without losing customers because we’ve allowed virtual monopolies to develop in many US industries. Since the 1980s, he says, two-thirds of all American industries have become more concentrated. Some examples:

  • Foods: Four companies control 85% of all meat and poultry processing. Just one corporation sets the price for most of the nation’s seed corn. Just two giant firms dominate consumer staples.
  • Drugs and prescriptions: Big pharma consists of just five corporations.
  • Air travel:The airline industry has gone from 12 carriers in 1980 to just four today.
  • Banking: Wall Street has consolidated into five giant banks.
  • Broadband: It’s dominated by three cable companies.

The US House Subcommittee on Economic and Consumer Policy released an analysis last Friday that spells out how some corporations have enacted price hikes and are enjoying record profits. What’s worse, the CEOs of the big firms openly admit on earnings calls with investors that they use inflation as a cover to raise prices. Here’s what a few CEOs of major companies are saying:

Michael McGarry, CEO of PPG, in response to a question whether prices will go back down when input prices are lower:

“…we’re not going to be giving this pricing back….So we’re telling people, this is the new price. And if you don’t like it, please don’t place purchase orders.”

William C. Rhodes, CEO of Autozone:

“It is also notable that following periods of higher inflation, our industry has historically not reduced pricing to reflect lower ultimate cost.”

Jim Snee, CEO of Hormel:

“…our Grocery Products pricing is very sticky and so the pricing that we’ve taken and that we’re in the midst of executing the additional price increase, that pricing will by and large stay.”

The inflation we’re experiencing is not due to wage gains, it’s due to profit gains from corporate pricing power.

It would be nice if the media reported on what’s really causing the inflation. Many people are going to the polls today thinking this is Biden policy-caused inflation rather than the reality of a corporate drive for higher profits.

Too bad so few Democrats are talking about this when they get hammered about inflation by their Republican opponents.

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The Media’s Obsession With Inflation

The Daily Escape:

Dixie National Forest, UT – October 2022 photo by Garrett Cottam

As the countdown to the midterms rolls on, the mainstream media are obsessed with two things: The latest polls and inflation. Let’s start with inflation. From the Editorial Board of The WaPo:

“Congress and Biden have to help the Fed fight inflation“

They’ve made inflation a bogeyman, and they’re saying this two weeks before the midterms. Moreover, they can’t write the word “inflation” without putting “Biden” or “Democrats” in the sentence. They’re implying that both are failing in America’s inflation fight. The WaPo and the rest pair the i-word with adjectives designed to scare us: “runaway,” “record-breaking,” or “crippling.”

In their editorial, the WaPo Board admits that the Biden administration has done a reasonable job on the economy, that they’ve played a bad hand fairly well. And that they can’t be faulted for the current spasm of inflation. They note that Republicans are “not offering much in the way of a concrete anti-inflation plan” — that’s an understatement, since they’re not offering anything at all.

Still, the WaPo is calling on Biden to use fiscal policy to “help the Fed.” Coherent fiscal policy will take more than the next two weeks to put in place. Let’s review the difference between monetary and fiscal policy.

Monetary policy is about the actions the Federal Reserve can take. The Fed can tinker with the money supply, or they can raise or lower interest rates. This allows the economy to adjust to changing conditions, like inflation. It is necessary, but not sufficient since adjustments to interest rates are hard to control. Even minor rate adjustments can sometimes have major consequences.

Raising rates too quickly or too high might slow inflation but also trigger a recession where many jobs are lost.

Fiscal policy is what the Congress can do. It’s using legislative action to heat up or cool down the economy. When there’s a slump, Congress can approve new public spending, like infrastructure, to inject money into the hands of businesses and consumers. When there’s a deficit, new tax legislation can dampen the effects of overspending.

The trouble with fiscal policy is that it presupposes a willingness by Congress to legislate. But today’s partisanship prevents any discussion of fiscal policy. The WaPo article makes a case for Congress engaging in fiscal policy legislation:

“Until inflation is defeated, fiscal policy should push in the same direction as the Fed, with no new major spending that isn’t fully or mostly paid for with higher taxes or reduced spending elsewhere in the budget.”

Get Wrongo whatever the WaPo is having! Higher taxes? What are they smoking?

Inflation isn’t the only story. It’s just the only story Republicans want to tell. They’re telling it dishonestly, and the mainstream media are helping them tell it. If democracy happens to die, sorry, that’s just collateral damage.

Let’s turn to reporting on the latest opinion polls. It’s tough to take the breathless polling coverage by the TV anchors. There’s still plenty of evidence to support either Party exceeding expectations in the upcoming midterms. But what has Wrongo worried is the general trend in reporting on the polling. Some polls are showing late movement, in large chunks, away from the Democrats. One such poll is by the WSJ:

“White suburban women, a key group of midterm voters, have significantly shifted their support from Democrats to Republicans in the closing days of midterm campaigning because of rising concerns over the economy and inflation…”

The WSJ found that they favor Republicans in Congressional races by 15 percentage points.

OTOH, that poll was of only 297 white women. And since it’s from the WSJ, it might be biased against the Dems. Nonetheless the PBS Newshour reported about it without mentioning how small the sample size was.

Polls that focus on likely voters seem to be consistently looking better for Republicans than the polls focused on registered voters. Likely voters are a proxy for voter enthusiasm, or which Party’s faithful are more likely to vote.

Also troubling, issue polling consistently shows that inflation is the biggest issue driving Party preference. More than abortion, democracy, or any other factor particularly among independents.

While control of both Houses of Congress might change next Tuesday, the recent polling seems so one-sided that it looks wrong to Wrongo. The meme that “just about everything is breaking in Republicans’ favor” doesn’t seem in context with what’s happening.

Regardless, most of the crucial Senate races look very tight, which means we could be seeing some late calls, some recounts and maybe a week or so before we know the final outcome.

As national issues go, inflation isn’t on a par with the deliberate demolition of democratic institutions, or the trashing of women’s reproductive rights, or the growing violence against politicians.

And yet, the so-called credible mainstream journalists feign an urgency about inflation, just to keep us all glued to their reporting on the political horse race.

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Saturday Soother, London Edition – October 29, 2022

The Daily Escape:

The Old Floral Hall, Covent Garden, Royal Opera House, London UK – October 2022 iPhone photo by Wrongo

We’re nearing the end of our week in London. Yesterday, we visited the Royal Opera House (ROH) in Covent Garden. We got to watch ballet rehearsals by the Royal Ballet Company which shares the ROH, and briefly listened in on a rehearsal by Lisette Oropesa who plays the title role in “Alcina” by Handel. Alcina turns her male lovers into plants, an idea that inspired much mirth from Ms. Right.

Wrongo saw Nureyev perform at the ROH in 1976, when he was working for the big American bank. That was ages before the remodel of the ROH which added a huge addition in 1997-1999. In the 1970s, the Old Floral Hall in the photo above was at street level. Now it has been refurbished, halved in size, and raised to the second floor inside the ROH addition. It is used as an event space and cocktail bar.

We heard over here about the good US economic news. And it wasn’t just about GDP growth. There was also good news on inflation. The Personal Consumption Expenditure (PCE) price index, which the Fed watches closely, increased by 4.2%, down significantly from 7.3% last quarter. And the CPI for the last three months rose by 0.5%, equating to an annual rate of 2%. If it were to keep up for the next nine months, that’s at the Fed’s inflation target. Pity that the media aren’t talking about this, but mostly about how the economy is still slowing.

One thing that caught Wrongo’s eye from abroad was Harvard’s Kennedy School of Government’s release of its 44th youth poll: (emphasis by Wrongo)

“A national poll released today by the Institute of Politics at Harvard Kennedy School indicates that 40% of 18-to-29-year-olds state that they will “definitely” vote in the November 8 midterm elections, on track to match or potentially exceed the record-breaking 2018 youth turnout in a midterm election. Young voters prefer Democratic control of Congress 57% to 31% (up five points for Democrats since spring), but 12% remain undecided.”

John Della Volpe, Kennedy School director, believes we will see a Gen Z wave in November:

“Youth today vote at levels that far exceed millennials, Gen X, and baby boomers when they were under 30.”

In the 2020 presidential election, voters 18-29 voted in even greater numbers than in 2018: closer to 50%. Yet, if turnout by younger voters is in the 40% range, that’s not something to celebrate. It means that younger voters are leaving a lot of political power on the table.

According to the US Census, people over 65 outvoted them by over 15 points in 2018. Political power is right there waiting for people to grab it. That only will happen if more people turn to vote.

Wrongo got an email from his Democratic Congressperson Jahana Hayes, saying that she was trailing by one point in the highly respected Emerson College poll which says:

“The economy is the most important issue for 46% of Connecticut 5th District voters, followed by abortion access (16%), and threats to democracy (14%).”

Hayes is a first-term Representative who was comfortably elected in 2020. While the results are within the ± 4.3% margin of error in the poll, this isn’t a seat the Dems thought was in play. This is more proof that the Dems are flailing with their messaging on inflation and the economy, despite the fact that inflation is falling and the economy is still growing.

But we also have to remember that if the GOP takes the House, they’ll have absolutely no incentive to even try to help make economic conditions any better.

In fact, they are actually incented to try to make it worse. Why? Because the Democrats will still control the White House and may also control the Senate for the next couple of years. It’s a safe bet that Republicans will do whatever they can to increase the chaos on the economic front, so that they can continue to blame Democrats when Trump runs again in 2024.

But we really have no idea which Party will control the House and Senate, and we may not know for sure until a week or two after November 8.

With Wrongo and Ms. Right in London, you’re on your own for how to relax on this Saturday. To help with that, watch and listen to Sinfonity TV Guitar’s incredible performance of Bach’s “Toccata & Fugue”, recorded live in Segovia, Spain. To watch 15 rock guitar musicians playing it in unison is astounding. Take your collective hats off to the musicians who play it:

Who says rock and classical music don’t mix?

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