Category: Political Gridlock

July 4, 2023

The Daily Escape:

Kilauea Caldera showing a blackened lava lake, Hawaii Volcanoes NP – June 2023 photo by J. Wei for the NPS

Kilauea stopped erupting on June 19, but the threat of another eruption is always present. That could be a metaphor for America in 2023: We could erupt at any moment.

The 1960s were an optimistic time. There were demonstrations for civil rights and against the Vietnam War. There was police violence against the demonstrators, and assassinations of JFK and MLK. But a throughline of those times was a belief that righteous change was possible.

Wrongo graduated from Georgetown in 1966. His specialty was American colonial history. Those also were times of optimism, and there also were factions and different priorities and beliefs throughout the land.

Back in the 18th century, we overcame our differences, declared our independence, and formed a nation.

Now, 247 years after our revolution, it seems that staying united is difficult, if not impossible. Today, facts are fungible, and so is the truth. As Wrongo stated in his last column, about one third of Americans fail to vote. They are apathetic because they can’t see what would change if they did vote.

Having one third of Americans regularly fail to vote has surrendered control over our politics and our courts to a minority, mostly a few at the top, supported by some people in the middle, and enabled by the apathy of most of the rest of us.

Worse, most of those in today’s controlling minority are extremists. They have exploited the imperfections in our system to impose a return to the social mores and politics of an earlier time.

The best example of this is the string of far-Right decisions handed down in 2022 by the Supreme (Extreme) Court. From Slate’s Mark Joseph Stern:

“Consider the issues that SCOTUS has resolved….The constitutional right to abortion: gone. States’ ability to limit guns in public: gone….Effective constraints around separation of church and state: gone. The bar on prayer in public schools: gone. Effective enforcement of Miranda warnings: gone. The ability to sue violent border agents: gone. The Environmental Protection Agency’s authority to regulate greenhouse gases at power plants: gone.”

Vast areas of law that took decades to establish were overturned in a year.

And in 2023, the Court’s reactionary majority has continued to overturn more of the American social order. Those rulings: ending affirmative action, preventing the forgiveness of student loans and an egregious decision on gay rights, show that the Court has lost any sense of judicial restraint.

The Court is no longer “calling balls and strikes” as Chief Justice John Roberts famously said. In fact, there could be a highlight reel of umpire John Roberts’ blown calls. It’s clear that the Extreme Court wants to go further, and given today’s politics, there’s zero risk of the other two branches of government agreeing to override their decisions.

So, on this Fourth of July weekend, let’s hit pause. Let’s take time to reflect on how our founders were able to weave a message that united many factions against a common enemy. It should be very clear that at this point that the common enemy to unite against is the partisan power of a partisan minority.

Real power no longer lies with the People or with their politicians, it resides in the Supreme Court. The antiquated and undemocratic elements of our government: the Electoral College, lifetime tenure for Supreme Court justices and the malapportionment of the Senate, would require Constitutional amendments to fix. But we’re too divided to amend the Constitution.

Imagine attempting to fix the Senate’s malapportionment by getting a Constitutional amendment through that same malapportioned Senate.

But there may be reason for optimism in the fact that the two of this term’s negative rulings related to college students (admissions and debt relief). Those issues will motivate young voters in 2024.

Here are some numbers that give some cause for optimism about younger voters helping to change our politics:

  • Voters 47 and younger will be in the majority beginning in 2028.
  • Younger voters have historically voted in significantly higher numbers for Democrats.
  • Young women, especially young Hispanics and young African Americans are substantially higher voters for Democrats.
  • Fifty-five percent of white male voters under 45 voted Democratic in 2022, as did 52% of younger white females.

Here are a few other facts that should make us optimistic going forward:

  • Abortion was youth’s #1 issue in 2022.
  • Mid-term voter turnout for people under 29 was 23%, lower than 2018 (28%), but much higher than in 2014 (13%).
  • Michigan had the highest youth turnout in the country (37%).
  • Two swing states, Michigan and Pennsylvania, were among the four states to have the highest youth turnout in 2022.

To help you reflect on how we might take back control, let’s listen to Neil Diamond’s “Coming to America” performed at the Greek Theater in Los Angles in 2012.

There are many versions of this tune on YouTube, but this one makes the point that virtually all of us are descended from immigrants, in this case, Diamond’s grandmother, who immigrated from Kyiv:

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Saturday Soother – June 10, 2023

The Daily Escape:

Peony, Fields of Wrong, CT – June 2023 photo by Wrongo

(There will not be a Sunday Cartoons column this weekend. Wrongo and Ms. Right are attending a memorial service for family member Bob W.’s mom.)

The week ended with a ton of political news. First, as Mark Joseph Stern reported in Slate:

“The Supreme Court’s 5–4 decision in Allen v. Milligan on Thursday, which found that Alabama’s congressional map violates the Voting Rights Act’s ban on racial vote dilution, sends two clear messages. First, a bare majority of the court—Chief Justice John Roberts, Justice Brett Kavanaugh, and the three liberals—believes that the VRA still plays a meaningful role in maintaining a multiracial democracy (or is willing to defer to Congress’ judgment on the matter). Second, that same majority of the court does not look kindly upon red states’ race to shred decades of precedent in an effort to wipe out the voting power of Black Americans.”

The good news is that the decision means that Alabama must create a second Congressional district in which the voting power of Black voters is not diluted by gerrymandering. It is likely that Alabama will add a second Democratic representative to its Congressional delegation.

Even better, Democracy Docket says that the holding in Allen v. Milligan will likely result in a net gain of six Democratic seats (five in other states) in the House in 2024.

Second, Trump is being indicted in Florida. He, along with a staff member at Mar-a-Lago, are facing 37 felony charges related to the mishandling of classified documents. This good news is offset by learning that judge Aileen Cannon is again assigned to hear the DOJ’s case that Trump wrongly held classified documents, failed to return all of them, and then obstructed the efforts of the National Archives and the FBI to recover them. Here’s a link to the indictment.

Mega millions of words will be written about this before there’s a trial or a guilty plea. Hold off on a victory lap until Trump is convicted. About a quarter of the classified/national security documents seized from Mar-a-Lago were found in Trump’s office. It will be difficult for Trump to persuade a jury that he didn’t know about the documents and chose not to return them.

Also, the Trump lawyers who were the front men for this indictment have quit the case. The attorneys, Jim Trusty and John Rowley, did not explain in detail why they had resigned.

Does MAGA now stand for: Make Attorneys Go Away? Or possibly, Make Attorneys Get Attorneys? Although it appears the parting was amicable, it would be irresponsible not to speculate! And it’s difficult to believe that the lead attorney’s last name is Trusty.

But Trump wasn’t the only MAGA mishandling secrets this week. The HuffPo reported that Rep. Marjorie Taylor Greene (R-GA) made an eyebrow raising claim during a TV interview with Laura Ingraham on Fox:

“Greene said she read a document inside a SCIF ― a sensitive compartmented information facility ― related to bribery allegations Republicans have made against Biden…Then, she described that document while speaking to Laura Ingraham on Fox News”

Wrongo has experience with reading documents in SCIFs. NOBODY takes notes on what they’ve read. It’s a violation of national security regulations. When you enter a SCIF, you check all electronic devices before entering, and can’t take notes while inside. And usually, information revealed in the SCIF can’t be repeated outside of it. But Greene held up her notes to the camera.

Mark Zaid, an attorney who specializes in national security, tweeted:

“Hey @FBI, if this information was classified sounds to me like the Congresswoman is admitting to a crime. And if it was not, @SpeakerMcCarthy should remove her privileges for violating the trust she was afforded as a Member of Congress to review sensitive information.”

— Mark S. Zaid (@MarkSZaidEsq) June 9, 2023

But McCarthy won’t do anything. The GOP is building a wall around Trump, and minimizing the mishandling of documents by Greene will just be part of the play. To be a Republican in 2023 is to love Trump. They no longer love him for a particular reason: He’s what the Party has become.

There was plenty of orange air outside of the Mansion of Wrong this week. So, let’s pray for brighter skies while we settle into our Saturday Soother, where we try to forget the political news and the impending climate disaster. Let’s try to relax for a few moments. This week, George Winston died. He was a composer who became the signature style of New Age music in the 1980s. Wrongo was mildly interested in him at the time but came to admire and respect his work in the past few years.

Here’s Winston in 2020 playing Vince Guaraldi’s “Cast Your Fate to the Wind”:

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Sunday Cartoon Blogging – June 4, 2023

Diversity, equity and inclusion initiatives or DEI, are intended to address inequities against historically marginalized groups and individuals who are working within an organization. DEI are three closely linked values that work together to be supportive of different groups of individuals, including people of different races, ethnicities, religions, abilities, genders, and sexual orientations.

DEI has recently come under fire. It’s at the center of some political battles being waged by Republican governors Greg Abbott and Ron DeSantis. Several Red states are considering or have passed legislation targeting DEI in public institutions. Texas passed a bill with a rider banning the use of state funds for DEI programs in universities and colleges. A similar bill to ban spending on DEI in public universities has been advanced in Iowa.

But Chick-fil-A? The same Chick-fil-A that’s given millions of dollars to anti-LGBTQ hate groups? The Chick-fil-A that conservatives circled the wagons around a few years ago after liberals criticized the owners for being haters?

They’re taking MAGA fire for creating a DEI policy and hiring someone to oversee the program. MAGA suddenly realized that Chick-fil-A had gone woke! But their program has been around since 2020. On to cartoons.

Nobody is safe:

Signs are everywhere:

MAGA says ya can’t help trans kids:

Our PolyCrisis government:

It’s a very old game, but Trump’s surrounded:

The Sacklers win:

Victory lap for Biden:

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Links You Can Use

The Daily Escape:

Santa Rita prickly pear in bloom, AZ – May 2023 photo by Wilson Goodrich

Today Wrongo returns to his “Links you can use” format from several years ago.

First up, Bloomberg reports that Trump’s takeover of the GOP helped him to rewrite the rules on how primary delegates to the GOP presidential convention will be awarded. Since leaving office, Trump has gotten 10 more states to award delegates through winner-take-all primaries, even if the winner receives fewer than a majority of the votes. The number of winner-take-all states has grown from seven to 17.

Needless to say, if it’s crowded field and he gets the most votes, even if it’s only 30%, he’ll win.

Second, Republican governors have discovered that they’re getting significant political mileage out of championing people who have engaged in vigilante violence that dovetails with the GOP’s culture wars. Brian Klaas writes about the Right’s open embrace of political violence. In Texas, Governor Abbott has said that he was “looking forward” to pardoning Daniel Perry, who murdered a Black Lives Matter protester. Perry was sentenced to 25 years in prison. He had previously texted a friend that he “might have to kill” some people on his way to work.

Over the weekend, Florida Governor DeSantis tweeted his support for Daniel Penny (Perry and Penny?) after Penny killed the homeless Black man Jordan Neely, on NYC’s subway. DeSantis didn’t hold back:

Lots of dog whistles right there from the governor. NBC 4New York reported that the legal defense fund had raised more than $2 million after DeSantis tweeted the link to Penny’s donation page. This shows MAGAs have found another way to wealth and fame as Daniel Penny now joins Kyle Rittenhouse as a violent millionaire funded by the Republican Right.

Brian Klaas wrote about a study that shows “Who Supports Political Violence?”, conducted by Miles T. Armaly, Assistant Professor of Political Science at the University of Mississippi and Adam M. Enders, an Assistant Professor of Political Science at the University of Louisville. Their findings show some key traits that predict support for political violence:

Perceived victimhood is highly correlated with support for political violence. This is different from actual victimhood. While previous research found that people who are actually being oppressed are more likely to turn to violence, this study shows that it doesn’t really matter whether someone is actually being oppressed; instead, the feeling of being oppressed is sufficient.

This was the strongest predictor of support for violence.

The next strongest correlate was a sense of “white identity.” And the two interact, as those who buy into the Right-wing narrative that white people are under attack in America (due to their loss of social dominance), are also likely to be the same individuals who feel perceived victimhood.

Also, past military service is correlated with a predisposition for vigilante violence. People who previously served in the American armed forces were more likely to express support for political violence than those who have not. None of this is good news for the US.

Third, the Debt Ceiling negotiations are resuming today in the White House after House, Senate and White House negotiators met for three hours Saturday, and then reconvened on Monday. Benjamin Studebaker worries that Biden may be about to repeat Obama’s errors in negotiations with Republicans in 2011:

“Back in 2011…Obama faced the same problem…Biden now faces. Congressional Republicans refused to raise the debt ceiling unless Obama agreed to budget cuts….Obama….Instead…cut a deal. He signed the Budget Control Act of 2011. It committed the federal government to…enormous cuts. Over the course of 2012, it became clear that these cuts would cause serious damage to the economy. So…Obama negotiated another deal that would save most of the cuts for 2013. Over the course of 2013, the same arguments were made again, but this time Obama was unable to secure another delay, and the cuts took effect.”

Sounds like what we’re going through right now. In 2013, we escaped the economic disaster, but at the price of the Fed adding several rounds of Quantitative Easing leading to our current economic situation. If Biden agrees to cut spending, the economy will again be damaged.

And the Federal Reserve will be pressured to limit the damage via lower rates or flooding the market with more dollars.

Republicans will, of course, oppose tax increases. That means the Biden administration won’t be able to raise taxes to help offset the growing deficit or pay for future expenses. Therefore it has to rely on the Federal Reserve’s monetary policies. The weaker economy created by rate hikes is an economy where the current tax rates will generate less tax revenue. That creates more political pressure to cut spending.

All of these stories look like rinse, lather, repeat. And not to the nation’s benefit.

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Is Default Preferable To Compromise?

The Daily Escape:

Wild Ocotillo blooms with Agave buds, Anza-Borrego Desert SP, CA – May 2023 photo by Paulette Donnellon

Yesterday, Biden met with the leadership of the Congress to discuss the debt ceiling and the dangers of default. Wrongo is writing this before we know what if anything concrete, comes out of that meeting.

This is the third time in twelve years that a Republican House majority has tried to use the debt limit to extort a Democratic president into adopting policies that the GOP failed to enact through normal political means. This time around, like the past two times, Republicans say they want spending cuts, but as Nate Cohn wrote in the NYT:

“The 2022 midterm campaign didn’t show evidence of a resurgent conservative passion for spending cuts either. The debt-deficit issue had such a low profile in the national conversation that a question about it wasn’t even asked in exit polling.”

But absent real news, let’s take a look at the Republican position as outlined in the bill McCarthy and the GOP passed in the House. They’re pushing to pair $4.5 trillion in spending cuts over a decade with a one year, one time, $1.5 trillion increase in the debt limit. Their plan achieves most of its savings with spending caps for discretionary spending — the part of the yearly budget that isn’t automatic (like Social Security payments) — but it doesn’t say which discretionary programs should be cut and which should be spared.

Their plan caps government spending at last year’s levels. This would be a decrease of ~ 9%. A yearly increase is capped at 1% annually for the next 10 years. This action would save approximately $3.2 trillion. They haven’t offered any detail about where the cuts would come from, and there is no inflation adjustment to the spending cap.

But since the GOP has said it plans zero cuts in the defense budget and that there will be no cuts for veterans or for border security, cutting everywhere else will be very deep. The NYT estimates that if those programs remained untouched, the GOP plan would cut the balance of federal spending by an amount of a 51% cut across the board.

Seems unrealistic.

Social Security checks could still be issued because a 1996 law provides a means of circumventing the debt limit. It allows the Treasury Department to pay Social Security benefits, along with Medicare payments, even if there is a delay in raising the debt ceiling. It allows for the Social Security and Medicare trust funds to be drawn down to keep those benefits flowing until the debt limit is raised, and the trust fund replenished. It also prohibits those funds from being used to pay for any other government programs.

In the past, the usual political rhythm of fiscal crises is that the GOP House stumbles around for a while, and then, right before the deadline, Senate Republicans and Mitch McConnell come off the sideline. They cut a deal with the Democratic president and pass the deal in the Senate with a big bipartisan majority. They then leave town with the hot potato squarely in the Speaker’s lap.

It’s questionable if this will happen in May, 2023.

Biden should address the nation after the Tuesday talks. How about an oval office address that lays out the facts, along with a call to action: Call your representatives and tell them to pass a clean debt limit bill. He could detail for the American people the cuts the GOP are demanding in return for raising the limit. He could also say that he is willing to negotiate in good faith on the budget with House Republicans as long as the debt ceiling is a separate matter.

The compromise might be to have a temporary debt ceiling increase to allow both to move forward together. Sadly, for McCarthy and the House Republicans, default seems to be preferable to compromise.

This is zero-sum politics with the highest stakes. At the end of the day, all paths lead to the same place: The US will need to find a way to pay the bills it has incurred as they mature.

The question is how much damage will have happened along the way.

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Sunday Cartoon Blogging – May 7, 2023

(The Monday Wake Up Call will be published on Tuesday this week.)

America has been waiting for more than a year for the Federal Reserve to get control over inflation. In that time, they’ve jacked up interest rates to over 5%. A year ago, raising rates that high seemed unthinkable, but here we are. Wages have also risen.

There was some damage: A few horribly managed banks collapsed. A couple of auto dealer-lender chains that specialized in selling overpriced used cars to subprime customers collapsed. And there were some fiascos in commercial real estate.

All of that has led the Fed to indicate that there could be a “soft landing” for our economy. But with the latest jobs growth numbers, maybe the Fed will have to keep circling the airport. In April, 253,000 jobs were created. There are now a record 155.7 million payroll jobs. Over the past 3 months on average, 222,000 jobs were created per month. So is a soft landing ahead?

Please raise your seat tables to the upright position and pass your trash to the attendant. On to cartoons.

Coronations aren’t just for the Brits:

(Wrongo watched the coronation of King Charles III yesterday. Seventy years ago, he also watched the coronation of Queen Elizabeth II  on a 9″ black & white Philco television. Yesterday’s was on a 55” Samsung.)

The reality about the GOP:

What to expect after the GOP talks with Biden about the Debt Ceiling:

Proud Boys found guilty, but who pulled the strings?

Kremlin complains:

Justice Thomas needs to be taller to take the ride:

Time to buy more cards:

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Sunday Cartoon Blogging – March 12, 2023

Let’s talk about Silicon Valley Bank (SVB). The tech industry’s go-to lender just became the second-largest bank failure in US history. The bank’s customers withdrew $42 billion from their accounts on Thursday. That’s $4.2 billion an hour, or more than $1 million per second for ten hours straight.

We ancient, moss-covered former bankers call this a bank run. That occurs when a large number of customers of a bank withdraw their deposits simultaneously over concerns about the bank’s solvency.

Nearly half of all venture-backed US companies were SVB customers. We’re unsure why the run started, but on Thursday, several Venture Capital firms started telling their client companies that pulling cash from SVB was prudent, and the run began.

While bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, few of SVB’s deposits, by value, were FDIC insured, since its customers were overwhelmingly corporations with much more than $250,000 in the bank. By Friday, there was no cash left in SVB’s coffers. In fact, the cash on hand was negative, to the tune of $958 million.

Do you remember when Trump and Republicans rolled back some of the regulations Dodd-Frank placed on regional banks?:

“Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.”

Trump signed the bill despite a report from Democrats on Congress’s joint economic committee warning that under the new law, SVB and other banks of its size:

“…would no longer be subject to nearly any enhanced regulations”.

This also affects ordinary people. Wrongo has a California friend who banks with SVB. Here’s a quote from her:

“While I’ve been waiting to sign the purchase contract on a condo, I woke to the news that my lender Silicon Valley Bank has been closed and taken over by regulators. That concludes literally 8 months of working on this….and the end of my effort to buy a home.”

So don’t listen to the pleas for another bank bailout. Wrongo would be okay with bailouts if they were accompanied by personal accountability by management. Like, we’ll rescue your institution, but none of the bank senior management can ever work in finance again. On to cartoons.

Tucker’s mendacity:

It takes two teams to play:

Walmart’s OK with pills for boners, but not for pregnancy:

GOP wants to regulate Trans not Trains:

GOP loves doormats:

Most appropriately named movie of this or any year:

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Monday Wake Up Call – February 6, 2023

The Daily Escape:

Sea smoke, South Portland, ME looking towards Portland Head light – February 2023 photo by Benjamin Williamson Photography

On Saturday, Wrongo and Ms. Right went to a dinner party with friends and two generations of family. The after dinner talk turned to how quite a few of the kids and grandkids weren’t planning on having children.

We tossed around ideas about why they were unlikely to procreate, and somethings stood out. First, they see climate change as an existential threat that society is unwilling to solve, even though the technology already exists. Why bring a kid into that?

Second, society seems broken. Our group meant that we face simultaneous crises, layered on top of each other.  This situation involving simultaneous global challenges, for which we have few solutions, is called Polycrisis.

And a crisis in one global system can spill over into other global systems. They interact with each another so that each new crisis worsens the overall harm. The Polycrisis environment weakens every individual’s sense of security and their place in the world.

One impact that seems related to the simultaneous climate, health, economic and geopolitical challenges are the effects on children. The needs for special education and special services for the very young has never been greater in America. It’s forcing big changes in public school budgets across the country.

No one is really sure why this is happening.

Wrongo isn’t proposing a solution, just suggesting we need to think more about how the problems of declining birth rates, coupled with the growing issues our young children are facing, might be interrelated.

Noah Smith an economist, has an interesting newsletter about how we define community:

“In the past, our communities were primarily horizontal — they were simply the people we lived close to….Increasingly, though, new technology has enabled us to construct communities that I’ve decided to call vertical — groups of people united by identities, interests, and values rather than by physical proximity.”

Smith says that in the past few decades, Americans became disengaged from their local communities, hunkering down in their houses, and failing to interact with the people around them. That led to a well-documented decline in Americans’ participation in civic organizations, local clubs, etc. Our neighbors can also be stifling and/or repressive because they impose uncomfortable community norms on us.

We’ve always had Smith’s vertical communities: “the Jewish community”, “the LGBT community”, and many others. But in the past, an identity grouping wasn’t a true community. We all have identities that connect us with faraway people — other Irishmen, other Taylor Swift fans.

Prior to the internet, we couldn’t have much contact with them. These loose vertical communities weren’t efficient ways to exchange ideas. Before email, text and streaming video, getting the word out was very slow, and our horizontal communities would decide whether what we wanted to share was worthwhile.

Now, we’re no longer isolated. The internet brought us a world of human interaction: social media feeds, chat apps, and so on. Suddenly we’re surrounded by people through their words, their pictures, and their videos.

Now we organize much of our human interaction around virtual vertical communities. Former occasional connections became Facebook groups, subreddits and personal networks on Twitter. And like our small towns back in the day, vertical communities use social ostracism to punish those who deviate from consensus norms.

But vertical communities can’t provide things like public education, national defense, courts of law, property rights, product standards, and infrastructure that we all depend on.

These require a government to administer them. And governments are organized horizontally; mostly defined by lines on maps. But what if we socialize, cooperate, and fall in love with the people from our vertical community? What if we grow apart from the people next door and the relationship is irreparable?

We see this every day in America when citizens go to a PTA meeting and discover a bunch of strangers saying things that they despise.

Wrongo isn’t saying that vertical communities are another enemy. But they can and do exacerbate the polycrisis by making truth harder to see. And by making effective action more difficult.

If you doubt this, remember how powerful the anti-vaxx vertical was at the height of the Covid pandemic. Today’s vertical communities are strong enough to keep our government from getting much of anything done. How can we work together with neighbors when we share few common bonds?

America today is a predatory society. We predate on politics, ideas, values, and culture. Biden’s trying to change this, but can he succeed? How many of us are trying to help? Changing a society that’s this broken, one that’s moving deeper into vertical communities will be a very heavy lift.

Time to wake up America! What can we do to maintain what Lincoln in his first inaugural address said:

“We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection.”

To help you wake up, listen and watch the Nitty Gritty Dirt Band’s 2022 cover of Bob Dylan’s “I Shall Be Released” with Larkin Poe (Rebecca Lovell and Megan Lovell) on vocals and a fabulous slide guitar solo:

Sample of Lyrics:

Standing next to me in this lonely crowd
Is a man who swears he’s not to blame
All day long I hear him shout so loud
Just crying out that he was framed

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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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Monday Wake Up Call – January 23, 2023

The Daily Escape:

Near Government Camp, OR – January 2023 photo by Mitch Schreiber Photography

Everyone is talking about the national debt and/or about increasing the nation’s debt limit. Congress should increase the debt limit because it’s the right thing to do. But there are many in the “very serious” media who are concerned that the Fed can’t continue to hike interest rates to 5.0% or higher because the government can’t afford to pay such high interest rates on our gargantuan debt.

Some pundits are pushing the idea that the Fed must cut interest rates or else. Or else what? The US government won’t go broke, regardless of how high interest rates rise.

While it’s true that the government’s cost of borrowing rises when interest rates rise, what these pundits are missing is that US tax receipts (which are used to pay that interest expense) have also spiked. They’re also missing the fact that interest expense as a percent of tax receipts was at a historic low in Q1 2022. And while it has moved up, it remains quite close to historic lows. Interest expense as a percent of tax receipts is one primary measure of whether the government can afford the interest expense or not. Wolf Richter of Wolf Street provides us with a chart:

As you can see, while the percentage of interest/tax receipts has “spiked” in 2022, it was at a historic low in 2021. And compare that to when the ratio hovered around 50% in the 1980s and early 1990s. In Q3 2022, it was 22.9%, still very near a historical low.

One reason for this was that inflation helped to increase tax receipts thereby lowering the government’s burden for paying interest on our existing debt.

Between the Trump and Biden administrations, the government’s debt spiked by 34%, or by $8 trillion, in the past three years. That additional debt quickly added a lot of interest expense for the government, as we see with the spike above on the chart in 2022.

As older Treasury securities mature, and assuming the national debt doesn’t go down, they are replaced by new Treasury securities with today’s higher interest rates, and the higher interest costs of those new securities are starting to show up in the government’s interest expense. Richter says that total interest expense in Q3 2022 spiked by 24% from a year ago and by 43% from two years ago. This spike in interest expense looks like this:

And this scary chart is what the GOP will be presenting as their reason to cut the debt. When you omit the spike in tax receipts and the historically low level of interest expense as a percent of tax receipts, as we saw in the first chart, you’re not presenting the whole picture.

Another way to look at the situation is Government interest payments as percent of nominal GDP. This is a classic measure of the cost of government debt compared to the overall economy. Richter offers us another chart:

As you can see, by this measure, interest on our national debt remains lower than it was at any time between 1977 and 2003. And it has remained in a narrow band from 2004 to today.

Without question, we should reduce our national debt. But unless and until interest expense on our debt returns to the level of 50% of tax receipts as it was in the 1980s, we shouldn’t expect much to change in Washington. If it starts to get near those highs, maybe we’ll see action by Congress to increase revenues and reduce spending. And despite all the GOP’s screaming, the Federal Reserve is doing the right thing: Hiking interest rates to stem inflation.

Time to wake up, Congress! The Fed is trying to gently nudge you into thinking that the country needs to raise revenues while also cutting expense. You need to consider the revenue side of the equation more seriously, if for no other reason than what will happen to our currently high tax receipts whenever the coming recession strikes.

To help you wake up, listen to the late David Crosby’s song “Laughing” from his first solo album, 1971’s “If Only I Could Remember My Name. Crosby wrote it for the former Beatle George Harrison, who never used it, so Crosby used it instead:

Several legendary musicians appeared on this recording, including Graham Nash and Joni Mitchell on background vocals; Jerry Garcia on pedal steel guitar, and Bill Kreutzmann on drums. Garcia is magical.

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