Saturday Soother, Inflation Edition – June 11, 2022

The Daily Escape:

Blackfish Creek, Wellfleet, MA – June 2022 photo by Jo LF

Wrongo and Ms. Right are on the road again, this time on Cape Cod visiting family. So this column will be brief. We saw on Friday that the Bureau of Labor Statistics gave us more bad news, that inflation jumped higher in May. That caused the Dow to decline by 880 points or about 2.7%.

From the Bondad blog: (parenthesis by Wrongo)

“People who were hoping inflation would abate did not get the news they wanted from the May CPI. Consumer prices rose 1.0% in that month alone. Inflation less energy rose 0.7%, and “core” inflation less food and energy rose 0.6%. On a YoY (year over year) basis, prices are up 8.5%, tied for a multi-decade high with a few months ago. Core prices are up 6.0%, down slightly from their February and March peak…”

Bondad says that this means that the Fed will continue stomping on the brakes. The big question is whether the Fed can engineer a relatively short and gentle recession, perhaps in 2023. Or whether instead, they engineer a good, old-fashioned “bust” that hurts all of us.

A recession happens when the economy contracts for two successive calendar quarters. In the first quarter of 2022, GDP declined 1.6%. If we see a similar result for the second quarter, this will meet the classic definition of recession.

Will that happen in 2022? Maybe. Will it happen in 2023? Probably. It is highly unlikely that the Fed’s actions alone will bring aggregate demand down to normal levels relative to supply.

Republicans are messaging that it’s the Biden administration’s fault that inflation got out of control. But if you remove politics from the equation, the reasons are the pandemic’s severe global economic impacts, and the efforts by both the Trump and Biden administrations, along with the Fed, to stimulate the US economy.

The stimuli led to a booming economy, even though it didn’t help everyone. The Fed’s inability to react quickly then left them behind the curve. Russia’s invasion of Ukraine created an oil shortage, that pushed gasoline prices even  higher.

The complex causes of our current inflation doesn’t lend itself to either Party presenting workable solutions in the short term. And they certainly can’t do that by using sound bites. And you shouldn’t expect the media to either provide both sides of the argument, or to detail what’s being offered to solve the problem.

After all, we’re in an election year.

Wrongo will wait a few more days before saying much about the J6 public hearing. We didn’t get to see much of it, but the WaPo says that about 19 million people watched the first public hearing. The preliminary data come from Nielsen and do not include the millions more who watched the hearing on streaming apps or social media, where a few clips of the testimony went viral.

The Post also provided some context, comparing the viewership of this hearing to Watergate and to Trump’s first impeachment:

“….some 71% of Americans told Gallup that they watched some of the Watergate hearings live back in 1973, the first televised hearing of Donald Trump’s first impeachment trial drew only about 13 million viewers in 2019…”

It’s time to let the millions of words about the hearing slip from your mind, and to get yourself into a place of calm reflection. That means it’s time for our Saturday Soother. We’re here on the Cape trying to do just that. The weather so far is fantastic. And we’re scheduled for dinners at two fabulous restaurants over the next two nights, in both cases, eating outdoors.

So, take a few minutes to center yourself by grabbing a chair outside, putting on your wireless headphones and listening to Lili Boulanger’s “D’un matin de Printemps” (On a spring morning). Lili wrote this piece in 1917 when she was 23. Boulanger was a child prodigy, but she battled bronchial pneumonia throughout her short life, dying a year later at age 24.

Here is the piece played in 2017 by the Chicago Youth Symphony Orchestra, conducted by Allen Tinkham at Orchestra Hall, in Chicago:

Facebooklinkedinrss

Biden’s Economy is Booming

The Daily Escape:

Sunrise with moon, Utah Lake, UT – December 2021 photo by Karen Lund Larsen

Bloomberg reported on Monday that the US economy is outperforming the world by the biggest margin in the 21st century. Surprisingly, they say that there’s a good reason:

“America’s economy improved more in Joe Biden’s first 12 months than any president during the past 50 years…”

They say that the objective economic data are pretty convincing about the Biden Boom of 2021, notwithstanding the contrary media narrative that seems to be driving poor public opinion. Biden is either in first place compared to recent American presidents, or at number 2 on all the big economic indicators, says Bloomberg’s Matt Winkler:

“Exceptional returns…especially the S&P 500 Index in both absolute terms and relative to its global counterparts, can be attributed to record-low debt ratios enabling companies to reap the biggest profit margins since 1950. Corporate America is booming because the Biden administration’s Covid-19 vaccination programs and $1.9 trillion American Rescue Plan reduced the jobless rate to 4.2% in November from 6.2% in February, continuing an unprecedented rate of decline during the Covid-19 pandemic.”

Also, inflation-adjusted GDP surged at an average annual rate of 5.03% in each of the first three quarters of 2021 and is poised to hit 5.6% for the year based on the preliminary estimates of more than 80 economists surveyed by Bloomberg. If that forecast holds up, it would be more than 2.8 times the average performance between 2000 and 2019. And double the average since 1976.

More from Bloomberg:

“All of which makes Biden’s first year in the White House the standout among the seven previous presidents, based on ten market and economic indicators given equal weight. According to data compiled by Bloomberg, no one comes close to matching Biden’s combination of No. 1 and No. 2 rankings for each of the measures:

Gross domestic product (1)

Profit growth (1)

S&P 500 performance (2)

Consumer credit (1)

Non-farm payrolls (2)

Manufacturing jobs (2)

Business productivity (2)

Dollar appreciation (2)

S&P 500 relative performance (2)

Per capita disposable income, which rose 1.08% this year, is the only comparable weakness for Biden, trailing Donald Trump’s 2.17%, George W. Bush’s 2.01%, Jimmy Carter’s 1.80% and Ronald Reagan’s 1.42%.”

GDP growth in year one of each new administration during the past four decades had never exceeded 2.74% until 2021. Bloomberg goes on to say that Biden might surpass Carter (5.01%) as the GDP growth champion of presidents since 1976.

Much of the credit goes to The American Rescue Plan, which poured $66 billion into 36 million households. The child tax credit reduced the child poverty rate by 50%, helping the US recover faster from the pandemic than most other nations.

That’s the same child tax credit that just expired, and that Sen. Joe Manchin is vociferously against.

The downside to those record corporate profits is that they are not being shared with workers. We know that in 2021 economic inequality got considerably worse, even with Biden’s recovery act putting $ billions in the pockets of American families.

Like Jimmy Carter, Biden now faces the political fallout of accelerating inflation. The NYT’s Neil Irwin wrote about how high inflation and  the never-ending pandemic are depressing Americans’ attitudes about the economy. He adds that it’s easy to recall Carter’s inability to deal with inflation in the 1970s, until the Fed’s Paul Volcker threw the economy into a deep recession. Back then, Carter took the political fall for the Volcker policy. Reagan got full credit for the recovery.

Once again, fear of inflation is everywhere in the press, but as Wrongo wrote:

“Back in 1980, when then-Chair of the Federal Reserve Paul Volcker raised interest rates high enough to throw the US into a recession and end inflation, inflation had averaged 6.9% for the previous 11 years.”

And while inflation’s averaging 6.81% for this year, it isn’t comparable, because of the amazing growth in US GDP and corporate profits, along with the chronic product shortages due to supply chain issues.

But contrast today to December 1981, when Reagan had been president for 11 months, just as Biden is now. Conditions were substantially worse: The unemployment rate was 8.5% and would keep rising throughout 1982. Inflation was 8.9%, and consumer sentiment was in the tank.

People believe what they’re told by the press and pundits. That in part explains Biden’s low approval ratings, along with the GOP’s master class of blaming Biden for a disastrous economy that was really caused by Trump’s inaction on Covid.

Keep all this in mind. Overall, Biden’s doing a very good job with the economy.

Time for another Christmas season tune. Here’s a group of UK theater performers called Welsh of the West End performing the Mariah Carey classic, “All I Want for Christmas is You” on a zoom call. Perfectly appropriate for Christmas with Omicron:

Facebooklinkedinrss

Trump’s Closing Argument? More Covid, Less Stimulus

The Daily Escape:

Littleton ME, October 2020 photo by Kim Smith-Williams. The trees were planted by her grandfather in 1942.

It was amazing to see Trump turn down an offer from the Democrats to inject $ trillions of stimulus into his weak economy just days before the election. Wouldn’t that have helped his chances?

And he did this the day after his “helicopter salute” ceremony that raised questions about his Covid strategy. Based on what he said, it sounds a lot like “Don’t worry about it, you’ll be fine, it’s no worse than the flu”. Trump resurrected “Same as the Flu“, and killed the economic stimulus package on the same day.

Sadly, Covid is much worse than the flu. Trump says that the flu claims more than 100,000 lives some years. Maybe it did when he was a kid, but for the past 10 years, the seasonal flu has killed between 12,000 and 61,000 Americans a year. In fact, Covid has killed more Americans in the past 8 months than the flu has killed in the past 5 years combined.

So his Covid strategy is: “Grandma’s gotta die because people need to go to restaurants”. Not a winning message.

Let’s move to Trump saying he won’t pass a new stimulus until he’s reelected. Republicans have been divided on more money for states, individuals and businesses, with those in close races generally more amenable to a bigger stimulus package.

But the hard-core conservatives have been opposed to a bigger package, and Trump is particularly hostile to providing funds to state and local governments. OTOH, while negotiations weren’t going anywhere fast, they weren’t that far apart. The House had passed a $2.2 trillion bill, while Mnuchin’s offer was $1.6 trillion.

According to the WSJ, the trigger for Trump’s pulling out of a possible deal was an update from Mitch McConnell, who said that even if Mnuchin and Pelosi came to an agreement, he wasn’t likely to have enough Republican votes in the Senate. There would have been sufficient votes in the Senate to pass the bill, but it would have required Democratic Senators to put it over the top, an unacceptable look for Trump.

Somebody should have told Trump the master negotiator, that if you walk away from a deal, you don’t get anything you want, either.

The stock market didn’t like Trump’s bailing on another stimulus. And on Wednesday, Trump reversed course and talked instead about bailing out the airlines :

“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!”

If seems likely that the CEO of Delta might have suggested to Trump that mass layoffs in Atlanta wouldn’t be helpful to his re-election. But Trump apparently hasn’t learned that when you’re dealing with people with actual leverage (instead of a contractor who can’t afford to sue you), you actually have to give up something to make a deal.

The CARES Act was the high-water mark of federal government response to the pandemic-caused economic disaster. That was six months ago, and nothing substantial has happened since. It’s hard for Trump or his Party to say, going into the last three weeks that they really care at all about those who have lost their jobs to the pandemic.

Through a series of bad decisions and foolish actions by Trump, America has been hit harder by the coronavirus than any other industrialized nation. The outbreak has killed 210,000 and caused large numbers of people to change how they live their lives.

And those changes have created enormous economic disruptions, everywhere.

There are just 27 days to go until the election. All of those people who are out of work have to make rent. And all of them, when they worked, supported other businesses with their spending. That’s all gone.

The only thing which will “fix” the economy are masks, physical distancing, and a vaccine. Nothing gets us back to “normal” until then.

The only question is whether or not the federal government will spend the money to keep as many people and businesses afloat as possible until a vaccine gets here.

Trump and the Republicans won’t work on either Covid or help those hurt by the pandemic. So no one should vote for them.

Facebooklinkedinrss

Stimulus Bill Blocked By Rogue GOP Senators

The Daily Escape:

Late winter, NH – February 2020 photo by Betsy Zimmerli

Just when you think that the two Parties and the White House have found agreement on a massive stimulus bill, a few rogue Republicans decide that there’s too much welfare in it for them. From NBC News:

“A handful of Republican senators on Wednesday threatened to delay the $2 trillion coronavirus spending bill over a proposed increase to unemployment insurance.”

Sens. Tim Scott, (R-SC), Lindsey Graham, (R-SC), and Ben Sasse, (R-NE), said that the bill “could provide a strong incentive for employees to be laid off instead of going to work” because some people could theoretically make more by being unemployed. Senator Rick Scott (r-FL) jumped onto the obstructionist bandwagon as well.

More from the Senators’ statement:

“If the federal government accidentally incentivizes layoffs, we risk life-threatening shortages in sectors where doctors, nurses, and pharmacists are trying to care for the sick, and where growers and grocers, truckers and cooks are trying to get food to families’ tables.”

The fight is over an additional $600 per week payment to each recipient on top of their unemployment insurance payment. The proposed benefit also extends to workers who typically would not qualify, such as gig economy workers, furloughed employees, and freelancers.

Imagine! These Senators are so out of touch, they think you can receive unemployment payments if you quit your job.

This is hypocrisy in action: These Republicans obstructionists pretend to be suddenly concerned about either deficit spending, or about government fraud and abuse after they blew a trillion dollar hole in the our last budget to give unneeded money to their wealthy benefactors.

The bill was supposed to be voted on late yesterday, but the Senators who are objecting could hold up the bill by forcing votes on amendments. Sen. Chris Murphy, (D-CT), tweeted:

“Let’s not over-complicate this…several Republican Senators are holding up the bipartisan Coronavirus emergency bill because they think the bill is too good for laid off Americans. “

From Charlie Pierce:

“Right on cue, of course…Bernie Sanders threatened to block the bill unless the stooges dropped their opposition. Which, of course, is exactly what every Republican everywhere would like. The stooges are running a bluff. They don’t want to be the people who block this. They just want to talk about blocking it. If Sanders does them the incredible favor of blocking it himself, thereby pulling Mitch McConnell out of the ditch into which the Democratic minority has rolled him, they’ll all get re-elected.”

So the question is what is Majority Leader McConnell prepared to give up to pass the bill? And are Chuck and Nancy prepared to give up anything in order to move the bill on to the House?

It seems likely that McConnell wants to meet their demands with no real Democratic pushback. Is that likely to happen?

So, a few Republican supporters of our capitalist super heroes want to reduce the crumbs provided to ordinary workers. They have a small point about people not “earning” more from the government than they did on the job. The problem is that each state has its own unique unemployment insurance system, and it would be a nightmare to adjust each payment for each worker just to make Lindsay Graham feel good.

That’s the trouble with grifters. They simply can’t understand that there are people who aren’t always grifting.

Facebooklinkedinrss

It’s the Economy Stupid. Or Is It?

The Daily Escape:

On Tuesday, Trump was in the Rose Garden for a “virtual town hall” on Fox News. The Boston Globe reported that he wants the country “open and raring to go” by Easter, which is less than three weeks away. “I think it’s possible, why not?” he said with a shrug.

Watching Trump do a press conference is like watching the kid who didn’t read the book give his book report.

The top health professionals have called ending social distancing by Easter far too quick. But, Trump compared the potential for Coronavirus fatalities to our annual flu casualties and, to automobile accidents. That led Charlie Pierce to say:

“I can speak with some authority on this. On December 9, I got hit by a car. It has been three months now. Nobody I came into contact with in the aftermath has been hit by a car.”

It’s important to remember that Trump is saying this while we still have no idea how many Americans have, or have had, the virus. It seems safe to say the number is vastly higher than the number of people who have tested positive (nearly 50,000). Here’s a terrifying tweet:

(James Gallagher is the BBC’s Health and science correspondent)

Trump’s “let’s get America back to work” plea comes at a time when we have no idea about the extent of the virus’s impact, or how large the tsunami of cases will be. Trump is sounding a bit like General Buck Turgidson in 1964’s “Dr. Strangelove“:

“I’m not saying we wouldn’t get our hair mussed. But I do say no more than ten to twenty million killed, tops.”

There are operational issues involved in conducting a safe economic restart while the virus remains rampant in the country: It would require testing all who enter the workplace, every time they come to work. Where do those test kits come from when we can’t get enough for America’s hospitals? Who will read the tests and get the data back to the individual and the business? Can social distancing really be practiced at work? In offices?

Obviously there are conflicting opinions about how long to use severe Coronavirus mitigation and suppression measures when the economic consequences of that mitigation could be disastrous. The medical experts can tell us what the consequences of various courses of action are most likely to be in terms of illness and fatalities.

But the willingness to endure the likely costs of a particular course of action is a political, and possibly an ethical question. Last week, Wrongo asked:

“Is restoring our economy, and putting Americans back to work worth a million lives lost? Is it worth 300,000?”

Trump is right both to wrestle with this question, and to be concerned that Coronavirus could end his presidency. Here’s a chart that shows how long prior stock market crashes took to return to the pre-crash level:

This compares three prior crashes and the time it took to recover. Only the 1987 crash was a sharp “V” recovery, and that recovery took nearly two years. Both of the others took four years.

This most likely means Trump can’t run as a peace and prosperity president. He’ll simply be running as another Republican who ran up the debt with the crucial difference that Americans died on the home front on his watch, after trying to go back to work prematurely.

A few words about the attempted bailout. As Wrongo writes this, it’s likely that there may be a “deal” sometime late on Tuesday . The stock market has already closed up more than 2,000 points, or 11% on the hope of a deal.

The bailout deal should absolutely be as big as possible, but Mitch, Trump and the GOP have it wrong. We should be pointing our water hoses where the immediate fire is: Low – moderate income households and small businesses that have a week or two of cash reserves, and little access to credit markets.

While this is an emergency, it’s no excuse for another GOP round of opportunistic, potentially wasteful spending with little oversight. We have more important things to do than setting up a $500 billion Republican slush fund in an election year.

Trump will no doubt make an announcement that “America is again open for business”. But, that’s not really within his power. The economy is not usually like a faucet you can turn off and on.

It also means that Trump’s replacement will have a major job starting in 2021 trying to restore the stock market and the employment level to where they were pre-Coronavirus.

It is the highest duty of the US President to keep the country safe, and protect its people. Trump’s downplaying of what his science and security advisers have told him is doing exactly the opposite.

Facebooklinkedinrss

Saturday Soother – March 21, 2020

The Daily Escape:

David Hockney (a new painting) — here’s a quote from Hockney: “Do remember they can’t cancel the spring 2020”.

Blog reader Fred VK emails:

“How do you know if you could be in a third world country? When you go see the Doctor, she greets you wearing a face mask that says ‘made by Mr. Coffee’”.

It is difficult for people to talk about anything else. COVID-19 is on the march, and America isn’t prepared for what’s coming. Worse, we’re unsure if this is a one-two month problem, or something that will last a year or longer. Most countries think that the virus will grow exponentially, and will kill many of their citizens. This leads nearly all governments to order many businesses to close. No one is traveling, except to their local stores. In Connecticut, no one is able to get a haircut for the duration.

But since Wall Street is still open, anyone who owns stocks has taken a huge haircut this week. Friday’s drop leaves Trump looking at a Dow average that’s 3% below what it was when he took office. He’s presided over the worst week in the stock market since 2008.

This market crash is due to investors trying to understand the extent of the damage to the US economy that’s being done by how we’re fighting COVID-19.

In order to save our society over the longer run, we’re actively putting ourselves into a very deep recession. That may mean that people will be out of work for a short, or a long time. If it’s a long fight, that may lead to a very dark economic time for all Americans.

A fundamental question is:

“What unpleasant decisions would our federal and state governments be willing to take to get us out of a deep recession, if the virus is still around a few months from now, and still killing a lot of people?”

Is restoring our economy, and putting Americans back to work worth a million lives lost? Is it worth 300,000?

Remember that before 9/11, no one thought we would surrender our freedoms for 3,000 deaths, but we did. No one thought we’d fight a nearly 20 year war that killed 6,789 and wounded 52,353 Americans, but we did.

Those wars have cost the American taxpayers $5.9 trillion since they began in 2001. We’ll easily spend $2 trillion between here and September to prop up the economy while fighting the Cornonavirus.

What kind of sacrifices will we be willing to make if the Coronavirus is still killing Americans on Election Day 2020? Which Party will be saying we should put people back to work?

It’s likely to be both Parties.

Dark, right? There are encouraging signs. Small acts of kindness in supermarkets, artists performing for free on the internet, people trying very hard to avoid making the elderly sick. These are all wonderful things, and we need much, much more of them.

Some say that it takes a common enemy like the Coronavirus to unite us. If we become united in the fight, and stay united once we’re victorious, that would be also be a wonderful thing.

So, let’s take a beat, and think hopeful thoughts about the arrival of spring. Here in northwest Connecticut, the peepers began singing a week ago, and the daffodils are blooming. The first dandelions are peeping through the grass, but we’re expecting snow on Monday. So winter isn’t over just yet.

Let’s try to soothe ourselves by listening to two pieces of spring music. First, “Spring Morning” by Frederick Delius, written around 1888. This is always a Wrongo favorite in spring:

Those who read the Wrongologist in email can view the video here.

Second, listen to Vivaldi’s Four Seasons: “Spring” (La Primavera) in a complete version, performed live in February 2020 by Alana Youssefian and the Voices of Music. This isn’t a “Vivaldi as usual” performance. Wrongo had never heard of Youssefian, but listening to her and the Voices of Music’s original instruments is a treat.

Subtitles in the video are words by Antonio Vivaldi!

Those who read the Wrongologist in email can view the video here.

Facebooklinkedinrss

Call It the Great Virus Crash of 2020

The Daily Escape:

Desert bloom on Siphon Draw Trail, AZ – photo by ericatect

That was the term used on Wednesday by Ed Yardeni, president of Yardeni Research:

“It’s all at once a health crisis, financial crisis and economic crisis. We need to fix the health part of it before we have it solved, but we can take financial and fiscal steps to blunt its effects.”

JPMorgan Chase said it forecasts a 14% decline in gross domestic product in the second quarter. That’s enough to scare anyone. In a partial response, the Trump administration suspended evictions, authorized the Defense Production Act, and is eyeing a stimulus package worth about $1 trillion.

The headline is that Trump wants to give Americans direct cash assistance. He wants to send two $1,000 checks to many Americans. Beginning April 6th, $250 billion would be issued, and another $250 billion would be issued beginning May 18th. Payments would be tiered based on income level and family size.

The Treasury Department is circulating a two-page sheet of priorities that it wants to see in the final deal:

  • Part of it is a $50 billion “airline industry secured lending facility” that would allow it to make direct loans to “U.S. passenger and cargo air carriers”.
  • The Treasury would also earmark $300 billion to help small businesses avoid mass layoffs.
    • Eligible borrowers would be companies with less than 500 employees.
    • Loan amounts would be limited to 100% of 6 weeks of payroll, capped at $1540 per week per employee.
  • The Treasury also wants Congress to allow it to temporarily guarantee money market mutual funds. Some are worried that an investor panic could lead to a run on these funds. This was done before during the Great Recession.
  • Finally, there would be a $150 billion fund to prop up other sectors, including hotels.

And Wednesday was another day when Trump appeared in front of the press, attempting to look as if he’s a war president. The bad news was that they again halted trading on the stock markets during his press conference.

At Wednesday’s close, the Dow was down another 1,338 points. We’ve now lost almost all of the gains accrued during the Trump administration. Nearly every asset class – stocks, bonds, gold, and oil – fell as investors fled to the safety of cash.

Mr. Market has decided that cash is king. The smart money can’t decide whether Trump’s offering too much stimulus. If so, things must be really bad. And if he’s not offering enough, then there’s no leadership.

Here’s one way to look at the Dow’s performance:

  • First 1153 days of Obama’s presidency +67%
  • First 1153 days of Trump’s presidency  +0%

The WH needs to shut him up. Each time he speaks, things get worse for the rest of us.

Inside this crisis is perhaps the biggest political challenge for Democrats: They have to agree to help an incompetent president and his Party avoid killing their constituents.

That’s a bitter pill, particularly in an election year.

It isn’t a stretch to see how Democrats would be painted as obstructionists if they fail to support what Trump wants at a time when millions of people need a cash bridge to help them across economic difficulties.

Wrongo thinks helping people is a good idea, and a total of $2,000 is better than nothing, but what will it really do? The average US mortgage payment is over $1,000, while the median rent for a 1-bedroom apartment is $1,234. So for a couple, in most cases, one month’s housing costs will eat up about 25% of the total cash from the government. The rest will go to car expenses, the cell phone, perhaps student debt payments. Maybe, if people can stretch, it will last two months.

It’s helpful, but far from enough if employers remain closed for two months or more.

And loans to small businesses? Will small businesses willingly take on more debt when they can’t be sure when their income will return, or if the business will survive?

Any loans to large corporations is a huge mistake. The big four US airlines – Delta, United, American, and Southwest – whose stocks are getting crushed because they will run out of cash in a few months, would be the primary recipients of that $50 billion bailout. But together, they incinerated $43.7 billion in cash on share buybacks since 2012. Now they are looking to get that back from the taxpayers. Those buybacks enriched the very shareholders that Trump now wants to bail out.

Perhaps Trump said it best, although it was a while ago: “We’re seeing a stock market like no one has ever seen before.”

Trump spent the first three years of his presidency trying to erase Obama’s legacy.  Now, The Great Virus Crash in Trump’s last year will erase his.

Facebooklinkedinrss

Biden’s Win and Trump’s Economic Stimulus

The Daily Escape:

This week’s Supermoon over Three Fingers, WA – March 2020 photo by Alpackie

Today we’ll talk superficially about two topics. First, a quick take on Tuesday’s Democratic primary, and second, about whatever it is Trump is cooking up with Republicans as an “economic stimulus” in this time of Coronavirus and stock market volatility.

Here’s Jameson Quinn with a pithy summary of the primary:

“Right now, the best-case scenario is that Joe Biden will be the next president of the USA; the worst-case is that Trump is the last one. That is to say, we will have a choice between a guy whose primary campaigns twice flamed out from self-inflicted errors and who, the day he takes office, will be the oldest president the country has ever had; and a narcissistic, mobbed-up reality television star whose platform is focused on his core base of racists, trolls, and racist trolls.”

But how do you really feel?

That said, Wrongo was always for Elizabeth Warren, but now, that door has closed. Wrongo like many others, overestimated the importance of competency and policy. Most people don’t read policy papers, and they knew that Biden had been Obama’s VP. That was enough to get them to vote for Biden.

People make their voting decisions based on things like personality, perceived connection to their tribe, perceived electability and an “X” factor, vague trust in a candidate’s judgment. Would Biden be a good president? Who really knows?

Moving on to Trump’s economic stimulus: It isn’t surprising that Trump promises some more corporate socialism and the stock market likes it. And it isn’t surprising that no one in the media notices that the Party of Obama Derangement Syndrome had zero concerns about debt/deficits once Orange became the new black.

But, rather than proposing tax cuts, good policy starts with identifying the problems:

  1. Sick people: They require costly medical care. Many can’t afford it, even if it’s available, and even if they have insurance.
  2. Unemployment: Unemployment will rise. Sick people without sick leave will lose their jobs. Businesses will have less revenue.
  3. Goods shortages: Much of our goods come from China, including medical supplies and drugs. Trade has already been disrupted, and it will get worse. Italy finds it needs thousands of ventilators, and China is supplying them.
  4. Childcare: Schools and daycare centers are closing, and working parents are in a jam. Worse, parents will be hospitalized with no care arranged for their kids.

Tax cuts won’t address these problems. Most sick people don’t have much income, so tax cuts won’t matter to them. Unemployed people won’t have income either. The idea that the government can wall off the economic impacts of a virus-caused recession is correct. Once the economic slowdown spreads, the right kinds of government programs could soften the blow.

Here’s Wrongo’s prescription for Trump and Congress:

  • No bailouts for any industry
  • Targeted financial help for hospitals and the health care sector
  • General financial relief paid directly to workers and families

America’s businesses and capitalists had a fantastic decade. Let them and their rich executives weather this economic downturn on their own.

Trump’s people floated the idea of a push back of the April 15 Tax Filing Deadline. This does nothing for people, and shows just how little the administration is prepared to do.

Trump’s suggestion of a payroll tax cut is also misplaced. It’s been tried in the past, including by Obama. But tax cuts are less effective than simply providing lump-sum payments to families below a certain income threshold.

Also, payroll taxes are the primary source of funding for Social Security and Medicare. So this opens the door to another GOP stealth attack on Social Security. Trump has already said he plans to cut Social Security if reelected.

Jason Furman, Obama’s head of the Council of Economic Advisers, proposed an immediate, one-time payment of $1,000 to every adult, plus $500 for every child. Such payments would help cover rent, food and other costs, without a large administrative burden of trying to determine who got sick, or who lost work due to the Coronavirus.

Furman’s proposal would add up to $350 billion. The right wing will say no financial stimuli for Joe Sixpack. Those things must be paid for.

But Trump thought it was fine to dig a $ trillion hole in the budget for an unnecessary tax cut during good economic times.

What we need now is urgent. It requires smart, humane, and energetic action.

Facebooklinkedinrss