Posts Tagged ‘bill clinton’

Don’t look to us

12 August 2011

Households, that is.

Household consumption has long been the mainstay of U.S. GDP, and asset-bubble-driven consumption in turn helped drive the expansions of the 1990s and 2000s. But consumption spending has been weak in this so-called recovery, growing at only about 2% (annualized and inflation-adjusted) since its trough in spring 2009, and it fell in each of the last three months for which we have data (see graph). On top of that, today’s consumer sentiment numbers are the worst in three decades. To find worse, you’d have to go back to a month that included recession, double-digit inflation, Americans held hostage in Iran, long gas lines, and the eruption of Mount St. Helen’s (this is starting to sound like a pub trivia quiz . . . the answer is May 1980).

(Graph from www.data360.org.)

File under “Outraged and paying attention”: From the press release accompanying the consumer sentiment survey data (from Thomson Reuters / University of Michigan):

‘”Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government’s role,” survey director Richard Curtin said in a statement.

‘The Obama administration received poor ratings from 61 percent of respondents, the worst showing among all prior heads of state. [I could not find a rating for Congress, but in recent polls Congress gets even lower ratings than Obama.]

‘”This was more than the simple recognition that traditional monetary and fiscal policy measures were largely spent; it was the realization that the government was unable or unwilling to act,” Curtin added.’

Yes. Imagine if the government had spent this year looking for ways to stimulate the economy rather than contract it through spending cuts. Failing that, imagine if if Obama had forcefully and publicly told the Republicans that it was absolutely unacceptable for them to hold the debt ceiling hostage to their root-canal economics. (It worked for Bill Clinton in 1995-96 with the government shutdown.) At least one branch of government would be seen as more focused on jobs than deficits.

Instead, as Curtin implies, the public rationally concludes that jobs take a back seat to deficit cutting on all major politicians’ agendas. And the attention given to the debt-ceiling debacle has much of the public expecting more of the same in connection with the budget appropriations deadline on Sept. 30, the deadline for the Group of Twelve’s long-term budget-cutting proposal on Nov. 23,  and the expiration of the Bush tax cuts on Jan. 1, 2012. It’s easy to imagine the entire rest of the year devoted to partisan trench warfare, isn’t it? Be glad these guys are on vacation.

P.S. Title inspired by The Clash, of course. Alas, poor London. Feels weird to read about traditional looting for a change instead of the financial variant.

Uh oh, the 14th amendment might not help here

30 July 2011

Many, including Bill Clinton, have said the debt ceiling is unconstitutional because it goes against the 14th amendment’s clause that the validity of the public debt shall not be questioned. However, it’s also been pointed out that interest on the debt is a relatively small obligation of the government and can easily be paid for out of incoming revenues ($29 B in interest, $172 B in revenues, for August after the 2nd). So it seems to me that a reasonable interpretation of the 14th amendment is that it applies to the government’s debt obligations but not to their obligations to anyone else — government employees, contractors, retirees, veterans, etc. Perhaps that’s why President Obama has said his lawyers don’t think invoking the 14th amendment is a promising solution.

Tom Geoghegan, one of my favorite writers on politics and the law (his book Which Side Are You On? even manages to make organized labor funny), suggests a different “constitutional option”: Article I. Sections 8 and 9 of Article I list the powers of Congress and the limits on those powers, which are quite limited. Article 10, Powers Prohibited of States, says no state shall pass any “Law impairing the Obligation of Contracts.” (Geoghegan’s March article on the subject is also worth reading.) Geoghegan says it’s implied that this would extend to Congress, too, but I’m not so sure — Section 8 gives Congress all sorts of powers that are prohibited of states, as well as the power to “provide for .. the general welfare of the United States,” and the Supreme Court’s interpretation of the “general welfare” clause became a lot more expansive around 1937 (after the kerfuffle over the Court’s resistance to the New Deal and FDR’s attempt to pack the court by increasing the number of justices; the so-called “switch in time that saved nine”). The conservative majority on the Court could conceivably rule that keeping the debt ceiling constant would aid the general welfare by forcing reductions in the size of government or in the burden of the debt on future generations. Lame, far-fetched arguments, to be sure, but those have carried the day rather recently with the Court.

So it’s unclear what the way out of this morass will be. If the debt ceiling is not raised, we most likely get a partial government shutdown, which will go on until the Republicans in Congress decide that it’s hurting them at least as much as it’s hurting Obama and the Democrats (see: 1995-96). If we’re lucky, the Republicans realize that before Aug. 2, and the nation is spared a shutdown.

Bill Clinton accepts some blame for the crisis

27 May 2009

It’s part of a lengthy cover story in Sunday’s New York Times Magazine.  There’s a good synopsis of it here in The New Republic online, and another one by NYT economics writer David Leonhardt, with annotations, here on the Times‘s Economix blog.  Some highlights:

Clinton says he totally blew it in acceding to Greenspan’s call that derivatives should be unregulated.

He also says that his backing of Gramm-Leach-Bliley (i.e., allowing banks and investment banks and insurance companies to merge) would have been wise only if, as he expected, there was going to be appropriate regulation and oversight of the new financial supermarkets.  Had he known there would be none in the next two presidential terms, he would have opposed it.

Very interesting.  He’s a lot more open about his administration’s shortcomings in this department than, say, Larry Summers has been.  Just in the little bits I saw, Clinton is thoughtful and persuasive.

He also touches on the important distinction between regulations/prohibitions and oversight, with financial supermarkets as a case in point.  When you can count on having good regulators who provide adequate oversight, then you can allow certain activities that might otherwise better be prohibited.  Then again, is “deregulation with proper oversight” too clever by half (not to mention oxymoronic)?  We shouldn’t be learning about this policy approach a decade after these deregulatory policies were put in place.  Who was speaking up for proper oversight during the Bush years?