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Tag: economic struggle

How The Political Climate Is Crippling The Fed

Despite the predictions of investors and traders, Chairman Ben Bernanke announced in a speech Friday that he would not be proposing new steps by the Federal Reserve to help the economy. The reasons behind his inaction might be more political than monetary.

Many people worry that the United States is on the brink of another recession — a fear compounded by slowing consumer spending, falling home prices, large debt burdens, and uncertainty in Europe. Investors had hoped that the Fed would take decisive action to help the economy; but instead of offering a new stimulus plan, Bernanke criticized Congress’ actions in the debt ceiling debacle and said fiscal authorities should do more to help the economy in the short term. The stock market temporarily dropped with the news that the Fed would, for the time being, not be enacting new measures to help the economy.

Contrary to hopeful investors, Paul Krugman had predicted in an Aug. 25 New York Times op-ed that Bernanke would not offer a dramatic stimulus plan during the annual Fed gathering at Jackson Hole, Wyo. There are many logical steps the Fed could take to help the economy, but Bernanke is instead choosing to not take action. The interest rates the Fed would usually target are already near zero and cannot be cut more; however, Krugman writes that Bernanke could take bolder actions, including purchasing long-term government debt and seeking moderate inflation to encourage borrowing, that would stimulate the economy.

But with presidential hopefuls saying that issuing more money would be “almost treasonous,” as Rick Perry said in Iowa earlier this month, the Fed chairman might not be as apt to take such measures. According to Krugman, the Fed is “intimidated into inaction” by the political climate.

Krugman wrote, “I’m using Mr. Perry — who has famously threatened Mr. Bernanke with dire personal consequences if he pursues expansionary monetary policy before the 2012 election — as a symbol of the political intimidation that is killing our last remaining hope for economic recovery.”

Perry’s comments created a stir in the media, but the underlying sentiment isn’t unique to bombastic presidential hopefuls. According to Rick Wilson, a Republican strategist and the founder of Intrepid Media, the Federal Reserve has played a far too significant role in the economy already.

He said that he thinks average Americans would be more opposed to the Fed’s actions if they understood it better. “They’re uncomfortable with its role in the economy, but they don’t understand it,” he said. Wilson accused the Fed of “playing a lot of games to keep the banks afloat” instead of letting market forces sort out the economy.

According to Wilson, the Fed’s meddling has nonetheless failed to reach the “mythical trigger point” where the economy is in ideal shape. “If we can’t get there from spending well over a trillion dollars in four years, we’ve got to reassess that model.”

Fed supporters counter that Bernanke’s decisions have helped the economy so far. In last year’s speech, he proposed a Treasury-buying plan to help lower long-term rates, which, when enacted, lifted stock prices.

With recent news that the economy grew at an annual rate of just 1 percent this spring, many argue that the Fed should take greater action now instead of caving to political pressure from Perry and other Republicans. The speech did not deliver immediate help, despite the fact that Bernanke said that in the September meeting, the Fed “is prepared to employ its tools as appropriate to promote a stronger economic recovery.”

That might be true, but it is also possible that the Fed will continue to be paralyzed by the hostile political climate.

Huntsman Would Ask Wealthy To Sacrifice If Elected

Jon Huntsman 2.0 is continuing his sprint to the center, telling the PBS Newshour on Thursday that wealthy Americans will have to make sacrifices to revive the struggling American economy.

“As president, I wouldn’t hesitate to call on a sacrifice from all of our people, even those at the very highest end of the income spectrum,” Huntsman said. “I’m not saying higher taxes, but there are contributions they can make too.”

Although Huntsman stopped short of saying that he would raise taxes on the wealthy, his comments are sure to distinguish him from fellow candidates such as Rick Perry and Michele Bachmann, who consider calls for greater sacrifice from the rich to be a form of class warfare.

Huntsman also made waves last week when he tweeted, “To be clear. I believe in evolution and trust scientists on global warming. Call me crazy.” This was a clear jab at Perry, who is notoriously skeptical of almost anything that scientists tell him.

The former Utah governor is clearly pinning his hopes for the nomination on capturing moderate voters who aren’t comfortable with supporting a Tea Party candidate. This strategy may pay off in New Hampshire, where the electorate is not extremely conservative and independents are allowed to vote in the Republican primary. It’s worth noting that John Weaver, who is Huntsman’s chief strategist, has pulled off two shocking Granite State upsets in the past while working for John McCain in 2000 and 2008. Still, in a Republican primary dominated by extreme-right politics and overt hostility to the President, Huntsman’s status as a former member of the Obama Administration makes him an extreme long shot to be the Republican candidate for president.

GOP Attacks On EPA Ignore The Problem

Dutifully following their Tea Party scripts, most of the Republican presidential candidates have declared war on the Environmental Protection Agency. They claim that the economy is being smothered by regulations designed to keep our air and water safe.

No iota of evidence is being offered, and in fact the record profits of big energy companies indicate a spectacular lack of suffering.

But listen to Rep. Michele Bachmann’s promise to an Iowa crowd about one of her first presidential priorities: “I guarantee you the EPA will have doors locked and lights turned off, and they will only be about conservation. It will be a new day and a new sheriff in Washington, D.C.”

Granted, Bachmann is a witless parrot who has no chance — absolutely zero — of being elected to the White House. But her hatred of the EPA is shared by Gov. Rick Perry of Texas, who is considered a GOP frontrunner.

Like Bachmann, Perry refuses to accept that global warming is real. He launched a lawsuit to stop the EPA from enacting rules to limit greenhouse gasses from oil refineries, power plants and other industrial sources.

Perry likes to whine that “EPA regulations are killing jobs all across America,” a statement that draws more cheers in his native state than in the rest of the country. In fact, polls show that a large majority of Americans are worried about air and water pollution, and hold a positive view of the EPA.

Nothing kills jobs like an environmental catastrophe, as the Gulf Coast gravely experienced during (and after) the BP oil spill last year. The true cost of that accident to the economies of Louisiana, Alabama, Mississippi and Florida is probably incalculable, although surely many billions of dollars were lost.

The cleanup wasn’t perfect, but it’s absurd to think that BP would have worked faster or more efficiently if the Obama administration and the EPA hadn’t been leaning on the company, both publicly and behind closed doors.

Forty-one years ago the agency was formed, and for good reason: Toxins by the ton were being flagrantly pumped into this country’s rivers, bays and oceans, and blown through smokestacks into the air. People were getting sick and dying only because some companies were too greedy to spend money cleaning up their own mess.

The corporate mentality toward pollution has changed because the alternatives are heavy fines, criminal penalties and savage publicity. A reminder of why we still need the EPA was last month’s oil spill on the Yellowstone River, which affected ranchers, farmers, fishing guides and rafting companies. It also occurred seven months after Exxon Mobil insisted that its pipeline would never rupture because it was buried too deep.

Of all the reasons government exists, none is more crucial than trying to keep its citizens safe, whether from a terrorist attack, Wall Street’s recklessness or industrial poisoning.

Not surprisingly, surveys show that most Americans want their children to grow up drinking clean water and breathing clean air. How, then, to explain the radical hostility of Bachmann, Perry, Newt Gingrich and some of the other Republican candidates?

First, it’s about raising money. The petroleum and coal conglomerates are huge GOP donors, and they’d love to have a president who would gut the EPA.

Second, it’s about politics. To win Republican primaries — the theory goes — a candidate must fire up the Wingnut Right. The easiest way to do that is to brainlessly bash whatever government does.

Perry specializes in this, even though almost half of Texas’ vaunted employment growth has been in the public sector — government jobs, in other words. You won’t hear the governor complain about the $200 billion that U.S. taxpayers pump into his state’s economy annually for military bases and related industries.

One thing to emerge from the Republicans’ attacks on the EPA is the early campaign path of Mitt Romney. Clearly, his strategy is to appear less loony and misinformed than his rivals.

Romney says the EPA has an important role, and furthermore he has actually conceded that global warming is a fact. As governor of Massachusetts, Romney expressed interest in a carbon cap-and-trade program, and proposed a plan to cut back on greenhouse gas emissions.

Predictably, with the primaries looming, Romney now says he opposes regulating carbon dioxide and other gases linked to climate change. As he and the other GOP candidates begin piling into Florida for the long campaign, pay attention to their rhetoric about the dreaded EPA.

The economy here would crumble if the environment was left unprotected. Florida can’t survive without tourism, and tourism dies when tar balls and rotting fish turn up on the beach.

What remains of the long-polluted Everglades would also be doomed without a federal regulatory presence, however cumbersome. Doomed, too, would be South Florida’s chief source of fresh water, upon which business growth depends — not to mention the future of about eight million people.

Yet don’t be surprised if Perry and Bachmann arrive here clinging to the Tea Party narrative that government oversight is inherently evil. They’d like us to kindly forget about that little mishap in the Gulf of Mexico last year, and other manmade though preventable disasters.

It’s easier to ignore the past and stick to the script, especially if someone else is writing it.

(Carl Hiaasen is a columnist for the Miami Herald. Readers may write to him at: 1 Herald Plaza, Miami, Fla., 33132.)

Did Marriage Equality Kill The Economy?

Is same-sex marriage the root cause of America’s economic woes? According to Republican presidential candidates Newt Gingrich and Rick Santorum, the answer is yes. Over the past two days, both conservative candidates made the case that marriage equality posed a grave threat to the future of the American economy.

On Tuesday, Gingrich argued that there is a clear connection between the “attack” on the traditional family and the struggling economy.

“The very basis of our belief and freedom is that we believe we are endowed by our creator with certain unalienable rights. The very source of our strength is that we believe these are truths…and so there’s a core absolute overlap between free enterprise, freedom and freedom of faith. And if you don’t have freedom of faith in the end you’re not going to have free enterprise because there’s no moral force that defends and protects you.”

Not to be outdone, on Wednesday Santorum argued that “moral failings” are at the heart of our economic problems.

“If you think that we can be a society that kills our own, and that disregards the family and the important role it plays, and doesn’t teach moral values and the important role of faith in the public square, and then expect people to be good, decent and moral when they behave economically, if you look at the root cause of the economic problems that we’re dealing with on Wall Street and Main Street I might add, from 2008, they were huge moral failings…Capitalism requires some strong modicum of moral consciousness if it’s gonna be successful.”

Something tells me that this isn’t what James Carville had in mind when he first warned that “it’s the economy, stupid!”