stimulus

How Trump Survives

NBC News and the Wall Street Journal polled his job approval. There was no appreciable change.

.. Why? The most important reason has to be the remarkable state of the American economy. On Election Day 2016, the Dow Jones Industrial Average closed at 18,332.43. On August 29, it closed at 26,124.57. That is an increase of some 40 percent. Other indices show similar gains. Growth in GDP went from 1.5 percent in 2016 to 2.3 percent in 2017 and, helped by the excellent 4.2 percent number in the second quarter, is forecast for around 3 percent in 2018.

.. The fact that presidents are not responsible for the economy does not stop the public from assigning them blame or credit. And Trump deserves some credit. His pro-business attitude stirs the bulls’ animal spirits. His deregulatory and tax policies contribute to growth. Trump understands that he is riding the bull — and that his following will be strong for the duration of the journey.

.. That’s why Trump doesn’t want the Federal Reserve to tighten interest rates. Like all populist leaders, he is fond of debt and inflation. These economic stimulants boost his political coalition. If Jerome Powell and company raise the federal funds rate too quickly, the economic gains of the first half of Trump’s presidency could unwind. The other promises Trump has kept to his voters —

nominating constitutionalist judges,

supporting Israel,

cracking down on illegal immigration,

promoting Second Amendment rights,

rebalancing global trade

— might not matter. As the saying goes: When the economy is the issue, it’s the only issue.

.. The economic boom is crucial in understanding why Trump enjoys the 88 percent approval among Republicans that keeps him politically viable.

.. Trump continues to goad, highlight, and benefit from an antagonistic news media. The overwhelmingly negative coverage of Trump paradoxically works to his advantage by driving his supporters to rally to his side. When the press gets a story wrong, Trump is vindicated. His voters have less reason to trust the elite media institutions they see as allied against them in a struggle over American identity.

.. Media obsession with Trump and scandal helps the president in other ways. For one, the scandals are confusing and increasingly self-referential. Only political professionals and junkies can keep track of them. The headlines run together. The talking heads are background noise to men and women outside the bubble.

.. The media fixation hands Trump the initiative. Because so much of the news is based on his Twitter feed, he can create storylines — and spark confusion and outrage — with the push of a button. This ability lets him shift attention from current controversies by creating fresh ones. The ongoing hysteria lessens the cost to Trump of each bad story. It also allows him to portray media institutions and figures as insiders contemptuous of Trump voters and eager to overturn the result of a presidential election.

.. Trump survives not only because of the economy but also because of his opposition. He benefits from media bias as well as the lack of a credible Democratic alternative. If Democrats are associated with socialism, abolishing ICE, and single-payer health care, Trump lives to fight another day.

Democrats — and most Republicans for that matter — have yet to grasp the ideas of political economy that Trump intuits: government that privileges American citizens through

tight labor markets,

border security,

trade reciprocity, and

entitlements.

.. Nor do Democrats understand that American populism is not simply economic. It is cultural. It has long been associated with traditional values and practices, an unreconstructed patriotism, and support for law and order. No matter how well Democratic proposals might test, the party will not succeed at the national level unless it addresses and mollifies the social concerns of the white working class. Pelosi, Schumer, and Sanders have not tried.

Maybe one day they will. Change the economy, the news business, or the Democratic party, and the president’s in trouble. Until then, Trump will be Trump. And will live to fight another day.

Who’s Afraid of Nancy Pelosi?

What has Pelosi achieved?

First, as House minority leader, she played a crucial role in turning back George W. Bush’s attempt to privatize Social Security.

.. Then she was the key figure, arguably even more crucial than President Barack Obama, in passing the Affordable Care Act, which produced a spectacular fall in the number of uninsured Americans and has proved surprisingly robust even in the face of Trumpian sabotage.

She helped enact financial reform, which has turned out to be more vulnerable to being undermined, but still helped stabilize the economy and protected many Americans from fraud.

Pelosi also helped pass the Obama stimulus plan, which economists overwhelmingly agree mitigated job losses from the financial crisis, as well as playing a role in laying the foundation for a green energy revolution.

.. whenever you hear Republicans claim that Pelosi is some kind of wild-eyed leftist, ask yourself, what’s so radical about protecting retirement income, expanding health care and reining in runaway bankers?

It’s probably also worth noting that Pelosi has been untouched by allegations of personal scandal, which is amazing given the right’s ability to manufacture such allegations out of thin air.

So how does Pelosi stack up against the four Republicans who have held the speaker’s position since the G.O.P. took control of the House in 1994?

Newt Gingrich was a blowhard who shut down the government in a failed attempt to blackmail Bill Clinton into cutting Medicare, then led the impeachment of Clinton over an affair even as he himself was cheating on his wife.

Dennis Hastert, we now know, had a history of molesting teenage boys. Personal behavior aside, the “Hastert rule,” under which Republicans could support only legislation approved by a majority of their own party, empowered extremists and made America less governable.

John Boehner didn’t do much except oppose everything Obama proposed, including measures that were crucial to dealing with the aftermath of the financial crisis.

And Paul Ryan, the current but departing speaker, is a flimflam man: a fake deficit hawk whose one legislative achievement is a budget-busting tax cut, a fake policy wonk whose budget proposals were always obvious smoke and mirrors, pretending to address the budget deficit but actually just redistributing income from the poor to the rich. In the final act of his political career he has also shown himself to be a coward, utterly unwilling to stand up to Trump’s malfeasance.

.. But Pelosi is typically referred to as “divisive.” Why?

.. I mean, it’s true that she’s a political partisan — but no more so than any of the Republicans who preceded and followed her. Her policy stances are far less at odds with public opinion than, say, Ryan’s attempts to privatize Medicare and slash its funding. So what makes her “divisive”?

.. Or maybe it’s just the fact that she’s a woman — a woman who happens to have been far better at her job than any man in recent memory.

.. It’s a sad commentary on Republicans that they have nothing to run on except demonizing a politician whose track record makes them look pathetic. And it’s a sad commentary on the news media that so much reporting echoes these baseless attacks.

How Big a Bang for Trump’s Buck? (Wonkish)

I’m having a hard time figuring out exactly how big a stimulus we’re looking at, but it seems to be around 2 percent of GDP for fiscal 2019. With a multiplier of 0.5, that would add 1 percent to growth.

That said, I’d suggest that this is a bit high. For one thing, it’s not clear how much impact corporate tax cuts, which are the biggest item, will really have on spending. Meanwhile, unemployment is only 4 percent; given Okun’s Law, the usual relationship between growth and changes in unemployment, an extra 1 percent growth would bring unemployment down to 3.5%, which is really low by historical standards, so that the Fed would probably lean especially hard against this stimulus.

With Budget Deal, the G.O.P. Tosses Out the Economics Textbooks

the Pentagon, which has spent years complaining about spending restraints that were introduced in 2011, will get an eighty-billion-dollar increase in its budget for this year, and an extra eighty-five billion dollars for next year.

.. All told, the deal authorizes about three hundred billion dollars in new spending over the next two years.

.. Gross domestic product .. is currently about twenty trillion dollars

.. the G.O.P. tax bill will reduce tax payments by about a hundred and thirty-five billion dollars in the 2018 fiscal year, and by two hundred and eighty billion dollars in the 2019 fiscal year.

.. If you add it to the additional spending in the budget deal, you’ve got a pretty big “Trump stimulus.”

.. the over-all effect of the tax bill and the spending deal would be about 1.25 per cent of G.D.P. for this calendar year, and two per cent for the next.

.. the Obama stimulus of 2009 through 2011 .. totalled about two per cent of G.D.P. each year

.. Many economics textbooks say this is the sort of environment in which the government should be balancing its books, and perhaps even paying down deb

.. in 2011 prompted members of the Party to refuse to raise the debt ceiling, is purely cynical.

.. The Reagan Administration and the George W. Bush Administration both raided the public purse to finance big tax cuts, and left the deficit much higher than they found it. The Trump Administration is merely following suit.

.. “As long as there is still slack in corners of the labor market, then this kind of fiscal stimulus of the economy near full employment is a kind of test I support.”