Gregg Easterbrook

Blame Obama and Boehner for the downgrade

Aug 7, 2011 22:24 UTC

In April 2010, Treasury Secretary Timothy Geithner said there was “no chance” Treasury bills could lose their AAA rating. The fact that top government officials thought there was “no chance” something could happen surely is one reason it happened.

U.S. government bond ratings are falling — the S&P downgraded the US credit rating yesterday from AAA to AA-plus, the stock market is plummeting — such movements don’t necessarily have story lines like Hollywood movies. Herd instinct and randomness are factors. Even top economists can’t agree on exactly why the Dow headed south.

But the bond rating drop unequivocally is a direct result of the Barack Obama-John Boehner national-debt deal being as phony as a three-dollar-bill.

Stocks for their part began to fall two weeks ago, on rumors the Obama-Boehner deal would contain nothing but pandering. The drop accelerated – 6.1 percent of the 10.5 percent decline – pretty much to the hour, on Monday, when the deal became final and it was clear that reports were correct. Monday, markets learned that people at the top of the government of the United States were going to do nothing at all about the national debt, beyond acting like windbags.

America had been elaborately warned that endless borrowing to appease interest groups doesn’t work – the warnings have come from Greece, Ireland, Portugal and most of all from Japan. President Obama and congressional leaders of both parties ignored those warnings and ordered another round of champagne, agreeing to a deal that includes $2.4 trillion of fresh borrowing by 2012, paired with only $21 billion in specific cuts in the same period — about $115 spent for each $1 saved.

The phony-as-a-$3-bill debt deal

Aug 1, 2011 15:55 UTC

Maybe Washington can start paying invoices with $3 bills — because the “dramatic” agreement to “reduce the national debt” is as phony as a three dollar bill.

Weeks of nearly round-the-clock negotiations among the White House, House and Senate have led to an “historic” debt deal that consists almost entirely of fluff, doublespeak and empty promises.

The politicians involved get to claim victory, and presumably will be rewarded with votes and campaign donations from the special-interest groups that, pretty much across the board, were spared any pain. Young people of the United States once again are hammered. If the deal becomes law, the national debt will rise again dramatically, while there’s no guarantee any cut will materialize — and the bill for this recklessness will be passed along to those under age 30.

Why didn’t the heat wave cause power failures?

Jul 28, 2011 19:38 UTC

Last week a record-setting heat wave afflicted much of the United States — yet there were no brownouts.

Electricity shortages during heat waves long have been common. We tend to miss what doesn’t happen, and what didn’t happen last week was electric power scarcity.

Two factors are at play, one positive and one vexing.

The positive factor is gradual decline in electricity demand. From 1996 to 2007, U.S. power consumption rose 23 percent. Since then, consumption has declined 16 percent. Taking population growth into account, per capita demand decline since 2007 is even greater. Details are in this fun report — every day must be a party at the Energy Information Administration.

Facing down the debt

Jul 20, 2011 18:07 UTC

Over the past three generations, America’s leaders have faced down the Depression, won World War II, won the Cold War, created Social Security and Medicare, passed the Civil Rights Act and dramatically expanded environmental protection. The record is one of boldness and triumph.

Today, America’s leaders face the challenge of reducing giveaways to special-interest groups. That is what the national debt issue boils down to — do Congress and the White House have what it takes to say “no” to interest groups that want to be showered with borrowed money?

Anybody can agree to a giveaway. In politics, nothing is easier than handing out bags of candy while making empty promises about fiscal discipline in the future. No mettle is required endlessly to say that this year everybody gets everything they want but look out, next year we get serious.

from MediaFile:

The Journal’s twisted self-defense

Jul 18, 2011 21:22 UTC

By Gregg Easterbrook
The views expressed are his own.

Today’s Wall Street Journal in its lead editorial declares Rupert Murdoch and News Corporation all but saints walking on Earth, claiming “politicians and competitors are using the phone-hacking years ago at a British corner of News Corporation to assail the Journal and perhaps injure press freedom.”

If patriotism is the last refuge of scoundrels, press freedom is the last refuge of tabloid gutter-dwellers. But note two corruptions in that single sentence of the Journal’s embarrassing editorial.

First, casually the Journal acknowledges the scandal’s initial charge is true, referring to “the phone-hacking years ago at a British corner of News Corp.” Just last week, Murdoch was vehemently saying in the Journal’s pages that some of the accusations were “total lies."

Twilight of the WASPs?

Jul 14, 2011 19:23 UTC

White Anglo Saxon Protestant (WASP) men are supposed to hold the reins of power in the United States. All but two presidents have been WASP males; almost all Supreme Court justices; most leaders of the House and Senate.

Today everyone knows America has a black president for the first time. It’s also the first time in American history that neither the president nor the vice president are WASPs. Of the six apparent frontrunners for the 2012 Republican presidential nomination to oppose Barack Obama, just one is a WASP. Of the four leaders of Congress, only one is a WASP. The Supreme Court not only has no WASP, it has no Protestant.

Is this the twilight of the WASPs?

Consider the absence of WASP males at the top of public life. The president is African American, the vice president is Catholic. Current favorites to top the Republican 2012 ticket are Mitt Romney and Jon Huntsman, Mormons; Sarah Palin and Michele Bachmann, women; Newt Gingrich, a Catholic and Tim Pawlenty, a Baptist.

How nations go bankrupt, one sliver at a time

Jul 7, 2011 16:08 UTC

Governments in Greece, Portugal, the United States and elsewhere are borrowing, and often wasting, money at a reckless pace. Why do banks and financial markets cooperate? Because there’s something in it for them.

They keep a little slice of the public money being borrowed or wasted. Only a sliver. But the more that is borrowed, the larger the sliver becomes.

This is the Sliver Strategy, and it underlies the ways many of the Western world’s wealthy institutions relate to government.

What Lucille Ball and Desi Arnaz could tell gay couples

Jun 29, 2011 20:48 UTC

New York is about to become the sixth state to recognize same-sex marriage, doing so by decision of its legislature, not judicial fiat. Gay marriage is gaining in social acceptance. Two generations ago, interracial marriage was viewed as scandalous, and often proscribed by law. Today it’s legal everywhere in the United States, unremarkable, and endorsed even by most religious conservatives. Same-sex marriage is likely to follow the same progression.

But as the saying goes — be careful what you wish for.

Advocates of gay matrimony speak entirely of the privileges received by those whose unions are recognized by the state. Human Rights Watch phrases same-sex marriage as a “right to equality.” The New York Times editorialized that New York’s new law expands the chance to “enjoy the legal rights of marriage.”

Marriage indeed brings privileges — community respect, health care benefits for spouses, improved credit ratings, the presumption of fitness for parenthood. I’ve been married for 23 years and am glad of that fact every day. (You’d have to check with my wife for her side of the story.)

Unemployment is the real price of war

Jun 22, 2011 20:29 UTC

The cost of ongoing U.S. wars in Afghanistan, Iraq and Libya is up to at least $1.2 trillion. What would the economic recovery look like if that money hadn’t been spent?

The GDP was about $10.1 trillion when U.S. forces invaded Afghanistan, and is $14.7 trillion now, an annualized growth rate at around 2 percent. That the U.S. economy still was able to grow despite war cost — every penny of it borrowed — other runaway borrowing, and the 2008 revelation of systemic perfidy on Wall Street, at the big banks and at Fannie Mae is testimony to America’s vibrancy.

But imagine if $1.2 trillion had been added to the economy, rather than spent on war. Of course lower military spending does not translate one-for-one into increased economic growth — the two aren’t directly correlated. But they are related, and as Harvard economist Martin Feldstein said last week, “each dollar of extra deficit adds much less than a dollar to GDP.”

Make Puerto Rico a state: it’s good for business

Jun 14, 2011 18:54 UTC

As Barack Obama makes the first presidential visit to Puerto Rico in half a century, let’s cut to the chase: this island will be the 51st state, and the sooner the better.

Fifty is a nice round number for states, but prepare to kiss it goodbye. Puerto Rico will be 51st, and not necessarily the last. Alberta and British Columbia may join the United States someday; U.S. states named Sonora and Baja California are not out of the question. There will be more stars on the flag.

The United States has always been about the open door: arrivals make the country stronger. The boundaries of our great nation have always been in flux: until 1912, it was far from clear that Arizona belonged.