Economic policy reports, blog postings, and media stories of interest:
James Kwak of The Baseline Scenario asks just who is driving the so-called “populist” backlash.
Michael Lewis, in an interview with Christopher Lydon, said that in his book tour, a lot of his audiences are well-off and moderate well-off professionals — doctors, dentists, lawyers, small business owners, etc. These are people who (at least according to them) followed the rules, worked hard, paid their taxes, made a fair amount of money, etc. — and just saw the economy almost collapse because of what they see as the shenanigans of a tiny, tiny elite that plays by a different set of rules. Lewis or Lydon (I can’t recall which) called it a “revolt of the petty bourgeoisie.” And it is true that one of the societal forces behind the French Revolution was a traditional official class that saw its status threatened by the new capitalist class. (Yes, this is the opposite of what Marx and Engels thought.)
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I don’t want to make too much of this. But I think it is true that the pitchfork-wielders of today are not rock-throwing Trotskyites; they are, largely, politically moderate (or conservative) people who believe in capitalism and in making money. And I also think that there has been a relative shift in economic fortunes away from the small business owning class that we like to think of as the bedrock of American society (the modern version of the yeoman farmer of the eighteenth century), and toward a new elite made up of corporate CEOs, investment bankers, and hedge fund managers. Where this will end up I do not know.
Brad DeLong asks how “RomneyCare” became the law of the land. The answer: politics.
The conservative DNA of ObamaCare is hardly a secret. “The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan,”[David] Frum wrote. “It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.”
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So why are none of the talking heads on your TV screen and none of the op-ed writers in your newspaper talking about how this health plan is a big victory for Mitt Romney and Republican policy analysts? Because there has been a conspiracy of silence among those working for the bill and those working against it.
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Republicans working against the bill have been unwilling to say “It’s RomneyCare!” because they would then face the awkward question of why they did not support it. And they were never, never, never going to vote for it. The point for the Republican legislators, you see, was to follow the Gingrich strategy: work as hard as you can to block the Democratic president’s initiatives so that the press then portrays him as a wimp. Then, Republicans could pick up seats and regain their congressional majorities — for Americans do not like wimps and the politicians who support them. This political gambit overwhelmed all policy considerations. The Son of Man himself, coming unto the Ancient of Days and stating that this was his favorite health care financing mechanism, could not have called forth Republican votes for it in Congress.
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And the Democrats? Well, the critical votes — numbers 200-240 in the House and numbers 55-60 in the Senate–would vote for RomneyCare but not for anything more liberal and interventionist. These Democrats would not support any form of government-provided health care — not even Medicare-for-All or Federal-Employees-Heath-Benefit-Plan-for-All. They were not on board for any plan that required businesses to pool the costs of their workers and bargain in their behalf for affordable health care. They were not even on board for a plan that allowed people to vote-with-their-feet and sign up for Medicare if they thought it was a better deal than their private insurance.
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So for the Democrats, it was RomneyCare or nothing. Thus the task for Harry Reid, Nancy Pelosi, and Barack Obama was to hold the Democratic right to RomneyCare while not losing the Democratic left. As long as they could say to the left, “Look, this is what we can pass: it’s a lot better than a poke in the eye with a sharp stick (and a poke in the eye with a sharp stick is a lot better than our current health care financing system),” they had a chance of holding the left, especially if they could sweeten it with progressive tax and subsidy policies. But if they pointed out the intellectual origins of the plan — oh, and by the way the guts of the plan came out of the conservative uber-think tank, the Heritage Foundation, and it was what Mitt Romney thought was good policy back in 2004 — then the left-wing Democrats’ heads would have exploded and their votes would have vanished.
Policy Points will be updated on a reduced schedule during the week of March 22, 2010. Please check periodically for updates.
With part of its federal recovery money, North Carolina has endeavored to create short-term training and career transition opportunities for dislocated workers. A recent story in The Charlotte Observer highlighted one such project taking place at Central Piedmont Community College.
The fast track program, created last fall with $500,000 in federal stimulus dollars, will offer training to 450 students in more than 10 vocations, including pharmacy technician, commercial carpentry and electronic engine repair. Much of that money comes through North Carolina’s “12 in 6″ worker-training initiative, launched by Gov. Bev Perdue last spring to help N.C. community colleges offer certification classes to displaced workers and other job seekers.
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In the Charlotte region, where the unemployment rate is now 12.1 percent, the fast track program is part of CPCC’s emphasis on training workers for emerging industries – or those hiring at the moment. Stimulus money also is paying for a $73,000 CPCC work-study program, in which 16 students can earn credit toward certification by working part-time in their field of study.
A new report from the Congressional Research Service summarizes the issues related to the various extensions of unemployment insurance benefits authorized by Congress. With the most recent extension, workers receiving insurance benefits can qualify potentially for four tiers of Extended Unemployment Compensation (EUC).
A key problem is that while Congress has extended benefits, it has not yet reauthorized the larger EUC program, which is set to expire at the end of the year. Explains the report:
There has been some confusion on what the Worker, Homeownership, and Business Assistance Act of 2009, P.L. 111 92, accomplished. P.L. 111-92 expanded benefits available in the EUC08 program. That is, it substantially increased the number of weeks of EUC08 benefits available to individuals; it did not extend the authorization of the program, which currently expires on December 26, 2009. Tier I benefits continue to be up to 20 weeks in duration and tier II benefits are now 14 weeks in duration (compared with 13 previously) and no longer are dependent on a state’s unemployment rate. The new tier III benefit provides up to 13 weeks of EUC08 benefits to those workers in states with an average unemployment rate of 6% or higher. The new tier IV benefit may provide up to an additional 6 weeks of benefits if the state unemployment rate is at least 8.5%; however, at this time tier IV benefits are largely symbolic as few workers will qualify for tier IV before the EUC08 program authorization expires.
A round-up of policy reports from the week ending on 11/20:
Highlights from the latest issue of the Center for Economic and Policy Research’s Housing Market Monitor:
There appeared to be a sharp falloff in the housing market in October, as the November 30th expiration date for the first-time homebuyers tax credit approached. As expected, this credit pulled home purchases forward, leading to a substantial increase in sales in the late summer and early fall.
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The underlying glut in housing means that it is only a matter of time before house prices begin to fall again. Delinquencies hit another record in the third quarter of 2009. The 6.25 percent 60-day delinquency rate was 58 percent above the level for the third quarter of 2008. Even with a higher percentage of delinquent homeowners now benefiting from mortgage modifications, the foreclosure rate is still running at near record levels. With unemployment virtually certain to remain high well into next year, there is little prospect for any sizable drop in foreclosures.
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As a result, foreclosures will be putting homes on the market at an annual rate of close to a 2 million. This is guaranteed to depress prices in a market with total demand of close to 5 million. In short, house prices will almost certainly resume their decline. The only questions are how soon and how fast.
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