As Congressional approval ratings flag, a Texas congressman provides a reason as to the precipitous drop, comparing President Obama to Hitler yesterday.
Rep. Randy Weber (R-TX) represents a conservative district in Galveston an area where the beaches are better known for drag racing than sunbathing. He was apparently throwing red meat to a ravenous political base when he Tweeted:
“Even Adolph Hitler thought it more important than Obama to get to Paris. (For all the wrong reasons.) Obama couldn’t do it for right reasons.”
Randy Weber’s statement’s on comparing the President Obama to Adolf Hitler
Weber would later clarify his statement. There were some inadvertent in the delivery that were wrong. Weber didn’t mean to compare the President to Adolf Hitler, he now says. “The mention of Hitler was meant to represent the face of evil that still exists in the world today,” he wrote in a press release Tuesday. “I now realize that the use of Hitler invokes pain and emotional trauma for those affected by the atrocities of the Holocaust and victims of anti-Semitism and hate.”
The matter stemmed from an incident yesterday in which President Obama admitted it might have been more appropriate to send a higher ranking official to a French solidarity rally in the wake of the recent terrorist massacre of 11 French journalists.
The State Department instead sent the U.S. ambassador to France to attend presumably with the president’s approval. This issue, Obama later admitted, might have been a mistake, as leaders from around the world gathered for a photo opportunity on a closed Paris street minus the leader of the free world.
Soon after the comment the National Jewish Democratic council demanded an apology as the Democratic Congressional Campaign Committee called on House Speaker John Boehner (R-OH) and other GOP leaders to condemn Weber’s “toxic brand of politics.”
Before the GOP leadership was goaded into action, Weber got their first.
Randy Weber on the Paris attack
“The terrorist attacks in Paris should remind us of the evil that still exists. Hitler was the face of evil, perpetrating genocide against six million Jews and millions of other victims,” Weber wrote as he looked at an unusual threat mounting in the east. “Today, we are facing the evil of Islamic extremists who are attempting to instill fear and murdering the lives of innocent people from Paris to Nigeria to Jerusalem and all over the world. The President’s actions or lack thereof is my point of contention,” he said, pointing to growing behind the scenes whispers that the military campaign against ISIS has strangely gone quiet. While silent, the threat has not gone away.
“Islamic extremists have shown they are not going away, and instead are hungry for more blood,” Weber said, drawing a more meaningful Hitler comparison.
JPMorgan Chase Chairman & CEO Jamie Dimon spoke with FOX Business Network’s (FBN) Maria Bartiromo about the United States economy, cyber security and his battle with throat cancer. Dimon said, “America looks pretty damn good.” Jamie Dimon commented on raising rates saying, “rates going up would be OK if the fundamental economy is growing” and “the more that employment is growing and companies are growing, you know, rates going up would be OK. It’ll be volatile, it’ll be a little scary, but it’ll be OK.” Dimon went on to talk about cyber security for the bank saying, “We spent $250 million a year, that number is going up; could double the next two years easily. It’s a big deal. But we’re safe.” When asked whether cyber security is something he will continue to invest in, Jamie Dimon said, “This is a permanent battle” and “Eventually it will be taken much more seriously by governments.” Jamie Dimon spoke about his throat cancer saying, “I’m actually doing fine” and “I never stopped working, but I’m mostly back to full health, back to working full time.“
Jamie Dimon on how many times a day people try to hack the system:
“Let me first say that our clients are completely safe. We move six to ten trillion dollars a day. Your deposit’s safe, the movement’s safe. We’re actually very good at this. We did announce a breach that we had. We made it voluntarily because all the information was public. Name, address, email. But it was a breach. We thought we should tell our shareholders. We spent $250 million a year, that number is going up; could double the next two years easily. It’s a big deal. But we’re safe. And I think what people have to do is have perimeter controls, internal controls like you know, these change of passcodes. If someone gets your passcode, they get inside your systems, your protection is track that. So you can make sure if that happened, you’re on top of it, too.”
Jamie Dimon on how many cyber-attacks they face each day:
“Oh 300 – would be 300,000 or something. It’s a huge number. And they’re mostly – they mostly don’t get through. If the banks are good at this, the feds can be good at it. In fact, a former director of national security was on TV and said people at JPMorgan are like the best at it. So – I’m not saying we are, but he said something like that. And if you look at the real breaches, where they get your social security, your mother’s maiden name, your security code, your credit card number – those haven’t been the banks. Those have been other people. And so we pay the price for that. And it’s incumbent upon all of us – merchants, banks, retailers, everyone – to come up with a better systems. And we are. We have a whole new generation of security things coming out called tokenization and chip – the chip that make it much harder for criminals. And then there’s other companies set of standards. They’ll protect their own credit card numbers, etc.”
Jamie Dimon on their investment in cyber security:
“This is a permanent battle that will be – people will lose battles, and you’ve also got to be prepared for that. Like what are you going to do if something goes wrong where you can continue to serve your client, continue to do the things, protect yourself from damage. And protect your client from damage. So this is a big deal. It’s not going to go away in our lifetime. And it’s also an example, by the way, where government – I think government and business are collaborating pretty well. We need to do more. You know, a lot of our collaborations is not real time. We need real time. You know, the government or other banks can see – there could be attack right now on these wires with this kind of malware, and we could put immediate protection against that. So we’ve even informed banks of other things we’re having, help them. We tell the government; they can disseminate it. The government knew about it – mostly, we knew about it first. The government may know about it. They see stuff coming. So we need real collaboration. And eventually cyber security is going to be a part of WTO, World Trade, and – and public policy and global relations. This can’t go on. I mean, you can’t have it where people are stealing IPs, stealing money, attacking you, and if it’s state-sanctioned allow it. It won’t. Eventually it will be taken much more seriously by governments.”
Jamie Dimon on his battle with throat cancer:
“I’m actually doing fine. I’m happy to be — I never stopped working, but I’m mostly back to full health, back to working full time. I had throat cancer, for those who don’t know. It’s a tough thing to go through, and I did exactly what my — I have exceptional doctors. I did exactly what they told me to do. But on December 4th, I got a — after all this treatment, radiation, chemo, I got that kind of clean bill of health, no evidence of cancer in my body. It’s a very good sign. Obviously, I’m going to be monitored for the next three years, but it’s not definitive, but it’s as good as can be, so…And my family was enormously supportive of this. I got hundreds of thousands of emails and calls, and the people at the company were great, the board was great, and I don’t wish it on anybody, but I’m glad it’s over.”
Jamie Dimon on whether the cancer has changed him:
“No, not really. Because I’ve always — people always ask me what your value system is and I always put “family” first and “country/humanity” second, and kind of JPMorgan kind of down here: not unimportant. You know, I spend a lot of time with my family. I adore all of them, three children and my wife and you know, I don’t know if I could do more. They have their jobs, they’ve got their careers, they’re all busy and doing things like that…If I do a good job here, I can help people with their careers. We help, you know, consumers and big businesses. We help countries and banks, central banks, governments, sovereign wealth funds, and we’re hugely charitable. You know, the work we do in Detroit, we’ve hired 8,000 veterans. So this is my contribution. It’s the best I can do. And so it hasn’t really changed that. And I like working.”
Jamie Dimon on how he characterizes the United States economy;
“Yeah. So, the U.S., if you looked all — most of the forward looking things, household formation, 10 million more people working since the depths of the great recession, businesses are actually doing still low amount of capital expenditures, but it’s growing, consumer confidence is up. Business confidence is up. Small business credit is kind of back to where it was. You haven’t seen small business formation get healthy yet, but I think it actually might. Housing, you know, turned the corner way back. Housing is not in short supply, but it’s at least balanced if not a little bit short supply in some markets. Innovation is alive and well. And you see it at conferences like this. And so I — America looks pretty damn good. The biggest negative when you talk about America is twofold. One is overseas, which we’ll talk about. Second is what are the potential expense of Q.E. three not being — kind of being not unwound but stopped. And if they start to raise rates. And my view there is that normalization is a good thing. Rates going up would be OK if the fundamental economy is growing. Just think of employment. The more that employment is growing and companies are growing, you know, rates going up would be OK. It’ll be volatile, it’ll be a little scary, but it’ll be OK.”
Jamie Dimon on why the JPMorgan health care conference is so important:
“You know, the amazing thing about this conference is it started 33 years ago…I think there’s some like 30 companies, the market cap combined was $2 billion. Today the market cap, combined of all the companies here, $4.6 trillion. Unbelievable. And it’s the sector is unbelievable. But the amazing thing to me is – you know, I’ve been coming here for the better part of 10 years now. But even in ’08, ’09, 2010, the bad years, this thing was growing over time. You had entrepreneurs, venture capitalists, big companies, small companies, global companies. And it always reminded me of the raw, utter strength of American business. And it’s gone global. These are a lot of global companies here. But the entrepreneurialism, we’re going to grow, we’re going to expand, we’re going to bet you save, we’re going to save lives. And
Art Cashin’s Tis the day before New Year’s
‘Tis the day before New Year’s
and despite what you’re hopin’
The folks in the Boardroom say
“the full day we’re open”
So we’ll buy and we’ll sell
as the tape crawls along
And though “Bubbly’s” verboten
we may still sing a song
Two Thousand Fourteen
was okay, not really a wow
Till a Santa Claus rally
took us through Eighteen Thou
We lost special people
as we seem to each year
It just makes us treasure
each one that’s still here
Robin Williams, so manic
snuffed out his own light
Mickey Rooney’s gone also
into Dylan’s Good Night
Joan Rivers departed
when a doctor slipped up
And Sid Caesar now sips
from a heavenly cup
James Garner, “Bret Maverick”
has played his last hand
Polly Bergen now sings
in an Angelic band
Eli Wallach needs no badges
he’s got wings, I’ve a hunch
Elaine Stritch found a new place
now with cherubs she’ll lunch
has thrown his last punch
Ann B. Davis as “Alice”
no longer waits on the “Bunch”
Bacall, who could whistle
took her last curtain call
Philip Seymour Hoffman
is now just down the hall
Casey Kasem’s now listing
Top 40 harp songs
Mayor Barry departed
moving on past his wrongs
Mike Nichols graduated t
o Mrs. Robinson’s place
Ruby Dee now also
fills heaven with grace
Ben Bradlee followed Nixon
for one final time
Maya Angelou tells St. Peter
her favorite new rhyme
Oscar De La Renta
designed his last gown
“Adam Smith” (Jerry Goodman)
he has also left town
The threat of Ebola
made everyone fear
‘So Time made health workers
their Man of the Year
Kim K bared her assets
glossed up till they shone
But most folks on the net shrugged
and left the whole thing alone
Some guy near the White House
hopped up over the wall
And since the door was unlocked
he just strolled down the hall
The ice bucket challenge
made some hairdos a mess
But it raised lots of money
to help fight ALS
In their Little League Series
one kid pitched a pearl
As a young lady showed us
how to “throw like a girl”
Polar Vortex froze business
The year started out rough
But when we got defrosted
things seemed to go well enough
There were shootings, then lootings
things kept turning bizarre
Until a mad man came North
to shoot two cops in a car
We saw ISIS beheadings
and car bombs galore
Sadly, three different airliners
got half way but no more
Brad wed Angelina
and George Clooney – Amal
But some folks like Don Sterling
could not find any pal
There were midterm elections
The GOP did quite well
Will that help them to govern?
It’s way too early to tell
Sony thought it terrific
and they’d have lots of fun
If they made a joke movie
in which they killed Kim Jung Un
Derek Jeter retired
one game at a time
In most states, gay marriage
is no longer a crime
The NFL fumbled
on domestic abuse
We didn’t see the whole tape
was their only excuse
Rolling Stone ran a story
that they later withdrew
And more women blamed Cosby
saying the press really knew
Gwyneth Paltrow “decoupled”
Taylor Swift told streamers “No!”
In the kid’s movie Frozen
Elsa sang “Let it go”
Let not this year’s memories
of sadness or sleaze
Disturb you this day
just give your heart ease
Have faith that this New Year
will bring a new sign
And believe in yourself
it will all work out fine
Just lift up your spirits
and some fruit of the vine
And kiss ye a loved one
and sing Auld Lange Syne
And late in the evening
as you watch the ball fall
Wish yourself all the best
Happy New Year to All!!
Art Cashin’s Comments Wednesday, December 31, 2014
According to a November 17th story from CNN, Republicans and outside groups used a number of anonymous Twitter accounts to share internal polling data ahead of the midterm elections. Legal experts say this may have been a violation of new election laws promulgated since the Citizens United case opened up unlimited money in political campaigns.
The user of fake Twitter accounts to hide information in plain sight is just the latest effort by political operatives to exploit murky campaign finance laws when limits on spending in politics are nearly and regulators have been largely emasculated.
How secret Twitter accounts worked
It turns out the Twitter profiles were publicly available, but useless to anyone without knowledge of how to access the accounts and decode the information. At least two external political groups as well as the Republican party campaign committee had access to the information posted to the accounts, according to a CNN source.
For example, a typical tweet read: “CA-40/43-44/49-44/44-50/36-44/49-10/16/14-52–>49/476-10s.” Although it might look like gibberish, the tweet actually represents polling data for several House races.
Twitter accounts were deleted after CNN contacted GOP
Although no criminal offenses have been alleged to date, the GOP operatives closed the accounts immediately after CNN contacted Republican officials with questions. Of note, the accounts CNN reviewed were active in the months ahead of the election two weeks ago, which gave Republicans their largest majority in the House in 60 years as well as control of the Senate. They were up until November 3rd, but were shut down just minutes after CNN contacted the NRCC regarding the accounts.
Law says no sharing of information among political groups
The Federal Election Commission makes and enforces election laws. The law currently states that outside political groups (such as super PACs) can spend as much as they want on political causes as long as they don’t coordinate their plans with specific campaigns.
However, despite the clearly unethical intent of the Twitter communications, legal experts have expressed doubts the FEC will respond strongly. They note members of FEC have been deadlocked along party lines for years, and attorneys on both sides develop legal arguments before engaging in such practices to protect their side in a legal tussle.
Statement from FEC vice chair
CNN contacted FEC vice-chair Ann Ravel to get a response to Monday’s news, and she said noted commission may address the use of social media to share campaign information in the future, but admitted that the rules governing campaign finance are “murky.”
Regarding the GOP’s strategy of using tweets to share polling data, Ravel wrote on Twitter, ” it shows that tech [is] changing politics… but coordination rules [are] sadly murky.”
The results are in and the Republican Party has seized control of the Senate. This comes to no one’s surprise as the GOP looked poised to make huge gains due to high levels of displeasure with President Barack Obama. While at first glance this may appear to be a crippling blow for the Democrats, in truth it was arguably the best thing that could happen to them.
Why? Dysfunction within the government and Congress in particular has reached absurd levels and by some measures the current Congress is in fact the most unproductive of all time. Almost certainly that dysfunction will continue even after the GOP takes control of the Congress, and rightly or wrongly, they’ll shoulder most of the blame for it.
Up until now the GOP has been able to use the Senate and the President Obama as a scapegoat for government dysfunction. Even so many Americans have blamed GOP leadership on the deadlock that has besieged Washington D.C. Once the GOP has complete control of Congress, they’ll have to shoulder even more of the blame.
GOP: Dysfunction Likely To Continue
With Congress firmly under control of the GOP, the Democrat nominee for the Presidential election will be able to shift blame for many of the problems that crop up over the next two years. The Presidential nominee will find her (or him) self in a particularly good position if the general dysfunction in DC continues.
And with bipartisanship at all time highs, said dysfunction will likely continue unabated. Even the GOP itself is split along internal ideological lines, with hard right conservatives opposing more moderate Republicans. This will make it difficult to forge any sort of consensus and main-stream Republicans may find themselves forced to reach across the aisle.
Of course, given the refusal of the GOP in general to work across aisles these last few years, it’s questionable whether Democrats will suddenly find themselves in the mood to be bi-partisan. And even if Democrats end dragging their feet and preventing bills from being passed, the GOP will likely shoulder most of the blame.
Democrat Nominee Will Benefit
Obama’s last two years in office will essentially amount to a lame-duck Presidency. Having lost both the House and the Senate, Obama’s power and ability to push through reform has been greatly reduced. Any attempt to push through major reforms would almost certainly flounder.
Republicans are now in the driver’s seat, Democrats can now begin shifting blame. If the economy continues to flounder, or immigration remains an issue, it’ll be the Republicans who will have to bear the bulk of the blame. And come 2016, Democrats will be quick to point any short-comings out.
Apparently, the Obama administration is considering tackling immigration reform on its own. With Congress mired in political infighting, any hope of bipartisan immigration reform has all but died out. Now, President Obama is exploring options for going it alone and expanding protections for illegal immigrants.
Obama is actually on track to remove more immigrants than George W. Bush did during his time in office, though Bush will have sent far more immigrants home than Obama. How can this be possible?
When it comes to deportations there are two ways an immigrant can be kicked out of the country. An immigrant can be returned, meaning he is sent out of the country, but his finger prints are not taken and no real record is made. Or he can be returned, meaning that prints are taken and authorities will know if he is detained in the United States gain.
Lack Of Immigration Pushing Obama
The Obama administration is considering this move after the push for immigration reform itself had essentially died out. Initially, it appeared that the Republican party was ready to spearhead efforts to overhaul immigration, but when it became apparent that Democrats and the GOP would not be able to come to any sort of agreement, the efforts lost all momentum.
With immigration reform essentially off the table, the administration is apparently looking to go its own way once again. Indeed, Obama has vowed to “fix” as many immigration issues on his own as possible. Apparently, the administration is not abandoning its tough stance on recent immigrants, many of whom are children. Instead, the administration will look to grant safe harbor to already established immigrants.
So what actions is the President considering? One option would be to expand the number of work permits granted. This would allow the President to specifically target people who are working and have largely integrated with society. Another possibility would be to extend protection to children under the Deferred Action for Childhood Arrivals program.
Yet another possibility would be to protect the parents of American citizens. Any child born on American soil is automatically considered an American citizen, so children born of illegal immigrants are still considered American citizens. Currently, the number of illegal parents to American citizens is estimated to number more than 4 million people.
Sure To Inflame the GOP
Exactly what mechanisms the President could take to reform immigration on his own remains unclear. If the President does push for reform, however, the GOP will almost certainly be enraged. Republicans already accuse Obama of overstepping his Constitutional authority and any efforts to reform immigration on his own will only strengthen calls for impeachment. Any reforms will also likely be challenged in court.
CNBC’s John Harwood asks New Jersey Governor Chris Christie if he’s leaning towards running for president in 2016 at CNBC’s Delivering Alpha Conference.
We will be covering the conference – sign up for our newsletter to ensure you get all the updates.
Chris Christie: Not thinking presidential run now
i know you haven’t decided and if you have i wouldn’t expect you to announce it here. that’s good. knowing what you know right now are you leaning towards it? are you thinking it’s likely to happen? this is another way of asking the question, isn’t it? yes. are you leaning? yeah. it’s another way to ask the question. no i’m not leaning. i’m not leaning in any way. i’m not giving it a lot of thought. i’m chairman of the republican governor’s association. my job is to elect as many republican governors as i can. i don’t have a 527 or a super p.a.c. or a c 4. we’re in the second half of 2014. if you’re going to do it — i’m aware. listen, let’s face it the folks who are leaning or actually doing stuff right now are oftentimes who folks don’t know that well. i suffer from a lot of things, that’s not one of them. i’m in no rush to make those decisions. i got a pretty busy day job as governor of new jersey and i’ve got, you know, a busy job politically as chairman of the rga. 37 governor races across the country. when do you have to decide? end of this year beginning of next. zion my own. whether i would tell you or anybody else at that point i’m not so sure about the timing of that. that’s more of a political judgment than it is a core judgment about whether you really want to do that or not. i’ve been clear. i certainly will consider it but whether i do it or not is something i honestly don’t know yet. i think people say that all the time. and folks are fairly cynical. oh, yeah he knows what he’s going to do. i don’t know what i’m going to do. if you have four relatively younger children like we have from 20 to 11, there’s a lot to consider in doing this on a personal level. putting aside the politics. so, you know, we’ll decide. i’ll decide coming year. let’s talk about your party
Chris Christie: Just be yourself
New Jersey Governor Chris Christie discusses divides in the GOP, saying the democrats have the “same problems.”
let’s talk about your party and what you or any presidential candidate faces if they decide to lead that party nationally. pew research center did a study and on the republican side you have a split between your business republicans who are all the people in this room, and your populace or tea party republicans, these guys have the money, the populace group has more votes. when you look attitudes on issues there are stark divisions. populists say international trade is bad for the country. business republicans say it’s good. populists say don’t even think about cutting social security. business republicans say of course we have to do that. immigration, populists say it’s bad. homosexuality the populist wing says not okay. people in this room, business republicans say it’s okay. how to you knit those together? carefully. listen, i think the only way to knit them together is to be yourself. every time you try to go towards one side of the party or another and the democrats have the same problems. just on different topics but the same problems. there’s always divides inside any vibrant political movement. the way to do is just be yourself. say here’s what i believe in. and, you know, try to convince people if what they are looking for is a candidate that they agree 100% of the time what they need to do is go home and look in the mirror. they are it. you are the only person you agree with 100% of the time on these issues. don’t try to be that. if you try to do that they will perceive you as a phoney and the reason they do that it’s because you are. so you shouldn’t look in their eyes and tell her i want to tell her what she wants to hear and pray to god she forgets when do i the opposite. own up to what your position are. say what they are. if that’s not good enough to win then you don’t want a governor under those circumstances anyway because you have to remember who you pretended to be yesterday and that’s not the way to govern. it’s complicated enough without trying to figure that out too.
Chris Christie: US has wretched tax system
New Jersey Governor Chris Christie shares three ways the government can raise the standards of living for U.S. citizens, and help develop a vibrant economy.
we know and we’re beginning to feel again that we can make an economy produce high stock values, high corporate profits, do very well for the people who are best off in the country, the most educated. but if you were elected president, what do you do to raise the living standards of average people in this country, what’s the right approach for that? first off, the premise of the question if i were elected president pre-supposes i would actually run. it’s another way to get me into that topic. forget the president part. i would say say listen there are certain principles that help to create a vibrant economy. and i think things that we’re not doing at the moment. first off, we have a wretched tax system on the individual and corporate levels. including my state which disincentivize growth and job creation and which make us less competitive with the rest of the world. the fact is we need to get around the table and redo this tax system which i think is one of the real wet blankets on our economy. secondly, you need go through regulatory reform. in new jersey, we’ve eliminated a third of the regulations that existed and put into place by my predecessor, by governor corzine. i hear from businesses across our state what a relief that has been for them and how much easier it is to conduct business and our water and air is cleaner and there’s nothing awful happening in new jersey because we’ve decided to do regulation in a common sense way. we need to look at that federally as well if you want a vibrant growing economy in that direction. third is improving our educational system. the fact is we’ve gone from 20th to 30th in math. we’ve now gone from 10 toth 20th in reading amongst the industrialized nations. if you think we can continue that trend and still be the smartest, most competitive, most cutting-edge economy in the world, then you’re wrong. that’s why you support common core. listen, what i support is to try to change something that’s much more important than common core. the most important factor besides a family to successful education is the teacher in front of the classroom. more than anything else is what is the training and experience and effectiveness of that person standing in front of the classroom. and we have an educational system in this country that puts the comfort of adults ahead of the potential of children. what we care more about we don’t want to disturb anybody. we don’t want to hurt anybody’s feelings. we don’t want to say anything bad. that’s crazy. there are ineffective teachers that are protected by a tenure system that’s the essence of anti-competition. we’re for competition every where else in the world but not for compete shine the k to 12 classrooms in america. and we expect that from duce good results. it doesn’t. so from my perspective what’s the curriculum in the classroom and those other issues you first need to get to having a competitive educational system that rewards good teachers. we should have merit pay across this country and get paid more if they are good and shouldn’t have a system that allows bad teachers to be guaranteed a job for life. and if anybody in this room ran their business this way they wouldn’t be in this room. and so the fact is that if we like success around our country that’s based upon competitiveness and real vigorous back and forth that happens in that kind of circumstance, then we need to say we can manage our k-12 system. let me ask you about the
Chris Christie: Government has fundamental role
New Jersey Governor Chris Christie says U.S.
Only a year into his second term, President Obama is already at risk of becoming a lame duck president. With his annual State of the Union address in the rear view mirror, it is expected that Obama will focus on alleviating poverty and growing inequality. The question, however, is what the President can do with Congress in the hands of the Republican Party.
President Obama will use an executive order to raise the minimum wage for all workers on Federal contracts to above $10 dollars per hour. While this move could potentially raise the wages of a few hundred thousand workers, it will not affect the Federally mandated minimum wage that covers most workers across the United States and is currently set $7.25.
Beyond that executive order, however, Obama appears to have few options in pushing actual policies through through Congress.
Obama has few options to address issue
So far, Congress has proven to be too ideologically divided to act on most issues. While the President can propose policies, he lacks the authority to enact laws on his own. Congressional cooperation is required, but with the Republican Party shifting sharply to the right under the pressure from the Tea party, Obama lacks the power to push laws through Congress.
Without Congressional cooperation there appears to be little Obama can do to address the issue. So far Congress has shown little willingness to stomach another stimulus package owing to already high debt levels. Many Republicans also appear to be against raising the minimum wage, arguing that raising the costs of doing business will only send jobs overseas.
GOP offers balanced, if not muted, response
Compared to past years, the GOP turned down its criticisms a notch. Following the radicalization of the far right of the Republican Party, it appears that mainstream Republicans are now trying to tone things down a notch.
Rep. Cathy McMorris Rodgers from Washington delivered a balanced approach. While criticizing the President on numerous counts, she resisted the temptation to lambaste and drive the nail home on every issue. Rodgers focused much of her criticism on the now unpopular Affordable Care Act, even calling for its repeal. Beyond that most of her criticisms were relatively muted.
After years of Tea Party antics which have largely sullied the GOP brand, it appears that party leaders are looking to once again promote a more moderate message. And with the upcoming 2014 elections promising to be bruising, this move may prove to be the essential step necessary to maintain control of Congress, or it could deflate the considerable momentum built up by the Tea Party.
Poverty and inequality a growing issue for the United States
The theme of Obama’s State of the Union speech centered largely around the economy, and specifically on the growing inequity and shrinking middle class in the United States. Obama stressed on several occasions the need to create opportunities for all Americans.
The United States has some of the highest levels of inequality and poverty in the developed world. The United States’ Gini coefficient, which measures inequality, has ticked above .45 since the Great Recession. Following World War II, the gini coefficient generally fell below .36 but starting in the 1980s it began to gradually climb.
Inequality in-and-of itself might not be much of a problem, so long as people in general are enjoying a higher quality of living. The number of people in poverty, however, has also been slowly growing. In 2003, the official poverty rate was 13%, but has since risen to 15%. This number is also among the highest in the developed world.
Some have also argued that this number may be miscounting the number of people actually living in poverty by wide margins. The United States poverty measurement is based on three times the cost of what a person needs to buy adequate food. When the formula was created in the 1960’s, food was a large portion of the average American’s budget, but these days food costs have since shrunk, while costs for rent, health care, college, and numerous other vital goods and services have risen sharply.
Indeed, when the initial poverty formula was created, Americans spent a quarter of their budget on food. Now, food makes up only 6% of the average person’s budget, according to the Gates foundation. If this number is correct, the way the United States measures poverty could be grossly incorrect. If so, the problem could be far worse than actual numbers indicate.
How can the Tea Party have the economics right when even some in the business community seem to be displeased with how the Tea Party dealt with the debt ceiling and how it tarnished the Republican Party?
Well, here’s the figure that makes the Tea Party’s point. The figure represents the dynamic economic effect of reducing federal expenditures.
Republican Party: Why the Tea Party has its economics right
The rest of this article explains why the Tea Party has its economics right, which is: reducing the costs of government, by reducing federal expenditures, has a positive economic effect.
Here are the details of why the branch of the Republican Party known as the Tea Party has its economics right.
First some brief background on economic multipliers.
An economic multiplier refers to the idea that industries are connected with each other.
For instance, if the federal government spends $1 on roads, that $1 ends up in the hands of businesses supplying gravel and other products to build and maintain roads. Those businesses, in turn, spend their money on employees, who then in turn spend money on groceries, airline tickets, and a bunch of other stuff. Suppose, just for illustration purposes, that the initial $1 in spending by the federal government increases overall national gross domestic product (GDP) by $1.10. In multiplier terms, the federal spending had a multiplying effect of 1.1.
Is a 1.1 multiplier good?
A multiplier above 1 indicates that spending, whether it be government or private sector spending, increases final demand above the initial spending amount. Any multiplier above 1 is worth it when it comes to government spending, at least in the short term.
A multiplier less than 1 but greater than 0 indicates that spending, usually by governmental entities, increases final demand by some amount less than the initial spending increase. A multiplier less than 1 is not worth it when it comes to government spending because more than $1 has to be paid back some time in the future.
The last possible value an economic multiplier can take is less than 0. In this case, government spending reduces overall economic activity.
Where do the Tea Party, Republicans, and Democrats fall on this spectrum when it comes to government spending?
Democrats certain believe that their social programs have some grand economic multiplier greater than, perhaps even enough to cover the interest cost on the government debt they like to issue to pay for spending today.
Republicans, on the other hand, generally fall in the less than 1 but greater than 0 crowd. Essentially, the economic multiplier is not worth it, but not harmful either. So called “business Republicans” likely fall into this category.
Where is the Tea Party? As a general guess, elected officials with a Tea Party bent see the government spending as barely positive to slightly negative. In essence, government spending generally isn’t worth it, and may make things worse over time.
Republican Party: What does the data show?
Well, not surprisingly, the academic studies are mixed, largely dependent upon what the researcher wants to find. Perhaps the world’s most renowned researcher on economic multipliers – Robert Barro of Harvard University – puts the federal government spending multiplier at around 0.4 to 0.8, meaning increased federal spending is, over time, a gigantic waste of money.
With this background in mind, here’s what the raw data show. Not surprisingly, the government spending multiplier is very low, between -0.04 and 0.24 for the years covered.
Why don’t the academic studies find these results? Well, some academic studies do, while others attempt to model things while controlling for the endogeneity of federal spending (meaning federal spending always goes up when output goes down, i.e. government spends a lot during a recession) or other factors.
This might be one reason why the Tea Party is highly skeptical of academic economists. Academic economists can take seemingly simple raw results like those above and manipulate things in such a way that the raw results are somehow wrong.
To make Tea Party members’ point simpler, here’s the results of a dynamic economic modeling system (those that do economic modeling can probably guess the source) on government spending.
Again, and probably unsurprising, the model show an initial increase in economic activity when government spending goes up (but less than 1), but then weakens and eventually causes economic activity to go negative as the economy becomes less productive, more bureaucratic, and less innovative.
Republican Party: Tea Party is right
Overall, the raw data and the dynamic modeling results confirm what everyone already knows but can’t politically say: the Tea Party knows what it’s talking about. The Tea Party has it right when it comes to economics, regardless how much certain business owners want to believe otherwise.
What the Tea Party has problems with is the politics of getting things done within the confines of governing systems that pander to the popular vote.