The Wall Street Journal opinion section publishes some truly odd material, but rarely have I seen anything as odd as this op-ed from Allan Meltzer which appears to be primarily founded on an inability to comprehend the meaning of the term “since”:
Day after day, economists, politicians and journalists repeat the trope that the current recession is the worst since the Great Depression. Repetition may reinforce belief, but the comparison is greatly overstated and highly misleading. Anyone who knows even a bit about the Great Depression knows that this is false.
The facts we face today are very different than the grim reality Americans confronted between 1929 and 1932. True, this recession is not over. But it would have to get improbably worse before it came close to the 42-month duration of the Great Depression, or the 25% unemployment rate in 1932. Then, the only safety net was the soup line.
To say that the current recession is the worst since the Great Depression just doesn’t mean that the current recession is as bad as the Great Depression. It means that the current recession is worse than all the recessions that came after the Great Depression. And Meltzer’s own chart clearly shows that this is correct. The other bad post-Depression recessions were 1973-75 and 1981-82. We’ve already exceeded both in terms of duration and decline in industrial production, and the unemployment rate seems likely to eventually peak above 81-82 levels. The only way to introduce ambiguity into this claim is to pretend not to understand that “Great Depression” refers to the entire period from the beginning of the crisis in 1929 all the way until the war-induced recovery in the 1940s. Everyone uses the term this way.
If you pretend not to understand this, you can hive off the recession-within-the-depression of 1937-38 as a very bad “post-Depression” recession. But what’s the point? I don’t even really understand how throwing smoke in readers’ eyes about this is supposed to advance the WSJ’s political agenda. It’s just nonsense.
Benen: THEY'RE STILL GETTING IT BACKWARDS...
I sometimes get the sense that congressional Republicans want to appear ridiculous on economic policy. It would explain a few things.
When the economy was in free-fall and there was talk of a depression, GOP lawmakers recommended tax cuts and a spending freeze. Fortunately, they were in the minority. More recently, the same Republicans who trashed the economic recovery package they opposed en masse suddenly began touting the ways in which it's helping their constituents.
At the same time, however, they're calling for the repeal of the stimulus, just as the economy starts to turn the corner. In July, Sen. Jon Kyl (R) of Arizona, the #2 Republican in the Senate, said he'd like to see all stimulus efforts come to end -- wrap up the pending contracts and then stop recovery investment altogether. This morning, Rep. Eric Cantor (R) of Virginia, the #2 Republican in the House, said the same thing, calling the cancelling of the stimulus "the responsible thing" to do.
Yes, this is the same Eric Cantor who's bragged about the benefits of the recovery efforts in his district.
The evidence of how wrong the Republicans are on this is hard to ignore.
The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.
Economists say the money out the door -- combined with the expectation of additional funds flowing soon -- is fueling growth above where it would have been without any government action.
Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.
For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. "Without that extra stimulus, we would be somewhere around zero," said Jan Hatzius, chief U.S. economist for Goldman.
"The signs of the stimulus are there," Allen L. Sinai, chief economist at Decision Economics, a forecasting firm in New York, said a couple of weeks ago. "Government -- federal, state and local -- is helping take the economy from recession to recovery. I think it's the primary contributor."
The Economic Policy Institute's Josh Bivens responded to the recent GDP numbers by noting, "The marked improvement in this quarter relative to last is largely due to the American Recovery and Reinvestment Act."
Here's a tip for future reference: if you want the country to prosper, do the exact opposite of whatever Eric Cantor recommends on economic policy.
Think Progress: Cantor Suggests Canceling The Rest Of The Stimulus
One of the most bitter opponents of the economic stimulus package is House Minority Whip Rep. Eric Cantor (R-VA), who has repeatedly claimed that the stimulus is “failing.”
Yesterday in an interview with CNBC’s Erin Burnett, Cantor floated the idea of canceling the rest of the economic stimulus and using the money to pay off debt:CANTOR: Since we know now that the Stimulus has not met the criteria by which it was passed and the White House promoted it, which was to stave off job losses and to stop unemployment from reaching above 8.5%, since we know it’s been a failure, why not do the responsible thing, which is to take the $400 billion that has not been committed yet - or not been spent, but been committed to the stimulus - and just pay off the debt and deficit so we can get our fiscal house back in order?
Watch it:
While Cantor might think that he can score political points by posturing on the stimulus, his constituents continue to benefit from its funds. Last month, Cantor hosted a job fair in Midlothian, VA, where the economic recovery package created dozens of jobs. Additionally, Chesterfield County, where the fair was being held, will receive more than $38 million in stimulus funding over the next two years. Were that money to be paid towards the national debt instead, tens of millions of dollars would have to be taken away from promised funding for higher education, special education, food stamps, and other essential public goods.
Sen. Jon Kyl (R-AZ) made the same suggestion last July, despite the fact that his state has received billions of dollars in stimulus funding that has provided much-needed relief to Arizona’s health and education systems.
While conservative members of Congress continue to slam the stimulus — even while hypocritically touting its effects in their own districts — the Wall Street Journal reports today that the stimulus appears to be “helping the US climb out of the worst recession in decades.”
Yglesias: Voucher FAIL in Arizona
Where public funds are expended, people normally desire public accountability. This has always been the hidden flaw in the scheme to dismantle the public education system via vouchers. Voucher systems in the United States have always been implemented only on a very small scale. And it’s impossible for me to imagine them being really scaled-up without coming to look a lot more like charter school schemes or the kinds of school choice that you see in some European countries. In either case the point would be that schools that are mostly funded by taxpayers are going to wind up being pretty heavily regulated.
The cutting edge loophole around this is the idea of education tax credits which, as Kevin Carey explains, are “a shell game whereby Taxpayer (A) donates $X to Non-Profit Foundation (B), which then turns around and gives $X to Private School (C). Taxpayer (A) then gets a tax credit from the government equal to $X.” The hope is that by hiding the expenditure in the tax code the funds can flow without any public oversight or accountability. And that’s how you get the kind of massive scandal unearthed by the East Valley Tribune about the operation of Arizona’s tax credit scheme.
The way the system works is that “taxpayers give money to nonprofit charities called school tuition organizations, or STOs for short. STOs give scholarships to children for private school tuition, and the state provides donors a dollar-for-dollar tax credit in exchange for their contribution.” Some key bullet points:
— An untold number of STOs, schools and parents are using the tax credits in ways that violate federal tax laws governing charitable donations.
— Nearly two-thirds of all STOs failed to spend 90 percent of their donations on scholarships – as required by state law – since 2003, the year the STOs began filing annual reports with the state Department of Revenue.
— Executives at two of the largest STOs have used tax credit donations to enrich themselves, buying luxury cars, real estate and funding their own outside for-profit businesses.
— A majority of tax credit donations are earmarked to give scholarships to students already enrolled in private schools, no matter how much money their parents earn. Just seven of the state’s 55 STOs use financial need as the primary factor in deciding who gets tuition money.
— Even as they took in millions of dollars in scholarships, the state’s private schools hiked tuition dramatically, pushing the cost of private education further from the grasp of middle- and low-income families.
— Tax credits have failed to increase minority students’ access to Arizona’s private schools. Students at the schools receiving the most scholarship money remained overwhelmingly white at a time when the state’s Hispanic population boomed.
Read the whole thing. This is the kind of serious investigatory work that, unfortunately, we’re seeing less-and-less of.
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