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Tuesday, August 16, 2011

Signs of the times: elite illusions

What we need is confidence!

Jerry Brown, CNN interview with Candy Crowley, August 2011:

You look back at history and all the elites, the ruling families of Europe in 1914 were feeling pretty good about themselves. And yet, it wasn't just a few months into the summer when they began what was an absolute catastrophe. So blindness is compatible with good breeding, good education and good relationships. Well, we don't even have that now in much of Washington.

Paul Krugman: "It really is a race between America and Europe: who can make the worst of a bad situation. And both competitors are giving it their all." (Eurostall 08/16/2011)

Via Digby, Dennis Jacobe of Gallup, Washington, D.C., Extends Its Lead in Economic Confidence. I wouldn't call it "pleasure palaces on the Potomac" the way Reagan did. But somebody there is clearly living in their own little fantasy bubble:

Washington, D.C., led the nation in economic confidence during the first half of 2011 with the only positive Economic Confidence Index score (+11) in the U.S. Its 12-point increase in confidence compared with the same period a year ago expanded its lead. Maryland and Virginia -- states adjacent to the nation's capital -- are also in the top 10 in confidence, as they were in the first half of 2010.

Here is their analysis of the likely drivers:

Many may argue that the relative economic optimism of those in the nation's capital and the states around it -- and its relative increase this year in Washington -- reflects their insulation from what is happening in the rest of the economy. This is at least partly true because those living in and around D.C. benefit from having the federal government as their major industry. And, unlike state and local governments, the federal government has continued to grow even as many other industries have not during the recession and its aftermath.

In the same vein, farm and energy states have benefited from global surges in the demand for and prices of commodities. The addition of South Dakota and Utah to the top 10 states reflects the benefits of having such job-creating, commodity-based industries.

On the other hand, the after-effects of the Gulf oil spill are evident as Louisiana, Mississippi, and Florida joined the bottom 10 states. Other low-confidence states like Nevada continue to suffer from the bursting of the housing bubble. [my emphasis]

Gallup's summary calls attention to the fact that the confidence in the DC area is based in part on real economic conditions. This was not just a survey of overpaid Beltway Village lobbyists and pundits. And those beneficial economic condition are based on rising federal spending in the area. If we had that kind of stimulus in other parts of the country, we'd see those economic confidence numbers going up there, too.

But what is the Democratic President offering us? From How 'Bloody' Will GOP Nomination Fight Get? PBS Newshour 08/15/2011, quoting Obama in Cannon Falls, Minnesota:

You know, I know it's not election season yet, but I just have to mention, you know, that the debate the other party candidates were having the other day, when they were asked to -- to reduce our deficit, reduce our debt, would you be willing to take a deal where it was $5 in spending cuts for every $1 of increased revenues? Who would take it? Everybody said no.

They said, how about 10-1, $10 of cuts for every $1 increase in revenue? Are you saying that none of you would take it?

And everybody raised their hand. None of -- none of them would take it.

Think about that. I mean, that's just not common sense. [my emphasis]

The President may be right that the Republicans weren't showing common sense. But who exactly is supposed to be impressed by his bragging that he offered the Republicans $10 of cuts for every $1 increase in revenue? And that in the middle of a protracted slump with high unemployment when the federal government can borrow money at negative real interest rates? What's not good sense is for the Democratic President to be offering such cuts!

Tags: barack obama, jerry brown, paul krugman, us economy

posted at 1:35:00 PM by Bruce Miller

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