Kevin Drum

Cuspers

| Mon Jan. 12, 2009 7:23 PM EST

CUSPERS....Debra Dickerson points to an essay at CNN.com by Marian Salzman about the end of the baby boom era:

After strutting and tub-thumping and preening their way across the high ground of politics, media, culture and finance for 30 years, baby boomers have gone from top dogs to scapegoats in barely a year.

As baby boomers lose their authority and appeal, generational power is shifting one notch down: to cuspers (born roughly 1954-1965), who arrived in style in 2008 with their first truly major figure, Barack Obama (born 1961).

Cuspers! Hooray! I had always thought of myself as a baby boomer and had become resigned to wearing sackcloth and ashes for the rest of my life. But no. As a 1958 baby, I'm a cusper instead, entitled to hold my head high and sneer at baby boomers just like everyone else. I'm relieved.

Of course, you may be wondering why I should trust Marian Salzman on this subject. CNN provides the answer: "She was named among the 'top five trendspotters' by VNU in 2004 and has been credited with popularizing the term 'metrosexuality.'" Works for me! From now on, I'm a cusper. Bye bye, baby boom.

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No More Bush to Kick Around

| Mon Jan. 12, 2009 2:37 PM EST

NO MORE BUSH TO KICK AROUND....James Fallows on the Bush press conference earlier today:

I think even people who oppose the Bush Administrations policies would find it somewhat harder to dislike him viscerally after this performance — rather than getting angrier the more they see him, as with most of his appearances over these last eight years....Everything in his posture, expression, and body language — even his emphasis on the word defeat in talking about the 2008 results — indicated that he has taken in the fact that things have not gone well.

I haven't yet watched the press conference myself, so all I can say is: I sure hope Fallows is wrong. It's human nature, of course, for anger over a botched job to recede with time, and perhaps it's also true that anger naturally morphs into other, more complex emotions anyway. How many people today are really angry at Herbert Hoover?

Still, I sure hope that the public doesn't forgive Bush for a very, very long time. To this day I don't understand how such a manifestly unqualified candidate got either nominated or elected in the first place, and the damage this man-child has done to the country during his eight years in office is hard to even put into words. If Barack Obama is lucky, he might — might — by 2016 be able to get us back to where we were in 2000. The last eight years have taken us backward by almost every metric that matters, and as he heads off to Texas, hopefully never to be heard from again, Bush will go down in history as one of the very few presidents to have left the country in demonstrably worse shape than when he got it. It's an elite group indeed.

Short Term vs. Long Term

| Mon Jan. 12, 2009 1:39 PM EST

SHORT TERM vs. LONG TERM....As long as we're talking about the economic long term, here's another question for the economics crowd. Conventional wisdom, after first complaining that TARP was misconceived and what was really needed was bank recapitalization, has quickly swung around to the idea that, in fact, Henry Paulson's capital injections were wasted. After all, banks still aren't lending.

Tax cuts, similarly, are in ill repute because they don't necessarily increase consumption. People are more likely to sock the money away in a savings account or use it to pay down credit card debt. So there's no bang for the buck.

But surely this is short sighted? Stimulus spending can (we hope) help keep the economy afloat over the next couple of years, but then what? When the economy starts to recover, it will certainly be helped along if bank balance sheets are in better shape than they are today. Likewise, it will be helped along if consumers have paid down some of that credit card debt and put a few dollars aside. Right? We can't keep running a negative savings rate forever, after all.

So: what's wrong with government spending to stimulate the economy now, combined with tax cuts and bank recapitalizations to help get the economy in shape for recovery a couple of years down the road? This isn't so much a suggestion as a question. Does this make sense, or is there some fundamental misconception at its core? What say the economists?

The Stimulus

| Mon Jan. 12, 2009 1:10 PM EST

THE STIMULUS....From the same Washington Post article about the Bush economic record that I quoted below, we also have this:

"The expansion was a continuation of the way the U.S. has grown for too long, which was a consumer-led expansion that was heavily concentrated in housing," said Douglas Holtz-Eakin, a onetime Bush White House staffer and one of Sen. John McCain's top economic advisers for his presidential campaign. "There was very little of the kind of saving and export-led growth that would be more sustainable."

"For a group that claims it wants to be judged by history, there is no evidence on the economic policy front that that was the view," Holtz-Eakin said. "It was all Band-Aids."

Agreed — and this is what continues to niggle at the back of my mind. A big stimulus package is all well and good, but suggestions that it should be even bigger and badder than Obama has proposed make me wonder what the end game is. Paul Krugman, for example, criticizes the $800 billion plan on the grounds that it will only make up for part of the output gap caused by the recession, not all of it. But aside from the practical question of whether we could effectively spend double the amount Obama is proposing anyway, I guess I wonder if we should even be trying to make up the entire output gap with domestic spending. Because there really is some readjustment that needs to happen in the medium term.

For years now the the skyrocketing U.S. trade deficit has been Topic A among economists. The big fear was that the Chinese were shipping us goods and we were shipping them back treasury bills, and this couldn't last forever. Eventually the Chinese would tire of stockpiling treasuries, the dollar would crash, and all hell would break loose. In the end, that's not what happened, but it was still the trade deficit that was at the heart of our problem: American consumers went into deep debt to buy all those Chinese goods, the savings glut from China and elsewhere poured into the American housing market, and eventually the music stopped. The dollar didn't crash, but housing and the American consumer did.

But the dollar could yet crash, because one way or another the books have to balance. Americans have to consume less and export more. Keeping American output high is important, but one way or another American consumption has to fall and Chinese consumption has to grow. If a gigantic stimulus plan keeps output high but also keeps consumption high, then it's just another Band-Aid.

So what's the end game? Hardly anyone wants to talk about it. And I feel sort of stuck. I'm not an economist myself, and virtually every economist I respect is on board with the idea that the Obama stimulus package is, if anything, too modest. It should be twice as big and last twice as long. Better safe than sorry. That's hard to argue with, but I still wonder where it's going to leave us in a few years. With a nice soft landing as the dollar rises but doesn't implode, or at the top of yet another bubble waiting to pop?

Quote of the Day - 01.12.09

| Mon Jan. 12, 2009 12:40 PM EST

QUOTE OF THE DAY....From Edward Lazear, chairman of George Bush's Council of Economic Advisers, on the administration's economic track record:

"It does look like a great eight years, aside from the last quarter, unfortunately."

Actually, he's wrong: it wasn't a great eight years, regardless of whether or not you count the final quarter. But this was still too good a quote not to memorialize.

24

| Mon Jan. 12, 2009 12:32 PM EST

24....So I watched the 24 premiere last night, and it's obvious that the show is going to deal head on with the subject of torture this season. Episode 1 opens with Jack testifying before a Senate committee about his past transgressions, which he wearily but defiantly confesses to, and then rolls through two hours of FBI agents wondering "how far he'll go" — because, you see, Jack's exploits with the dark arts are apparently the thing of legend in the hallways of the Bureau.

Is there any way for this end other than badly? After all, here in the blogosphere we opponents of torture like to argue that we don't live in the world of 24, guys. And we don't. But Jack Bauer, needless to say, does live in the world of 24. And in that world, there are well-heeled terrorists around every corner, ticking time bombs aplenty, and torture routinely saves thousands of lives. What are the odds that it won't do so again this season — except this time after lots of talk about the rule of law blah blah liberals blah blah it's your call blah blah? Pretty low, I'd guess. Hopefully the writers will surprise me.

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The Harry Potter Effect

| Mon Jan. 12, 2009 11:54 AM EST

THE HARRY POTTER EFFECT....Via Dan Drezner, the NEA has released its latest survey of reading habits, and the news is good. Fiction reading among young adults is way up, and overall reading is up too. More than 50% of adults read a piece of literature last year. Huzzah!

The highest rate of reading is among 55-64 year-olds. Poetry reading continued to decline: only 8% of adults read a poem last year, compared to 12% in 2002. And in other unsurprising news, internet reading is concentrated among the young. About half of 18-44 year-olds read an article or essay online last year, with the number plummeting quickly above that. Less than 10% of 70-year-olds read anything online in 2008.

Stimulus Details

| Sat Jan. 10, 2009 3:43 PM EST

STIMULUS DETAILS....In case you're curious, Barack Obama's economic boffins now estimate that his stimulus plan will create 3.6 million additional jobs over the next two years. And if you're further curious about how likely this is to affect you, the estimated breakdown by industry is on the right:

To get more detailed information on the breakdown of the jobs created, we use a simulation from a prominent private forecaster on a plan that is similar — though not identical — to the type of plan the President-Elect is considering....The estimates suggest that 30% of the jobs created will be in construction and manufacturing, even though these industries employ only 15% of all workers. Both sectors have been particularly hard hit recently. The other two significant sectors that are disproportionately represented in job creation are retail trade and leisure and hospitality.

Later in the report the authors helpfully estimate that 42% of the new jobs will go to women. Bruce Bartlett emails a very brief critique of the report: "Some of these numbers look rather dubious to me, especially those for 'indirect' job creation." Perhaps so, though the broad methodology seems within the ballpark of reasonableness: they assume a net multiplier (spending + tax cuts) of around 1.3 producing nominal GDP growth in 2010 of $500 billion, combined with a "conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs." Paul Krugman thinks these numbers sound roughly right and show that the stimulus package is too small. I'll pass along other economic comment as I see it.

Job Losses

| Sat Jan. 10, 2009 1:29 PM EST

JOB LOSSES....A headline at CNN blares:

Worst year for jobs since '45

The LA Times follows suit. But come on, folks. This is completely bogus. I'm all for dramatizing just how grim our economic situation is, but you can't use raw numbers like this in an era of rising population. The civilian labor force today is 40% larger than it was in 1982 and more than twice as large as it was in 1945. Job losses last year amounted to about 1.7% of the labor force, but in 1945 the equivalent number was nearly 5% and in 1982 it was nearly 2%.

Job losses last year were brutal, and if you count broader measures than the headline unemployment rate they were even grimmer. But there's no need to use moron math to make it seem even worse than it is. "Worst since 1982" would have been fine.

Don't Ask, Don't Tell

| Fri Jan. 9, 2009 10:37 PM EST

DON'T ASK, DON'T TELL....Obama press secretary Robert Gibbs posted a video Q&A today on the change.gov site and took the following question:

Thaddeus: Is the new administration going to get rid of the "don't ask don't tell" policy?

Gibbs: Thaddeus, you don't hear a politician give a one-word answer much, but it's yes.

That's very good news, though I sure wish Gibbs had given a multi-word answer instead. Mainly, what I want to know is: "What do you plan to replace it with?" We'll just have to wait and see, I guess.