Time Lags and the Killing of Obama’s Expansion

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The Dems’ Virtual Convention

Is a virtual convention like those “cookieless cookies” that we Geezers eat to save our hearts—devoid of all the fat and most of the sugar we used to love? So far, the answer is no. The Dems adapted to the medium and hit the ball out of the park. For at least a couple of decades, direct primaries have made conventions little more than show. Nothing both important and substantive happens in them any more. When it does—as in the Dems’ rules-and-delegates brouhaha in 2016—it’s painful to watch and hurts the cause. In-person conventions have become zombies, surviving without purpose or life. Pandemic necessity has revived them. They are now four-day-long infomercials about the party, its candidates, their character, their values, their supporters, and (of course) how bad the other guys are. They’re chances to capture voters’ heads and hearts with far more than thirty-second sound bites or the pressured 90-second answers in debates. For those purposes, the Dems did a superb job. I’m a substance guy. I value a high truth-to-words ratio. To me, the highlighters of the first two days were Bernie Sanders, Michelle Obama, Bill Clinton, and Colin Powell, in that order. In a short speech, well worth watching, Sanders laid out precisely what’s at stake in this election. Donald Trump’s kingly reign is “not normal.” Sanders then told us precisely what that Dems plan to do about it if they win, as specifically as he could in the time given. Michelle Obama translated what Sanders had said into the softer language of female caring and empathy. She raised a question key to our national survival: will our kids and grandkids think this is normal? If so, nothing else matters; our democracy is doomed. With his usual incisiveness, Bill Clinton pointed out that leadership doesn’t mean passing the buck, as Trump did to states, cities and everyone but himself. And Colin Powell—who might have been our first Black president but for the GOP’s three-generation electoral strategy of racism—told us how badly Trump has weakened us. (Think that Powell, who kept Bush I out of Baghdad, would have mired us in two needless wars, which have become the longest in our history? Racism doesn’t just hurt its direct victims; by depriving us of the full use of talents like Powell’s, it hurts us all.) The Dems made mistakes, of course. At one point on the second night, vibrating, highlighted all-caps words overlaid the video, as in ads for used cars. If there’s any more of that garbage on tape, there’s still time to edit it out. But everything else worked well. The first day’s testimonials of reformed Republicans, including former Ohio Governor John Kasich and a bunch of ordinary voters, was strong. The second-day’s non-speaker highlight was the virtual roll call of States. It did three things. First, it tallied the primaries’ results and showed where Sanders had significant support. Second, it properly paid homage to Sanders and his supporters for making invaluable points about gross economic inequality, abysmally inadequate health care, and longstanding racial injustice, and for getting solutions into the party’s platform. Third, the roll call showed—graphically and demographically—what a marvelously broad, diverse and inclusive nation we have, and why we need a government to match. Can the GOP beat that beautiful display of inclusion and variety with its usual image of burly white guys in red MAGA hats backing Trump up? It’ll be interesting to see how the GOP roll call rolls out, or whether they’ll even have one. Can a Trump in-person rally attract more than the people who are there in person? Last but not least, there was Dr. Jill Biden. Such an intelligent, dedicated, caring, dynamo of a woman, a teacher no less! Can Melania ever match that? Will the GOP even put her on, with her perpetual air of a woman utterly dominated and utterly unhappy, waiting with pitiful patience to get her long-delayed reward? Again, we’ll see. But it’s hard to see how even Hollywood’s best, who mostly oppose Trump wildly, could do a better job for him. How can you “spin” the facts of 170,000 mostly needless deaths, or our nation’s dismal record in pandemic fighting? How can you morph a soulless narcissist into a man who, under stress of a hard job and personal tragedy, took time to befriend an elevator operator? How can you disguise those selfsame burly white guys in MAGA hats, some bearing semiautomatic weapons (like the “protestors” in Michigan’s capital), as neighbors and friends who care about voters and their families? It’s a tall hurdle for the GOP to jump next week. The Dems have so far set the bar high.

“[Trump] inherited the longest economic expansion in history, from Barack Obama and Joe Biden. And then, like everything else that he inherited, he ran it straight into the ground.”—Senator Kamala Harris, in her maiden speech as the Democratic vice-presidential nominee. [Set the timer at 11:24]

There are many ways to deceive voters. You can simply lie or mislead, as President Trump has reportedly done 20,000 times. Or you can use derision and sarcasm, like a frat boy in a clique on a high-school playground, as Fox did in treasonously retarding our diplomatic efforts to deal with Kim Jong Il and his nukes.

But one of the most effective means of duping voters is to lead them to false conclusions that come “naturally” but erroneously. The field of economics is rife with opportunities for that kind of scam.

Perhaps the simplest and easiest scam relies on a hard but common truth. It takes years for changes in government policy, good or bad, to affect the whole nation’s economy for better or worse. (For a different kind of deception based on a common misconception about the price of solar energy, click here and scroll down to “The PR Hack’s Method.”)

Time lags in the responses of our huge economic “system” to policy changes are an intrinsic feature of a complex economy of 330 million people with many moving parts. Whenever a president, the Fed, or our Congress makes a significant change in economic policy, the real effects of that change usually take years to show up. Only the stock market, which measures collective greed and fear, responds more quickly, and often erroneously.

Voters often tend to assume that, because B followed A, A must have caused B. But that’s not necessarily so. Because time lags in big national economies typically take years, something that happened long before A may actually have caused B.

And so it was with the Obama-Biden-Pelosi Expansion. Mere days after President Obama’s first inaugural, Sen. Mitch McConnell declared making President Obama fail the GOP’s immediate goal. For a purely partisan ploy, the idea made sense, because of the economic time lag.

Obama took office just four months after the Crash of 2008. That was the greatest financial panic since the Crash of 1929, which brought on the Great Depression.

Most economists think that, despite FDR’s heroic efforts and a then fully Democratic Congress, the Great Depression never really ended until we got into World War II in December 1941. That delay was over twelve years. So based on general principles and actual history, the GOP had every reason to expect the Crash of 2008 to last at least four years, i.e., all of Obama’s first term. If, as then seemed likely, there were not much of an improvement by its end, the GOP could blame it all on Obama and maybe win back the presidency. For unscrupulous people bent on gaining and keeping power above all else, that ploy was well worth a try. (We won’t even mention the incessant resort to virulent racism.)

That’s just what the GOP tried to do. It skimped on a much-needed stimulus package, begrudging the bare minimum needed to keep the financial system from collapsing. Due to GOP opposition, Democrats’ attempts to stem losses in the housing market and save millions of individual homeowners from foreclosure never got congressional buy-in. For more details on how the GOP and Mitt Romney rolled out this cynical “blame Obama” strategy in 2012, click here.

But in the end, the GOP scam failed for two reasons. First, Obama, his then VP Joe Biden, and Nancy Pelosi are skilled pols. They added some things to the general stimulus, including bailing out the American auto industry and increasing its sales with “cash for clunkers.” Second, the American economy proved to be far more resilient than many expected: except for housing, the Crash turned out to be mostly confined to the finance sector. It didn’t contaminate all the real economy.

So what actually happened was a classic “V-shaped” recovery. Following is a graph of quarterly net private-sector job gains or losses, in thousands, for the entire nation, for the calendar years 2006-2011:

The raw data came from the Bureau of Labor Statistics website. What they show is that, by year-end 2010, under Barack Obama’s wise and steady hand, private-sector job growth had rebounded to about the same level as under George W. Bush, in the last full year pre-crash.

The Obama stimulus—called The American Recovery and Reinvestment Act of 2009—passed in February 2009. The time lag between that big policy change and the right edge of the “V-shaped” recovery was less than two years. With skill, determination, and an understanding of basic economics, Obama, Biden and Pelosi had made a classic “V-shaped” recovery in record time. That’s a very fast turn of our ocean-liner-sized economy after a change of heading at the helm.

Now comes Donald Trump. He knows nothing at all about how anything works, except for his own fragile ego and the power of extortion. Under his über-incompetent rule, today’s GOP continues to blame Obama, Biden and Pelosi, who actually fixed it, for the Crash of 2008 that the GOP’s deregulatory mania and coddling of Wall Street had helped cause. But that ongoing propaganda enterprise pales when compared with the GOP’s current scams.

In the first and most evilly audacious, the GOP is pushing to “reopen” the national economy in the midst of the Covid-19 pandemic by forcing “reopening” down workers’ throats. The coercive method is simple: depriving workers and hard-hit cities and states of the cash they need to survive economically beyond July. Without enforceable lockdown orders, and with workers’ unemployment insurance reduced or ended, they would have to go back to work or starve and be evicted, health risks be damned.

Trump and the GOP have pretexts for this coercion, endorsed with a straight face by multiple GOP Congresspeople. The main claim is that restoring the extra $600 per week of unemployment benefits, which has now expired, would encourage workers not to seek jobs. A secondary talking point is that states, counties and cities, which are mostly under water, don’t “deserve” any more money because they’ve “mismanaged” the grossly inadequate sums they’ve already been given.

This is nothing less than scorched-earth class warfare. The assault on supplemental unemployment insurance is an assault on private-sector workers. The skimping of money for states and localities—most of which, unlike the feds, have to balance their crashing budgets by law—is an assault on public-sector workers. Unless reversed, it will soon force mass dismissals of police, fire-fighters, teachers, bus- and train-drivers, garbage collectors and public health officials, among many others. They will find themselves among the ranks of laid off in the middle of a pandemic.

This is a ploy to force workers to go back to work, regardless of their safety, and to downsize local government by sacrificing public workers, so their bosses and private businesses can thrive, and so Trump can steal credit for continuing the Obama-Biden-Pelosi Expansion.

Beyond its sheer inhumanity, this economic coercion has two logical flaws. First, there are no jobs for most of those who’ve lost them, at least in the private sector. Customers fearing the pandemic, not government, have shut down most businesses that “pack ’em in.” That includes theaters, restaurants, public gyms, sports stadia, airlines, cruise ships and even bars and barber shops. Those businesses aren’t going to be thriving anytime soon, regardless of how much economic pressure misguided government policy puts on laid-off workers.

Second, by depriving idled workers of the now-expired “extra” unemployment benefits, the GOP has drained the economy of its life blood, consumer spending, just when it needs it most. The same is true of state and local public-sector workers idled by plunging state budgets, with no decrease in public demand for their services. Stopping their salaries kills general demand by putting less money in their hands as consumers. But the pandemic has actually increased demand for public-sector workers in public health. Nevertheless, cash-strapped state and local governments may soon have to start laying them off.

As the pandemic resurges this summer, and perhaps gets even worse in the fall (as happened in 1918), this class warfare is not just figurative. There have been dead bodies, mostly of workers and their loved ones who risk exposure to the virus. And there will be more. Already there have been over 160,000 deaths, including workers in over-stressed hospitals, on the front lines of testing and contact tracing, and in slaughterhouses and closely-packed assembly lines. Workers in schools, if not the kids themselves, may soon be next.

So there you have it: open class warfare, with jobs and consumer spending under siege, and with actual corpses resulting. And there is no end in sight.

This is how low one of our two great political parties has sunk. This is how it has bypassed the normal economic time lags and turned the Obama-Biden-Pelosi Expansion—the longest in American history—into the Trump Pandemic Depression. November’s election may be the very last chance for voters to rescue our economy and our democracy, as well as tens of millions of innocent workers laid off and made destitute in the middle of a still raging pandemic.

While Trump and his GOP lackeys are not in lock-step on every tactic in this class warfare, they all come at it from the same direction: their own personal interests. Trump wants the stock market and economy to rebound prematurely, no matter how many sicken and die, and long before workers and consumers feel safe, so he can claim economic recovery and win the coming election. His sycophants want to keep their political power by continuing to delude the same workers they have scammed for twelve years.

If the pandemic had never happened—or if they had managed it well—they might have pulled the whole scam off. Trump’s blunderbuss whole-commodity tariffs are terrible economic policy, known as counterproductive from actual experience for about a century (ever heard of Smoot and Hawley?). So is Trump’s would-be Cold War with China: like most of what Trump thinks and does, it’s childish, impetuous, and ill-thought-through. It hasn’t begun to bring jobs back from offshore and rebuild our industrial infrastructure, which our oligarchs willfully sold and moved abroad. Only sophisticated, carefully targeted “rifle-shot tariffs” might do that trick.

Despite these gross blunders in policy, the usual time lags in national economic response might have given Trump a second term. It has been less than three years, eight months, since Trump took office and began messing almost everything up. Under normal circumstances, that would not be enough time to degrade the robust Obama-Biden-Pelosi Expansion significantly. The still-rising economic indicators were just beginning to level off when the pandemic struck.

But the pandemic did strike. It’s what economists call an “exogenous” economic force: something out the blue that breaks all the usual rules. It cut short the normal time lags before the effects of bad policy show up. In fact, it’s now cutting our economy stone cold dead, mostly because Trump and his lackeys failed to take the pandemic seriously and screwed up our national response to it as badly as was humanly possible.

So now, Trump, the GOP and we, their hapless victims, can only dream of the kind of V-shaped recovery that President Obama, then Vice-President Biden and Speaker Pelosi engineered after the Crash of 2008. Instead, what we have so far is an L-shaped crash in employment, with a increase in unemployment from 7.1 to 23.1 million in a single month, and with only a small and tentative recovery in jobs since then:

[Click on graph for clearer image.]

Very likely, the jobs curve will soon turn down yet again, as we see the effects of: (1) an ongoing surge in Covid-19 infections and deaths likely to get worse with cold weather and the advent of flu season, and (2) Trump’s and the GOP’s continued skimping on unemployment compensation and money that states, counties and cities need to pay their own employees and stimulate demand. But those effects, only indirectly from the pandemic (mediated by Trump’s and the GOP’s über-incompetence), will probably not show up in full force until after the election.

Meanwhile, we are left with a drop off a sheer cliff, followed by a small and soon-to-be-abortive rise, caused by our president and his Republicans putting their own short-term power interests above the nation’s and its people’s economic and medical survival. Our economy has fallen off a precipice. Your family likely will suffer yet more, because Trump and his GOP care more about their personal political fortunes than about whether you and your family survive or become unemployed and destitute, then sicken and die. It really is that simple: if they had cared about you or your family, they would have taken on the virus first, not Democrats and people of color.

Footnote 1: This economic near-miracle undoubtedly derived also from the fact that the Crash was a product of and threat to bankers primarily; it didn’t much affect the real economy outside of housing.

The V-shaped graph overstates the beneficence of the recovery, because it reflects only private-sector jobs. It doesn’t include government jobs. Total job growth was actually lower than the graph shows because the GOP was trying to drown government in a bathtub at the same time as President Obama was trying to grow all jobs.

Footnote 2: The graphed raw data come from this source and this path: Unemployment: Upper Top Picks: Check box for “Unemployment Level - LNS13000000”: scroll down and click on “Retrieve data.”

Endnote: As if all this were not bad enough, the Trump Administration appears to be hiding the numbers, or at least making them hard to see. The data for the V-shaped graph of the Obama-Biden-Pelosi recovery came from a Bureau of Labor Statistics (BLS) mini-server that is no longer operative. I can assure readers that I faithfully compiled that graph from data on that mini-server for a footnote in a post published on this blog in November 2012.

Today, the best data I could find on the BLS website was on this page, which tallies and graphs job losses and job gains separately, making it hard to see their net effect without a lot of further work.

Whether the BLS’ current political management deliberately made it hard to see the net change in jobs over time, I leave to the reader to decide. But why would any rational person want to compile and graph job gain and loss figures separately, except to make analysis difficult and let the president brag about job gains without referring to simultaneous job losses?

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