Steven Rattner | We Were Worried About Inflation. Then Russia Invaded Ukraine. – The New York Times

By Steven Rattner

Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.

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While the extraordinarily strict sanctions imposed on Russia constitute an admirable policy response to its appalling invasion of Ukraine, we should not be complacent about the potential boomerang effect on the global economy.

The shunning of Russian petroleum has already caused oil prices to jump. Prices of corn and wheat, major exports of both Russia and Ukraine, have been soaring — in the case of wheat, to levels not seen since 2008.

That comes as we already endure the highest inflation in 40 years. Last Thursday, the Labor Department reported that prices in February were 7.9 percent higher than a year ago, an acceleration from the previous month.

More inflation likely means slower growth. On the demand side, the bite of inflation will leave households with less money to spend. On the supply side, already stretched supply lines will be further challenged by repercussions from the war in Ukraine.”

David Lindsay:  I have always liked Steve Rattner, as a responsible voice from the right. I realize now he was the Counselor to the Secretary of Treasury, which is the same position my father had for about three years in the Eisenhower administration. I liked the comment about raising taxes on the wealthy as part of the solution. Eisenhower raised the top tax rate to 92 or 93? Many economists say 70% is the magic number in Europe.

Here is a comment I endorsed:

David E,    Concord, MA    7h ago

Well, as I read this, I wonder if we’re missing the forest for the trees. What I think more about is the potential impact of a Sino-Russian partnership. If China opts to support Russia’s war and strengthens its alliance, assuming we don’t turn a blind eye, this will drive a massive adjustment on the supply side of our economy. Independent of the obvious “blind spots,” I believe globalization is credited with fueling significant wealth for the top half of the US population. A transition to a more mercantilist economy, anchored in a strong US/Europe/UK alliance that significantly diminishes trade with China may mean accepting a lower standard of living. Personally, I’m comfortable with that if it’s the price to pay for condemning dictators and autocrats around the world and standing up for our values. And maybe it will accelerate the transition to greener, cleaner future.

Reply55 Recommended

Steven Rattner | Washington Should Quit Its Budget Gimmicks – The New York Times

By Steven Rattner

Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.

“Americans of a certain age may remember J. Wellington Wimpy, a droll character from Popeye cartoons. “I’ll gladly pay you Tuesday for a hamburger today,” Wimpy would periodically implore passers-by.

That pretty much summarizes the opaque budget math behind the two huge spending plans now before Congress, one aimed at fixing our physical infrastructure and the other targeted at everything from child care to the climate crisis.

Unlike earlier pandemic rescue efforts, Democratic leaders have promised that these new bills would not add to the country’s enormous deficits. “It is zero price tag on the debt,” President Biden said recently. “We’re going to pay for everything we spend.”

Except they won’t. Take, for example, the bipartisan infrastructure bill. When it was unveiled with great fanfare at the end of July, a group of Democratic and Republican senators proudly proclaimed that its costs would be fully offset by new revenues.

“This is paid for,” said Senator Joe Manchin, Democrat of West Virginia. “Our infrastructure bill is all paid for.”

Just a few days later, the Congressional Budget Office — the official scorekeeper — delivered its verdict: The $550 billion in new spending would, in fact, mostly add to the deficit, with just $173 billion of offsets. A separate analysis by the University of Pennsylvania’s Wharton Budget Model pegged the 10-year shortfall at $351 billion.”

Steven Rattner | Too Many Smart People Are Being Too Dismissive of Inflation – The New York Times

By Steven Rattner

Mr. Rattner, a contributing opinion writer, covers economics and finance.

• March 5, 2021

Credit…Doomu, iStock/Getty Images

“We are all, to one degree or another, shaped by early experiences.

My father grew up during the Depression and never lost his fear of debt. I spent an early part of my career as a reporter at The New York Times, chronicling the rampant inflation that scarred the economy in the 1970s and the Federal Reserve’s struggle to contain it.

So far, the wary eye that I have kept on prices for four decades has been unnecessary. But now, with Congress poised to approve an additional $1.9 trillion in spending through the American Rescue Plan Act, I’m worrying again.

Yes, the monthly price index that tracks consumer prices continues to look benign. But even when casting aside the stimulus that the Biden administration wants to add to the economy, some important early warning signals have begun flashing.

The prices of many commodities are surging — copper and lumber because of a jump in home building. Global steel demand has pushed up iron ore prices. Even tin, heavily used in electronics, has soared as suppliers rush to meet consumer demand for new gadgets.”

Opinion | The Economy Is Not as Good as It Looks – By Steven Rattner – The New York Times

By Steven Rattner

Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.

• Feb. 5, 2020

 

 

A farmer in in Polo, Ill., last month, near silos where he feeds cattle.Credit…Brendan Smialowski/Agence France-Presse — Getty Images

“Every few days, fresh economic statistics roll out, each one almost invariably reinforcing the perception of a solid economy. In his State of the Union address on Tuesday night, President Trump reinforced that impression — and took credit for it.

He has ammunition. According to calculations by J.P. Morgan, Mr. Trump is the beneficiary of the strongest economic tailwind of any incumbent running for re-election since 1900.

But Democrats shouldn’t despair. While overcoming that tailwind will be a tough challenge, the economy isn’t as good as it looks. Equally important, on balance, Mr. Trump has had little to do with its continued expansion, providing several lines of attack for the opposition, as follows:

The Trump recovery is merely an extension of the Obama recovery. Yes, we’re adding jobs every month, and yes, the overall economy is growing. But the performance of both of these key headline indicators has not been anything for the president to brag about.”

Opinion | Trump’s Formidable 2020 Tailwind – The New York Times

By Steven Rattner

Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.

• May 27, 2019

Supporters of President Donald Trump at a campaign rally in Montoursville, Pa., this month.CreditEric Thayer for The New York Times

“The economy invariably ranks among the top issues on the minds of voters in presidential elections. At the moment, it appears to offer President Trump a meaningful tailwind.

But how big is that tailwind? Fortunately, economists have worked hard to develop models for predicting election outcomes, and according to one of the best of these, it should be quite large.

One of the first — and perhaps still the best — of these models was created by Ray Fair, a professor at Yale. He found that the growth rates of gross domestic product and inflation have been the two most important economic predictors — but he also found that incumbency was also an important determinant of presidential election outcomes.

How well has Professor Fair’s model worked?

In short, while not perfect, the Fair model has done remarkably well. In 2008, it predicted that Barack Obama would receive 53.1 percent of the popular vote; his share actually totaled 53.7 percent. In 2012, when Mr. Obama was running for re-election, its final estimate was a vote share of 51.8 percent, just two-tenths of one percent less than what the incumbent president received. (For Mr. Obama in 2012, the power of incumbency helped offset a still-recovering economy.)”

The Market Isn’t Bullish for Everyone – by Steven Rattner – NYT

“Hardly a day goes by without President Trump tweet-bragging about the relentless rise of the stock market to fresh record highs — Exhibit A in his mind about how he is, indeed, making America great again.But, while strong equity markets are certainly a Good Thing, let’s not forget that, like so many effects of Mr. Trump’s policies, those higher share prices are propelled upward in considerable measure by the new president’s pro-business policies and benefit the wealthy far more than the average American.

The unsurprising reality is that the rich are far more likely to hold stocks, and when they do, they own them in much larger chunks than their less-well-off brethren.The percentage of Americans who hold any stocks at all has declined to just over half of all Americans, while only 28 percent of families with below-median incomes hold any shares (including in retirement accounts). Moreover, while middle-class Americans typically own just $15,000 in equities, the top 10 percent have amassed median holdings of $365,000.”

Trump’s Tax Cuts May Be More Damaging Than Reagan’s – by Steven Rattner – NYT

“Deficits have left a lasting mark in the form of vast piles of national debt — $14 trillion currently, up from $712 billion when Mr. Reagan took office, an almost 20-fold increase. Big deficits can sometimes be advisable, as they were in aiding recovery from the 2009 recession. But incurred pointlessly, as Mr. Trump is proposing, large fiscal gaps simply mean more debt that will be left to our children and grandchildren to pay off.”

Pushing Obamacare Over the Cliff – by Steven Rattner – NYT

After Republicans pulled their legislation to repeal and replace the Affordable Care Act last Friday, President Trump told The Washington Post, “The best thing politically is to let Obamacare explode.”Or he could light a match. Republicans may have conceded defeat in their legislative effort to get rid of Obamacare, but their guerrilla war to achieve its demise remains underway.The stealth battle began on Inauguration Day, when Mr. Trump signed an executive order giving his agencies wide latitude to weaken the law.

Trumpcare: Fiction and Fact – by Steven Rattner – NYT

“Watching administration officials play cat and mouse with Sunday talk show hosts is a hoary Washington tradition. But yesterday, Trump spokesmen offered a remarkably large number of flat out untruths as they attempted to defend the Republican health care plan.
Untruth #1:“I firmly believe that nobody will be worse off financially in the process we are going through.” – Tom Price, Secretary of Health and Human Services, on Meet the Press.

Fact #1:Millions of Americans will be worse off. For those currently purchasing insurance on the exchanges using Federal subsidies, that support will be replaced by tax credits that, for many, will be substantially smaller, as this chart shows:”

An Extremist Holding the Purse Strings – by Steven Rattner – The New York Times

“President Trump will hardly be short of far-right cabinet members, including an education secretary who has called public schools a “dead end,” a labor secretary who has been cited for employment law violations and an Environmental Protection Agency administrator who has sued his own department.

But within the Trump team, the views of Representative Mick Mulvaney, Republican of South Carolina, his little-known choice to lead the important Office of Management and Budget, rank as among the most reactionary.”