Opinion | Trump Sends In the Economic Quacks – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Anna Moneymaker for The New York Times

“As the U.S. economy careens toward disaster, congressional talks about what to do appear to have ground to a halt. So on Saturday President Trump — speaking at one of his golf courses, of course — announced four executive measures that, he claimed, would rescue the recovery.

Unfortunately, one of the measures was vacuous, one trivial and one unworkable. And the fourth may do substantial harm.

The vacuous measure simply calls on government agencies to “consider” helping renters facing eviction. The trivial measure waives interest and defers principal repayment on student loans.

The unworkable measure supposedly provides new aid to the unemployed, who have lost pandemic benefits because Senate Republicans don’t want to provide them; but the announced program would be an administrative nightmare that might take a long time to put into effect and would require partial matching funds that strapped states don’t have. Remember, states had a very hard time implementing the first round of aid to the unemployed, leaving millions in the cold for many weeks. This would be worse.”

Opinion | Why Can’t Trump’s America Be Like Italy? – by Paul Krugman – The New York Times

Another wonderful week. I cope with the joys and sorrows of this Covid/Recession/BlackLivesMatter era by reading and writing about it, focused on the New York Times. Often what speaks to my heart, has helped unmuddle my brain.

Just going back to last Friday, Paul Krugman wrote, Why Can’t Trumps America Be Like Italy.

It is so rude it is delicious. It ends,

“. . . In particular, tens of millions of workers are about to lose crucial unemployment benefits, and Republicans haven’t even settled on a bad response. On Wednesday Senate Republicans floated the idea of reducing supplemental benefits from $600 a week to just $100, which would spell disaster for many families.

For someone like Trump, all this must be humiliating — or would be if anyone dared tell him about it. After three and a half years of Making America Great Again, we’ve become a pathetic figure on the world stage, a cautionary tale about pride going before a fall.

These days Americans can only envy Italy’s success in weathering the coronavirus, its rapid return to a kind of normalcy that is a distant dream in a nation that used to congratulate itself for its can-do culture. Italy is often referred to as “the sick man of Europe”; what does that make us?”

Opinion | America Drank Away Its Children’s Future – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…David J. Phillip/Associated Press

“A brief history of the past four months in America:

Experts: Don’t rush to reopen, this isn’t over.

Donald Trump: LIBERATE!

Covid-19: Wheee!

Trump officials: Here’s our opposition research on Anthony Fauci.

And we’re now faced with an agonizing choice: Do we reopen schools, creating risks of a further viral explosion, or do we keep children home, with severe negative effects on their learning?

None of this had to happen. Other countries stuck with their lockdowns long enough to reduce infections to rates much lower than those prevailing here; Covid-19 death rates per capita in the European Union are only a 10th those in the United States — and falling — while ours are rising fast. As a result, they’re in a position to reopen schools fairly safely.

And the experience of the Northeast, the first major epicenter of the U.S. pandemic, shows that we could have achieved something similar here. Death rates are way down, although still higher than in Europe; on Saturday, for the first time since March, New York City reported zero Covid-19 deaths.

Would a longer lockdown have been economically sustainable? Yes.

It’s true that strong social distancing requirements led to high unemployment and hurt many businesses. But even America, with its ramshackle social safety net, was able to provide enough disaster relief — don’t call it stimulus! — to protect most of its citizens from severe hardship.

Thanks largely to expanded unemployment benefits, poverty didn’t soar during the lockdown. By some measures it may even have gone down.

True, there were holes in that safety net, and many people did suffer. But we could have patched those holes. Yes, emergency relief costs a lot of money, but we can afford it: The federal government has been borrowing huge sums, but interest rates have remained near historical lows.

Put it this way: At its most severe, the lockdown seems to have reduced G.D.P. by a little over 10 percent. During World War II, America spent more than 30 percent of G.D.P. on defense, for more than three years. Why couldn’t we absorb a much smaller cost for a few months?

So doing what was necessary to bring the coronavirus under control would have been annoying, but entirely feasible.

But that was the road not taken. Instead, many states not only rushed to reopen, they reopened stupidly. Instead of being treated as a cheap, effective way to fight contagion, face masks became a front in the culture war. Activities that posed an obvious risk of feeding the pandemic went unchecked: Large gatherings were permitted, bars reopened.

And the cost of those parties and open bars extends beyond the thousands of Americans who will be killed or suffer permanent health damage as a result of Covid-19’s resurgence. The botched reopening has also endangered something that, unlike drinking in groups, can’t be suspended without doing long-run damage: in-person education.

Some activities hold up fairly well when moved online. I suspect that there will be a lot fewer people flying cross-country to stare at PowerPoints than there were pre-Covid, even once we finally beat this virus.

Education isn’t one of those activities. We now have overwhelming confirmation of something we already suspected: For many, perhaps most students there is no substitute for actually being in a classroom.

But rooms full of students are potential Petri dishes, even if the young are less likely to die from Covid-19 than the old. Other countries have managed to reopen schools relatively safely — but they did so with much lower infection rates than currently prevail in America, and with adequate testing, which we still don’t have in many hot spots.

So we’re now facing a terrible, unnecessary dilemma. If we reopen in-person education, we risk feeding an out-of-control pandemic. If we don’t, we impair the development of millions of American students, inflicting long-term damage on their lives and careers.

And the reason we’re in this position is that states, cheered on by the Trump administration, rushed to allow large parties and reopen bars. In a real sense America drank away its children’s future.    . . . .   “

Opinion | How America Lost the War on Covid-19 – by Paul Krugman – The New York Times

“. . .  But what strikes me, when looking at America’s extraordinary pandemic failure, is how top-down it all was.

Those anti-lockdown demonstrations weren’t spontaneous, grass-roots affairs. Many were organized and coordinated by conservative political activists, some with close ties to the Trump campaign, and financed in part by right-wing billionaires.

And the rush to reopen in Sunbelt states was less a response to popular demand than a case of Republican governors following Trump’s lead.

The main driving force behind reopening, as far as I can tell, was the administration’s desire to have big job gains leading into November, so that it could do what it knew how to do — boast about economic success. Actually dealing with the pandemic just wasn’t Trump’s kind of thing.

In that case, however, why has Trump refused to wear a face mask or encourage others to do so? After all, wider use of masks would be one way to limit infections without shutting down the economy.

Well, Trump’s vanity — his belief that wearing a mask would make him look silly, or mess up his makeup, or something — has surely played a role. But it’s also true that masks remind people that we haven’t controlled the coronavirus — and Trump wants people to forget that awkward fact.

The irony is that Trump’s willingness to trade deaths for jobs and political gain has backfired.

Reopening did lead to large job increases in May and June, as around a third of the workers laid off as a result of the pandemic were rehired. But Trump’s job approval and electoral prospects just kept sliding.

And even in purely economic terms the rush to reopen is probably failing. The last official employment number was a snapshot from the second week of June; a variety of shortterm indicators suggest that growth slowed or even went into reverse soon afterward, especially in states where Covid-19 cases are spiking.

In any case, the point is that America’s defeat at the hands of the coronavirus didn’t happen because victory was impossible. Nor was it because we as a nation were incapable of responding. No, we lost because Trump and those around him decided that it was in their political interests to let the virus run wild.”   -30-  (end of article)

Opinion | Why Do the Rich Have So Much Power? – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Woody Harrington

“America is, in principle, a democracy, in which every vote counts the same. It’s also a nation in which income inequality has soared, a development that hurts many more people than it helps. So if you didn’t know better, you might have expected to see a political backlash: demands for higher taxes on the rich, more spending on the working class and higher wages.

In reality, however, policy has mostly gone the other way. Tax rates on corporations and high incomes have gone down, unions have been crushed, the minimum wage, adjusted for inflation, is lower than it was in the 1960s. How is that possible?

The answer is that huge disparities in income and wealth translate into comparable disparities in political influence. To see how this works, let’s look at a fairly recent example: the budgetary Grand Bargain that almost happened in 2011.

At the time, Washington was firmly in the grip of deficit fever. Even though the federal government was able to borrow at historically low interest rates, everyone who mattered seemed to be saying that the budget deficit was the most important issue facing America and that it was essential to rein in spending on Social Security and Medicare.”

Opinion | America Didn’t Give Up on Covid-19. Republicans Did. – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Ross D. Franklin/Associated Press

“Earlier this year much of America went through hell as the nation struggled to deal with Covid-19. More than 120,000 Americans have now died; more than 20 million have lost their jobs.

But it’s looking as if all those sacrifices were in vain. We never really got the coronavirus under control, and now infections, while they have fallen to a quite low level in the New York area, the pandemic’s original epicenter, are surging in much of the rest of the country.

And the bad news isn’t just a result of more testing. In new hot spots like Arizona — where testing capacity is being overwhelmed — and Houston the fraction of tests coming up positive is soaring, which shows that the disease is spreading rapidly.

It didn’t have to be this way. The European Union, a hugely diverse area with a larger population than the U.S., has been far more successful at limiting the spread of Covid-19 than we have. What went wrong?

The immediate answer is that many U.S. states ignored warnings from health experts and rushed to reopen their economies, and far too many people failed to follow basic precautions like wearing face masks and avoiding large groups. But why was there so much foolishness?

Well, I keep seeing statements to the effect that Americans were too impatient to stay the course, too unwilling to act responsibly. But this is deeply misleading, because it avoids confronting the essence of the problem. Americans didn’t fail the Covid-19 test; Republicans did.”

Opinion | How Many Will Die for the Dow? – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Johannes Eisele/Agence France-Presse — Getty Images

“In mid-March, after weeks in denial, Donald Trump finally admitted that Covid-19 was a serious threat and called on Americans to practice social distancing.

The delayed acknowledgment of reality — reportedly driven by concerns that admitting that the coronavirus posed a threat would hurt the stock market — had deadly consequences. Epidemiological modelers believe that tens of thousands of deaths might have been avoided if America had started lockdowns even a week earlier.

Still, better late than never. And for a little while it seemed as if we were finally settling on a strategy for containing the virus while also limiting the economic hardship caused by the lockdown.

But Trump and the Republican Party as a whole have now given up on that strategy. They won’t say this explicitly, and they’re throwing up various disingenuous explanations for what they’re doing, but their basic position is that thousands of Americans must die for the Dow.”

Opinion | How to Create a Coronavirus Economic Depression – by Paul Krugman – The New York Times

“Last week the Bureau of Labor Statistics officially validated what we already knew: Just a few months into the Covid-19 crisis, America already has a Great Depression level of unemployment. But that’s not the same thing as saying that we’re in a depression. We won’t know whether that’s true until we see whether extremely high unemployment lasts for a long time, say a year or more.

Unfortunately, the Trump administration and its allies are doing all they can to make a full-scale depression more likely.

Before I get there, a word about that unemployment report. Notice that I didn’t say “the worst unemployment since the Great Depression”; I said “a Great Depression level,” a much stronger statement.

To understand why I said that, you need to read the report, not just look at the headline numbers. An unemployment rate of 14.7 percent is pretty horrific, but the bureau included a note indicating that technical difficulties probably caused this number to understate true unemployment by almost five percentage points.

If this is true, we currently have an unemployment rate around 20 percent, which would be worse than all but the worst two years of the Great Depression. The question now is how quickly we can recover.

If we could get the coronavirus under control, recovery could indeed be very rapid. True, recovery from the 2008 financial crisis took a long time, but this had a lot to do with problems that had accumulated during the housing bubble, notably an unprecedented level of household debt. There don’t seem to be comparable problems now.

But getting the virus under control doesn’t mean “flattening the curve,” which, by the way, we did — we managed to slow the spread of Covid-19 enough that our hospitals weren’t overwhelmed. It means crushing the curve: getting the number of infected Americans way down, then maintaining a high level of testing to quickly spot new cases, combined with contact tracing so that we can quarantine those who may have been exposed.

To get to that point, however, we would need, first, to maintain a rigorous regime of social distancing for however long it takes to reduce new infections to a low level. And then we would have to protect all Americans with the kind of testing and tracing that is already available to people who work directly for Donald Trump, but almost nobody else.”

This weekend in the New York Times, reported by David Lindsay

Photo: Jacinda Ardern, the 39-year-old prime minister of New Zealand.

There has been plenty of good analysis this weekend in the New York Times.

Paul Krugman wrote on Friday, May 2nd, “But I’d argue that there are deeper reasons for the current stock market-real economy disconnect: Investors are buying stocks in part because they have nowhere else to go. In fact, there’s a sense in which stocks are strong precisely because the economy as a whole is so weak.

What, after all, is the main alternative to investing in stocks? Buying bonds. Yet these days bonds offer incredibly low returns. The interest rate on 10-year U.S. government bonds is only 0.6 percent, down from more than 3 percent in late 2018. If you want bonds that are protected against future inflation, their yield is minus half a percent.

So buying stock in companies that are still profitable despite the Covid-19 recession looks pretty attractive.

And why are interest rates so low? Because the bond market expects the economy to be depressed for years to come, and believes that the Federal Reserve will continue pursuing easy-money policies for the foreseeable future. As I said, there’s a sense in which stocks are strong precisely because the real economy is weak.” https://nyti.ms/3d4hMMx

 

David Brooks, not to be outdone, weighs in with good news. In a piece titled, Why Trump’s Ploy Stopped Working, he starts, Even in a pandemic there are weavers and rippers. The weavers try to spiritually hold each other so we can get through this together. The rippers, from Donald Trump on down, see everything through the prism of politics and still emphasize division. For the rippers on left and right, politics is a war that gives life meaning.

Fortunately, the rippers are not winning. America is pretty united right now. In an ABC News/Ipsos poll last week, 98 percent of Democrats and 82 percent of Republicans supported social-distancing rules. According to a Yahoo News/YouGov survey, nearly 90 percent of Americans think a second wave of the virus would be at least somewhat likely if we ended the lockdowns today.

Pew survey found 89 percent of Republicans and 89 percent of Democrats support the bipartisan federal aid packages. Seventy-seven percent of American adults think more aid will be necessary.

According to a USA Today/Ipsos poll, most of the policies on offer enjoyed tremendous bipartisan support: increasing testing (nearly 90 percent), temporarily halting immigration (79 percent) and continuing the lockdown until the end of April (69 percent). A KFF poll shows that people who have lost their jobs are just as supportive of the lockdowns as people who haven’t.

The polarization industry is loath to admit this, but, once you set aside the Trump circus, we are now more united than at any time since 9/11. The pandemic has reminded us of our interdependence and the need for a strong and effective government.” https://nyti.ms/2SoVXPL

 

The Editorial Board struck a blow to our President, with their editorial, In a Crisis, True Leaders Stand Out, which began, Leadership may be hard to define, but in times of crisis it is easy to identify. As the pandemic has spread fear, disease and death, national leaders across the globe have been severely tested. Some have fallen short, sometimes dismally, but there are also those leaders who have risen to the moment, demonstrating resolve, courage, empathy, respect for science and elemental decency, and thereby dulling the impact of the disease on their people.

The master class on how to respond belongs to Jacinda Ardern, the 39-year-old prime minister of New Zealand. On March 21, when New Zealand still had only 52 confirmed cases, she told her fellow citizens what guidelines the government would follow in ramping up its response. Her message was clear: “These decisions will place the most significant restrictions on New Zealanders’ movements in modern history. But it is our best chance to slow the virus and to save lives.” And it was compassionate: “Please be strong, be kind and united against Covid-19.”

Ms. Ardern, a liberal, then joined with the conservative prime minister of Australia, Scott Morrison, in shaping a joint effort that has all but eliminated the virus from their island nations.”

 

Opinion | What Will the Coronavirus Do to Our Deficit? – By Paul Krugman – The New York Times

By 

Opinion Columnist

Credit…Bishara Mustafa/EyeEm, via Getty Images

“Almost a decade has passed since I published a column, “Myths of Austerity,” warning that deficit alarmism would delay recovery from the Great Recession — which it did. Unfortunately, that kind of alarmism seems to be making a comeback.

You can see that comeback in the gradually increasing number of news analyses emphasizing how much debt we’ll run up dealing with the Covid-19 crisis. You can also see it in the rhetoric of politicians like Mitch McConnell, the Senate majority leader, who is blocking aid to beleaguered state and local governments because, he says, it would cost too much.

So this seems like a good time to emphasize two key facts. One is economic: While we will run very big budget deficits over the next couple of years, they will do little if any harm. The other is that whatever they may say, very few prominent figures in politics or the media are genuine deficit hawks, who are actually worried about the consequences of rising government debt. What we mainly have, instead, are deficit peacocks and deficit vultures.

The term “deficit peacocks” was coined by the Center for American Progress for people who preen and posture about fighting deficits without offering realistic policy proposals. I’d broaden the term to include what I used to call Very Serious People — those who inveigh against the evils of debt not because they’ve done a careful analysis but because they imagine that it makes them sound earnest and tough-minded.