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Governor Perry’s First Week
It has been fascinating to watch Governor Rick Perry’s first week of campaigning. Before he announced, I began to think that he would be the nominee, if for no other reason than governors tend to do well in presidential races and Romney is, well, Romney. Governor Perry said a lot of interesting things this week, such as that the stimulus did not create any jobs when it created 50,000 in his own state. But there were four moments in particular that I think illustrate the type of president he would be.
In Monday Perry opened his campaign with this statement: “We’re calling today on the president of the United States to put a moratorium on regulations across this country, because his regulations, his EPA regulations are killing jobs all across America.” To begin with, I think it is worth noting that this is a fairly nonsensical proposal; it’s just that it makes for a good sound bite. The key to understanding what Perry is trying to get at is his reference to the EPA, this week’s Republican punching bag. I do not dispute that EPA regulations mean that there are less jobs out there. I just prefer to refer to EPA regulations as those government policies that are keeping your children from having bone cancer and malformed brains. I will leave it up to you to decide which is your priority.
Also on Monday came the bit about the Fed. “If this guy [Fed Chairman Bernanke] prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics…is almost treasonous in my opinion.” Let’s set aside the standard violent rhetoric, which at this point is a litmus test to prove you are in fact a Republican. And also let’s set aside the fact that Governor Perry meant sedition, not treason, except to note that he should be familiar with sedition as he did advocate secession. That leaves us with him not wanting the Fed to print money between now in the election. Also known as helping the economy recover. Also known as doing what the Fed is required to do by federal law.
Wednesday brought us an interesting statement on climate change. “I think there are a substantial number of scientists who have manipulated data so that they will have dollars rolling into their projects” was the highlight. I think this can best be explained as follows. As has been well documented, those scientists who deny anthropogenic climate change have selectively chosen data so that the oil and coal companies will continue to fund their research. In Governor Perry’s mind, this means that obviously the scientists who think the opposite must behave the same way. There are a few problems with this logic, but I think the most obvious one is that the money he is talking about comes from grants that are generally funding by the federal government. So is Perry accusing Congress of buying off thousands of scientists? Congress is responsible for the claims about anthropogenic climate change?
Thursday was my personal favorite. Approached by a young boy in New Hampshire asking about the age of the Earth and evolution, Governor Perry gave us this gem. “How old do I think the Earth is? I don’t have any idea. I think it’s pretty old. It goes back a long long ways. I’m not sure anybody actually knows completely and absolutely how long ago the Earth is. I hear your mom was asking about evolution. It’s a theory that’s out there and it’s got some gaps in it. In Texas, we teach both creationism and evolution in our programs.” Phew. The first part can obviously be read as his way of trying not to sound crazy while not angering the religious right: “pretty old” is pretty ambiguous. (If anyone is wondering, the answer is 4.54 billion, which is 4,539,994,000 more than many of Perry’s supporters think). As for evolution having “some gaps in it,” well, so it does. If his point is that something else (ie, creationism) might better explain life on Earth then we can just label him as ignorant and/or pandering and move on. His last sentence takes the cake though. Let’s translate. “In Texas, we teach both creationism and evolution in our programs in direct violation of two United States Supreme Court decisions.” After that, Perry did say this: “I figure you’re smart enough to figure out which one is right.” So I think we can illustrate Governor Perry’s plank on education as this: let’s teach our seven-year-olds that there are two equal, competing hypotheses about the shape of the Earth and let them decide which is correct: scientists overwhelmingly say it is round, but there are some people who believe it is flat.
Misconceptions about the Federal Reserve are rife in this country, and it’s a serious problem. You do a disservice to your readers to imply that there is the least bit of anything that “the Fed is required to do by federal law”. In point of fact, the Fed is not required to do a single thing under federal or any other law. The sole influences wielded over this private bank (that is legally empowered to print our money) is that its chairman and board of governors are appointed by the president, and that its existence is enabled by a federal law (The Federal Reserve Act of 1913) which Congress would theoretically be able to change. (As they did in 1930 when establishing the FOMC–Federal Open Market Committee). No other oversight exists–it is not audited, and it does not share its books with any entity.
Rick Perry was poorly spoken, and a horse’s ass for doing so. We certainly do not need a president with such poor judgment and lack of self control. But the underlying sentiment of Perry’s comment about Ben Bernanke is actually correct.
The Full Employment and Balanced Growth Act of 1978 established what has come to be known as the dual mandate: minimize unemployment and minimize inflation. I admit that what I wrote was a gross oversimplification, but I wanted to keep the post short. I do stand by what I wrote. At the moment, Chairman Bernanke and at least some of the Fed presidents do not seem to be very worried about inflation. We aren’t meeting the Fed’s target for growth. In contrast, unemployment is obviously a huge issue, especially considering Washington’s irrational obsession with contractionary fiscal policy. This means that the Fed is the only government body willing to try to drive down unemployment. They basically have two tools for doing this: lowering interest rates to promote lending and growth and performing open market operations, which is what Governor Perry was referencing. As interest rates have been at zero for quite a while now, the Fed is left with two options. The first the FOMC exercised recently: they declared they will not raise rates until, at the earliest, 2013. The second is performing those open market operations.
Now, technically speaking it was wrong of me to say that the Fed is required by law to “print money.” However, it is required to minimize unemployment and “printing money” is the only tool available to it. It’s obviously unclear whether another round of QE would do much, but obviously the Perry campaign is worried that it would in fact improve the condition of the economy.
Not to nitpick, but the chairman and board of governors are confirmed by the Senate. In fact, two seats have been left open since Obama took office as the Senate Republicans have opposed his nominees. In addition, the FOMC includes 5 of the Fed presidents, who are not government appointees, giving the private sector a good amount of control over monetary policy.
Again, to be clear: saying something like “only government body” is more than misleading. The Fed is NOT a government body. It’s a private bank indulged by Federal law to be beyond oversight or audit. It’s also a gross oversimplification to say that the Fed has any real interest in unemployment, despite the politically-motivated “comments” that are offered after their private meetings, or Congressional directives that have absolutely no requirement or recourse. The Fed is a closed club of bankers in business to profit themselves who enjoy special privileges in return for managing US currency. The Humphrey Hawkins bill suggests that the Feb Board of Governors also consider “growth and stability” (not unemployment per se) and asks them to submit a Monetary Policy Report, but there’s absolutely no oversight to spell out how such actions are to be taken, or whatever might be a consequence if they aren’t. In point of law, there is nothing requiring the Fed to do anything it doesn’t privately care to do.
I would also point out that Fed-endorsed propaganda that “Quantitative Easing”, IE printing more money, is somehow to the benefit of the unemployed, is a line of BS that should not be swallowed whole, and you should not repeat it or believe it without doing more research. It’s possible, yes, but in practice large corporations are not hiring–they’re using that liquidity primarily to buy back their own stock (AOL and Principle Financial just announced, and if you Google news for “stock buyback” you’ll see how many other companies are actively engaged in this practice while they are not hiring these days).
One of the many unfortunate consequences of 9-11 was the SEC’s waiving of corporate stock repurchase restrictions that have since been the primary corporate use of capital. The Fed is complicit in this via their monetary policies that they continue to claim are for public benefit, but, in practice are producing purely private profits. (The #1 direct beneficiaries of buybacks are corporate directors and executive management, NOT employees, and certainly not the unemployed who continue not to be re-hired).
We can pound Gov Perry for pandering to those of his supporters who don’t believe in evolution. But, in fact, if God created the whole shebang six thousand years ago, how would we know? I don’t think that is the way it came to be, but I would not dismiss someone who did.
On the other hand, the biggest issue facing this nation is the one about culture and what counts for culture. For that I refer us all to Mayor Michael Nutter. I hope no one is picking on the Philly Mayor for his statements, since culture counts.
Regards &mdash
And to continue, overcoming my clumsy fingers, I fully support Kad in his comments above about the Fed. I am not for abolishing the Fed, but it does make me nervous.
Regarding AGW, saying that the oil companies fund some scientists, which then distorts their data, is just saying that “your side is as bad as ours”. What we really need to know is what the possible futures are and what the possible hedges are. I don’t see that kind of information out there. Is it too complicated for us ordinary citizens? That is not the idea upon which this nation was founded.
Further, I don’t see anyone explaining that if we take certain actions because of our understanding of AGW it will turn the economy upside down and require a major rewickering of how we provide work and provide income.
Regards — ; Cliff
The Fed’s QE and Zero Percent Interest Rate policies are nothing more than a continued bailout of the financial services sector, which remain in dire straits and more so than anyone wants to admit. Rather than boost employment, the Fed has succeeded in slamming the unemployed, those living on fixed incomes, and almost everyone else by increasing the monetary base about threefold since 2008. The Fed’s strategy rests on the faulty supply-side premise that by providing more liquidity to banks, money will be irrigated throughout the broader economy via lending. This hasn’t happened because the American consumer is on hiatus, and over 16% of Americans are either unemployed or underemployed, despite their desire for full-time work.
I predict further stupidity at the upcoming Jackson Hole meeting. Given the recent correction in stocks, there is a lot of pressure for a QE3 and Bernanke is likely to give it to them. Or maybe a QE2.5. Regardless, you can guarantee that Bernanke will do the wrong thing.
I agree with Michael, that these “zero” interest rates do little good for the majority. Just look at the returns that senior citizens are getting on their savings, producing very little income, while the banks and corporations sit on the extra monay, at least the portion that they do not distribute among themselves. Savers are getting the shaft.