12:00 AM, Mar 15, 2014 • By IRWIN M. STELZER
President Obama might have been economical with the truth when he promised Americans they could keep their doctors when Obamacare takes effect, but he is proving a man of his word when it comes to the exercise of presidential power as he defines it. “I’ve got a pen and I’ve got a phone,” he told his cabinet, developing a theme of his State of the Union message. “We’re not just going to be waiting for legislation, or plans, or any logical idea of what will result in order to make sure we’re providing Americans the kind of help I’ve decided they need.” Liberals, or progressives as they now prefer to be called, found this activism cheering; conservatives and constitutionalists found it a chilling echo of some Latin American caudillo.
The presidential telephone so far has been deployed primarily in an effort to persuade Vladimir Putin to leave the Crimea, but a 90-minute call seems to have had little impact on an adversary who responds more to a display of power than of rhetoric. The pen, however, is proving mightier than the telephone: the president is using it to make changes in the Affordable Care Act (Obamacare) without bothering to obtain congressional approval, to tighten the regulatory noose around the neck of the coal industry, to prevent his Justice Department from enforcing a law that makes use of marijuana illegal, and now to drive wages up and profits down. For all his jacket-less, tie-less informality, Obama’s presidency is as close to an imperial one as we have had in modern memory.
Now the president is refilling his pen for an assault on what he feels is the second greatest problem facing the nation, the first being climate change. The background is important. Wall Street bonuses are up by an average of 15 percent, and average wages are “stagnant for too long,” according to Obama—median household income remains below the 2007 level when adjusted for inflation. Wages have declined sharply as a portion of national income, while profits are taking a larger share. Never mind that there are complex forces at work depressing wages of workers facing competition from low-paid Asian and Latin American workers, that the premium paid for education has risen, as has the premium for managerial skills in a globalized economy. Those complexities are best dealt with by policy pedants at cushy think tanks. Obama and the progressive wing of his party feel no need to worry about “any logical ideas of what will result” or to examine complex causes when simple, direct action on the results of these causes is at hand.
No one has ever argued that our labor markets work perfectly. At times employers have exploited desperate workers, at others trade unions’ excessive demands have brought down great companies and, lately governments. That’s why we have minimum wage laws and statutory penalties to protect against excessive work-weeks, procedures to assure a modicum of fairness in labor disputes, and lately a reconsideration of the structure of public-sector wage bargaining.
Because Obama believes that the wages produced by those regulated markets have been too low for too long, he has decided to engineer a rise in the minimum wage and in the number of workers eligible for time-and-a-half payment for time spent on the job beyond forty per week. He undoubtedly has been told that a rise in the wage minimum will push up other wages as employers find it necessary to restore wage differentials. And that reducing inequality will stimulate economic growth. Ross Eisenbrey, vice president of the liberal Economic Policy Institute put it this way, “Move more money from employers into employee pockets. That is good for the economy.” A recent study by the International Monetary Fund also finds a relationship between greater equality of income distribution to more rapid wealth.
The first step was a directive to all government departments to contract only with companies that pay a minimum wage of $10.10 per hour, rather than the current statutory minimum of $7.25. Because that order can only affect future contracts, it has minimal effect just now. But as new contracts phase in, the cost of government will rise and taxpayers will get the bill, with no overt increase in tax rates needed to extract the additional funds from them.
3:28 PM, Mar 14, 2014 • By GEOFFREY NORMAN
Expectations unexpectedly fell with is something many have come to expect … if you know what we mean.
12:01 PM, Mar 13, 2014 • By JERYL BIER
In testimony before the Senate Appropriations Committee Thursday, Secretary of State John Kerry made the point that his department is not just concerned with foreign affairs. The State Department tweeted the following comments of the secretary at the hearing:
Economy's better, but headwinds ahead.12:00 AM, Mar 8, 2014 • By IRWIN M. STELZER
Five years ago this Sunday share prices hit a 13-year low: the S&P index of 500 shares fell to 676.53.
8:50 AM, Mar 7, 2014 • By GEOFFREY NORMAN
Non-farm payrolls surprised to the upside in February with 175,000 jobs added. The number was “unexpectedly” high with forecasts running in the 150,000 range and some going much lower.
2:21 PM, Mar 4, 2014 • By GEOFFREY NORMAN
The administration has produced a budget that includes various predictions not least of which concerns GDP growth. The White House, as Jeffry Bartash of Marketwatch reports, is looking for sunny days ahead and:
11:00 AM, Feb 20, 2014 • By JERYL BIER
A recently released Department of Agriculture (USDA) report on the "Food Assistance Landscape" for the fiscal year 2013 shows that for the second year in a row, participation in the federal government's SNAP (food stamps)
10:40 AM, Feb 19, 2014 • By GEOFFREY NORMAN
What we have been told is a “recovery” has a way of throwing off false trails. We were told to expect a robust performance, this year, from the housing sector yet, yesterday, for example, we learn that home-builder confidence has not merely fallen, but cratered. As Reuters reports:
12:00 AM, Feb 15, 2014 • By IRWIN M. STELZER
Janet Yellen made her first appearance before Congress since assuming the chair of the Federal Reserve Board and produced the yawns she was seeking, even thanking several of her interlocutors for calling her “unexciting.” Knowing that some Fed critics are seeking to rein in the bank’s independence (several of these critics would like to eliminate the Fed entirely), Yellen offered to stay for as long as necessary—six hours, as it turned out—in the hope that demonstrating such heightened transparency will head off legislation to politicize the central bank. The examples of Japan and Britain, where the central bankers have become aligned with Prime Minister Shinzō Abe and Chancellor of the Exchequer George Osborne, respectively, apparently do not appeal to her.
9:09 AM, Feb 13, 2014 • By GEOFFREY NORMAN
Braving the weather, the BLS has released the weekly first-time claims numbers. They were off, a bit, on the high side. The “expected” figure: 330,000.
Actual and, of course, “unexpected” number: 339,000. Close enough for government work, anyway.
Blame the weather.
And the recovery keeps rolling along.
12:00 AM, Feb 8, 2014 • By IRWIN M. STELZER
When economic forecasts prove wrong, it is customary to blame the weather. So cold that consumers stayed home, or so hot that consumers, well, stayed home. So cold that outdoor construction was unexpectedly low, unless of course unusually high temperatures made such work impossible lest heat stroke afflict the workers. In short, weather is the straw at which sinking forecasters often grasp.