Semi-Daily Journal

Hope is not a plan, folks, hope is not a plan. Someone needs to remind the crooks on Wall Street *cough* my 401k fund managers of that simple phrase.

And while I admire your tenacious attachment to the cheerful notion that some "adults" on the Republican side will suddenly pop out of the Continuum and save the day, Mr. DeLong, I will have to say I see zero evidence that this will happen. Unless Bush the Elder personally intervenes with his son, the current crowd will continue to run amok, and doubly so if Bush is elected in 2004.

"The baby boomers start hitting retirement age at 2011"

This assumes retirement at 65. In the US by this age a majority of people have already retired, especially the very productive high wage earners who can afford to retire. The first year of eligibility for Social Security benefits is a very popular year to retire. It is however better than Europe where almost everyone has retired by 65.

Early retirement a "disturbing characteristic" of employment trends: St. Louis Fed's Poole
http://www.stls.frb.org/news/releases/2003/05_19_03.html

Indeed, Professor DeLong, perhaps, as you suggest, is it still time to save capitalism from itself? Perhaps is it time to recall that this animal has this uggly tendency to find its own tail tasty...

Of course things could get so bad, that a coup d'etatwould be necessary to save the state. Isn,t the USA government based on the Roman government?

Brad, I have to second Tom's comment on the lack of adults in the GOP. Look at this administration - the 'adults' we were promised are:

Cheney (booster of the Iraq war, and Mr. Crony Capitalist).

Powell, of the UN speech on Saddam's non-existant WMD's, and he who did not resign when his namesake doctrine was violated.

Rice, Ms. "I don't read my e-mail from the CIA on trival matters like nuclear weapons programs of somebody whom we are planning on attacking", who also holds a doctorate in Alternative History.

Rumsfield, who has demonstrated the truth of one his rules (quote from memory): 'there are many ideas which are bold, imaginative, new, but which are also wrong'. If the Army/Marine generals hadn't been able to shake at least a little of the BS out of his head, we'd have gone into Iraq with 60K troops, and the present situation would look like a glorious victory.

Bush's first secretary treasury, whose name I can't remember, and can't find in a quick google search,
whose performance merits this level of remembrance.

Alan Greenspan, supporter of Bush's first tax cut, AKA Mr. "Doesn't look so good now, maybe he should have retired in the late 1990's".

Ashcroft - the AG who figured that medical marijuana and New Orleans hookers were worth diverting agents from hunting Al Qaeda.

When we go to the House, we've got Tom 'Exterminator' DeLay. The House is only going more GOP in the next election, with redistricting.

In the Senate, we've got Frist & Co. An enabler of whatever the administration wants.

Daschle is either playing a weak hand for what it's worth, or is the sort of DLC guy who sees the GOP as the party it'd really rather be. One way is better than nothing, but not much.

Writing the checks, there's a bunch of donors who obviously figure that they can pull so much good stuff out of the federal government that it's worth whatever long-term problems are caused. In some cases, such as the military-industrial complex, causing more problems causes more profits. Heck, they can always leave the country, get foreign citizenship, and laugh at us. Or, in 2008 or 2012, some Democratic President will clean it up, take the blame for the pain, and set things up for Jeb or Barb or Jenna.

Over at that Ministry of Propaganda, we've got the AM radio spectrum, and Big Media.

Providing the votes, we've got the 'Christian Right', who can frequently be counted on to make Voltaire, Twain, and other critics of religion look prescient. Despite many of them being truly devout Christians.

And in terms of the election, I rate it at 50-50, at best.
Bush has the office, most of the media, more money than even he can spend, an economy which might actually be in recovery, and (will have) many, many, many video spots of returning soldiers. Even if troop numbers are increased, by Nov '04 most Americans will probably believe that almost all troops are back home.

The "hope" that, come post 2004 election. GWB will turn into Bob Dole is pretty much predicated on the idea that the Bush (or Rove, or Cheney, or whoever it is you think is in charge) is merely saying what they say to get elected, and that once freed from the need to win another election, they'll do the right thing.

They may be right, but its a pretty sad sitation where the best case scenario for explaining behavior is simply craven interest. But surely this must be it since the obvious alternative, that they actually believe the s#*t they've been selling, is just a little too hard to believe.

But whatif their motivation has more to do with the whole "starving the beast" theory of how you reduced the size of the Federal Government? If that's the working theory, there is really no incentive to ever ease off the throttle because the coming trainwreck is actually thought to be a good thing.

And electorally, it might even work. The bigger a mess we get into, the more painful the steps are to correct it, the more likely vopters are noit going to want to vote for somebody who tells the truth.

Positive feedback should be assumed to act like positive feedback, not like negative feedback. If Bush is re-elected in 2004, why should he change policies? After all, they worked.

One important lesson from the Reagan administration is that a president can get away with an impressive amount of stuff, while shifting the burden to his successor. I believe that Bush, Cheney & Co. noticed that.

In addition, most of these guys are people whose careers consisted of getting away with the sort of shenanigans (sp?) which would put the rest of us either behind bars, or looking forward to a career in the fast food industry. They've taken advantage of connections for decades, reaping the gains while others were stuck with the losses.

Reagan is the right precident to cite. Bush will call attention to the "social security crisis" and jack up FICA rates. This, as far as I can tell, is the whole point of the fiction of the Social Security Trust - a tax that can be used to shore up federal revenues without affecting the wealthy. Plus, it's not really a tax, it's an investment, right?

msw

You really want him reelected? You still believe that somewhere in this party there's a genius orchestrating what is in the best interest of everyone? We've been watching this train wreck for three years, and the voice of reason economically and environmentally has been ignored with a vengance. You folks put the GOP in charge of the executive, legislative and judicial branch--thanks a bunch. Holy war against half the world (them) and economic/environmental war at home (us). I've never seen so much useful idiocy in my life, and the only example I can see that comes close is the rise of fascism in Germany. If it weren't so pathetic it would be funny. Good job boys--thanks for putting the Rapturists in power. And if you think they're going out of power willingly, you need to look up your history.

Sounds like things will get better after the 2024 election, if we're lucky. How much is Swiss citizenship selling for nowadays?

Yeah, and a lot of us thought that Bush would be just another conservative Republican. We'd survived Nixon and Reagan, after all.

Stupid us. And stupid you, Professor DeLong, for continuing to believe there's a moderate under the pile of shit.

Yeah, and a lot of us thought that Bush would be just another conservative Republican. We'd survived Nixon and Reagan, after all.

Stupid us. And stupid you, Professor DeLong, for continuing to believe there's a moderate under the pile of shit.

Bush lose in 2004?

With Dean signing a bill allowing gay marriage?

With Bush spending $200 million on an (unopposed) primary campaign?

With the economy recovering at the rate it has been (remember: it is the first half of the election year that has the statistical correlation with election success, ie consistent with a lagged model of voting intentions).

I really, really, cannot see a plausible Democratic candidate to beat Bush in 2004.

I think the second Bush term will be an impressive case of deadlock between competing factions: both Sec Rumsfeld and VP Cheney are likely to exit the stage due to age and health issues (ditto of course Colin Powell). The religious conservatives will be going for final kill, the libertarians are hacked off, the Wolfowitz/ Perle faction will be planning the marches on Tehran and Damascus.... it will be a lovely mess.

Oh and the GOP could easily have 55-60 seats in the Senate, with Graham, Edwards, Hollings and Miller stepping down.

I don't think Congress has ever shown any appetite to control public spending.

Think to California. Republican Governor: roll back the vehicle registration tax and ask for a bond issue to close the deficit, and push away an accounting of debt charges for a future Governor.

There will be no change in economic policy as long as this Administration and Congress hold sway. Debt is fine, plan on debt. Devil take the middle class household that is beset by a bit of bad luck.

Democrats winning Presidential elections since 1950, with extra-ordinary circumstance in parentheses:

1960->Kennedy wins by a hair (because Illinois results faked?)

1964->Johnson in a landslide (JFK legacy/Goldwater extremism)

1976->Carter (Watergate)

1992->Clinton (Perot)

1996->Clinton (Perot). Actually, reviewing the results at http://www.presidentelect.org/e1996.html, it loooks like he would have won handily w/o Perot.

In 2000, of course, Gore won the popular vote. Are these last two elections the harbinger of a shift back towards the Dems, or are they a blip caused by the 1990's economic boom?

Brad, what other "group of hands to operate the sock puppet" (i.e. high ranking Republicans) do you think has any chance to balance the fiscal situation in a 2004-2008 Republican administration? How they heck would they do it? They absolutely will not repeal the bulk of the tax cuts - the Republicans have already shown that they and their supporters LOVE those tax cuts, even when they know exactly what it is doing to the fiscal situation. Bush didn't make them to get re-elected, they're a fundamental policy pushed repeatedly since the beginning of the administration.

A new administration might restrain further spending growth, but I don't see any plausible programs for them to cut to bring revenue in line with their taxes. Some Republicans are obviously hoping that an eventual fiscal crisis will give them the political guns to slash major social programs, but I see absolutely no chance of that actually happening. As the baby boomers age and medical costs continue to increase, the willingness of the public to cut the major social programs will decrease, not increase. The only way to overcome this would be a major economic meltdown. And they're not going to cut military spending in the next four years with the amount of new demands they've put on it.

So Polly^H^H^H^H^H Brad, could you actually come up with some serious suggestion of what Republicans would drag us out of their fiscal mess in 2004-2008, and how? And do you REALLY think that under a new administration the "usual suspects" from the current one would be totally ditched? Rumsfeld and Wolfowitz and the other foreign policy fuckups might get the boot if things get really bad in Iraq. But in fiscal policy I don't see the Bushies as just one faction within the Republican leadership, they're fairly representative.

Um so what are the markets supposed to do? Sell the dollar? Well, last time I looked, that's what they're doing. The dollar isn't going down as fast as it might be, because the Chinese and Japanese keep buying it so that they can line their vaults with more paper.

Or is Krugman astonished that interest rates aren't heading to the roof? (This comment board has already seen this kind of discussion, re Krugman's op-ed in the spring that he had just locked in the interest rates on his mortgage.) Well, he's partly to blame; some people are still worried that the Fed might come in and start buying the 10-year bond, to counter the deflation that Krugman used to warn about. That's looking less likely should the U.S. economy pick up steam, but on the other hand you don't want to sell just before the 300-pound gorilla starts buying. And yes, the market probably is more concerned about realized deficits than projected deficits. Projected deficits can change.

Anyway, honest question here: which financial instrument does Krugman think the market is mispricing?

"And even if Bush doesn't lose the 2004 election, there's a good chance that the normal vicious infighting of White House politics will throw up a different group of hands to operate the sock puppet"

notice a lot of people leaving the Bush administration? They've been loyal, they'll be back.

"He said he gets various letters from hedge funds"

whatever your expectations are, I doubt hedge funds, etc. are sitting around pinning their hopes on a democratic win, I would expect they're pinning their hopes on a republican win, but inexplicably expect stuff to work out for the better.

The reasoning of the 'everything is going to turn out alright' crowd, including financial professionals, is their unshakable faith that once safely re-elected in 2004, the Bush administration will take steps to fix the mess it has made. It will raise taxes/cut spending to balance the budget, put pressure on Israel to make peace, pass an energy bill that's more than just a pork buffet, genetically engineer flying pigs etc.., etc...

Of course none of this will ever happen, but as Krugman said, the hardest part about dealing with fanatics is realizing that they are fanatics, i.e. not open to compromise or willing to limit their goals, not just in the face of opposition but even in the face of reality (how else to explain the eternal return of supply-side economics?). And while there are some pragmatic/cynical people in White House on foreign policy and social issues, this is plainly not the case when it comes to fiscal policy. We're screwed.

"Oh and the GOP could easily have 55-60 seats in the Senate, with Graham, Edwards, Hollings and Miller stepping down.

I don't think Congress has ever shown any appetite to control public spending."

Posted by: John on November 22, 2003 11:10 AM

I just realized that, given a Bush win in '04 (almost certainly combined with a few more GOP senate seats) that a few Democrats would be willing
to switch parties.

A second-term Bush with a GOP fillibuster-proof Senate, and a House which has more GOP seats than now, could be very, very nasty.

Barry writes:
> I just realized that, given a Bush win in '04 (almost
> certainly combined with a few more GOP senate seats)
> that a few Democrats would be willing to switch parties.
>
> A second-term Bush with a GOP fillibuster-proof Senate,
> and a House which has more GOP seats than now, could
> be very, very nasty.

The outcome predicted from most pre-hatch chicken counts can indeed be pretty impressive. But the position Bush holds right now is probably not as strong as some people think. He's pegged at 50% in the polls right now with one year to go. But the only big upside possibility as I see it is a strong economic recovery, and that's not a sure thing. We did have that one amazing quarter, but if there's anything other than a spectacular Christmas buying season, I'll lay even money on a return to layoffs by the spring.

Iraq is going to continue to be a nightmare, and it could get worse rather than better. At the moment, more and more National Guard units are being called up to deploy, and this brings the war, which is well past any point where you could detect a hint of glory or shining victory, all the way home for a lot of people. None of the possible alternatives there are likely to work for the administration.

If Bush comes up in November with an unpopular war (and it's almost certain he will) he really does need a strong economy to win. If he doesn't get that, he could lose. If things get detectably worse, he and the GOP could *really* lose, since they can't hide the fact that they were calling every shot.

As far as how all this depends on who the opponent is, I'm not really sure it matter much, since the Democrat will get the party base plus whatever percentage of others vote against Bush. Dean is thought by some to be a push-over, but I see no huge advantage for Bush against a previously NRA-endorsed anti-war governor with no record on interntaional affairs. For that matter, the Iowa Electronic market only has him as a 60% favorite for the nomination.

Bush does need some bad things to happen to lose big, but he has done little or nothing to forestall the possibility of disaster.

Iraq is likely to be even worse come election time, but having Dean as the alternative may not exactly inspire fearful voters.

I call 2004: Anonycrat +5% vs W. Bush.

I have my reasons, but why clutter? dammit, I just like calling elections even when I'm wrong.

in that vein: House stays GOP, Senate is 50/50 but leaning "left" (or what passes for it in north america these days).

Thank, Jonathan. I think it comes down to two things: the economy, and the war (like so many elections).

One explanation for why the markets haven't priced in Bush's policies can be found in 1998-9.
There was at least a year when it was obvious that almost all dot com stocks were ridiculously overpriced. Most of them had competitors in other dot coms, and so wouldn't necessarily reap massive profits. The 'old economy' companies were moving operations onto the web. It was clear that the ability to conduct business on the web was widespread, and growing - very, very few companies could reap a long-term edge by being web-friendly.

However, for a year or so, people who tried to make money off of this clear irrationality got hammered, more often than not. It turned out that an inefficiency in the market and an arbitrage opportunity were not the same.

Similarly, anybody in the financial markets who moves prematurely would fail. Even if interest rates are pushed up over the next decade by Bush policies, it doesn't mean that one could make much money in the short-term on this knowledge.