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Defying the Odds

Defying the Odds
New book about the 2016 election.

Saturday, March 23, 2019

Incompetence Update, Economics Edition

In Defying the Odds, we discuss Trump's approach to governing The update  -- just published --includes a chapter on the 2018 midterms.

The U.S. posted its biggest monthly budget deficit on record last month, amid a 20 percent drop in corporate tax revenue and a boost in spending so far this fiscal year.

The budget gap widened to $234 billion in February, compared with a fiscal gap of $215.2 billion a year earlier. That gap surpassed the previous monthly record of $231.7 billion set seven years ago, according to data compiled by Bloomberg.
On the advice of a media pundit turned adviser, Trump picked another pundit for a job requiring actual expertise.

Eamon Javers and Jacob Pramuk at CNBC:
Earlier this week, Trump spoke to National Economic Council Director Larry Kudlow. The president had seen a column in The Wall Street Journal, co-written by Moore, with the headline: “The Fed Is a Threat to Growth.” In it, Moore argued that the “last major obstacle to staying on this path [of economic growth] is the deflationary monetary policy of the Federal Reserve.”
Trump asked his top economic advisor whether he had seen the column. Kudlow replied that he had and “liked it a lot.”

“Why isn’t [Moore] the Fed chairman?” Trump asked rhetorically.
After Kudlow answered that the Fed board had two openings, the president asked his advisor to talk to Moore about one of the posts. Kudlow asked whether Moore was interested, and he said he was. Trump offered Moore the Fed board job, which will not become official until he goes through a vetting process.
I first started writing about Moore in 1997. Four years before, President Clinton had raised the top tax rate to 39.6 percent, and supply-siders had insisted this would without question cause tax revenues to drop. This prediction was a necessary corollary of supply-side economic theory, which holds that tax revenue moves in the opposite direction of the top tax rate. The prediction was spectacularly wrong — revenue not only rose, it rose much, much faster than even the most optimistic advocates of Clinton’s plan had predicted.
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He is capable of writing entire columns that contain no true facts at all. He made so many factual errors he achieved the rare feat of being banned from the pages of a Midwestern newspaper. He has sold his policy elixir to state governments which have promptly experienced massive fiscal crises as a direct result of listening to him. He believes what he calls “the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy” should be lionized, and that the idea that a recession might be caused by anything other than excessively high rates on these heroes defies “common sense.” He was pulled into Trump’s orbit during the 2016 campaign and co-wrote a ludicrous hagiography of Trump and his agenda. By all appearances, Moore opposes mainstream fiscal theories because he simply doesn’t understand them.
Conservative economist Greg Mankiw:
A couple of weeks ago, I gave a talk at the Federal Reserve Bank of Dallas. I said that, although I am not a fan of President Trump, I have to give him credit for making good appointments to the Fed. I was thinking about people like Jay Powell, Rich Clarida, and Randy Quarles.
Then today the president nominates Stephen Moore to be a Fed governor. Steve is a perfectly amiable guy, but he does not have the intellectual gravitas for this important job. If you doubt it, read his latest book Trumponomics (or my review of it).
It is time for Senators to do their job. Mr. Moore should not be confirmed.



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