THEMES, Atlande, The presidency of Obama, a New New Deal in US Economic policy? Flashcards
1
Q
2008 election and central ideaological debate in US economic policy
A
- what is the proper scope of government intervention in a market economy?
- shifts from one period to the another generally emerge when the dominant paradigm seems incapable addressing new economic challenges
- window of opportunity offered by the financial crisis
- usually arise after a severe economic crisis // Great Depression, New Deal
- from “laissez-faire” to restoring social justice
- 1980, Reagan’s election
- to restore growth by freeing markets from government intervention
- FDR and Reagan: transformational presidents because they inspired Americans to embrace major shifts in US economic policy
2
Q
Beinart, “The New Liberal Order”, Time
A
A “new New Deal”
3
Q
A “new New Deal”
A
Beinart, “The New Liberal Order”, Time
4
Q
Laisser-faire, 1920s
A
- competitive market self-regulate according to natural laws and cycles that governments should refrain from interfering in
- taxes and regulations that inhibit business during a recession should be reduced to a minimum
- government should let the crisis run its naturl course to purge the system of its weaknesses
- foster the survival of the fittest
- Andrew Mellon’s point of view (Herbert Hoover’s Treasury Secretary)
- tax increase: all categories affected
5
Q
FD Roosevelt
A
- Americans ready to test FDR’s government
- end the Great Depression
- ensure decent living conditions for all Americans by affirming its democratic authority over private economic power, regulating business activities and promoting social values
6
Q
FDR adressing the financial crisis
A
- Banking Act, 1933 (Glass-Steagall Act)
- restructured the banking system
- investment banking separated from retail
7
Q
FDR addressing the housing crisis
A
- Federal Housing Administration, 1934
- to develop homeownership
8
Q
FDR addressing working conditions
A
- National Labor Relations Act, 1935, to expand union rights
- Fair Labor Standards Act, 1938, introduced a minimum wage
9
Q
FDR addressing unemployment
A
- Social Security Act, 1935, created a national insurance system
10
Q
Reagan: the Conservative-Neoliberal Reorientation of US economic policy
A
- “In this present crisis, government is not the solution to our problem: government is the problem”
- to break with New Deal liberalism
- free market principles
- to him, government intervention responsible for the economic troubles of the 1970s
- income taxes were reduced on all groups
- reducing federal social spending, but popular programs such are Medicare and Social Security reinforced
- spending > tax cuts = deficit rose
11
Q
Neoliberals
A
- younger generation
- Bill Clinton “New Democrats”
- offered a “Third Way” between Reaganism and New Deal liberalism
12
Q
The Third Way
A
- no fiscal and regulatory barriers to market growth // Reagan
- to invest in people “human capital” to be able to compete in global markets
- balancing the federal budget and reform welfare // Republicans
- “end welfare as we know it”
- tax fairness ≠ Republicans
- environmental protections to create sustainable growth ≠ Republicans
- repeal the New Deal-era Glass-Steagall Act
- critics accused Clinton of betraying the left
- to steer the US economic away from its New Deal heritage
13
Q
The financial crisis of 2007-2008: Hopes and fears of a New New Deal
A
- fiscal stimulus package in February 2008
14
Q
The economic thought of the Obama Administration
A
- Geithner and Summers (repeal of the Glass-Steagall Act)
- Hamilton Project (Robert Rubin, central figure of the Clinton Administration)
- economic policy think tank that produces research and proposals on how to create a growing economy that benefits more Americans
- Obama believed in a moderate, bipartisan consensus
- market’s abaility to bring growth and prosperity
- but also the need for pragmatic government action to make the market work for everybody in the long haul
15
Q
Thaler & Sunstein, Nudge
A
- “petit coup de coude”
- “choice architects”
- “We are not for a bigger government, just better governance”
16
Q
- “petit coup de coude”
- “choice architects”
- “We are not for a bigger government, just better governance”
A
Thaler & Sunstein, Nudge
17
Q
Policies to recover from the Great Recession
A
- TARP fund
- proximity of Geithner and Summers to the financial community limited the administration’s will to punish financial greed and irresponsibility
- and the government’s bailout measures remained unpopular
- Fed: lowered short-term interest rates near 0% and quantitative easing (QE)
- central approach which disappointed left and right
18
Q
Policies to recover from the Great Recession: TARP
A
- to bail out GM and Chrysler to avoid massive job losses in the automobile indutry
- to bail out 1000 troubled firms
19
Q
Quantitative easing
A
Fed directly injected liquidity into the economy
20
Q
Policies to recover from the Great Recession: Règle Volcker
A
- dispositif du Dodd-Frank
- vise à limiter les activités spéculatrices des banques commerciales afin de protéger les épargnants et stabiliser le système bancaire
21
Q
Policies to promote inclusive, sustainable growth
A
- plan for “middle class economics”
- homeownership, car, college education, health and retirement security and occasional family vacations
- these aspirations fulfilled by postwar policies
- late 20th: prices of housing, health care, college tuition had risen 2 to 8 times faster than income gains
- ACA
22
Q
Policies to promote inclusive, sustainable growth: education
A
- ESSA
- Hamilton Project: Pay As You Earn (PAYE): monthly payment requirements on federal students loan were contingent upon income
23
Q
Assessing Obama’s economic legacy: sustained but ambiguous recovery from the Great Recession
A
- GDP growth
- federal budget
- financial markets
=> better state at the end of the prisdency - GDP pre-recession level in 2014 (// 10 years in Euro Area)
- unemployment: 10% October 2009 // 4.7% January 2017
- fewer Americans were looking for employment: retirement age of the baby boomers, women who chose family over work
- underemployment: part-time workers and highly skilled workers with low-skilled
- “bullshit jobs” David Graeber, Bullshit Jobs. A Theory
- Housing prices continued to decline until January 2012 but grew back to their pre-recession level by late 2016
- stock market indexes recovered quickly (Dow Jones, NYSE, NASDAQ)
- bank sector recovered to pre-crisis levels by 2015
- not a single banking executive faced imprisonment for their responsibility in the crisis
- government protected Wall Street more than Main Street
24
Q
Assessing Obama’s economic legacy: between continuity and change in long-term economic trends
A
- GDP growth 1.8% 2010-2018: consistent but low
- unemployment under 5%
- decline in manufacturing jobs: resentment among blue-collars
- investing in health, education and social security: largest increase in federal intervention on these areas since the pre-Reagan era
- tax policy: raised taxes on the wealthiest, progressive but nowhere close to New Deal
- bolder than Clinton, but less bold than New Deal
25
Q
2016 election
A
- Hillary Clinton embodied continuity with the Third Way
- progressives were lacking enthusiasm
- rise of Sanders: more Democratic voters wanted a bolder shift in economic policy
- $15 minimum wage
- stricter equal pay legislation
- stronger union rights
- a single-payer “Medicare for All” health care system
- tuition-free public universities
- a new Glass-Steagall Act to regulate Wall Street
- infrastructure and environmental protection program
