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El-Erian Blasts America's Partisan Peril
Authored by Mohamed El-Erian, originally posted at Project Syndicate,
The United States’ reputation for sound economic policymaking took a beating in 2013. Some of this was warranted; some of it was not. And now a related distorted narrative – one that in 2014 could needlessly undermine policies that are key to improving America’s economic recovery – is gaining traction.
The 2008 global financial crisis left the US economy mired in a low-level equilibrium, characterized by sluggish job creation, persistently high long-term and youth unemployment, and growing inequalities of income, wealth, and opportunity. Many Americans started 2013 with high hopes that congressional leaders would overcome, even if only partly, the polarization and political dysfunction that had slowed recovery.
Expectations of less political turbulence were enhanced at the start of 2013 by a bipartisan agreement that avoided the so-called fiscal cliff (though at the last minute and with much rancor) and a deal reached later in January to raise the debt ceiling (albeit temporarily). With expectations of less political brinkmanship and lower policy uncertainty ahead, consensus projections foresaw faster, more inclusive economic growth.
In turn, faster growth was expected to revitalize the labor market, counteract worsening income inequality, mollify concerns about debt and deficit levels, and enable the Federal Reserve to start normalizing monetary policy in an orderly fashion. It would also facilitate a return by Congress to more normal economic governance – whether passing an annual budget, something not accomplished in four years, or finally taking steps to enhance rather than impede growth and job creation.
But optimism foundered over the course of 2013, and frustration soared.
Growth has again fallen short of expectations. With another year of uneven job creation, the problems associated with long-term and youth unemployment have become more deeply embedded in the economy’s structure. Inequalities remain too high, and continue to grow. Congressional paralysis has reached levels unparalleled in recent history. And, again, lawmakers have not enacted an annual budget.
This is not to say that there has been no economic or financial progress in 2013. After all, economic growth, while unnecessarily held below potential by Congress (and vulnerable to decline if Congress is not careful), has again outpaced that of Europe. The budget deficit has fallen markedly, while companies and households, too, have continued to strengthen their balance sheets. Many segments of the equities market have bounced back strongly, with price indexes hitting record highs. And Americans are on the verge of obtaining much better access to health care.
What is frustrating is that the country could have – and should have – done a lot better. Recognizing this, Americans are not hesitant to blame a Congress that seems more eager to manufacture problems than to enable the economy to reach its considerable potential.
Rather than building on some of the fledgling bipartisanship from earlier in the year, Congress decided to produce a mid-year government-financing drama. Even immigration reform – a bipartisan pro-growth issue with considerable support from much of American society – has languished unnecessarily. More broadly, Congress took no significant action to avoid headwinds that impose a drag on growth and discourage companies and individuals from investing in their future.
According to a survey based on data from the Office of the Clerk of the US House of Representatives, the current 113th Congress has delivered the lowest legislative activity “since at least 1947, when the data collection began.” And Americans know it. According to Gallop, the 9% approval rating for Congress is the lowest level in the survey’s 39-year history.
Partisan polarization in Congress has also undermined the executive branch, unduly blocking government appointments – including routine and essentially uncontroversial ones – and placing unwarranted obstacles in the way of implementing even the most sensible and seemingly bipartisan legislative proposals. The resulting sense of political drift and dysfunction has been exacerbated by the poor rollout of the Affordable Care Act (Obamacare) – a massive, avoidable distraction that has been allowed to cast doubt on this landmark initiative.
Yes, 2013 was not a good year for public-sector decision-making, especially given that most of the slippages were “own goals.” In the process, the US damaged the reputation for effective economic management that it had earned during the global financial crisis, when bold and timely measures prevented a period of reckless private risk-taking and financial leverage from ending in Great Depression II. The Congress-imposed government shutdown and near-default in October were particularly harmful to the country’s global standing.
As a result, the popular narrative is shifting to the danger of “government failure.” More and more Americans are being led to forget how, just a few years ago, a united US government reacted decisively to “market failures” and thus helped to avoid a global economic meltdown that would have devastated millions of lives and undermined future generations’ prospects. Now, as the pendulum swings back, it risks overshooting the optimal combination of private and public activity and ending up at a simplistic view of government as the problem and the private sector as the solution. If this occurs, the outlook for faster, more inclusive growth would be weakened further.
Government has a long pro-growth to-do list heading into 2014. The top priorities include modernizing the country’s transport and energy infrastructure, reforming an underperforming education system, improving the labor market, bringing order to an overly-fragmented fiscal structure, enhancing the provision of public goods, and safeguarding America’s interests abroad.
It is tempting for politicians and analysts to overplay simple narratives that place the blame entirely on one side or the other. The truth is more nuanced and complex. America is in desperate need of a Congress that encourages, rather than impedes, better partnerships between the public and private sectors. Constantly pitting one side against the other may make for entertaining roundtables on cable television and energizing political rallies. But it comes at the cost of undermining an economy that could – and therefore should – be performing much better.
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Judging by the legislative goals of many in congress, I welcome the gridlock.
"Danger of government failure" in 2014? Really? Truth is, that danger has been present since 2001. And it will be a welcome change to a corrupt, brutal, insolvent ideology.
Only new danger that exists is the guy that had rose colored glasses on in 2009, naming global insolvent governments trying to maintain status quo a "new normal".
I guess as a hedge fund manager, part of that job is to get policies and government nonsense to work in your favor, rather than what might be conceivably be the right thing to do.
Oh, so we now have a problem with "Government Failure"
It's never done anything but fail, so what's new?
Oh, the perceptions.
Gotcha, Mohammed!
I read:
"As a result, the popular narrative is shifting to the danger of “government failure.”
.. and thought to myself he's worried the government is going to "fail" to give moar moniez to Wall Street.
How else can a sane, thinking person interpret such a claim?
Because the "popular narrative" on the steets is just the opposite; that government is going to continue to transfer wealth to the .01% and in fact will not stop doing that ever.
Naw Knukles, according to him, we're not bothered by government failure, just its narrative. So if we speak of government in hushed tones and with reverence all of our problems will dribble away.
My nuts hurt now.
How about the "Promise of goverment failure"?
Too right. The "danger of Gubmint failure" passed the danger point about 100 years ago. The US is moving from failed gubmint to failed nation.
Fuck El-Erian. He's just another status quo-gloabalist-cheesedick fucktard. I'd pay to see him hanging from a lamp post
"The resulting sense of political drift and dysfunction has been exacerbated by the poor rollout of the Affordable Care Act (Obamacare) – a massive, avoidable distraction that has been allowed to cast doubt on this landmark initiative."
Hopefully, the Obamadon'tcare act will be the straw that broke the camel's back. The voting public needs to be rewarded for their stupidity with a couple decades of economic ruin. Landmark initiative indeed.
well said. cudda saved Mohammed alot of words
This sounds like something krugman wrote. "Please big govt come save us" and there will be no big economic recovery since we don't make anything any more. Nor will we have a sustainable fiscal situation as long as the fed is around. What this sounded like to me was we should just raise the debt ceiling to infinity, print lots moar money, and everything would have been great. And the botched obamacare roll out was an unfortunate distraction casting doubt in this landmark achievement? It's a shitshow, just like millions of people have been saying it would be for years. An I'm glad you were so happy with the bipartisan TARP saving us from another Great Depression. Get the fuck out of here
+1 (C)ACA is just a new tax on the middle class they can hardly afford ($10K a year tax upper for family?). If you also start losing spousal healthcare then its truely anti-family.
In addition, they should stop exporting the jobs and start importing jobs. In a slow growth environment that will be the ONLY way to decrease unemployment.
However, with the FED printing press at lightspeed, and the congress frontrunning the FED, there can be no problem, no crisis, and no change.
FULL STEAM AHEAD ! (come Hell or High Water) sooo sad.
Another so-called piece of journalism with the Economic Recovery bullshit!
I'll judge Congress by the rights of mine that they protect, not the legislation that they create, TYVM.
ME-E, You NEVER show
http://www.showrealhist.com/RHandRD.html
Omission is: Fool Them If You Can!
" the current 113th Congress has delivered the lowest legislative activity “since at least 1947, when the data collection began."
I'm so damned sick of hearing this crap. SO FREAKING WHAT? You measure success by the number of laws a congress passes? I sure as shit don't.
I'm GLAD they got almost nothing done. Every time they "so something" it usually involves taking more of my freedoms and more of my money.
I'm raising my glass and toasting this outgoing Congress for their lack of progess taking more of my stuff, mortgaging my childrens' futures or starting another ill-conceived war somewhere in the world.
Yes but give credit where credit is due. They did manage to pass the worst fucking piece of legislation ever seen in any modern state at any time in the form of Obamacare, and if that is an example of their finest work, I hope I don't see another law passed until after I'm long gone.
and this gem from el mohomad el erian alah akkbar "And Americans are on the verge of obtaining much better access to health care"
FUCK YOU
These fucking clueless fucktards don't even get it. I was talking to 2 young 28-31 year olds who were on the verge of signing up for Obuttholecare. They both said, "we thought it was free" and then saw the premiums. I told them the premium is just the teaser, you still have $6250 deductible you're on the hook for. They responded "Fuck that", I'll pay the fine if they catch me. The premium just buys you access to a shitty doctor. You're on your own after that until the deductible is satisfied. They weren't even sure what deductible meant. And forget about co-pays . What a fucking joke, both the Obuttholecare act and the density of the citizenry. We are fooked
Their EIC/student loan deduction/etc., net receiveable return is going to be confiscated to pay the penalty... so, unless they have a net negative return and choose not to file, uncle sam will get some, if not all, his due (even if it's just uncle sam changing the pocket the money was in). Hope they weren't planning on stuffing that money in the bank for a deposit on their own apartments, downpayment on a car, or some type of emergency fund...
The Feds cannot impose the Obamacare penalty unless the State in which the taxpayer resides has established a Obamacare exchange. If your state has established an Obamacare exchange, move to one that hasn't.
We still have volumes of laws being generated each and every day via Execitive Orders,Frank-Dodd, Obamacare, and the EPA.
The fear of low legislative activity has been greatly exagerated.
Now if we can just get them to stop issuing new regulations every freaking day.
I think we ought to have a congressional term every few years where their only duty is to go through and remove all the useless laws we already have on the books.
Double PoMo !
I think he's wrong. Neither the Democrats nor the Republicans have the answers in either of their intellectual tool kits to solve this country's problems. So, for them to "work together" is not an answer. I think that under the circumstances, the best thing is for them to hog tie each other and do nothing.
...intellectual tool kits...
Plus one for the best laugh of the day.
the current 113th Congress has delivered the lowest legislative activity “since at least 1947, when the data collection began.”
True, it's been a while now since they passed legislation so massive that no one in Congress could read it before they voted on it. But the president and his executive branch federal agencies have been so busy issuing Acts, decrees and interpretations in the wake of the ACA that they've effectively superseded the job of the legislature.
Now, as the pendulum swings back, it risks overshooting the optimal combination of private and public activity and ending up at a simplistic view of government as the problem and the private sector as the solution.
Yes, the federal government is in real danger of becoming too small and weak to be effective. Let's just move to a pure dictatorship before it's too late.
It was like, just the other day people that your government saved the world from free market Armageddon and NOW you want to pick and choose their centrally planned wisdom on every little thing? I don’t think so. Stop your “partisan bickering” and lay back and enjoy it.
OK, Krugman.
Exactly to what "reputation for sound economic policy making" is the author referring ?
Well it is loud and noisy.
Obviously the author is referring the the U.S. that exists on the Bizzaro World.
Typical propaganda from the left.
The House tilts toward smaller government.
House bills are dead on arrival in the Democratic Senate.
So, yes, people are upset that nothing is happening.
People want ObamaCare flushed and spending cut.
If we could cut just 1% of the budget each year for five years we would achieve balance. Instead, we are piling on government programs at warp speed.
I am with you but I do not think you are entirely correct. The problem is that about 50% are upset with the ACA because it is not giving them free insurance/healthcare (i.e. the uneducated think government paid healthcare is free).
partisan? no
peril? yes
He is SUCH a better writer and communicator than Bill Gross it's sad. And, I think english is his second language.
But as far as the market....It's like Jim Morrison said..."im going to get my kicks before the whole shit-house goes up in flames ALIRGHT!" (Jim Morrison)
I think I said that in reference to Obamacare.
Ah yes, if only congress can "work together" to get stuff done and fix our economy. Is this author serious? Working "together" to fuck the rest of us is why we are here today. I welcome a non-functioning government. Less they do, the less my ass hurts.
Think I'll start up a new political party, The Partisan Front-Running Taper UnTaper Party.
Why didn't he mention priority #1... End The Fed?
Oh wait. He want's to enable the Fed, and normalize the Fed. I gave him a 1 out of 5.
This confirms Bill Gross' sits down puffing some good old OG Kush and THEN writes the monthly letter...it flops around so much....maybe he should try some headband, it keeps you on track.
A famous Jim Willie quote (paraphrased)
"administering a blood transfusion to a cadaver has a higher probability of success than any attempts to fix the existing system"
Let me translate: "Give me more handouts and taxbreaks!". The least that those jackasses in Congress do the better.
"Partisan polarization in Congress has also undermined the executive branch, unduly blocking government appointments" SAY WHAT? pimco wants the full terror of obama unleashed
pimco palace is now opening at 650 NCD
"bold and timely measures prevented a period of reckless private risk-taking and financial leverage"
and ushered in an era of reckless PUBLIC risk-taking and financial leverage. As long as the right people are taking the risks, I guess its OK.
Its all Political now...elections in 11 months again...got to win to keep my seat..and privilages..I will lie to survive.....Politicians all..
There are many days and months between here and there. Maybe we will be fortunate and some miracles...but not much else will solve these problems. Maybe we can vote our way out...it seems the only viable way.
“The fault, dear Brutus, is not in our stars, but in ourselves.” ... seems appropriate since there are now concerns, but still no issues on the horizon. One day we may have a real crisis, but not while the FED prints.
If he does not like it let him go back to Egypt and live with their government...douche bag banker.
In a past life the author of this article was a musician on the Titanic.
Mohamed El-Erian, you are a fool!
"Americans are on the verge of obtaining much better access to health care" - What? Ten times as many Americans got their health insurance plans cancelled since Oct 1st compared to those who signed up successfully for Obamacare.
"Immigration reform - a bipartisan pro-growth issue with considerable support from much of American society" - Are you kidding me? The only support it has is from liberal Reconquista types and Elite employers like Mark Zuckerberg.
Manage the money and leave the politics and cronyism to others. Whining about how it works won't change it.
Where was this clown born ?
El-Erian just doesn't want CONgressional drama to make it to the Evening News so he can make a living off of investors.
The way compromise works -
Both sides get something they want -
And most of it is bad for the country.
Welfare to keep people dependent on the government, special tax breaks to keep the campaign cash flowing.
Sweet heart deals to keep the special interest groups happy.
Compromise by these cowardly bitches normally means kicking the can down the road a little farther.
"...effective economic management that it had earned during the global financial crisis, when bold and timely measures prevented a period of reckless private risk-taking and financial leverage from ending in Great Depression II."
We have a prize-winning, triple oxymoron here. Borrowing, printing and spending $4 trillion (the absolute EASIEST political path possible, btw - until the people paying the bill finally stood up in August of 2011) qualifies as neither effective, economic NOR management.
Mohamed El-Erian,
I wonder just how much gold he's stashed away while he feeds the lambs to slaughter.
Government has a long pro-growth to-do list heading into 2014. The top priorities include modernizing the country’s transport and energy infrastructure, reforming an underperforming education system, improving the labor market, bringing order to an overly-fragmented fiscal structure, enhancing the provision of public goods, and safeguarding America’s interests abroad.
Is that all? Why not same us some scrolling and keep it short - perhaps something like: "things won't improve until they get better and congress should fix everything under the sun by just getting along leading and by not fighting and by finding solutions." Because everybody knows government can fix everything were it not for those damn not democrats that just want to keep everthing broken.
This El-Erian cat, perhaps could run a good bond fund, but here he's talking loud and saying nothing. He'd find a better audience in Time and Newsweek.
Does modernizing the countries infrastructure mean I pay for Californian's roads and those in my own state so Californians can continue to pretend their state is solvent?
And Americans are on the verge of obtaining much better access to health care.
That's all you need to read to know that El-Erian is a statist, liberal, shit-for-brains. Yeah, you'll have better access to health care if you can find a doctor who will take Obamacare and have $5000 a year to pay the deductible.
To paraphrase Robert DeNiro: El-Erian is either in on it, or too stupid to see what is happening. Either way, we can't keep him around.
Mohamed El-Erian is in The Fed's back pocket. The Fed has facilitated bad behavior in Congress for decades. Congress has been able to borrow cheap money, use cheap money to buy votes, buy votes to keep their crony seats and do nothing about the cashed based debt and the unfunded liabilities the great american government has given the American people.
The Fed represents the banks. The banks love to loan money with minimal risk. The Fed prints debt dollars, creates debt and the big banks collect the interest. Congress loves free money and The Fed loves to have their bank association to collect BILLIONS of interest from American taxpayers who will bail the TBTJ banks out of their gambling debt if there is a crisis. Can anybody say CONFLICT OF INTEREST.
FUCK BERNANKE
The most incredible load of horse shit I have read in some time. The author is clearly working his own agenda.........and not very convincingly I might add. Anyone letting this imbecile manage their funds is the greatest fool.
El Erian or whatever your name is.
What a grade A pile of utter bollocks that was son.
You have a hole in your head where your arsehole belongs, now fuck off, talk sense and do something 'Constructive' with your time before all is lost you idiot cunt.
Fucking childish left wing cunt twaddle.
Fuck you El-Erian you statist piece if shit. Everything is fine and dandy with you as long as .gov is borrowing and spending, but God forbid that the constitutional terrorists might actually want some spending restraint.
I for one am glad that this congress has delivered the lowest legislative activity since 1947. As the senator from Rome Tacitus once said: the more corrupt the state the more they legislate. Besides the congress isn't the only body that has a role to play in the debt ceiling debate. The administration has a part to play too. Where is your criticism of the Zero administration you steaming pile of horse dung?
Stay long gridlock.
The lack of bi-partisanship goes back to a lack of leadership in the executive office. This is the most partisan executive branch of my lifetime, by far. My best explanation for that is the fact that even as Senator Barack Obama he rated the most liberal in the entire senate. This is what happens when you have such an extremist holding the reins of power in the executive office.
El 'Come Fly With Me' Erian - dumb as a box of falafels
"Kaaaahn!"
(Bill Shatner)
As far as I'm concerned, since the parties are just two sides of the same coin, anybody that WANTS this government to work together is as much a traitor as the clowns in DC.
If he thinks politicians are going to deviate from simple narratives, he's a fucking idiot. Apparently a lot of us 'mericans thought Obama would actually bring hope and change.
According to Gallop, the 9% approval rating for Congress is the lowest level in the survey’s 39-year history.
That high?
the US damaged the reputation for effective economic management that it had earned during the global financial crisis, when bold and timely measures prevented a period of reckless private risk-taking and financial leverage from ending in Great Depression II
I tend to have no problem with Mohamed. I wouldn't expect anybody to recogniize him by what he says. That's because it is the talk mostly of an extinct creature which used to be called a Moderate Republican.
However, just as it is with his elitist pals, he is never going to get past the above self-induced and expedient brain-fuck. The one which absolutely guarantees this country will never heal, and certainly never get better than what it is today. There wasn't, and is still not today, any justification for those "bold and timely measures" . Which might have been the most destructive and wealth-redistributing actions by a strata of seething elitist cowards in Earth's history.
Had we accepted the just and necessary fails and pain, I don't know that things would be better today as we had watched our Regional and Community Banks across America rise up to stabilize the Financial System and the Economy. It would have taken great Courage by Everyone.
But at least it would have been something worth fighting for. And not this dogshit excuse of a Feudal System, run by the same simpering cowards who failed history, real capitalism, and their Country.
And certainly it would be a more "equal" state today. for it would have been all of the bourgeois faux-credit and leveraged assets holders who would have been made considerably less abominably wealthy and more equal.
They love to hear the word "inequality". That's how they know their power and favor of influence is still working nicely.
Mohamed will never see that episode and its ongoing machinations for what it really was and continues to be. Because PIMCO and his own prospects would have been withered to a degree of shit, from which he couldn't likely have recovered, even if he had 2 lifetimes to try.
****
Props to any libtards or bag-terrorists who haven't fallen into the neuronless trap of liking or hating because it's Obama's piece of shit. That was our bread and circuses frame of discussion to keep us busy and at each other this time.
It'll take a year or so, but people will begin to realize the 1984esque Ministry of Truth of "Care" in either "The Affordable Care Act" or "ObamaCare".
Reshuffling Insuring Systems doesn't have a fucking thing to do with the cost of HealthCare, nor the quality of HealthCare. Never did. Any promises of economic or quality improvement are based on "competition" or other propaganda words, which are in turn based on the same Trickle-down, crony-capitalism, favored-few-markets belief systems, which we know (after 30 years) don't fucking work. Never did, either.
And props to those who take some comfort that less legislation is better legislation. Mainly because, those dickless bought-and-paid-for politicians are a threat to the People everytime some bill has the accidental chance of being passed. No matter how clearly a bill was intended to help the American People, by the time it gets to a vote, the Corporatocy has another one in the Win column, and the People have that familiar burning sensation in their rectum again.
Nothing could have been a plainer example or warning, than the first month of making the Bill. That's when Pimp Weasel-Elite Supreme Rahm Emanuel sat down with the Pharma industry and guaranteed them a de-facto closed market, no price competition nor price negotiations EVER on US soil.....this carte blanc for blatant pricing supreme-power,,, while, all of everything else had been shoved into global pricing and global market arbitrage. Labor wages/salaries and jobs being the hallmark. Apparently we needed to expose people to global markets, but never ever the medications they have to buy to be the serfs we need, and the indentured servants they have become.
It has been said before...
No. Really. Right now and here today.... It is Us against Them.
The sooner we quit this libtarded and bag-terrorism waste of time, and get our asses organized together..
The sooner we will put an end to Them.
It's easier and more inspiring to re-build something if you know you won't get continually robbed along the way.
"And Americans are on the verge of getting much better access to health care"... yeah right!
Excuse me, but I think it was government meddling in mortgage markets in the name of increasing access to hone ownership that led to the bad loans that caused the crises. Far from saving us from economic Armageddon, it was our government that threw the kerosine on te fire.
So much for El-Erian's credibility. Could have been written by the Dem party. "Partisan" means it's bad to be a fiscal conservative.
Sorry, El, but negotiating with communists is worse than useless.