Today’s Edition: Deflating inflation.

November 11, 2021

          Let’s start with a positive development: China and the U.S. announced a surprise agreement to fight man-made climate change by “do[ing] more to cut emissions this decade.” In addition, China committed for the first time to reduce methane emissions. The agreement is long on ambition and short on detail, but engaging China in the fight against man-made climate change is a positive step forward.  It comes as nations attending the global climate conference in Glasgow are debating a pledge to “accelerate the phasing-out of coal and subsidies for fossil fuels.” The effort to reduce dependence on coal is opposed by coal producing countries and processers such as Australia and Senator Joe Manchin. The modest progress demonstrates that elections in the U.S. can affect the global resolve to fight climate change. That is a lesson worth keeping top of mind as we move into 2022 and 2024.

Inflation report gives Joe Manchin another reason to oppose the Build Back Better agenda. Don’t fall for his hypocritical and misleading reasoning.

          The Consumer Price Index rose 6.2% year-over-year, the steepest increase since 1990. Senator Joe Manchin immediately said, “Americans know the inflation tax is real and D.C. can no longer ignore the economic pain Americans feel every day.” Let me translate: Manchin meant, “I am going to vote against the Build Back Better bill on the ground that federal spending causes inflation; and if it kills efforts to reduce dependence on coal, that is just a happy coincidence for me.”

          Inflation is real, government spending is contributing to the current increase, and it is an issue that most Americans believe they understand. That makes the rise in inflation a substantial threat to Biden’s agenda. But Manchin’s arguments are hypocritical and misleading (at best). In discussing this topic, I am not holding myself out as an economic expert; so, if you send me a tome discussing fiscal policy and inflation, you will be writing for an audience of one (yourself).

          At the human level, Manchin says that “D.C. can no longer ignore the economic pain Americans feel every day.” That is a true statement, but Manchin was eager to ignore the economic pain of parents who cannot afford childcare so they can work, of fixed-income seniors who must choose between dental care and rent, of chronically ill Americans who cannot afford prescription drug prices set by pharma companies, and of families that must mortgage their homes to send their children to college. Manchin’s faux concern for the pain of Americans is strategic. By opposing the Build Back Better agenda on grounds of inflation, Manchin is giving himself cover to oppose the provisions of BBB that reduce our dependence on coal—the source of his considerable wealth.

          It is also disingenuous to target spending on social programs as the cause of inflation. If government spending is a cause of inflation, then the totality of government spending is the cause of inflation. It is entirely legitimate to debate whether the federal government is spending too much; it is bogus to suggest dollars spent on Medicare cause inflation but dollars spent on defense do not. For example, the U.S. defense budget is larger than the combined defense budgets of the next eleven largest militaries in the world, including China, Russia, India, U.K., Germany, France, Japan, Saudi Arabia, South Korea, and Australia. Don’t fall for the false premise that only dollars spent on social programs cause inflation. Every federal dollar injected into the economy affects the supply and demand for goods and services. If we want to fight inflation by reducing spending, everything should be on the table.

          And we must recognize that the current spike in inflation is occurring during the recovery from one of the deepest, quickest economic contractions on record. Fueling the recovery—including the creation of six million new jobs—required injecting a record amount of money into the economy. Whether that was a wise investment is a question that reasonable minds can debate. But we must recognize that spending to recover from a once-in-a-generation recession contributed to the current inflation rate. It is worth noting that the U.S. recovered from the pandemic recession more quickly than every other developed country in the world. So, there’s that.

          In fact, the spending helped Americans during a major economic and health crisis. As a former Federal Reserve economist said in an interview in Vox,

          Inflation, it’s not good, I’m not sugarcoating it, but there was a lot of good done. The American Rescue Plan [the stimulus bill signed into law by President Joe Biden earlier this year] was the absolute best policy, particularly in an environment with high inflation. You look across the world in developed countries, they all have inflation. And you know what the difference is in the United States? We put thousands and thousands of dollars in people’s pockets at the beginning of the year.

          Finally, the pandemic created world-wide shortages of goods, services, and labor. Such shortages are classic drivers of inflation that affected every country on the globe and have nothing to do with federal spending in the U.S. Everyone reading this newsletter has experienced the effects of “bottlenecks” of goods coming from Asia. Again, federal spending did not create those bottlenecks.

          As I said, inflation is real. It will be weaponized for political purposes. But when Joe Manchin says that inflation is a reason to oppose social programs that will alleviate the economic suffering of Americans, don’t believe him. He is protecting his coal processing businesses, not tending to the needs of his constituents.

Judge Chutkan’s Opinion denying Trump’s request to block records request from Special Committee.

          Federal Judge Tanya S. Chutkan denied Trump’s request to block the National Archives from providing documents to the Special Committee. See Donald J. Trump v Bennie G. Thompson. Judge Chutkan’s opinion is worth reading (pages 12-20). In the most quoted passage of the opinion, Judge Chutkan rejected Trump’s claim that he controlled the application of executive privilege in perpetuity:

          [Trump’s] position that he may override the express will of the executive branch appears to be premised on the notion that his executive power “exists in perpetuity.” But Presidents are not kings, and [Trump] is not President. He retains the right to assert that his records are privileged, but the incumbent President “is not constitutionally obliged to honor” that assertion. That is because [Trump] is no longer situated to protect executive branch interests with “the information and attendant duty of executing the laws in the light of current facts and circumstances.

          The National Archive is scheduled to provide the documents to the Special Committee on Friday. Trump will seek a temporary stay of the order from Judge Chutkan, the D.C. Circuit Court of Appeals, and the Supreme Court. It is likely that one of those courts will issue a temporary stay. For a discussion of the potential outcomes, see Talking Points Memo, “Will A Court Rescue Trump from Friday’s Deadline For The Jan. 6 Subpoena?”

You say tomato, I say Gohmert.

          In yesterday’s newsletter, I confused the names of Paul Gosar and Louie Gohmert; when I corrected the error, I failed to update Gosar’s home state (Arizona). Thanks to all who noted the error. I have fired my fact-checking staff (all none of them). Apologies to Texas voters for suggesting that they would elect someone as odious as Gosar. But what about that Louie Gohmert?

          Now that we have that straight, ten Democrats in the House will introduce a resolution on Friday to censure Gosar. Predictably, Kevin McCarty, the cowardly minority leader, has said nothing. See HuffPo, “House Democrats Move To Censure GOP Rep. Paul Gosar Over Violent Video.” Let’s hope that all Democrats will take a stand against Gosar’s grotesque call to violence and misogyny.

Professor Laurence Tribe’s comments on Merrick Garland’s delay in indicting Bannon.

          I thought I was tough on Merrick Garland for his delay in indicting Steve Bannon for contempt of Congress. Professor Laurence Tribe was even tougher. In an interview with Laurence O’Donnell on Tuesday evening, just after Judge Chutkan’s order was issued, Professor Tribe said,

          [I]f AG Garland does not act on the prosecution of Bannon for contempt of Congress, then Garland himself is obstructing Congress.

          It is worth noting that Merrick Garland was a student of Laurence Tribe at Harvard. Let’s hope that Professor Tribe still has sway over his former student.

 Concluding Thoughts.

          The silence of Republicans in the face of Rep. Gosar’s depiction of a fantasized killing Rep. Alexandria Ocasio-Cortez is reprehensible. The GOP’s cultish adherence to Trump has blotted their humanity and decency. It has turned them into cowards. If the same depiction of violence was directed at their family members, they would be filled with outrage and anger. But they can find no compassion or sympathy for a woman who is their colleague. When the resolution to censure Gosar comes to the House floor on Friday, virtually all GOP representatives will oppose the resolution. Readers sometimes criticize my tendency to paint the Republican Party with a broad brush. The vote on Friday will test whether it is fair to assume that the Republican Party writ large is beyond redemption. I am not holding my breath.

          It is painful to say, but all of our energies should be directed to defeating Republicans rather than attempting to make common cause with them. Let them prove us wrong by demonstrating decency and moral courage. Then we can talk.

          Talk to you tomorrow!