Great Recession or Little Depression

July 26, 2011

It was understandable at the time.  With financial markets in a panic and confidence shattered, everyone from media, politicians, and financial analysts characterized the period from late 2008 through early 2009 as the Great Recession.  But has that characterization, which underrepresented the extent of the economic crisis, hampered our nation’s recovery?  In addition, has it prevented politicians from enacting the policies necessary to combat devastating economic conditions not seen in this country since the 1930’s?

Subsequent economic analysis from 2008-09 demonstrates that the period was unlike any recession we have seen since World War II.

U.S. post-WWII Job Losses

The graph above – compliments of Calculated Risk – highlights the percentage of job losses compared to peak employment prior to economic contraction.  Clearly, the period from late 2008 to now is far worse than anything seen since the Great Depression.

U.S. Long Term Unemployed

The second graph illustrates people unemployed for more than 26 weeks.  Renowned economist Paul Krugman argues that we are still in the midst of a depression.  He notes that historically depressions do not normally comprise periods of nonstop contraction.  Instead, depressions usually have a period of economic growth, but the growth is too small to undue damage from the initial slump.  Krugman, along with other economists, are arguing for more expansionary fiscal and monetary policy.

But since many pundits characterized the period from 2008-09 as a recession, many Americans believe the worst is behind us.  Thus, they are more agreeable with political sentiment that argues for contractionary fiscal policy, such as near-term reductions in government spending.  Barring a complete collapse in our economy, which is certainly possible if the government defaults, a stimulus would be impossible to navigate through Congress.

Politicians most harmed by this are the ones who were in power in 2009, particularly the Democratic Party and President Barack Obama.  The public is more apt to compare the Great Recession with more recent recessions, such as 2001, 1991, or the early 1980’s, as opposed to the 1930’s.  As such, the public is less inclined to give elected officials the benefit of the doubt for slow progress in the job market.  America bounced back quickly in the 1990’s, why isn’t it happening this time?  President Obama’s fleeting words during his Election Day victory speech, when he said “the road ahead will be long, our climb will be steep, we may not get there in one year, or even one term,” are but a distant memory.

In many ways, President Obama is a victim of his own words. By downplaying the seriousness of the crisis in early 2009 to restore confidence in the markets, the American public never truly comprehended the seriousness of the economic slump.  And when a recovery was not immediately realized, frustrations mounted, leading to a Republican rout in the 2010 elections.

If anything, this illustrates the consequences of words in the long term.  It was certainly important for elected officials to restore confidence in 2009.  But in 2011, as our economy still teeters on the balance of recovery or collapse, officials lack the capabilities to instill the policies necessary to ensure this Little Depression doesn’t become great.

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Innovating Toward Fiscal Solvency

June 24, 2011

Now that Weinergate is finally behind us, Capitol Hill can affix its attention on the most pressing issue facing our economy.  Unfortunately, instead of worrying about structural unemployment, which is the most critical obstacle facing our nation right now, Members of Congress have turned their attention to our national debt and annual deficit.

The national debt is certainly something the country needs to concentrate on in the long-term, as the events in Greece so vividly illustrate, but it will be next to impossible unless we get our economy heading in the right direction.  Recent economic figures, predominately revolving around manufacturing and payrolls, have lagged in the last few months.  Despite the best efforts of the Federal Reserve, including a near-zero interest rate and two rounds of quantitative easing, the country is still in need of a legislative boost.

These points are reinforced by some of our country’s leading economic minds.  Bill Gross, founder of PIMCO and one of the world’s leading financiers, wrote a thought provoking letter to his investors discussing steps the Federal government and our nation’s education system need to address in order to stimulate American innovation, and subsequently growth.  Gross contends:

Solutions from policymakers on the right or left, however, seem focused almost exclusively on rectifying or reducing our budget deficit as a panacea. While Democrats favor tax increases and mild adjustments to entitlements, Republicans pound the table for trillions of dollars of spending cuts and an axing of Obamacare. Both, however, somewhat mystifyingly, believe that balancing the budget will magically produce 20 million jobs over the next 10 years.

Gross continues by noting “The move towards [a balanced budget], in fact, if implemented too quickly, could stultify economic growth.”  Ben Bernanke, Chairman of the Federal Reserve, reiterated Gross’ thoughts by noting:

I don’t think that sharp, immediate cuts in the deficit would create more jobs. I think in the short run that we’re seeing already a certain amount of fiscal drag coming from state and local governments from the withdrawal of previous federal stimulus, so I think in the short run, you know, the fiscal tightening is at best neutral and probably somewhat negative for job creation.

In addition, in his 14 suggestions to stimulate growth in the U.S. economy, former President Bill Clinton stressed investments the Federal government can make, not cuts or tax increases.  But despite warnings from leading figures of our lagging economic recovery, the discussion on Capitol Hill invariably reverts to short-term deficit reduction.

Despite the failed attempts of elected officials and now aspiring Republican Presidential contenders to convince the public otherwise, anti-Keynesian policies, such as government cuts or tax increases, will not do anything to stimulate the economy.  If anything they can have the opposite effect.  Don’t believe me?  Look at how growth in the U.K. stalled after austerity measures were enacted last year.  Want a U.S. example?  Study government fiscal policy during the Great Depression, particularly from 1929-32 and again in 1936-37.

A Member of Congress looking to have their name resonate in history will be best remembered not from cutting, but spurring economic vitality.  President Kennedy is revered for setting America on a mission toward the moon.   Considering our structural economic challenges, it will take forward, courageous thinking to spark the necessary innovation to significantly raise GDP.  The elected official willing to take a chance and deliver a brazen new plan to jumpstart America’s economy, instead of cutting it, will grab the headlines and truly reduce our national debt in the long-term.


The Poll-arization of Politics

May 25, 2011

Public opinion polling is a critical aspect of the political process.  Campaigns leverage internal polls to influence candidate messaging and advertisements.  News organizations leverage polls to develop headlines and questions for elected officials during shows.  Political parties use carefully scripted polls to craft attack messages against opponents or reinforce core ideals.  But are there too many polls?  And do both media and elected officials overuse polls when discussing and crafting legislative initiatives?

Technological advances have exponentially increased the speed with which polls are taken and distributed.  While polls previously involved time consuming phone calls and hand-written calculations, they are much more cost-efficient and easier to conduct with the Internet, robo-calls, and easy-to-use statistical programs.  In addition, opinion polling previously revolved around major national debates and upcoming elections.  Now any issue that garners even a glimpse of national media attention will have a poll wrapped around it within 24 hours.

Anyone who has taken even one political science course understands the ways in which pollsters can manipulate poll results.  The phrasing of questions and the order in which questions are asked significantly influence results.   When news organizations discuss polls over the air, rarely do they discuss how the questions were worded, the order in which they were worded, the sample size of the poll, or the statistical confidence.  Most importantly for every poll issued, an opponent – either a candidate or an advocacy group – can develop a competing poll and skew its results in order to support their position.  This renders objective polls meaningless.

In addition, opponents of legislative initiatives, whether originated from the right or the left, love to attack legislation on the grounds that it lacks a mandate from the American public.  But it is important to remember that America is not a democracy in its purest sense, and that was on purpose.

James Madison, the father of the U.S. Constitution, said it best in Federalist #10:

Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.

Our founding fathers never intended on having elected officials legislate based on the day-to-day whims of their constituents.  Certainly they can, and should, listen to constituent opinions at town halls or from office contacts, but legislation needs to be based on the public’s best interests in the long-run.  And since Members of Congress and their staffs are often the most informed about the details and implications of pending legislation, they are entrusted to make difficult decisions, whether popular at that moment or not.

The media needs to spend more time informing the public on the specifics of legislation, instead of regurgitating meaningless poll numbers that only incite emotion.  While poll numbers help ratings, and score political points, they erode intelligent debate and cripple our legislative process.

Editor Note:  Please note this article is in no way a reaction to current legislation in either chamber.  This article is analyzing an aggregation of legislative initiatives over many years.


Where do Americans Turn for Breaking News?

May 8, 2011

The death of Osama Bin Laden has rightfully captured a majority of our national discourse since the announcement on the evening of May 1.  But what does the announcement demonstrate about our new media paradigm?  In the moment of breaking national news, how is information circulated?  What channels to Americans leverage to find news?

SocialFlow, a social media optimization company, analyzed Twitter on May 1 from 9:46 p.m. EST, when the White House sent a news alert regarding a pending press conference, to 11:30 p.m. EST, when the President took to the podium.

Following the news alert at 9:46 p.m., the Internet lit up with speculation regarding what Obama was going to address.  By 10:24 p.m. EST the mystery was leaked through a lone tweet.  Keith Urbahn, chief of staff to former Secretary of Defense Donald Rumsfield, sent this tweet to his followers:

Moments later, New York Times reporter Brian Stelter retweeted Urbahn’s tweet to his more than 50,000 followers.  After that, the news spread rapidly through Twitter, the blogosphere, and eventually to national news.

The image above demonstrates how exponentially information can travel through Twitter.  As people read an important tweet, they are likely to spread it by retweeting or creating an original tweet, building a cumulative Web of information.  SocialFlow notes:

Twitter has proven time and time again its value in tracking events as they unfold in realtime, accelerating the flow and spread of information across the globe. Twitter has become the dominant mechanism to get timely updates about events that are taking place regardless of geography, topic or even language.[i]

On May 2 people jumped to the Internet for news, analysis, and developments of the astonishing story.  This chart by Eric Savitz shows website visits for top online news sites on Monday, May 2 versus Monday, April 25:

As Felix Salmon, a financial reporter for Reuters astutely acknowledges, the increase in visitors for TV news organizations such as MSNBC, CNN, and ABC increased at a larger rate than more traditional print-only organizations such as The New York Times and The Washington Post.  Yahoo! News was the glaring exception, with nearly twice as many visitors as any other news site.  Salmon determines that despite our increased usage of the Internet, when breaking news hits, Americans still run to their television sets for real-time coverage.

While Americans still leverage their television sets to follow breaking news, its influence is waning.  The amount of Americans with televisions is decreasing and Felix Salmon notes the news on Osama Bin Laden’s death was reported via Twitter before any traditional news organization.  In addition, it is important to realize many people turning on a television and jumping online for news on May 1 or 2, were directed to a particular station or URL via social media – ultimately demonstrating the median’s growing significance in our culture and on our flow of information.



The Power of the Bully Pulpit

April 19, 2011

“I suppose my critics will call that preaching, but I have got such a bully pulpit!” – Theodore Roosevelt[i]

President Theodore Roosevelt poignantly coined the phrase “bully pulpit” to describe the president’s ability to leverage his stature in order to dominate media messaging and push a specific agenda. Rooseveltwas a master at manipulating media, much to the consternation of his political opponents.  He was known to give insider tips to reporters who responded with favorable stories.  In addition, his first State of the Union Address, known as the Message to Congress back then, was nearly 20,000 words long or approximately three times longer than President Obama’s State of theUnionin January 2011.

Franklin Roosevelt continued the family tradition of leveraging the bully pulpit for political advantage.  He successfully coerced the media to photograph him in certain ways to mitigate public knowledge of his paralysis and simultaneously charmed them with weekly off-the-record question and answer sessions.

Even in our present day, media saturated society, the power of the presidential bully pulpit still resonates.  Its influence was never clearer than during the final days leading up to the expiration of the FY11 continuing resolution in early April.  Prior to April 1, Obama seemingly stayed above the fray of Congressional budget negotiations.  But beginning April 4, with the launch of his reelection campaign, Obama leveraged his position to establish himself as a mediating voice in an increasingly acrimonious debate.

In order to measure media influence, we studied the amount of Google News hits from April 4-13 for Obama, House Speaker John Boehner, House Budget Committee Chairman Paul Ryan, and Senate Majority Leader Harry Reid – the four most influential voices during budget negotiations.  Obama dominated the airways with an average of 69,330 Google news hits per day.  This is more than twice as much as John Boehner (26,790) and Paul Ryan (26,500), and approximately four times greater than Harry Reid (17,790).

Despite Chairman Ryan unveiling a House Republican budget plan on April 5, the president still received more national media attention.  When Obama unveiled his own long-term budget plan on April 13, Boehner was unable to garner media interest in a press conference he scheduled approximately one hour before the president’s speech.

The advent of social media and proliferation of alternative news sources has done nothing to mitigate the power of the bully pulpit.  Similar to presidents before, Obama was able to leverage his position to dictate the narrative during budget negotiations.  In addition, he continued to set the tone for future budget talks on April 13 with his blistering rebuke of Chairman Ryan’s plan while simultaneously proposing his own alternative.

It is important to remember that the bully pulpit is only as powerful as the president wants it to be.  The president is always capable of setting the tone for debate, but sitting idle on the sidelines can lead to alternative messages spinning out of control.  This was never more apparent than during the early days of the health care reform debate in 2009, when accusations of socialism and death panels filled the airways while the Senate dragged negotiations along for months.

This time around, President Obama certainly took a page from his predecessors.  It will be interesting to see how he leverages his pulpit when Congress returns in May and the debt ceiling takes center stage.



Launching a Campaign via Video

April 6, 2011

Three days.  Three important Democratic campaign announcements.  One method.

Campaign 2012 launched into full swing starting April 2 when Congressman Martin Heinrich (D-NM) announced his candidacy to replace the retiring Senator Jeff Bingaman as a U.S. Senator from New Mexico.  Two days later, Americans began their work week with the fully expected announcement from President Barack Obama that he is seeking a second term as President of the United States.  The deluge of Democratic candidate news continued on April 5 when Tim Kaine, former Virginia Governor and current Chairman of the Democratic National Committee, announced his candidacy to replace the retiring Senator Jim Webb as a U.S. Senator from Virginia.

While the races are different, all three candidates eschewed the old methods of announcing a candidacy – such as a press release or press conference – in favor of an approximately two-minute homemade video launched via the Web and social media.

Congressman Heinrich portrayed his family life and illustrated how his upbringing and middle class values make him the ideal candidate to fight for New Mexican working families.  The video was simultaneously launched on his campaign website and Facebook page.

President Obama utilized his reelection campaign introductory video to reenergize the grassroots activism that launched him into the White House.  The video interviews Obama supporters from all over America describing why they support the President and the importance of being involved in the political process.  The video was launched via social media and on the President’s reelection website.

Tim Kaine made his long-awaited campaign announcement by highlighting his work as a city councilman, mayor of Richmond, and Governor of Virginia.  He articulated the achievements Virginia has made in the last two decades to attract business and grow economically while remaining fiscally solvent.  The announcement was posted on Kaine’s campaign website, with a separate Spanish-language version.

These videos represent how candidates are utilizing social media and online channels to define their campaign message and illicit early campaign supporters, volunteers, and donors.  Video announcements allow candidates to easily build an online database and ensure maximum local and national news coverage without the expense or logistical challenges that stem from campaign rallies.


Leveraging Website Statistics

March 30, 2011

It is always difficult to measure the effectiveness of media campaigns.  Traditionally, staffs have counted media clips or calculated cable news ratings when a Member of Congress partakes in an interview.  While these methods produce a snapshot of exposure for a particular initiative, they do not present the whole picture and are not entirely quantifiable.  Fortunately, the Web offers a host of new methods for communications professionals to evaluate messaging efficacy.

Congressional websites are in many ways the first impression Members of Congress display toward constituents.  In addition, they can be a calculator to gauge the strength of communications campaigns.  Staffers can measure daily website unique visitors and analyze changes when new initiatives are introduced.

For instance, if the communications director decides to emphasize online and television appearances as opposed to radio and newspapers, he or she can measure the new campaign’s success by quantifying website visitors.  Other online measurement tools include Member Wikipedia page views, Facebook impressions, and Twitter retweets.

If a Member introduces a new bill or a scandal erupts, citizens will invariably scour the Internet for more information.  For instance, Senator Claire McCaskill (D-MO) came under scrutiny recently for admitting she failed to pay property taxes on her private plane.  On March 22, the day the story broke, Senator McCaskill’s Wikipedia page received ten times more visitors than an average day, according to http://stats.grok.se/en/201103/Claire%20McCaskill.  In addition, she had an exponential increase in her Twitter following, which now contains more than 50,000 followers.

Web tools give Members of Congress more avenues to measure the effectiveness of legislative and communications campaigns.  These statistics can then be leveraged to make decisions on what legislative initiatives to pursue, what media outlets pitch, and how best to allocate a Member’s limited time – optimizing office operational efficiency.