The Washington Bubble

Aug 6 2012 @ 1:08pm

by Gwynn Guilford

On Friday, Jonathan Chait chalked up Beltway inaction on the unemployment crisis to DC's insularity:

I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they’ll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa. For millions and millions of Americans, the economic crisis is the worst event of their lives. … But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.

Though Chait's piece cites two recent events – the Fed's QE3 punt and Ed DeMarco's decision not to offer debt relief through Fannie and Freddie – Brad DeLong points to a longer-arced crap-out of moderate Republican policymaking:

Some of it is–and from my perspective this looms very large–the failure of the moderate Republicans to lay down policy markers during election season or after to create an environment for bipartisan technocratic agreement on policies to create a stronger economy. The Council of Economic Advisers chairs of the George W. Bush administration–Glenn Hubbard, Greg Mankiw, and Eddie Lazear–surely did not go to Washington to be shills for policies that would slow economic growth. Yet that is what they did, and if they had any positive impact on the policies actually pursued by the George W. Bush administration, I do not see it.

Chris Herbert calls out the Fed and the behavior of Congressional Republicans:

Republicans blocked all the administration’s effort to hire directly for infrastructure projects, or to transfer funds directly to state’s which stops them from firing public employees. These policies would drop the unemployment rate several percentage points. Failing to transfer funds to cash strapped states added a full 1% to the unemployment rate and clipped almost 1% from the country’s Gross Domestic Product. Republicans in Congress who blocked these common sense, fiscal reponses that guarantee jobs, now attack the administration for not creating more jobs.