Morning Report: Bill Gross says 100% chance of a hike in December 11/9/15

Stocks are down this morning as investors digest the jobs report. Bonds and MBS are down.

The Labor Market Conditions Index improved to 1.6 in October from an upward-revised 1.3 in September.

The week after the jobs report is usually pretty data-light, and this week is no exception. Aside from the JOLTS job openings on Thursday and retail sales on Friday, there simply isn’t much market-moving data.

Luxury builder Toll Brothers announced preliminary numbers for the 4th quarter and full year. Revenues came in at $1.44 billion, a touch higher than the Street estimates. This was up 6% in dollars and 1% in units. Average selling prices rose 5.8% to $790,000. Signed contracts rose 29% in dollars and 12% in units. Backlog is up 29% in dollars and 10% in units. We will hear from D.R. Horton tomorrow. Although we are in the dull season for the builders, it looks like they are thinking of ramping up production. In the jobs report, construction jobs increased from 33k in September to 78k in October.

The OECD took down its forecast for global growth in 2016 from 3.6% to 3.3%. A deterioration in the Brazilian and Russian economies drove the downgrade. Japan’s forecast from from 1.2% to 1%. The Eurozone was taken down from 1.1% to 1%. The US economy is forecast to grow 2.6%.

In light of those forecasts, should the Fed hold off on raising rates until things are more clear? Many would argue that ZIRP is an emergency measure and we are no longer in an emergency. Bank of America lays out the argument that the economy can withstand an increase in rates.

65 Responses

  1. Frist! Is the Fed hike just a show of power to demonstrate that they can and will hike rates or is there real underlying economic progress justifying it? Deflation seems like a real and everpresent threat.

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  2. ZIRP is an emergency posture. The economy is strong enough that emergency monetary measures are no longer appropriate. I suspect they will increase 25 basis points in December and will take it slow. Nothing like Alan Greenspan’s 50 basis points every FOMC meeting ramp.

    ZIRP causes all sorts of problems as well – it isn’t free. Pension funds are getting killed in this environment..So are insurance companies.

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    • Brent:

      The economy is strong enough that emergency monetary measures are no longer appropriate.

      I think they should have hiked in Sep.

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  3. I really wish that the college administrators would grow some balls and just expel these clowns:

    http://www.slate.com/blogs/the_slatest/2015/11/07/yale_students_protest_over_racial_insensitivity_and_free_speech.html

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    • jnc:

      I really wish that the college administrators would grow some balls and just expel these clowns:

      If they had that capability, they probably wouldn’t be in this situation to start with.

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  4. This is what happens when you don’t have anything real to worry about. And were taught to cry to teacher about every slight, real or imagined. So we’ve got people who can’t handle the slightest discomfort and nasty a authoritarian streak. What could go wrong?

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  5. The football team in Missouri just showed who has the real power at college now.

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    • The football team in Missouri just showed who has the real power at college now.

      Was there really any doubt? They were looking at the forfeiture of the BYU game and the loss of one MEEELYUN dollars if the players wouldn’t take the field.

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  6. “It is your job to create a place of comfort and home for the students that live in Silliman … Do you understand that?” one student shouts at Master Nicholas Christakis, after yelling at him to “be quiet” when he tries to speak. “Why the fuck did you accept the position? Who the fuck hired you?” When Christakis begins to argue, she interrupts: “Then step down! If that is what you think about being a Master, then you should step down. It is not about creating an intellectual space! It is not! Do you understand that? It’s about creating a home here! You are not doing that. You’re going against that.”

    And America continues it’s march towards becoming a “Former Economic Superpower”.

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  7. Re: Missouri football: “These players will also ultimately force Wolfe into a decision, not because it’s the right thing for the president to do, but because if the team forfeits its game against BYU on Saturday, Missouri will have to pay its opponent $1 million for breaking their contract.”

    Higher Education! And this is different from those evil For Profit Universities how? This is not a Fot Profit University how? Why are institutions meant to educate people (or prepare them for the work force) entering deals with million dollar penalties if the sports team refuses to play?

    Unclear on what Tim Wolfe has actually done wrong, other than having, thus far, not conducted a room-to-room search for Nazi-related paraphernalia to see if they could catch whoever did it.

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  8. “Prayers were answered, although there’s a lot more work to do,” Missouri linebacker Brandon Lee wrote on Twitter.

    Be careful what you wish for. It won’t take much for jocks to find themselves on the wrong side of the Politically Correct line.

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  9. i’d have said: play or lose your scholarships. up to you.

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  10. In a profile I read pre-resignation which probably means it can’t be found again, it painted Wolfe as a no-nonsense businessman hired to streamline the university system. He did so by doing things like cutting the health insurance of grad student instructors. Vox has a decent primer on some of the simmering disputes which finally boiled over.

    http://www.vox.com/2015/11/8/9691740/missouri-football-boycott-tim-wolfe

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    • KW:

      Unclear on what Tim Wolfe has actually done wrong…

      Agreed. If yello’s Vox article is at all representative of the truth, it seems that Wolfe was run out of office for pretty much no reason whatsoever.

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  11. I’m looking forward to when the players figure out that they can demand to actually be paid for playing.

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  12. @yellojkt: “He did so by doing things like cutting the health insurance of grad student instructors. Vox has a decent primer on some of the simmering disputes which finally boiled over.”

    Apparently, demands included that the university offer racial sensitivity classes and that he apologize and acknowledge his white male privilege. Why didn’t he do that? And is the next University head going to have to do that? Presumably, they’re going to search for a candidate free from white male privilege to head the university going forward.

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  13. “Why didn’t he do that?”

    it’s a myth?

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  14. @yellojkt: “They were looking at the forfeiture of the BYU game and the loss of one MEEELYUN dollars if the players wouldn’t take the field.”

    I think jncp4 is right. The football team is going to run the university for this point forward.

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  15. @novahockey: “it’s a myth?”

    So is the idea you can send your money to a TV preacher and have it returned to you 100 fold by God, but people who know better spend all their lives pitching that line. There’s money on the line!

    I suppose he refused on principle, but . . . they were offering him a way to keep his job and smooth things over. He only had to publicly acknowledge that he was and would forever be their thrall.

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    • Great series of comments today, KW.

      I don’t have time to reply, so I am adopting the comments with which I most identified!

      Like

  16. Our society doesn’t value solutions, it values scalps. and the mob got one. it will be satiated for awhile. until it moves on to the next one.

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    • it values scalps. and the mob got one. it will be satiated for awhile. until it moves on to the next one.

      Mobs are like drug addicts. They keep needing bigger and bigger hits to get the same high.

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    • nova:

      Our society doesn’t value solutions, it values scalps. and the mob got one.

      I think this is particularly true of that segment of society that finds its home in academia. This seems like a timely comment.

      http://conservativewahoo.blogspot.com/2015/11/our-authoritarian-future.html

      Your blogger is vastly more worried about the strong authoritarian impulse that seems to beat within the heart of today’s undergraduates, at least at elite universities. Their first response when confronted with something they don’t like is to appeal to authority. In doing so, they demand that the authorities impose a punishment on the target of their ire calculated not only to redress the particular perceived offense, but to intimidate third parties. In the linked case, they are demanding the termination of two professors because one of them voiced objections to a university policy, and the other one defended his wife. Seriously?

      The term we would have used back in the day to describe these impulses — and that is what they seem to be — is fascistic.

      The common response of my generation is “these delicate flowers are in for a real shock when they enter the real world.”

      I am more worried the effect this generation of students will have on the real world. We are breeding a generation whose first impulse is to appeal to power, and to demand that “the Man” crush people that the local majority finds offensive, or out of step, or in some undifferentiated way non-conforming in their ideas.

      What are we going to do when these very bright and hard-working elite students become our judges, regulators, prosecutors, and politicians? Do we actually believe they are going to change in this fundamental respect? Highly unlikely. In the absence of a transforming catastrophe, like a world war, our basic generational sensibilities and impulses do not seem to change very much.

      My only disagreement with this is the use of the future tense, “What are we going to do when…” Take a look around. Exactly those types of elite (former) students already occupy vast positions of power. The left has already won the culture wars. Everything from here on out, including the current goings on at Yale and Missouri, is just the consequences of that victory.

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      • I caught just a snippet of an NPR show last night which had the Harvard College Director of Bi-, Gay, and Trans- Student Life (or some similar mouthful) bragging about the new pronoun inclusiveness of the campus student rolls which will eliminate a lot of confusion on the part of professors. In addition to he/him/his and she/her/hers there is they/them/their as a singular pronoun and ze/zer/zers. Or students can just supply their own. I can see that clearing up a lot of confusion.

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        • yello:

          I caught just a snippet of an NPR show last night which had the Harvard College Director of Bi-, Gay, and Trans- Student Life (or some similar mouthful)…

          It may become less of a mouthful at some point.

          Drop The T

          We are a group of gay/bisexual men and women who have come to the conclusion that the transgender community needs to be disassociated from the larger LGB community; in essence, we ask that organizations such as the Human Rights Campaign, GLAAD, Lambda Legal and media outlets such as The Advocate, Out, Huff Post Gay Voices, etc., stop representing the transgender community as we feel their ideology is not only completely different from that promoted by the LGB community (LGB is about sexual orientation, trans is about gender identity), but is ultimately regressive and actually hostile to the goals of women and gay men.

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  17. NoVA’s comment at 11:16 hit the nail on the head. My boss has had to respond to student complaints that she didn’t return an e-mail in a timely fashion. . . because she was at a funeral.

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  18. This is pretty much spot on:

    “Maybe this is the real Ferguson effect: People who have been coached up and primed to believe that they are victims, who want to be a part of some kind of important historical movement, to the point that they’re seeking confrontation over essentially nothing.”

    http://www.theatlantic.com/notes/2015/11/maybe-this-is-the-real-ferguson-effect/414900/

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  19. What a waste of your college years.. You’re supposed to be doing keg stands and getting laid, not going to the mat over insignificant things. You will have your whole career ahead of you to go to the mat over insignificant things..

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  20. i’m convinced that had video recording been ubiquitous when i was an undergrad, i’d be famous for a few days as persona non grata b/c of .. well, a lot of reasons.

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  21. They’re all Cao.

    Though he is a tender and considerate lover.

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  22. Like

  23. @McWing: “Solution: Cut off all public college funding. Why make Americans subsidize what are evidently society’s most racist & sexist institutions?”

    True, dat. But it’s not going to happen.

    “Though he is a tender and considerate lover.”

    I wonder how he defines that. Is it that he’s constantly asking: “How does that feel? Is that good for you? What about this?”

    Presumably he gets his hate and bile out on and about Internet strangers, thus leaving him a pleasant person for his significant other. Or not. Who knows.

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  24. @Scottc1: “Drop The T”

    Why do I feel this is about Bruce Jenner? Or Caitlyn? Or whoever zer is. (BTW, the reasons these bullshit transgender pronouns are not going to take off any time soon is that they aren’t recognized by autocorrect, and until such a time as they are nobody is going to use them for more than a day no matter how enlightened they are).

    The Wachowski siblings, one of whom was a dude but is now a gal, had transgender/gay politics in the show, having an important transgender character who was, of course, (a) played by a woman, so that we understand there is no real difference between a woman-assigned-at-birth and a decided-I’m-a-woman-at-thirty-five, (b) attacked by angry lesbians for being transgender and trying to insinuate her/his tranny self into their pure homosexual movement, and (c) misunderstood by everybody, especially those evil parents who insist on calling her by her male name! And so on.

    I feel there is another schism coming on. The words “first world problems” come to mind.

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  25. @Scottc1: “. The left has already won the culture wars. Everything from here on out, including the current goings on at Yale and Missouri, is just the consequences of that victory.”

    Eh, for now. I think there is an expiration date on identity politics, though it might not be in our lifetime. In regards to sexual liberalization and redefining marriage/relationships/parenthood, I think that’s done, as well as I think identifying *most* social/psychological pathologies is done (that is, folks he feel they won’t complete until they have a limb amputated? They aren’t mentally ill, they just need to express themselves!) . . . and by done, I mean that’s how it is, and there’s no walking it back, culturally. Culturally, progressives tend to always hold the high ground (using that as a military term) and ultimately triumph on the social issues.

    The problem is, everybody can get gay married and even polygamously married and it’s not going to really effect Yello. Or Michigoose. Or MarkInAustin. Or Me! Same with voluntary amputation becoming a culturally accepted norm.

    Not the way that Identity Politics can be used as a cudgel to keep me out of places, or positions, or jobs, or deprive me of access or money or free speech can affect me. And then liberals (say, vociferous transgenders turned on by the LGB community) might finally suddenly find themselves under the hammer in a way that affects them personally. Which is why I think to a great degree the current version of PC and Identity politics will peak and fall. Come and go. It always gets to the point where it’s negatively impacting people left of center, and sometimes pretty far left of center.

    Which does not mean I think Identity Politics will disappear, just that the influence and scope of power will wax and wan. Hopefully more waning than waxing, but I doubt it.

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    • KW:

      I don’t understand how you reconcile this:

      Eh, for now.

      …with this:

      Culturally, progressives tend to always hold the high ground (using that as a military term) and ultimately triumph on the social issues.

      If you think the left ultimately triumphs, then why would you be so dismissive about a claim that the left has triumphed?

      Also, on this:

      The problem is, everybody can get gay married and even polygamously married and it’s not going to really effect Yello. Or Michigoose. Or MarkInAustin. Or Me! Same with voluntary amputation becoming a culturally accepted norm.

      Tell that to the bakers who are being put out of business for not baking a gay wedding cake.

      If your point is that cultural changes only impact those who directly participate in them, I think you are being naive. History does not support such a cavalier attitude. Indeed, if such events didn’t have implications beyond direct participants, they wouldn’t be cultural changes in the first place.

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  26. “Though he is a tender and considerate lover.”

    Just a joke I make. Some PLers would defend Cao’s death wishes and genocidal tendencies by remarking how nice and considerate he is towards them.

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    • McWing:

      Some PLers would defend Cao’s death wishes and genocidal tendencies by remarking how nice and considerate he is towards them.

      Is 12Bar still at PL?

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  27. Perfect coda:

    “University of Missouri Protesters Force Media Out of Quad, Declare Area a Student “Safe Space”
    By Elliot Hannon ”

    http://www.slate.com/blogs/the_slatest/2015/11/09/missouri_protesters_force_media_out_of_safe_space_quad.html

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    • JNC, obviously the Slate writer finds it incomprehensible. I have mentioned here before that I believe that the Clintons and BHO have sucked the DP dry as a viable political organization, but maybe it is just that FL woman.

      Scott, I agree with KW in that I do not think there are ultimate victories in politics in America. Everything is “for now”. Identity politics includes stirring up irrational fears of job loss to immigrants, legal and illegal, or stirring up irrational fear that Christmas is under attack. These sorts of attacks were common at many periods of American history, as were the various overblown leftish rants.

      Any responsible person might see that Medicare/Medicaid is unsustainable. Some possible fixes include raising taxes or cutting benefits. Or both. But the left wants to double down on deficit financing based on goosing the public fear of loss of something they have been paying for since they were 14, and the right wants to eliminate the benefits, pandering to the fears employed folks have that they are being robbed and the whole thing won’t be there for them when their time comes.

      Scott, you always criticize me for seeing problems both left and right, but frankly, politics is not directed at dealing with problems but with getting elected. So the problems are pretty much everywhere. If everyone agreed with you, or with me, or with KW, or with George, or with JNC, or Yello or ‘Goose or Brent, some consistent policy, probably workable, could be had. NoVA, of course, is hopeless.

      Some method of cooperation, at the local, at the state, and at the national level, based on what everyone sees as a problem, could be achieved if the parties were not so eager to take the cheap shots and pander to fear.

      Frankly, many local governments run much more efficiently because everyone wants public safety, sanitation, parks, no potholes, and libraries. And many local governments are “non-partisan”. OTOH, where there is a party machine in control of local government, it often becomes a pit of political favoritism, nepotism, and corruption. I give you Newark and Philadelphia and Colorado Springs, for starters.

      I am not offering a fix, just a lament. I have no idea how the nation would look after four years of a Ted Cruz Presidency and R control of both houses, except the Court would likely have two more Federalist Society members. But I’d bet it would end with a D POTUS and D houses in the next election, b/c I no more trust Rs to not play to their cronies and Big Donors, and get caught out, than I trust Ds to not play to theirs, and get caught out.

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      • Mark:

        Scott, I agree with KW in that I do not think there are ultimate victories in politics in America.

        I think a comparison of the Republican position on Social Security in 1935 vs the Republican position on Social Security in 2015 would establish pretty conclusively that you are wrong. The left has won an enduring and conclusive victory over the role the federal government should play in society. I really don’t see how that can be denied. (And SS is hardly an exception.)

        BTW, if KW thinks, as he explicitly said, that “Culturally, progressives tend to always hold the high ground (using that as a military term) and ultimately triumph on the social issues,” then it seems to me that you clearly disagree, not agree, with him on this front.

        Scott, you always criticize me for seeing problems both left and right…

        I think you misunderstand my criticism. I criticize you not for seeing problems in the politicking of both left and right, but rather for downplaying or ignoring the real effects of ideology on politics. Yes, politics itself leads to behavioral problems that are non-partisan. All politicians lie to some extent. All politicians like to hold and accrue power. All politicians want (need) to get elected, and so pander to constituent fears. But ideology about the role of government in society is distinct from the practice of politics, and the embrace of certain ideologies does far more to enable the problematic aspects of politics and politicians than does the embrace of others. This is something that you don’t seem to see, or which you ignore in your “pox on both their houses” criticisms.

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  28. Haven’t been on for a long time, so I don’t know.

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  29. it’s because we don’t understand what tolerant means. it’s become synonymous with celebrate. which is incorrect.

    the whole point of this country is that i must tolerate you. i don’t have to like you. and i shouldn’t be driven from the public square for that.

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    • nova:

      it’s because we don’t understand what tolerant means.

      I would suggest that it isn’t so much that “we” don’t know what it means, but rather that progressives deliberately corrupt the language in order to obfuscate what they are actually doing. The left uses the politically appealing language of “tolerance” in order to obfuscate and gain assent for the imposition of its own intolerance.

      The corruption of language (and therefore concepts) is very much a fundamental aspect of the progressive project. Language is crucial to our ability to think, and progressives know that by corrupting language they can manipulate how people think about things.

      Like

  30. Is 12Bar still at PL?

    Yes. Although it seems that Cao’s biggest defender currently–when anyone bothers to–is a woman who posts as dmartin. I think it’s because she seems to be in as bad a mood as he is, most days.

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  31. i don’t have to like you. and i shouldn’t be driven from the public square for that.

    But it stings less if you’re being driven in a limo, no?

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  32. It does’nt sting at all, Michi. i’m a firm believer of “sticks and stones.” we don’t teach that anymore. and we have a nation of crybabies as a result.

    i’d agree with that assessment, Scott.

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  33. @Scottc1: “But ideology about the role of government in society is distinct from the practice of politics, and the embrace of certain ideologies does far more to enable the problematic aspects of politics and politicians than does the embrace of others.”

    While I think this is true in many respects, I think incentives in the political process often trump ideology. I don’t think a small government ideology can survive in DC. Thus, the small government politician will either be co-opted, Animal Farm style (some animals are more equal than others), where as there may be some disagreement as to where government should be over-reaching and over-large and insinuating itself into the life of the average american, but they all, ultimately, end up agreeing that Big Government (just the right kind) is ultimately good, and in a way that seems very similar to me (I don’t see much difference between Obama and Dubya in terms of actual military policy, nor do I see a huge difference collectively between NCLB and Medicare Part D and the eagerness to create a huge new government bureaucracy in the DHS and Obama’s advancement of the ACA). While ideologically the left may believe in bigger government for it’s own sake and the right does not, the incentives in government are going to ultimately turn 99% of politicians into “big government” politicians. And the few true small government pols, like perhaps Ron Paul, that manage to stay in DC and remain relatively small government in practice, will accomplish nothing.

    Culturally, I think progressives hold the high ground—and it’s hard for them not to in a classically liberal, technologically advanced society (that is also a representative republic or democracy). The “ground” always favors progressives in a wealthy, technologized nation. The only bulwarks against progressivism in America that I see are tight-knit conservative groups and their communication apparatus, fundamentalist religion (including Islam, as Islam is nothing if not anti-progressive), and conservative media.

    While I still maintain that the liberal news media is a non-issue in modern times, I would agree that it would essentially be nothing but a propaganda arm for Democrats politically, and progressives generally, if not for the conservative media and its bullhorn. It would be nice if there were something other than a smattering of parochial private universities to offer an alternative to our increasingly progressive college campuses, but alas . . . I suppose some For Profit universities exist outside of the progressive indoctrination mold, which may be one reason liberals are attacking private colleges (there are other reasons to do so, however).

    Presently, as far as I can tell, progressives seem dominant in entertainment and on college campuses. And in many spheres of the public bureaucracy. Which is why they are generally victorious (especially on social issues) and I expect will continue to be, up to a point. When it involves obviously taking money from people (i.e., overt taxation that includes the middle class), embracing radical Islam, and a few other things they will have more trouble.

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    • KW:

      While I think this is true in many respects, I think incentives in the political process often trump ideology.

      I totally agree. I just think it is far better for there to be tension between ideology and the incentives of the political process than for ideology to reinforce the incentives of the political process.

      I am constantly amazed at how liberals express unreserved cynicism about politicians and the political process, and then go out and advocate yielding ever more power to those same politicians.

      I don’t think a small government ideology can survive in DC.

      Certainly not any more, I agree. Another example of the kind of ultimate political/ideological victory that Mark thinks doesn’t exist.

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      • Another example of the kind of ultimate political/ideological victory that Mark thinks doesn’t exist.

        I know what you mean, now. I also think that the freeing of the slaves and the creation of NASA are more or less here to stay. Yes, the federal government has ratcheted up in size and the small government forces can probably only reduce its size to the last ratchet up. Think de-regulation as an example.

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        • Mark:

          I also think that the freeing of the slaves and the creation of NASA are more or less here to stay.

          Indeed. Freeing the slaves was the first, and most likely the last, ultimate cultural victory that the Republican party has ever achieved.

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        • the last, ultimate cultural victory that the Republican party has ever achieved.

          Most recent long term R culture victory and one that may be ultimate is the diminution of the American labor union movement.

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  34. @markinaustin: “Scott, I agree with KW in that I do not think there are ultimate victories in politics in America. Everything is “for now”.”

    In the sense that the contemporary version of a given political party/ideology is holding a greater overall influence or power in the country at a given time, I agree. But as Scott says, the Republicans are never going to deconstruct the new deal, conservatives are never going to roll back the Great Society and end Medicare, even if you occasionally get one that says they want to, and even if one of them actually gets elected. Bush had very, very, very modest goals with SS and it was DOA.

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  35. @scottc1: “I am constantly amazed at how liberals express unreserved cynicism about politicians and the political process, and then go out and advocate yielding ever more power to those same politicians.”

    And often feel find yielding a great deal of power to political positions as if there is no chance that someone they disagree with might ever acquire that position at a later day and use that power to work agains their ideological aims. A logical disconnect there.

    “Certainly not any more, I agree. Another example of the kind of ultimate political/ideological victory that Mark thinks doesn’t exist.”

    I tend to think in that case it was less intentional than it was a structural inevitability of the very system created to prevent a large government with sweeping powers. The Founding Fathers had some good ideas (and the right folks won, for the most part at the time) but I think it was impossible to build in safeguards for every possible vector of abuse or manipulation (and such safeguards could have, in their own ways, become vectors for abuse in ways they could not imagine at the time, I’m sure). Or control how incentives would look 200 years out.

    Term limits since the first elections might have helped.

    Term limits for SC justices? Maybe term limits and a immediate appointment (without a possibility of filibuster) unless the opposition can muster a 2/3rds “we must stop this appointment” type of thing? I think 12 years would be a good term for a SC justice.

    I feel the direction we head generally tends toward the progressive, but sometimes more contemporary conservative elements hold sway, especially in the political realm. But certain things—such as government growth—are lost battles, ultimately. Although if it is the left or the political class generally that has won in that case, I’m not sure.

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  36. @markinaustin: I think the Republican party has also set the dialog on taxation to something more conservative than it would be, without the Republican party. While not an all out victory, I don’t believe Obama would have introduced even temporary tax cuts (or that there would have been any middle class tax cuts there for him to preserve, nor do I believe he would have introduced new ones) without the Republicans. Without Republicans as a quasi-anti-tax party, taxes would be at pre-Reagan levels or higher, and discussion would center around how much to increase taxes the next time around. It’s not a clear victory, as the dialog has not entirely changed (i.e., we still have discussions of tax cuts as “costs” to government which much be paid for, which I find pedantically irritating) but . . . it’s something.

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    • KW:

      I think the Republican party has also set the dialog on taxation to something more conservative than it would be, without the Republican party.

      Maybe, but what you are talking about is just the distribution of the tax burden. In 1940 total federal tax receipts as a percent of GDP was 6.7%. By 1945 it was 20.5%. In 2000 it was 20%. Last year it was 17.5%, and is predicted to rise to over 19% by 2020. It has only fallen below 15% twice (1949 and 1950) since 1945.

      That looks to me a lot more like an enduring victory for FDR-type progressives than it does a victory for conservatives.

      http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

      Like

    • @KW: True about the last 35 years of federal taxation.

      But I am so certain that taxes will inevitably rise again that I was actually thinking about the ebb and flow of taxation when I first wrote that it’s all temporary.

      Like

      • Mark:

        True about the last 35 years of federal taxation.

        Federal tax receipts as a percent of GDP has averaged 17.3% over the last 35 years (since 1980). In the 35 years prior to that, they averaged 17.1%. How does that indicate anything other than an enduring progressive/liberal victory regarding federal taxation?

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        • What is true is that 1] top brackets have been substantially reduced and 2] KW and I are talking about relative effects of the RWR legacy, not the increases in SS taxes implemented to “save” that system.

          Further, federal gasoline taxes have been frozen for 25 years or so.

          These are R or small government victories, in at least a relative sense. I don’t rate them as permanent and I don’t think they will be as lasting as the diminution of labor unions.

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        • Mark:

          These are R or small government victories, in at least a relative sense.

          Obviously R’s have had occasional policy successes. But these are individual battle victories in a long war that is clearly being lost.

          With regard to the lower top tax brackets, a straightforward comparison of rates is not that meaningful because so much else within the tax code has also changed. It seems to me that if tax receipts as a percent of GDP have remained relatively constant (ie 17.3% post 1980 vs 17.1% pre-1980), then any changes to the brackets or other elements of the tax code during that time can only indicate changes in the distribution of the tax burden, not changes in the total tax burden itself. And I think any look at the distribution of the tax burden would clearly show a progressive/liberal trend, ie the burden borne by lower income brackets has decreased, while the burden borne by the higher income brackets has increased.

          BTW, even if a lower rate for the top bracket was by itself a meaningful metric, I think it would be wrong to equate lower tax rates with small government. As our ever-increasing national debt shows, starving the beast is not a successful strategy to keep government from growing.

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  37. @scottc1: ” How does that indicate anything other than an enduring progressive/liberal victory regarding federal taxation?”

    Let’s call it a stalemate. I think both Democrats and the left would love to see tax receipts at 25% or 35% of GDP. Some of them might be in the 50% or 100% camp, but I think there is little doubt that, though neither side can claim a victory, Republicans have have a victory in terms of preventing the left from getting what it wants (something that cannot be said with, say, same sex marriage). And it’s more of victory than the ACA, which is much less than the single payer, completely socialized-medicine model the left may want, but is still not outright prevention.

    More than that, direct taxation on the middle and lower classes is kind of a 3rd rail. Mondale ran on it and look what happened to him. This is also something of a minor ideological victory, even though it falls far short of an ideal victory.

    ” As our ever-increasing national debt shows, starving the beast is not a successful strategy to keep government from growing.”

    Which I think points to the fact there are no ideological small government conservatives in Washington, or running for office, really. There is no one serious about reducing debt, just managing its growth and claiming fiscal responsibility for some small role in doing so. So debt-financing is ultimately a victory for someone, because it’s clearly entrenched in the federal budget.

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    • KW:

      I think both Democrats and the left would love to see tax receipts at 25% or 35% of GDP. Some of them might be in the 50% or 100% camp, but I think there is little doubt that, though neither side can claim a victory, Republicans have have a victory in terms of preventing the left from getting what it wants (something that cannot be said with, say, same sex marriage).

      That’s like calling D-Day a victory for the Germans because they prevented the Allies from achieving all of their day 1 objectives. Sure there are a lot of people on the left calling for more federal revenue than its ever had. But how many people on the right are calling for a return to the same federal revenues that existed before the FDR expansion? Almost none. That represents a victory for the left in my book.

      For the entire history of the nation up until 1930, federal spending as a percent of GDP (outside of war time) was never greater than 10%. Since 1930, it has been on a nearly ceaseless trend upwards (again, controlling for the spike of WWII). The feds now spend nearly 35% of GDP. Do some people want it to be even higher? Absolutely, but “It could be worse” is hardly a slogan of the victorious.

      Which I think points to the fact there are no ideological small government conservatives in Washington, or running for office, really.

      Exactly my point. The left has won.

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  38. @markinaustin: “These are R or small government victories, in at least a relative sense.”

    Which is important. Such ideological victories are often relative to what is possible, not what is ideal. The left won on abortion, but a pure victory would have been something akin to abortion as a medical service, something you could get at any outpatient clinic or gynecologist, something untouchable by state limitations that right-to-life folks routinely use to make abortions more difficult to obtain.

    I think the left is going to have a pretty pure, ideal victory in regards to gay marriage. Time will tell. I don’t think small c conservatives have quite as many almost total victories to point to. One could argue our military adventurism and foreign policy entanglements point to a philosophical triumph on the right, but of a globalist right rather than an isolationist right (who have clearly lost that ideological battle).

    However, I think the most important ideological battle has to do with the overall size (tax, regulatory, size of bureaucracy) of the federal government and the centralization of power at the federal level, and I think conservatism has essentially lost that battle, as both Republicans and Democrats do things to consolidate power in Washington, and have for the past 100 years, at least. Some of the worst offenders have been Republicans (such as Nixon, oft vilified for his ultra-conservative “Southern strategy”) and the Evil Dubya, with Medicare Part D and No Child Left Behind, and a clear expansion of both our security and surveillance bureaucracy and our military adventurism. Thus, liberalism/leftism has triumphed in that, the most important, regard.

    There is little discussion amongst even the most “conservative” candidates right now about ending corporate welfare (either special tax breaks not available to all or actual transfer payments), and little mention that the biggest chunk of the Obama deficits was TARP . . . and so on and so forth. The left has won on the “appropriate” size and scope of government thing. Or, in other words, “the right” has won some battles and still might win some, but “the left” has ultimately won the war.

    But the right has had relative victories, of which I consider taxation, as it stands, to be one, though it was not (and will never be) an absolute victory.

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  39. @markinaustin: “But I am so certain that taxes will inevitably rise again that I was actually thinking about the ebb and flow of taxation when I first wrote that it’s all temporary.”

    I think most future taxation is going to be backdoor taxes, ala the ACA or the Cadillac tax, or targeted taxes that are supposed to only hit a narrow band of people and start hitting lots more (ala, the Alternative Minimum Tax). I think across the board tax hikes on the middle class will go over like a lead balloon, and continue to do so.

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