Senate Republicans chose Sen. John Thune of South Dakota to be their new leader, rejecting an outside pressure campaign from Donald Trump’s allies to break with the establishment in the secret-ballot election, according to two people familiar with the vote.
Thune, a close ally of retiring leader Mitch McConnell (Kentucky), has been critical of Trump in the past but has worked to repair that relationship in recent months. He reassured senators in a closed-door meeting that he would work hand in glove with the new administration and would not butt heads with Trump even on issues such as continuing U.S. aid for Ukraine, which Trump opposes, senators said.
Thune was always the favorite, so this is no surprise—and Trump himself wisely kept his mouth shut about it. Thune will, of course, be a normal staunch Republican partisan, but he's probably the best we could hope for. He's not a firebrand conservative and he'll likely show at least a little spine in standing up to Trump.
In 2021, Senator Elizabeth Warren (D., Mass.) led the fight to keep President Biden from reappointing Jerome Powell as chairman of the Federal Reserve.... Former Fed official Randal Quarles has said that uncertainty about the Fed’s leadership delayed the central bank’s response to rising inflation.
A more halting Fed response likely led to inflation rising more, and subsiding more slowly, than it otherwise would have.
I assume Ponnuru isn't being especially serious about Warren, but he is serious about the Fed fighting inflation. I sure wish we could put an end to this. I mean, the facts are the facts:
I'm using core PCE inflation because this is allegedly the Fed's favored measure of inflation. It peaked in December 2021 and then started declining. But the Fed didn't start raising interest rates until three months later. Inflation was already coming down on its own as supply shortages eased and pandemic stimulus ended.
Did the Fed's interest rate hikes at least help things along? Maybe, but I doubt even that for three reasons. First, interest rates rose above 3% in October 2022. Inflation was basically conquered by July 2023. Nine months just isn't enough time for an impact that large. Second, interest rates peaked in mid-2023 and stayed high for more than a year. But during this time inflation didn't budge even a hair. Third, there was never a recession or even a slowdown. How does monetary policy affect inflation without first affecting the economy?
I'll admit that if I had been in charge of things I would have raised interest rates too—but slowly and steadily. It can't hurt to make sure, right? And in fairness, things weren't as clear two years ago as they are now.
But they are clear now: The Fed raised interest rates, causing economic pain to millions, for nothing. There was never any need for it.
The COVID-era boosts to SNAP, UI, CTC, and child care went away. Medicaid unwound. Food costs spiraled. Interest rates doubled. Measures of material hardship worsened. And Democrats pointed to headline figures showing a boom.
I know I'm beating a dead horse, but I continue to have problems with this narrative. SNAP benefits went way up and were permanent. Expanded UI went away, but that's because everyone went back to work. Food costs went up, but not by more than wages and not at all for the past year. That leaves interest rates, which did indeed rise, and CTC and Medicaid benefits, which did indeed unwind.
That said, if any of these things were serious they really would show up as worsening measures of material hardship. But which ones? Lowrey is right that headline averages can be deceiving, so let's look solely at measures of the poor and working class. Here are expenditures:
This is not the BEA measure of spending, which includes stuff like imputed rent and healthcare paid by insurance. It's the one from the Consumer Expenditure Survey, which measures money out the door. As you can see, every income level did about the same, with the working class doing a hair better than anyone else. But is this because they were depleting their savings? Nope:
During the pandemic itself workers got help from stimulus checks, which they spent down. But over the past five years working class incomes have gone up more than working class spending ($1,700 vs. $700), so even after the stimulus benefits were used up saving has held at its normal historical level. Now here's working class unemployment:
Working class folks all had jobs and weren't losing them. Here's poverty:
The poverty rate never rose above its 2019 level, not during the pandemic or after it.
Here's another check on things. If money were tight, the first thing you'd cut back on is entertainment. Did that happen?
There's a small dip in 2022, probably just noise. In any case, it only lasted a year. By 2023 everything was back to normal.
Now, I understand that maybe I'm just stuck here in my upper middle class bubble, refusing to acknowledge all the pain out there. And yes, there are some government benefits that inevitably unwound over the past couple of years.
It's also true that some people did worse than others, and it doesn't take many of them to move the vote a few percentage points toward Trump. That's a possibility.
But it's grasping at straws. There are individual things that have been problems (auto insurance, for example), but no matter how hard I look I can't find any evidence of serious overall hardship among the working class. It really seems like we have to look elsewhere if we want an explanation of what happened.
President-elect Donald Trump chose Pete Hegseth, who is a combat veteran and co-host on the weekend edition of “Fox & Friends,” to be his defense secretary.
Hegseth has no defense experience—aside from having lots of opinions. He has no government experience and no experience dealing with the Pentagon bureaucracy. He's never run anything bigger than a broom closet. Even at Fox he's only junior varsity, co-hosting the weekend edition of Fox & Friends.
On the other hand, he sure looks like a cabinet secretary. And he agrees with Donald Trump a lot. I suppose that might be good enough for a press secretary, but heading up the biggest, most complex organization in the federal government? You'd think that even the most servile Republican senators might think twice before letting a Fox talking head run the Defense Department. It's considered a pretty important job in some circles.
This picture was taken on the U6 metro line in Vienna near Thaliastrasse. I don't really know why it appeals to me since there's nothing all that special about it. But maybe that's it. Just an ordinary slice of life on an ordinary day.
Since we seem to be relitigating Joe Biden's ARP stimulus and whether it caused inflation, I want to show you my theory of the case. It will be familiar to most of you.
Apologies for the complicated chart. What it shows is that the first phase of inflation started shortly after the pandemic and was the result of supply shortages plus the $2.2 trillion CARES Act, which kept demand steady. It peaked about 15 months later (red dots). This is a shorter interval than usual because this wasn't a normal monetary inflation, which takes a while to work through the system. It was an external shock, which has an impact fairly quickly.
That took us up to about 8% inflation, and then CRRSA and ARP kicked in.¹ They pushed inflation up to 10% and extended the inflationary period by half a year or so (blue dots).
This is why I say the inflationary surge was almost entirely a result of the pandemic plus CARES. That was responsible for about six points of inflation. CRRSA+ARP was perhaps responsible for another two points for a couple of quarters. This means the (allegedly) excessive size of ARP was responsible for at most one point of extra inflation.
How bad was that? That's a matter of opinion. If inflation had peaked around 8-9% and subsided two quarters earlier, how much difference would that have made? That's genuinely hard to say, but my gut feeling is it would have been fairly minimal.
¹CRRSA is the $900 billion pandemic bill passed a month before Biden took office.
I keep reading that Donald Trump might try to fire Fed chair Jerome Powell, whose term runs through 2026. But what is this based on? Trump himself hasn't said anything, and Powell is steadily lowering interest rates, which is what Trump wants. Nor has Powell put himself on Trump's enemies list by saying something critical about him.
A friend asked me yesterday if turnout was really down this year. The answer is yes, but it's a bit trickier than it seems.
Turnout was 158 million in 2020 and looks like it will end up around 154 million this year. But 2020 was a big spike year and might not be a fair comparison. My preference for "expected" turnout is to ignore 2020 and instead draw a trendline through 2016. Then extend it through 2024 and see what you get:
That's a drop from the record high of 2020, but not much of one. So even if this is a better way of estimating turnout, 2024 fell short by three million voters. Enthusiasm just wasn't there like it was in 2020, when Donald Trump's antics were fresh in everyone's minds.
