How Peter Orszag Can Save the Economy and Why Americans Don't Care

Enter Peter Orszag. At first appraisal, he appears perhaps a little bland, an unassuming fellow really, with a bookish air. Upon closer inspection, the intellectual aspect is only strengthened, though by no means are we dealing here with the absent minded professor - quite the opposite. Indeed, he's all sharp wit and bustle of energy, like one of those high school track star valedictorians, Orszag (a marathoner, who runs 35 minutes every morning) combines gymnast-like athleticism with scholastic vigor. And this rather unremarkable, yet exceptional man is the current director of the Office of Management and Budget, and holder of one of the most important cabinet positions in the Obama administration. It's his job to crunch the numbers, to make sure they make sense, and to conjure up the genie of fiscal responsibility while formulating a budget that meets all of the many ambitious goals his boss has set for the country.

And he does it with style. Look here how he adds a pinch of irreverence to the stultifying hum drum of statistics:

We often hear about people who are unlucky in love, but what of those who are unlucky in the business cycle? What is the impact of being born two decades before a significant economic downturn, such that you graduate from college and enter the labor force in the middle of a period of high unemployment?

The cliche about numbers speaking for themselves is almost always a half truth, conveniently disguising the unglamorous work of statisticians, the unsung heroes of the modern age. Even so, the figures Orszag provides are all too plain. The immediate after-effect of entering the labor market is to experience a 6 to 7 percent decline in wages for each 1 percent increase in the unemployment rate. And of course, the maelstrom provoked by the confluence of banking collapse and real estate fizzle hasn't caused a mere 1 percent rise in unemployment, but more like five times that since the start of the troubles. So, as any precocious grade school student could calculate, we're dealing with something more like a decline in wages of 30 to 35%. What's worse, the differential in wages received is cloyingly persistent even after national employment levels resume their average trend, and only gradually declines over the subsequent 15 years after graduation. Which is to say, that well into middle age, today's Facebook generation of college graduates will make less money each year than they otherwise would have enjoyed, all because of the recession.

Yet, somehow, amid the gloomy figures and murky forecasts, we hear voices emanating not only from Washington or Wall Street, but from Main Street and public opinion pollsters, that the Federal Government's efforts towards an economic stimulus have gone too far. From near and far, from heartland Senators to irate talk radio callers, a new awareness of deficits, dormant over the previous eight years, has been reawakened at just the least appropriate moment. Alas, in the public consciousness, the Troubled Asset Relief Program (initiated, remember, in the waning days of the Bush administration) and the American Recovery and Reinvestment Act, the first major initiative of the Obama presidency, are conflated into one big bugaboo. It's the terror underneath all our beds, that we might easily call either "socialism" or "bank bailout", depending on one's darkest fears. This is revealed all too well, in a recent Rasmussen poll revealing that 51% of Americans hold the fanciful belief that halting the stimulus would produce more jobs than continuing with the program. In other words, a majority of the public subscribes to the view that just at the moment when the private sector is at it's most anemic and while one-tenth of consumers are unemployed, the public sector should also be contracted, just for the sake of decency.

Unfortunately for John Q. Public, this is not an opinion widely shared amongst economists. No, frustrating though it may be, in the search for classic villains in black hats, the federal government doesn't hold the smoking gun in this recession. How could it, when the downturn preceded any response by the Federal Reserve or the major two responsible branches in Washington? Indeed, when three major financial forecasting companies were surveyed by the New York Times, there was a firm consensus: the stimulus has helped turn a great depression into a bad recession. It's worth looking at these figures in full:

What's immediately apparent, is that absent the federal stimulus, the national economy would still have been in negative growth through most of 2009, and possibly well into 2010. Moreover, unemployment would have been anywhere from 1 to 2 percent higher than it is today: which is to say that we could have been looking now at a 12.2% jobless rate. And to be clear, this is only taking into account the American Recovery and Reinvestment Act, not the many other measures the government has taken, including TARP, since the Soviet-like collapse of Lehman Brothers back in the frenzied campaign days of September, 2008.

But, we seem to have forgotten poor Peter Orszag. Increasingly, as the bulk of the stimulus funds are dispersed, his purview has been shifting towards health care reform. And as the deficit hawks in Congress have begun to circle overhead, he's found it necessary to justify and explain the expansion of insurance coverage in terms of it being fiscally neutral. This is in keeping with the tenor of the times. The talk, just a year ago, of an Obama New Deal is now a historical curiosity. Indeed, it will fall to historians of a future age, pouring through the electronic archives and speaking at colloquia on the Great Recession, to determine how it was that precisely at the moment when great, concerted national action was most required, the American people shrugged their shoulders, and redoubled their efforts to suffer through the crisis in private.

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After 9/11 and Fort Hood: The Anti-Muslim Backlash That Almost Never Happened

A strange rhythm reverberates through American society. Every few years or months, another mass shooting punctuates the national consciousness. Each massacre is like an aftershock of the last, a seismic tremor that immediately seems to foreshadow the next inevitable tragedy. Of course, the Fort Hood shooting stands apart. Here, the assailant's religion and motives, the non-civilian nature of the targets and it's connection to the Afghan War, mark off the shooting as belonging to that murky sub-genre of mass violence called terrorism.

After having been both victimized and turned into helpless spectators during 9/11, and since then, in a massive case of overcompensation, having borne the brunt of the military casualties in two wars, it would seem plausible that the United States would have fallen prey at home to a wave of anti-Muslim prejudice. Has this, in fact, occurred? The answers are complicated, as the real world has an annoying tendency of being. To begin with, Americans are far less biased against Muslims than almost any other Western nation. The Pew Global Attitudes Project, found in 2008 that the English speaking countries, the U.S. and Great Britain, at 23% of those polled, had lower levels of unfavorability towards Muslims than the nations of Continental Europe. By contrast, in Germany and Spain about 50% the population had a negative perception of their Muslim minorities.

Notably, the U.S. was the only country polled where public sentiment towards Muslims significantly improved since 2004. In other words, there was a backlash against Islam after the Al Qaeda attacks, but it fairly quickly died down. This is confirmed by evidence provided by Human Rights Watch, in a report ironically intended to prove the precise opposite. In the year following the September 11th hijackings, there was an unmistakable surge in hate crimes against Muslims and Arabs in America, from 28 the previous year to 481 in 2001. During that period, four murders, two by the same individual, can be attributed to the anti-Muslim backlash. Yet, the bulk of the violence took place in a window of just a few weeks after the theatrical demolition of the World Trade Center. Again, the same pattern emerged following the London bombings of July, 2005: a disturbing, but brief spate of racially motivated violence, followed by a return to the average trend.

In other words, the data from both international public polling, and from the number of hate crimes committed simply do not provide consistent support for the proposition that levels of terrorism correlate well with bigotry towards Muslims. Rather, the stronger correlation is with levels of racism towards minorities in general. Intriguingly, the same Pew survey indicated that, in broad terms, those nations with higher levels of anti-Muslim animus, are those where anti-Semitism still has prevalence. The lesson here is the moral of the 20th century, the one redeeming value that emerged from the ruins of the last global war: that an injury to one is an injury to all.

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