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James Bullard, the president of the Federal Reserve Bank of St. Louis,
and a voting member of the Fed’s policy-setting
Federal Open Market Committee (FOMC) worries about deflation
in a research paper published today:

In this paper I discuss the possibility that the U.S. economy may
become enmeshed in a Japanese-style, deflationary outcome within
the next several years. To frame the discussion, I rely on an analysis
that emphasizes two possible long-run outcomes (steady states) for
the economy, one which is consistent with monetary policy as it has
typically been implemented in the U.S. in recent years, and one which
is consistent with the low nominal interest rate, deflationary regime
observed in Japan during the same period. The data I consider seem
to be quite consistent with the two steady state possibilities. I describe
and critique seven stories that are told in monetary policy circles re-
garding this analysis. I emphasize two main conclusions: (1) The
FOMC’s extended period language may be increasing the probabil-
ity of a Japanese-style outcome for the U.S., and (2) on balance, the
U.S. quantitative easing program offers the best tool to avoid such an
outcome.

Just 3 weeks ago, Bullard saw no reason to worry.

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Elimination of First Mandatory Minimum Since Nixon Administration

Yesterday the U.S. House of Representatives passed landmark legislation to dramatically reduce the sentencing disparity between federal crack and powder cocaine sentences and to repeal the five-year mandatory minimum for simple possession of crack cocaine. The bill, S. 1789, already won unanimous approval from the Senate in March and now goes to the White House for President Obama’s certain signature. Its passage marks the first time that Congress has repealed a mandatory minimum drug sentence since the Nixon administration.

While S. 1789 will not eliminate the mandatory minimum for trafficking crack cocaine, it will substantially reduce racial disparity in cocaine sentencing. The infamous 100-to-1 sentencing ratio will be reduced to 18 to 1. Moving forward, 28 grams of crack cocaine will trigger a five-year prison sentence and 280 grams of crack will trigger a 10-year sentence. Once enacted, the law could affect an estimated 3,000 cases annually, reducing sentences by an average of about two years and saving an estimated $42 million over five years. The bill does not provide any relief for people in prison serving crack cocaine sentences because it does not provide for retroactivity. The bill also provides for enhanced sentences for drug offenses involving vulnerable victims, violence and other aggravating factors.

For more detailed information about the history of the federal crack disparity and the changes that will result for S. 1789, go to the Families Against Mandatory Minimums web site.

Families Against Mandatory Minimums is a national nonprofit, nonpartisan organization supporting fair and proportionate sentencing laws that allow judicial discretion while maintaining public safety.

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Economists

Yesterday economists Mark Zandi and Alan Blinder released the first comprehensive study that estimates the total effect of fiscal and financial policies of the last few years. They write:

In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.

When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration. To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind..

In a summary of the analysis, The New York Times wrote that the “sweeping interventions to prop up the economy since 2008 helped avert a second Depression.”

According to the report, without the government response:

· There would be about 8.5 million fewer jobs, on top of the more than 8 million already lost.
· The nation’s gross domestic product would be about 6.5 percent lower this year.
· The economy would be experiencing deflation.

All of which is well and good, but it ignores one lingering effect of the worst recession ever: unemployment. The fiscal stimulus was not enough to avert this crisis, nor will it be enough to bring full employment back for many, many years.

Paul Krugman illustrates just how bad the employment situation is and will be:

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I said I was through with the Democratic governor’s primary, but this is too good to ignore:

Glassman responds to Malloy’s newest negative advertising

“Running with Dan four years ago, I watched him tear our party apart with dirty, divisive attacks on good Democrats. He photo-shopped his opponent into a dress, but his negative attacks backfired, costing him the nomination. I had hoped that Dan learned his lesson in 2006 but his latest run of television ads shows otherwise. These attacks on Ned Lamont are blatantly false and should be out of bounds for any Democrat who cares about the future of our party and our state.

“I hope he will come to his senses and take the ads down, and if he doesn’t, I hope his running mate Nancy Wyman will join me in condemning these despicable tactics.”

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Cross-posted with permission from the Third Party and Independent Daily blog.

(I said from the beginning that she had no business doing this)

Scott Deshefy, the Green Party candidate for Congress in CT-2, has stated he is likely to ally with Daniel Reale in taking legal action against Connecticut Secretary of State Susan Bysiewicz. As reported at Poli-Tea on Monday, Daniel Reale, an independent candidate for Congress in CT-2, lodged a formal complaint against Bysiewicz with the Office of State Ethics, the State Elections Enforcement Commission and the Federal Election Commission.

A response to the Secretary of State’s so-called “affiliate and participate” propaganda campaign, the complaint accuses Bysiewicz of using state funds and resources to boost enrollment in two specific parties, misusing public funds to influence the outcome of federal and other elections, misusing the official seal of the Secretary of State’s office for this purpose, and substantially complicating the ballot access petition efforts of third party and independent candidates for office in the state.  (See TPID’s interview with Reale discussing the complaint.)

Candidate Deshefy concurs with the substance of Reale’s complaint. Contacted for comment via email, Deshefy stated: “I talked with Reale about this action and concur that the Secretary of State behaved capriciously, abused her office and acted preferentially towards the two corporately-funded parties, all to the detriment of other parties and candidates in CT.”

Deshefy further intimated that the Green Party may join in the legal action, saying, “The Green Party is scrutinizing Dan’s action and will likely ally with supporters of this legal action.”

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As much as I hate to see Democrats attacking each other, I love it when Republicans do:

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Hey Rob Simmons – welcome back! Still carrying that teabag everywhere?

California Tea Party supporters are being told to bring dogs to harass Muslim worshippers during a Friday congregational prayer, or “Jummah.”

CAIR-LA called on local officials and interfaith leaders to show support for the Islamic Center of Temecula Valley, the target of the July 30 protest by the Southwest Riverside County (SWRC) Tea Party group. The protest is in opposition to a proposal for a new mosque in the area.

An e-mail alert announcing the anti-mosque protest sent to area newspapers by “a leader of a conservative coalition that has been active with Republican and Tea Party functions” stated:

“An Islamic Mosque is planned to be built in Temecula. Islam is not a religion. It is a worldwide political movement meant [sic] on domination of the world. And it is meant to subjugate all people under Islamic law. . .Islam permits lying!. . .The Islam’s [sic] treat women as second class people and they also hate dogs. Women are forbidden to sing and dogs are killed. We will not be submissive to Sharia Law. Tennessee was able to stop the Mosque so bring your Bibles, flags, signs, dogs and singing voice on Friday.”

“Californians of all faiths should repudiate those who would target a house of worship using tactics specifically designed to cause offense,” said CAIR-LA Executive Director Hussam Ayloush. “National and state Tea Party leaders should explain why their movement has apparently deviated from its agenda on fiscal responsibility and limited government to the promotion of Islamophobia.”

Ayloush noted that many Muslims believe the saliva of dogs invalidates the ritual ablution (wudu) performed before prayer. For this reason, it has become a cultural norm for individuals not to have dogs in their houses — not because the dog is “hated.” Islam’s Prophet Muhammad allowed the use of dogs for protection and for hunting, and he related several traditions (hadith) in which individuals were rewarded by God for protecting animals, including dogs, and punished for mistreating them.

In response to the planned protest, the Islamic Center of Temecula Valley released a statement that read in part: “It has come to our attention that a group of people seek to disrupt our prayer session on Friday, July 30th. We are disheartened and saddened that a group of our neighbors seeks to disrespect and make our community feel unwelcome.”

Last week, CAIR called on Florida GOP U.S. Senate candidate Marco Rubio not to accept an invitation to take part in an August 21 Tea Party rally featuring an extremist anti-Islam keynote speaker who has stated that Muslims should not be allowed to hold public office, that an American Muslim “cannot be a loyal citizen” and that Islam is the “real enemy.”

Earlier this month, CAIR offered support for an NAACP resolution asking the Tea Party movement to condemn racism within its ranks.

Other Islamophobic incidents nationwide indicate a growing level of anti-Islam sentiment in American society and a trend toward seeking to restrict American Muslim civil rights:

Tennessee Gubernatorial Candidate Takes Heat for Islam Jibe

Anti-Muslim Bigot and Fanatic Explains Islam to the FBI and the Tidewater Joint Terrorism Task Force

Video: Fla. Church to Hold Koran Burning

Muslims Attract Suspicion of US Police Over Public Prayer

CAIR is America’s largest Muslim civil liberties and advocacy organization. Its mission is to enhance the understanding of Islam, encourage dialogue, protect civil liberties, empower American Muslims, and build coalitions that promote justice and mutual understanding.

Become a Fan of CAIR on Facebook. I did.

Subscribe to CAIR’s E-Mail List

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Despite adapting several “education reform” measures, including ridiculous national standards*, Connecticut once again did not qualify for “Race To The Top” funding, although each one of our closest neighbors did.

The legislation includes higher standards for high school graduation ( which I think will have the perverse effect of creating more high school dropouts) and better teacher accountability.

Alex Johnston, CEO of New Haven-based education advocacy group ConnCann:
“A number of these ideas are not new, but the fact that Race To The Top competition created a framework for which really there was a reason to come together and really push hard on some comprehensive education reform legislation.”

Thirty-five states and the District of Columbia entered the competition’s second round.

The finalists announced today are Arizona, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, and South Carolina.

*Here’s an example of a Grade 4 math standard:

“Understand a fraction a/b with a > 1 as a sum of fractions 1/b.”

Do you understand that? Does any fourth grade teacher understand that? Why is it essential that a fourth grade understand that?

P.S. I think what it means is understand that 4/5 = 1/5 + 1/5 + 1/5 + 1/5. Does that clear it up for you?