Washington Post portrayal of the “not apocalyptic” John Kasich. (photo: Chip Somodevilla/Getty)
The Washington Post gave high marks to Ohio Gov. John Kasich after he met with the Post‘s editorial board. The lead editorial noted that Mr. Kasich, “does not dismiss science.” It went on to point out that he recognizes that climate change is human-caused, although he has no plan to address the problem. (Kasich does reject President Obama’s plan, as the piece notes.) Editorial writer Charles Lane was even more effusive, asking readers, “What’s not to like?”
People who follow politics and economics would have little difficulty answering that question. For example, Mr. Kasich signed a bill prohibiting the state of Ohio from contracting for health services with Planned Parenthood or any other organization that performs abortions.
Kasich also has bizarre views on economic policy. In addition to supporting tax cuts for the rich, which the Post criticized because of the impact on the deficit, Kasich also criticized the Fed for its quantitative easing policy. According to Kasich, this only led to companies “buying up more of their stock and making the rich richer.” It is difficult to envision how Kasich thinks this process works.
Most immediately, quantitative easing leads to lower interest rates. For believers in economics, this lead to more borrowing for things like buying homes, and both public and private investment. It also frees up money for homeowners who refinance their mortgages. This allows them to spend money on other things. Lower interest rates also mean a lower-valued dollar, other things equal. This makes our goods and services more competitive internationally, reducing our trade deficit.
All of these things create more jobs, which also puts workers in a better position to get wage gains. It is true that lower interest rates can also make it easier for companies to borrow to buy back shares of stock, although it is pretty bizarre to find a Republican who would argue against a policy that leads more growth and jobs just because it can increase the wealth of the rich. (Low interest rates also help to raise house prices, which are the main source of wealth for the middle class.)
Anyhow, the Post apparently thinks great things about a candidate who seems to have zero understanding of economics and has no ideas on how to address a potentially catastrophic environmental problem. It is worth noting that he proposed tax cuts, rather than tax increases, for the rich.
Economist Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. A version of this post originally appeared on CEPR’s blog Beat the Press (4/11/16).
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Dean, it surprises me that a prominent economist such as yourself would have such views on quantitative easing. From everything I’ve read about it, I’d have to agree with Kasich:
QE3 Won’t Create Jobs or Spur Investment
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8811
QE Goes to Banks, Not For Small Business Loans or to Create Jobs
https://www.popularresistance.org/why-cant-we-access-the-feds-free-money/
QE3 Another Fed Giveaway to Banks, Not Small Businesses or Homeowners
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8853
I agree, Q.E. is another form of supply side economics, giving the banks fairly free rain to increase personal debt, in the hopes that personal income will increase along with it. It has not worked yet as per capata debt is increasing and personal wealth per capata is decreasing adjusted for inflation. Banks do not increase productivity, or personal income, but do increase asset prices, more money trying to find more profit from a stagnent resource.
I’m a huge Dean Baker and FAIR fan, to be clear, because this is one of the rare times I am critical. Baker writes ” According to Kasich, [QE] only led to companies ‘buying up more of their stock and making the rich richer.’ It is difficult to envision how Kasich thinks this process works.” Not all that difficult if you stay abreast of Mike Whitney’s economic reporting. According to him this is exactly what QE does, and it saw Fed injections of free cash into bank coffers of some $800 billion monthly from circa 2009 to current or very recently, which were on top of the TARP bailout of $800 billion in 2008. He then calculates the total bailout at some $15 trillion, quite a haul for the few, the proud, the industrious like Jaime Dimon and Lloyd Blakenfeld. Matt Taibbi reports similar effects of what he refers to as vampire squid. As far as the term “the economy,” that’s just code for the continuing economic interests of the oligarchy imminent to become once again more nepotism.