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  July 22, 2016

United States of Amnesia and the Economics of the RNC

Former financial regulator Bill Black responds to House Speaker Paul Ryan's speech, and says the RNC chairperson has created a false image about the reality of unemployment, interest rates, and inflation under the Obama presidency
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William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


SHARMINI PERIES, EXECUTIVE PRODUCER, TRNN: Welcome to the Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

During a speech at the Republican National Convention, house speaker and RNC chairperson Paul Ryan blamed enduring poverty and declining economic security on President Obama. He also criticized what he called liberal, progressive ideas for having no solutions to offer. Let's have a look.

PAUL RYAN: Progressives like to talk, like our president, like to talk forever about poverty in America. And if high-sounding talk did any good, we'd have overcome those deep problems long ago. This explains why, under the most liberal president we have had so far, poverty in America is worse, especially for our fellow-citizens who were promised better and who need it most.

And we offer a better way for dealing with persistent poverty in this country, a way that shows poor Americans the world beyond liberal warehousing and check-writing, into the life everyone can find with opportunity and independence, the happiness of using your gifts and the dignity of having a job. And you know what? None of this will happen under Hillary Clinton. Only with Donald Trump and Mike Pence to we have a chance at a better way.

PERIES: Joining us now to talk about who's really responsible for the enduring poverty in this country is Bill Black. Bill is an associate professor of economics and law at the University of Missouri-Kansas City. He's a white collar criminologist and former financial regulator, and author of "The Best Way to Rob a Bank Is to Own One." Thanks for joining us, Bill.

BILL BLACK: Thank you.

PERIES: So Bill, what did you make of Paul Ryan's speech and particularly the part about enduring poverty in this country?

BLACK: Well, that was virtually the only mention of Donald Trump's name, and of course there was no mention of any programs that Donald Trump was supposedly going to bring, too, so it was all entirely words, which, as Speaker Ryan aptly said, don't do anything to reduce poverty.

So, poverty went up dramatically because of the financial crisis, and the financial crisis caused unemployment to grow dramatically and caused many people to withdraw from the work force because the wages were so low that they would actually save money staying home and taking care of their own kids rather than working and such.

Poverty and unemployment would have gone up dramatically higher and would have persisted for many more years if Speaker Ryan's policies had been adopted. Speaker Ryan, later in the same presentation--so, as a footnote, the idea that Speaker Ryan is a serious analyst is hilarious. There is no analysis, there's no data, there are no specific programs either that allegedly cause problems or would fix problems. It is all words.

But, what we do know is that the stimulus program, A, was much too small, B, the revenue-sharing portion was cut out at the behest of people like Speaker Ryan, who follow his ideology, but also by conservative Democrats called the blue dogs. But even in its weakened form the stimulus package got the United States much more promptly out of the Great Recession.

And you can see the comparison in Europe, which it's only about six weeks ago that Europe got back to the GDP it had before the crisis. A number of European nations still have youth unemployment above 40 percent. The IMF just came out and said that Italy will have two lost decades. So, Italy, Greece, Spain, all of them in a Great Recession that's actually more severe than the Great Depression.

In other words, it's only the fact that Ryan's policies weren't implemented, because he wanted austerity, that poverty didn't shoot up by another 10 to 15 million Americans. Poverty has been reduced because employment gains that we've seen, would have been reduced much more quickly and much more fully if the full stimulus had been adopted that should have been.

PERIES: Now, the running mate for Donald Trump is Mike Pence, and what's his track record in terms of economic policy, and what can we expect with a Trump-Ryan-Pence triangle?

BLACK: Well, Pence is known as a very, very conservative type. He hates the idea of stimulus. He thinks that austerity is a wonderful thing. None of–these people have all been historically opposed to any meaningful increase in the minimum wage, any meaningful stimulus even in Great Recession. So, they are, you know–Actually, the only hope is Trump. The other two that you've mentioned are completely hopeless in terms of economics.

PERIES: Now, is there a permanent state of amnesia in this country? I mean, do the people who were roaring and clapping yesterday, do they not realize that the Obama administration actually inherited perhaps the greatest economic crisis, definitely of this century, that you call a Great Depression, is there an amnesia taking place?

BLACK: Well, that's actually the perfect question. Because, literally, they do not recognize it. Literally, when we do surveys of core Republicans, they think the stock market, for example, has declined under President Obama. In fact, the largest gains in the history of the United States. They think unemployment has increased or barely decreased, which is completely contrary. They are completely wrong about interest rates. They're completely wrong about inflation.

So, yes. It isn't simply they have amnesia. They actually have this falsely created image, deliberately created by people like Ryan, that is exactly the opposite of reality.

PERIES: And, looking forward now to the Democratic Party convention coming up, of course, you know, we would like to have seen more a progressive stand when it comes to economic issues like that of Bernie Sanders, but that's not going to be the case, obviously, when we look at the Democratic Party platform and what's going forward. What's the takeaway from the RNC to the DNC?

BLACK: Well, a kind of segue is Speaker Ryan's line where he claimed that President Obama was the most liberal president in US history, which is preposterous and, on precisely the point we've been discussing, is a classic example of that. President Obama has said inconsistent things about the new Democrats, but his most famous one is going in front of them and saying, I'm one of you, in terms of outlook.

And we know that he tried very hard to get what he called the grand bargain, and the grand bargain was to start cutting Social Security and to have austerity. And had he succeeded in getting that grand bargain–He tried everything on his end. It was actually the Tea Party that was so extreme that it ultimately killed the deal which, by the way, the predecessor to the Tea Party, their analog under President Clinton, did the same thing, or Clinton would have privatized Social Security years ago.

So, the Democrats in both the Clinton administration and the Obama administration eventually moved very, very far to the right, to the voodoo economics and such. So, the question is, can the DNC and Hillary Clinton who, after all, it was Bill's policies that were precisely these Republican policies, can they be brought back to rational economics or, if we get a recession under Hillary, is she going to say the equivalent of what President Obama said in a State of the Union. He said, you know, it's bad times, so households have to pull in their belts, so the government has to do the same thing.

Well, that's exactly the opposite. The government, if people are pulling in their belts, has to serve as the automatic stabilizer that will prevent that contraction of the economy, prevent the insanity of this self-inflicted, worse than Great Depression levels that we're seeing in many parts of Europe and such.

So, you won't look to the platform. That won't tell you. You have to look to Hillary Clinton's economic advisers, and of course that was one of the differences on Bernie Sanders. People like me were economic advisers for Bernie Sanders. The chance that Hillary Clinton will pick any of us to even have as a rival source, you know, a heterodox source of views, I think is close to nil. But, you know, that would be a good signal if she at least expanded her economic team to get people that got it right as opposed to the string of disasters that have been major economic advisers for people like Bill Clinton and, all too often, President Obama.

PERIES: All right, Bill. I thank you so much for joining us today.

BLACK: Thank you.

PERIES: And thank you for joining us on the Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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